DIMON INCORPORATED
512 BRIDGE STREET
P. O. BOX 681
DANVILLE, VIRGINIA 24543
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 15, 1996
<PAGE>
DIMON INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 15, 1996
TO THE SHAREHOLDERS:
The annual meeting of shareholders of DIMON Incorporated will be held at
the offices of the Company, 512 Bridge Street, Danville, Virginia, the 15th
day of November, 1996, at 10:00 A.M., for the following purposes:
1. To elect four members of the Board of Directors to serve until the
1999 annual meeting or until the election of their successors;
2. To approve the designation by the Board of Directors of Price Waterhouse
LLP as auditors for the fiscal year ending June 30, 1997; and
3. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Only record holders of Common Stock at the close of business on October 4,
1996, are entitled to vote at the meeting.
By Order of the Board of Directors
J. O. HUNNICUTT III
Secretary
Danville, Virginia
October 17, 1996
You are cordially invited to attend the meeting. However, it is important
that your stock be represented if you do not attend, and the Board of
Directors of the Company requests that you date, sign and return the
accompanying proxy. A postage paid, addressed envelope is enclosed for your
convenience. You may revoke your prior proxy at any time by submitting a
newly dated proxy or by attending the meeting and voting in person if desired.
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<PAGE>
DIMON INCORPORATED
512 Bridge Street
P. O. Box 681
Danville, Virginia 24543
October 17, 1996
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
November 15, 1996
GENERAL
This statement is furnished in connection with solicitation by the Board
of Directors of DIMON Incorporated (the "Company"), of proxies in the
accompanying form to be voted at the annual meeting of shareholders of the
Company to be held on November 15, 1996, or any adjournment thereof. Proxies
received in the accompanying form may be revoked at any time before exercise
by written notice addressed to the Secretary at the office of the Company or
by a later dated proxy, or attendance at the meeting and voting in person if
desired, but proxies so received, properly executed and unrevoked, will be
voted.
Only record holders of Common Stock of the Company at the close of
business on October 4, 1996, are entitled to notice of, to vote at and to
participate in the meeting. On October 4, 1996, there were 42,368,059 shares
of Common Stock outstanding. Each share of Common Stock is entitled to one
vote. A majority of votes entitled to be cast on any matter will constitute a
quorum on that matter. If a quorum is not present at the meeting, the meeting
may be adjourned from time to time by vote of majority of shares present
without notice other than announcement at the meeting.
Cost of solicitation will be borne by the Company. In addition to the
use of mails, proxies may be solicited personally or by telephone by regular
employees of the Company. The Company will reimburse banks, brokerage firms,
and other custodians, nominees and fiduciaries for expenses reasonably
incurred by them in sending proxy material to the beneficial owners of stock.
The date of mailing of this statement and the accompanying proxy was October
17, 1996.
On April 1, 1995, Dibrell Brothers, Incorporated ("Dibrell") and Monk-
Austin, Inc. ("Monk-Austin") merged into the Company (the "Reorganization").
Where information herein is provided as of a date or period ending prior to
the Reorganization, such information is provided with respect to Dibrell or
Monk-Austin, as appropriate.
ELECTION OF DIRECTORS
(Proposal 1)
Four Directors will be elected, each of whom is to serve until the 1999
annual meeting or until his successor shall have been elected.
Votes pursuant to the accompanying proxy will be cast for the election
of the following nominees, three of whom are now members of the Board of
Directors: Mr. James E. Johnson, Jr., Mr. Joseph L. Lanier, Jr., Mr. Robert T.
Monk, Jr. and Mr. William R. Slee, who has been nominated to replace Mr. W. G.
Barker, Jr., who has elected to retire from the Board. Although management
does not anticipate that any of the persons named below will be unable or
unwilling to stand for election, a duly executed and delivered proxy may be
voted for a substitute designated in accordance with the Company's Amended and
Restated Articles of Incorporation (the "DIMON Articles"). The election of
each nominee for Director requires a plurality of the votes cast by record
holders of Common Stock entitled to vote in the election of Directors. Votes
that are withheld and shares held in street name that are not voted in the
election of Directors will not be included in determining the number of votes
cast.
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<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL OF
THE NOMINEES.
The Board of Directors consists of twelve persons divided into three
classes, Class I, Class II and Class III, with terms expiring at successive
annual meetings of the shareholders of the Company.
The following information is furnished with respect to the Company's
directors and nominees:
<TABLE>
<CAPTION>
Business Experience Other Public
Name Age During Past Five Years Directorships Held
- ---- --- ---------------------- ------------------
<S> <C> <C> <C>
Class I Nominees (term expiring at the 1998 annual meeting of shareholders)
R. Stuart Dickson 67 Chairman of the Executive Committee First Union Corporation;
of Ruddick Corporation, a holding PCA International, Inc.;
company, Charlotte, North Carolina Textron, Inc.; United
since 1994; prior thereto Chairman of Dominion Industries;
the Board of Ruddick Corporation. Ruddick Corporation.
Albert C. Monk III (1) 57 President of DIMON and President and
Chief Executive Officer of DIMON
International, Inc. since 1995; prior
thereto Chairman of the Board, Chief
Executive Officer and President of Monk
-Austin since 1994; prior thereto Chief
Executive Officer and President of Monk
-Austin since 1992; prior thereto President
of Monk-Austin.
Claude B. Owen, Jr. 51 Chairman of the Board and Chief American National
Executive Officer of DIMON since Bankshares, Inc.;
1995; prior thereto Chairman of the Richfood Holdings, Inc.
Board, Chief Executive Officer and
President of Dibrell since 1993; prior
thereto Chairman of the Board and Chief
Executive Officer of Dibrell.
Norman A. Scher 58 Executive Vice President, Treasurer Tredegar Industries, Inc.
and Chief Financial Officer of Tredegar
Industries, Inc., a plastics and metal
products manufacturer, Richmond,
Virginia.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Business Experience Other Public
Name Age During Past Five Years Directorships Held
- ---- --- ---------------------- ------------------
<S> <C> <C> <C>
Class II Directors (to be elected for a term expiring at the 1999 annual meeting of shareholders)
James E. Johnson, Jr. 67 Partner of Womble Carlyle Sandridge &
Rice, PLLC, a law firm, Charlotte, North
Carolina.
Joseph L. Lanier, Jr. 64 Chairman and Chief Executive Officer of SunTrust Banks, Inc.;
Dan River Inc., a textile manufacturer, Flowers Industries, Inc.;
Danville, Virginia. Torchmark Corporation.
Robert T. Monk, Jr. (1) 48 Senior Vice President of DIMON
International, Inc. since 1995; prior
thereto Vice President and Director of
Processing Operations of Monk-Austin.
William R. Slee 56 Senior Advisor, Schroders PLC, a Videotron Holdings;
merchant bank, London, United Kingdom PLC; Proudfoot PLC;
since 1995; prior thereto Group Managing Algemeen Burgerlijk
Director, Schroders PLC. Pensioen Fonds.
Class III Directors (term expiring at the 1997 annual meeting of shareholders)
Louis N. Dibrell, III 51 Senior Vice President of DIMON
International, Inc. since 1995; prior thereto
Senior Vice President of Dibrell.
Henry F. Frigon 61 Interim Chairman of the Board of CompuServe, Inc.;
CompuServe, Inc., a technology company, H&R Block, Inc.;
Columbus, Ohio; prior thereto Executive Group Technologies
Vice President and Chief Financial Corporation; Buckeye
Officer of Hallmark Cards, Inc. Cellulose Corporation.
John M. Hines 56 Consultant to DIMON Incorporated since
July,1996; prior thereto Executive Vice
President of DIMON since 1995; prior
thereto Executive Vice President and
Chief Financial Officer of Monk-Austin.
Dr. Thomas F. Keller 65 R. J. Reynolds Professor of Business American Business
Administration, Fuqua School of Products, Inc.; LADD
Business, Duke University, Durham, Furniture, Inc.; Nations
North Carolina since 1996; prior thereto, Funds Trust; Mentor
Dean and R. J. Reynolds Professor, Growth Fund;
Fuqua School of Business, Duke Hatteras Income
University. Securities, Inc.; Wendy's
International, Inc.
</TABLE>
__________________
(1) Messrs. A. C. Monk III and R. T. Monk, Jr. are first cousins.
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<PAGE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Five meetings of the Company's Board of Directors were held during
fiscal year 1996. No Director attended less than 75 percent of the total
number of meetings held by (i) the Board of Directors and (ii) all
committees of the Board on which a Director served.
The Board has standing Executive, Audit, Executive Compensation and
Nominating Committees.
Members of the Executive Committee are Messrs. Owen (Chairman), Barker,
Hines and Albert C. Monk III. The business of the Company is under the
general management of a board of directors as provided by the laws of
Virginia, the Company's state of incorporation. The DIMON Articles and By-
Laws provide that the Executive Committee has authority to act in all
matters that the full Board may act upon when the Board is not in session.
The Executive Committee reports all of its actions to the full Board of
Directors at its next meeting. The Executive Committee met once during
fiscal year 1996.
The Board's Audit Committee is composed of Dr. Keller (Chairman), and
Messrs. Frigon, Johnson and Lanier. The Audit Committee is authorized to
consult with the Company's outside auditors and recommend the selection of
such auditors for each fiscal year. The Audit Committee's basic functions
are to assist the Board of Directors in preserving the integrity of the
financial information published by the Company through the review of
financial and accounting controls and policies, financial reporting
requirements, alternative accounting principles that could be applied and
the quality and effectiveness of the independent accountants and the
Company's internal auditors. The Audit Committee met three times during
fiscal year 1996.
The Board's Executive Compensation Committee is composed of Messrs.
Scher (Chairman), Dickson, Johnson and Lanier. The Executive
Compensation Committee's basic functions are to review the effectiveness of
the management compensation plans of the Company, to set the compensation
of the Chief Executive Officer and the managers reporting to the Chief
Executive Officer, to review and approve the management incentive systems
of the Company and the awards granted thereunder and to administer the
Company's stock option plans. The Executive Compensation Committee met
three times during fiscal year 1996.
The Board's Nominating Committee is composed of Messrs. Frigon
(Chairman), Dickson, Scher and Dr. Keller. The Nominating Committee
recommends to the full Board of Directors persons to serve as Directors of
the Company and establishes such procedures as it deems proper to receive
and review information concerning potential candidates for election or
reelection to the Board of Directors. Shareholders entitled to vote for
election of directors may nominate candidates for consideration by the
Nominating Committee. (See Shareholders' Proposals and Nominations.) The
Company's employment agreements with Mr. Owen and Mr. Albert C. Monk III
include provisions related to their nomination to the Board of Directors.
The Nominating Committee met three times during fiscal year 1996.
Persons who are employees of the Company or its subsidiaries or persons
who serve as paid consultants to the Company receive no compensation for
their services as directors of the Company. During fiscal year 1996,
directors who were not employees of the Company or who were not paid
consultants of the Company received an annual retainer of $18,000 and fees
of $1,500 for each meeting of the Board of Directors and $1,000 for each
meeting of a committee of the Board of Directors attended. The Chairmen of
each committee of the Board of Directors who were not employees or
consultants received an additional annual retainer of $2,000. In addition,
pursuant to the Company's Non-Employee Directors' Stock Option Plan, each
year each director who is not an employee of the Company or its
subsidiaries or a paid consultant is granted an option to purchase 1,000
shares of Common Stock for a per share exercise price equal to the fair
market value of one share of Common Stock on the date of grant.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides information as of September 15, 1996,
with respect to the direct and indirect ownership of shares of Common Stock
by (i) all Directors and nominees for director; (ii) each executive officer
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<PAGE>
named in the Summary Compensation Table, and (iii) all Directors and
executive officers of the Company as a group. No person known to the
Company beneficially owns more than five percent of the outstanding shares
of Common Stock.
<TABLE>
<CAPTION>
Number of Number of
Shares with Shares with Percent of
Sole Voting Shared Voting Total Class
Name of Beneficial and Investment and Investment Number of (if more
Owners Power (1) Power Shares than1 percent)(2)
- ------------------- -------------- -------------- --------- -----------------
<S> <C> <C> <C> <C>
Willie G. Barker, Jr. 376,428 54,000 430,428 1.01
Louis N. Dibrell, III 458,066 0 458,066 1.08
R. Stuart Dickson 2,000 0 2,000
Henry F. Frigon 1,000 5,000 6,000
John M. Hines 40,000 10,550 50,550
James E. Johnson, Jr. 3,000 0 3,000
Thomas F. Keller 3,000 1,000 4,000
Joseph L. Lanier, Jr. 8,500 0 8,500
Albert C. Monk III 1,657,408 30,785 1,688,193 3.98
Robert T. Monk, Jr. 1,704,106 0 1,704,106 4.02
Claude B. Owen, Jr. 185,271 87,396 272,667
Norman A. Scher 11,122 0 11,122
William R. Slee 0 0 0
All Executive Officers,
Directors and Nominees
for Director as a group 4,624,709 189,449 4,814,158 11.28
(24 persons)
</TABLE>
________________
1. The amounts in this column include shares of Common Stock with respect
to which the following persons have the right to acquire ownership within
60 days of September 15, 1996: Messrs. Barker, 48,030 shares; Dibrell,
34,200 shares; Dickson, 1,000 shares; Frigon, 1,000 shares; Hines, 40,000
shares; Johnson, 1,000 shares; Keller, 1,000 shares; Lanier, 1,000 shares;
Owen, 60,630 shares; Scher, 1,000 shares, and the executive officers,
Directors and nominees as a group, 324,310 shares.
2. Percentages determined include shares of Common Stock with respect to
which certain persons have the right to acquire ownership within 60 days of
September 15, 1996.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table presents information relating to total
compensation for the three fiscal years ended June 30, 1996, 1995 and 1994,
of the Chief Executive Officer and the three most highly compensated
executive officers of the Company during fiscal year 1996. Prior to April
1, 1995, Messrs. Owen and Faucett were employed by Dibrell Brothers,
Incorporated and Messrs. Albert C. Monk III and Hines were employed by
Monk-Austin, Inc.
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<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
Awards Payouts
Other Annual All Other
Compen- Compen-
Name and Principal Fiscal Salary Bonus sation(1) Options/ LTIP sation
Position Year $ $ $ SARs(#) Payouts $ (2)
------------------ ------ ------ ------ ------------ -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Claude B. Owen, Jr. 1996 405,000 303,750 0 33,000 0 33,969
Chairman of the Board and 1995 391,800 0 0 30,000 0 30,118
Chief Executive Officer 1994 340,300 0 0 12,600 0 30,080
and Director
Albert C. Monk III 1996 355,000 266,250 0 25,500 0 5,958
President and Director 1995 205,000 175,000 0 0 0 15,421
1994 195,000 225,000 0 0 0 26,872
John M. Hines 1996 315,000 189,000 0 20,400 0 5,625
Executive Senior Vice 1995 185,000 650,000 0 0 0 12,469
President and Director 1994 165,000 200,000 0 0 0 26,872
Thomas H. Faucett 1996 180,000 81,000 0 9,000 0 19,425
Senior Vice President, 1995 163,000 0 0 10,800 0 17,978
Chief Financial Officer 1994 156,000 0 0 10,800 0 17,886
</TABLE>
________________
1. None of the named executive officers received other annual
compensation with an aggregate value in excess of $50,000 or ten percent of
the total of combined salary and bonus for fiscal year 1996. a)
2. Includes contributions to the Company's 401(k) Plans and
Profit Sharing Plans, accruals in the Dibrell Deferred Compensation Plan
and premiums in the Dibrell Pension Equalization Plan ("PEP") for fiscal
years 1996, 1995 and 1994 as follows:
<TABLE>
<CAPTION>
Corporate Pension
Match Equalization
401(k) Deferred Plan
Fiscal Plans Comp. Premiums Total
Name Year $ $ $ $
---- ------ --------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Claude B. Owen, Jr. 1996 6,000 12,144 15,825 33,969
1995 2,149 12,144 15,825 30,118
1994 2,111 12,144 15,825 30,080
Albert C. Monk III 1996 5,958 0 0 5,958
1995 15,421 0 0 15,421
1994 26,872 0 0 26,872
John M. Hines 1996 5,625 0 0 5,625
1995 12,469 0 0 12,469
1994 26,872 0 0 26,872
Thomas H. Faucett 1996 3,600 0 15,825 19,425
1995 2,153 0 15,825 17,978
1994 2,061 0 15,825 17,886
</TABLE>
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<PAGE>
Stock Option Grants
The following table contains information concerning the grant of
options made during fiscal year 1996 under the Company's Omnibus Stock
Incentive Plan.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Grant Date
Present
Individual Grants Value
% of Total ($/SH) Black-
Options Exercise Scholes
# Options/SAR Granted to or Base Expiration Pricing
Granted (1) Employees Price Date Valuation(2)
------------- ------------ -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Claude B. Owen, Jr. 33,000 8.3 $17.00 8/24/05 $191,400
Albert C. Monk III 25,500 6.4 $17.00 8/24/05 $147,900
John M. Hines 20,400 5.1 $17.00 8/24/05 $118,320
Thomas H. Faucett 9,000 2.3 $17.00 8/24/05 $ 52,200
</TABLE>
__________________
1. All option grants consisted of incentive and nonqualified stock
options. These grants become exercisable on August 24, 1998. a)
2. The exercise price was set at the closing price of DIMON Common Stock
on the date of the grant. Utilizing the Black-Scholes valuation method, a
value of $5.80 per share was determined. The Black-Scholes Model is a
complicated mathematical formula widely used to value exchange traded
options. However, stock options granted under the plan differ from
exchange traded options in three key respects: the options are long-term,
nontransferable and subject to vesting restrictions while exchange traded
options are short-term and can be exercised or sold immediately in a liquid
market. In applying the Black-Scholes pricing model, the Company has
assumed an option term of ten years, an annual dividend yield for the
Company's Common Stock of 3.2 percent, a riskless rate of return of 7.0
percent and a stock price volatility of .96 (based on the variance of
return for the Common Stock over the 60 trading days prior to June 30,
1996). No adjustment has been made to reflect the non-transferability of
options granted under the plan. Consequently, because the Black-Scholes
Model is adapted to value the options set forth in the table and is
assumption based, it may not accurately determine the grant date present
value. The actual value, if any, an optionee will realize will depend on
the excess of the market value of the Common Stock over the exercise price
on the date the option is exercised.
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<PAGE>
Option/SAR Exercises and Holdings
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during fiscal year
1996 and unexercised options and Stock Appreciation Rights ("SARs") held
by them on June 30, 1996:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Value
Number of Value of
Unexercised Unexercised
Options and SARs In-the-Money
at Fiscal Options and SARs
Year End at Fiscal Year End
Shares Acquired Value Exercisable/ Exercisable/
on Exercise Realized Unexercisable (2) Unexercisable (1)(2)
--------------- -------- ----------------- --------------------
<S> <C> <C> <C> <C>
Claude B. Owen, Jr. 0 0 56,430/67,200 $157,529/267,203
Albert C. Monk III 0 0 0/25,500 $0/38,250
John M. Hines 0 0 40,000/20,400 $80,000/30,600
Thomas H. Faucett 0 0 33,000/14,400 $67,114/75,600
</TABLE>
__________________
1. At year end June 30, 1996, the closing price of the Company's Common
Stock was $18.50. a)
2. The options represented as unexercisable could not be exercised by the
named executive on June 30, 1996, and future exercisability is dependent
upon the named executive remaining in the employ of the Company until the
vesting date, which is up to three years from the grant date, subject to
acceleration for retirement, death or total disability.
Employment Agreements
Prior to the Reorganization, Dibrell and a subsidiary of Monk-Austin
entered into employment agreements with Messrs. Owen, Albert C. Monk III,
Hines, Faucett, Robert T. Monk, Jr. and Dibrell. The Company agreed to
honor these agreements following the Reorganization. The agreements with
Messrs. Owen and Dibrell and those with Messrs. Albert C. Monk III and
Robert T. Monk, Jr. provide for their employment until November 1, 1999,
and June 30, 1999, respectively. Both Messrs. Faucett and Hines retired
from the Company effective July 1, 1996. All of the agreements may be
terminated early in certain circumstances and are renewable for successive
one-year terms. Under the agreements, Messrs. Owen, Albert C. Monk III,
Robert T. Monk, Jr., and Dibrell are entitled to annual base salaries of
$391,800, $380,000, $270,000 and $155,000, respectively, subject to
increases to reflect cost of living adjustments, and are eligible for cash
bonuses under the Company's Cash Bonus Plan. The agreements also provide
for (a) an annual supplemental retirement benefit equal to 50 percent of
the executive officer's average base salary for a period of up to ten years
upon termination of the agreements for reasons other than death, disability
or cause (for Messrs. Owen and Dibrell reduced by amounts payable to them
under the Dibrell Pension Equalization Plan (the "PEP")), (b) an annual
death benefit equal to 25 percent of the executive officer's average base
salary payable to a beneficiary designated by such executive for a period
of up to five years, and (c) annual disability payments, for Messrs. Owen
and Dibrell, under the Dibrell Long-Term Disability Plan and, for Messrs.
Albert C. Monk III and Robert T. Monk, Jr., equal to 50 percent of their
average base salaries for a period of up to ten years. The agreements
further provide that from the time of termination of such executive's
employment (other than by virtue of death or for cause) until his death,
each executive will be entitled to participate in any group health plan or
program provided by the Company at the time of termination, and the Company
must use its best efforts to provide each such executive with an individual
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<PAGE>
health insurance policy if such executive is unable to participate in such
plan. The agreements may be terminated by the Company for cause and by the
executive officers for Good Reason, generally related to a failure by the
Board to elect the officer to a responsible executive position, material
modifications of the officer's duties, functions and responsibilities or
breach of the agreement by the Company. In the event of termination of
employment by the Company other than for cause, by such executive for Good
Reason or upon the expiration of the agreement, each agreement provides
that the executive officer will be entitled to receive a special severance
benefit for a period of one year after the time of termination equal to a
maximum of his base salary and bonus for the employment year just
completed. The agreements further provide for the reimbursement by the
Company of reasonable business expenses. The Company is obligated to pay
any additional amounts for any taxes the executive officers would have to
pay with respect to any parachute payments under Section 280G of the
Internal Revenue Code of 1986, as amended.
Retirement Plan
The following table sets forth, as of June 30, 1996, the estimated
annual benefits payable as a straight life annuity under the Dibrell
Retirement Plan upon retirement at age 65 after specified years of Credited
Service. In the event of early retirement prior to age 65 the following
benefits are subject to reduction.
<TABLE>
<CAPTION>
Estimated Annual Benefits Payable at Retirement
Final
Average
Earnings Years of Credited Service
10 Yrs. 20 Yrs. 30 Yrs. 40 Yrs.
------- ------- ------- -------
<S> <C> <C> <C> <C>
180,000 19,800 39,600 59,400 79,200
220,000 24,200 48,400 72,600 96,800
260,000 28,600 57,200 85,800 114,400
300,000 33,000 66,000 99,000 132,000
360,000 39,600 79,200 118,800 158,400
400,000 44,000 88,000 132,000 176,000
500,000 55,000 110,000 165,000 220,000
600,000 66,000 132,000 198,000 264,000
700,000 77,000 154,000 231,100 308,000
</TABLE>
Annual retirement benefits in excess of the limit established under the
Internal Revenue Code (currently $120,000 for tax qualified trusts) will be
paid from corporate assets and not the Retirement Plan. Such excess
payments will be made from the excess benefit plan described below.
Benefits under the retirement plans are computed on the basis of a life
annuity with 60 months guaranteed payments. The benefits reflected in the
table are not subject to offset for Social Security or other offset
payments.
The Retirement Plan's normal retirement allowance is stated with
reference to the Participant's Final Average Earnings. A Participant's
"Final Average Earnings" are one-fifth of his or her Annual Earnings during
the highest consecutive five-year period within the immediately preceding
ten-year period. The term "Annual Earnings" includes all cash remuneration
paid to a Participant other than commissions, specified foreign service
earnings, and amounts realized under the Omnibus Stock Incentive Plan, not
to exceed $150,000, the applicable Internal Revenue Code limit, for 1996.
Annual Earnings are the calendar year equivalent of salary and bonus shown
in the Summary Compensation Table. The Participant's normal retirement
allowance is 1.10 percent of his or her Final Average Earnings multiplied
by Credited Service.
As of December 31, 1995, Messrs. Owen and Faucett had 25 and 12 years
of Credited Service under the Retirement Plan, respectively. Messrs.
Albert C. Monk III and Hines were not participants in the Plan as of June
30, 1996.
Effective July 1, 1996, the Retirement Plan was converted to the DIMON
Incorporated Cash Balance Plan (the "Cash Balance Plan"). Benefits that
were accrued prior to July 1, 1996 under the Retirement Plan are converted
to a lump sum actuarial equivalent. The Cash Balance Plan includes all
full-time active U.S. employees of DIMON and its subsidiaries. Benefits
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<PAGE>
under the Cash Balance Plan are determined by age and years of credited
service. Benefits are payable as a lump sum or on an annuity basis.
Under the Cash Balance Plan each participant has an account balance
which represents his or her benefit under the Cash Balance Plan. The
participant's initial account balance equals the present value of his or
her benefit earned through June 30, 1996, under the Retirement Plan.
Benefit accruals earned after June 30, 1996 are credited annually to the
participant's account and are comprised of the sum of two components:
Retirement Credit and Interest Credit.
The following table summarizes the annual Retirement Credit provided to
participants in the Cash Balance Plan:
<TABLE>
<CAPTION>
Combined
Age and Years Annual Retirement
of Service Credit
------------- -----------------------
<S> <C>
<40 3.5% of annual earnings
40-49 4.0% of annual earnings
50-59 5.0% of annual earnings
60-69 6.0% of annual earnings
70-79 7.0% of annual earnings
>80 8.0% of annual earnings
</TABLE>
All of the individuals named in the Summary Compensation Table are
participants in the Cash Balance Plan, with the exception of Mr. Faucett
and Mr. Hines, who retired July 1, 1996. As of July 1, 1996, Mr. Monk's
and Mr. Owen's age and credited service equaled 91 and 76, respectively.
The estimated annual benefit from the Cash Balance Plan for Mr. Monk and
Mr. Owen, assuming a four percent annual salary increase is $15,379 and
$79,882, respectively.
The Interest Credits are equal to the annual interest rate times the
participant's account balance at the end of the previous year. The
interest rate, which is equal to a yield on one year Treasury bills, is
computed at the beginning of the plan year and is used throughout the plan
year. The annual interest rate credit for calendar year 1996 is 6.15
percent.
Benefits earned under the Cash Balance Plan are vested after five years
of service. The Cash Balance Plan limits the pay that is used in
determining the annual Retirement Credit. The limit is $150,000 for
calendar year 1996. A limit is also imposed on the amount of benefit
payable to the participant from the Cash Balance Plan.
Benefits under the Cash Balance Plan are payable upon normal retirement
(age 65), vested termination or death. A participant may elect to
commence benefit payments on the first day of the month that is coincident
with or next following the earlier of his or her 55th birthday or the first
anniversary of separation of employment. The benefits are payable in the
form of an increasing annuity, level annuity or lump sum which are all
actuarially equivalent.
Excess Benefit Plan
The Company maintains an excess benefit plan that provides individuals
who participate in the Cash Balance Plan the difference between the
benefits they could potentially accrue under the Cash Balance Plan
considering total compensation and the benefits actually paid as limited by
regulations imposed by the Internal Revenue Code. Employees meeting the
eligibility requirements of the Cash Balance Plan and who are selected by
management may participate in this plan. Such benefits are not funded and
are expensed by the Company as paid.
Pension Equalization Plan
The PEP was established to pay selected employees unreduced early
retirement benefits coordinated with benefit payments under the Cash
Balance Plan. Under the PEP, some participants receive a benefit that --
when added to their Cash Balance Plan benefits -- provides them with
unreduced benefits if they retire on or after age 55 (with credit to 65)
with 30 years of service. For other participants, the unreduced benefits
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<PAGE>
are available if they retire on or after age 60 (with credit to 65) with 25
years of service. An unreduced benefit is payable to Messrs. Owen and
Dibrell and certain other participants if they retire on or after age 54
(with credit to 65) with 24 years of service; provided the sum of their age
and years of service (which will not be less than the service to be
completed during the initial term of their employment agreements) is at
least 82. The PEP also provides individual account based benefits to
employees determined by the Company in its full discretion in amounts
likewise determined. In all cases, a participant's benefits are not fully
vested until that participant satisfies a "vesting contribution" provision
(satisfaction can include a direct contribution, an indirect contribution,
a waiver by the Company, any combination of the foregoing, or other
measures satisfactory to the Company) in the PEP. All benefits are funded
through a trust arrangement. The PEP also allows the Company to provide
"back-up" benefits to assure benefit payments (but not to duplicate benefit
payments) under other nonqualified retirement plans.
Consulting Agreements and Retirement Benefits
Effective July 1, 1993, Mr. Willie G. Barker, Jr., retired from Dibrell
as President and Chief Operating Officer and entered into an advisory
agreement with Dibrell under which Mr. Barker was paid $150,000 annually
through June 30, 1995, unless extended by mutual agreement. In 1994, the
agreement was extended for one year until June 30, 1996.
Effective July 1, 1996, Mr. John M. Hines retired from the Company as
Executive Vice President and entered into a consulting agreement with the
Company, under which Mr. Hines will be paid $170,000 annually until June
30, 1998.
Effective July 1, 1996, pursuant to his employment agreement, Mr. Hines
is entitled to a special annual retirement benefit of $180,000 annually
until June, 2008.
Effective July 1, 1996, Mr. Thomas H. Faucett retired from the Company
as Senior Vice President and Chief Financial Officer and entered into an
agreement with the Company under which Mr. Faucett will be paid a monthly
retirement benefit of $8,378.11 which includes the accrued benefit under
the Retirement Plan.
Executive Compensation Committee Report
DIMON's Executive Compensation Committee (the "Committee") is comprised
of four outside Directors whose role is to oversee the development and
management of total compensation levels and programs related to the
Company's executive officers.
The Committee's principal objectives in fulfilling its role for DIMON
include:
- Establish and maintain executive compensation levels and methods that
are fully competitive with comparable organizations.
- Reflect in the executive compensation programs of DIMON the interests
of shareholders and the impact on their investment.
- Ensure that compensation programs incorporate the potential for a
substantial portion of executive pay to be provided in the form of
at-risk, performance-based, short- and long-term incentives.
- Through Committee actions undertaken to meet the above objectives,
help DIMON's top management to build and maintain a highly qualified
and effective management team.
In achieving the above stated objectives, the Committee reviews
extensive survey information on pay levels and practices compiled with the
help of an independent consultant. The comparison group for competitive
compensation information includes the peer company group in the performance
graph appearing below, as well as a broader group of companies with
operating characteristics and revenues similar to DIMON. The Committee
strives to provide a direct compensation package to executives that is
fully competitive with average total pay for the comparison group. The
direct compensation package for DIMON's executive officers includes base
salary, annual bonus and long-term incentives.
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<PAGE>
The Revenue Reconciliation Act of 1993 places some requirements on the
design of executive compensation programs to allow full expense
deductibility in certain cases. In this regard, the Committee's objective
is to obtain the fullest compensation deduction possible while preserving
needed flexibility in recognizing and rewarding desired performance. All
compensation provided to executive officers in fiscal 1996 is considered to
be fully deductible.
Base Salary - The base salary levels for executive officers, other than
the CEO, are established by the Committee upon recommendations from the CEO
and reflect salaries for similar positions in the comparison group
described above. The Committee determines CEO base salary using similar
competitive pay information. Because DIMON places substantial emphasis on
performance driven pay delivered through incentives, salary ranges are
established so that the range midpoint is below the comparison group
average salary. Adjustments are periodically made to salaries based on
competitive market changes along with the Company's financial performance,
individual executive performance, any modification in job responsibilities
from year to year, and each executive's position in the respective salary
range.
Annual Bonus - DIMON provides executive officers the opportunity to
earn meaningful annual cash awards through its Cash Bonus Plan. The Plan
pays up to 75 percent of salary to the CEO and President and reduced
maximum potential awards to other executive officers. Performance under
the Plan is determined by fiscal year pretax return on shareholders' equity
compared to a preestablished target or goal level. A range of performance
above and below the goal is used to align with higher or lower annual bonus
opportunity levels.
Long-Term Incentives - The Committee administers the DIMON Omnibus
Stock Incentive Plan as the principal mechanism to link the executive
compensation package to shareholder interests. The Plan permits the
Committee to grant options to purchase shares of the Company's stock, to
grant tandem stock options and stock appreciation rights ("SARs"), to grant
stand alone stock appreciation rights ("SARs"), to award shares of
restricted stock, or award performance unit shares to executive officers or
other key employees. The Committee's primary objective in granting stock
options and other long-term incentives is to encourage recipients to more
closely identify with DIMON's owners and to take a longer term view of the
Company's financial performance.
Compensation Actions in Fiscal 1996 - During fiscal 1996, the Committee
reviewed the CEO's base salary versus the comparison company group and
adjusted his salary 3.4 percent from $391,800 to $405,000. This increase
percentage was consistent with increases provided to other DIMON executives
and pursuant to the cost of living adjustment in the employment agreements.
(See Employment Agreements above.)
Evaluation of annual bonuses for DIMON executives was determined by
pretax return on equity versus a preset target. Fiscal 1996 performance
was above the maximum level of pretax income required to earn an award.
Therefore, the CEO earned a cash bonus award of $303,750 and the other
DIMON executive officers earned a maximum cash bonus award.
The CEO was granted 33,000 stock options under the DIMON Omnibus Stock
Incentive Plan during fiscal 1996 at the fair market value of DIMON's
Common Stock on the grant date. This grant was determined by the Committee
based on its understanding of competitive levels of long-term incentive
opportunities provided to CEO's in the compensation comparison group, as
well as to provide an appropriate long-term incentive opportunity for his
leadership role in the newly merged organization.
In summary, the Committee believes the total direct compensation
program for DIMON's executive officers effectively serves to accomplish its
objectives as stated above on behalf of shareholders and executive
employees.
Executive Compensation Committee:
N. A. Scher - Chairman
R. Stuart Dickson
J. E. Johnson, Jr.
J. L. Lanier, Jr.
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<PAGE>
Compensation Committee Interlocks and Insider Participation
None of the Executive Compensation Committee members listed above is an
officer or employee or former officer or employee of the Company or any of
its subsidiaries. None of the Company's executive officers serves on the
board of any entity of which any Executive Compensation Committee member is
an executive officer or director or on the compensation committee of the
board of any entity, one of whose executive officers serves as a director
of the Company. None of the Executive Compensation Committee members is an
officer, director or significant shareholder of any entity which had any
significant transactions with the Company.
Performance Graph
The following graph compares the cumulative total return for the Common
Stock from April 3, 1995, to June 30, 1996, to the total returns for the
S&P 500 Index, the MidCap 400 Index and an index of peer companies
selected by the Company for the same period. Companies in the peer group
are as follows: Standard Commercial Corporation, Universal Corporation,
Philip Morris Companies, Inc., RJR Nabisco Holdings Corp. and American
Brands, Inc. The graph assumes an investment of $100 in Common Stock and
in each index as of April 3, 1995, and that all dividends are reinvested.
(GRAPH PICTURED ON ORIGINAL DESCRIBED AS FOLLOWS)
<TABLE>
<CAPTION>
COMPARISON OF FIFTEEN MONTH CUMULATIVE TOTAL RETURN*
AMONG DIMON INCORPORATED, THE S & P 500 INDEX,
THE S & P MIDCAP 400 INDEX AND A PEER GROUP
(PERFORMANCE GRAPH)
4/95 6/95 6/96
---- ---- ----
<S> <C> <C> <C>
DIMON INCORPORATED $100 $114 $120
PEER GROUP 100 107 128
S & P 500 100 110 138
S & P MIDCAP 400 100 109 132
</TABLE>
* $100 Invested on 04/03/95 In Stock or on 03/31/95 in Index -
Including Reinvestment of Dividends.
Fiscal Year Ending June 30.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, file
with the Securities and Exchange Commission initial reports of ownership
and reports of change in ownership of Common Stock and other equity
securities of the Company. The same persons are also required to furnish
the Company with copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, and written representations that no
other reports were required, during the fiscal year ended June 30, 1996,
all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent beneficial owners were met.
APPROVAL OF AUDITORS
(Proposal 2)
The Board of Directors, upon recommendation of the Audit Committee,
has designated Price Waterhouse LLP, independent accountants, as auditors
for the Company for the fiscal year ending June 30, 1997, subject to
approval of the holders of a majority of the shares of Common Stock voting
on this proposal. A representative of the auditors will be present at the
annual meeting with an opportunity to make a statement and will be
available to respond to appropriate questions relating to the fiscal year
1996 audit of the Company's financial statements.
Although shareholder approval of this action is not required under
applicable law, the Board believes it is in the best interests of the
shareholders of the Company to afford them a vote on this matter. Should
the designation not be so approved, the Board intends to reconsider its
action in light of this result. It is intended that proxies will be voted
FOR approval unless instructions to the contrary are given in the proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
AUDITORS.
Prior to the Reorganization, the firm of Ernst & Young LLP ("Ernst &
Young") was engaged for the limited purpose of auditing the balance sheet
of the Company as of December 31, 1994. Ernst & Young's report on the
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<PAGE>
balance sheet of the Company did not contain an adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles. During its engagement by the Company
there was no disagreement with Ernst & Young regarding any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure which would have caused Ernst & Young to make
reference to the subject in its report.
SHAREHOLDERS' PROPOSALS AND NOMINATIONS
Under the rules and regulations of the Securities and Exchange
Commission, any proposal that a shareholder intends to present at the next
Annual Meeting must be received by the Company at its principal office in
Danville, Virginia, on or before June 13, 1997, if the shareholder desires
it to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to that meeting.
Commencing with the 1996 annual meeting of shareholders, any
shareholder entitled to vote generally in the election of directors may
nominate one or more persons for election as a director only if prior
notice of any such nomination is given to the Secretary. For the 1997
annual meeting, notifications must be delivered or mailed to the Secretary
not earlier than September 2, 1997, and not later than September 27, 1997.
To the extent known to the nominating shareholder, notifications must
include: (i) each nominee's name, age and address, (ii) each nominee's
principal occupation, (iii) each nominee's qualifications to serve as a
director, (iv) the name and address of the notifying shareholder, and (v)
the number of shares owned by the notifying shareholder. The Nominating
Committee will thereafter make its recommendation to the Board of
Directors, and the Board of Directors will make its determination, as to
whether such candidate should be nominated. Nominations not made in
accordance with these procedures, and votes cast for any such nominee, will
be disregarded.
OTHER MATTERS
On this date, the Company is not aware of any matters to be presented
for action at the meeting other than as stated in this notice. However, if
any other matters requiring a vote of shareholders are properly presented
to the meeting, it is intended that proxies in the accompanying form will
be voted on such other matters in accordance with the judgment of the
persons voting such proxies.
ANNUAL REPORT
The annual report, including consolidated financial statements of the
Company and its subsidiaries for the fiscal year ended June 30, 1996, is
being mailed to shareholders with this Proxy Statement.
By Order of the Board of Directors
J. O. Hunnicutt III
Secretary
October 17, 1996
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<PAGE>
PROXY
DIMON INCORPORATED
512 Bridge Street
P. O. Box 681
Danville, Virginia 24543
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Louis N. Dibrell, III, John M. Hines
and Robert T. Monk, Jr. or any one of them, with full power of substitution
in each, proxies (and if the undersigned is a proxy, substitute proxies) to
vote all shares of stock in DIMON Incorporated, which the undersigned is
entitled to vote, at the annual meeting of shareholders of said Company to
be held November 15, 1996, at 10:00 A.M., at the principal office of the
Company at 512 Bridge Street, Danville, Virginia, and at any and all
adjournments thereof:
1. ELECTION OF DIRECTORS (mark only one box)
__FOR all nominees listed below (except as marked to the contrary below)
__WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: James E. Johnson, Jr., Joseph L. Lanier, Jr.,
Robert T. Monk, Jr. and William R. Slee
INSTRUCTION: To withhold authority to vote for any individual nominee
print that nominee's name in the space provided below.
____________________________________________________________________________
2. __FOR __AGAINST __ABSTAIN the approval of Price Waterhouse LLP as
auditors as proposed in the Proxy Statement.
The Board recommends a vote "FOR" the foregoing proposals.
Please sign and date on reverse side.
3. In their discretion, the proxies are authorized to vote upon such other
business and matters incident to the conduct of the meeting as may properly
come before the meeting.
This proxy when properly executed and delivered will be voted in the
manner directed herein by the undersigned shareholder. If no direction is
made, this proxy will be voted "FOR" the election of Directors and "FOR"
the approval of Auditors.
Dated _________________, 1996 ___________________________________________
SHAREHOLDER'S SIGNATURE
Please sign exactly as the name appears on
this card. Only one of several joint owners
need sign. Fiduciaries and Corporate Officers
should give full title.
Please mark, sign, date and return the proxy card promptly using the
enclosed envelope.
