DIMON INCORPORATED
512 BRIDGE STREET
P. O. BOX 681
DANVILLE, VIRGINIA 24543
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 14, 1997
<PAGE>
DIMON INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 14, 1997
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 14th day of November, 1997, at 10:00 A.M., for the following
purposes:
1. To elect five members of the Board of Directors
to serve until the 2000 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, 1998; 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 6, 1997, are entitled to vote at the meeting.
By Order of the Board of Directors
J. O. HUNNICUTT III
Secretary
Danville, Virginia
October 13, 1997
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.
-1-
<PAGE>
DIMON INCORPORATED
512 Bridge Street
P. O. Box 681
Danville, Virginia 24543
October 13, 1997
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
November 14, 1997
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 14, 1997, 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 6, 1997, are entitled to notice of, to vote at and
to participate in the meeting. On October 4, 1997, there were
44,400,921 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 13, 1997.
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)
Five Directors will be elected, each of whom is to serve until the
2000 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, all of whom are now members of the
Board of Directors: Mr. Louis N. Dibrell, III, Mr. Henry F. Frigon, Mr.
John M. Hines, Dr. Thomas F. Keller and Mr. Anthony C. B. Taberer. Mr.
Taberer was named to the Board pursuant to the Stock Purchase Agreement
between DIMON Incorporated and Intabex Holdings Worldwide S.A. dated
February 14, 1997. 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.
-2-
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL OF
THE NOMINEES.
The Board of Directors consists of thirteen 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 III Nominees (to be elected for a term expiring at the 2000 annual
meeting of shareholders)
Louis N. Dibrell, III 52 Senior Vice
President of DIMON
International, Inc., a subsidiary of
DIMON Incorporated, since 1995;
prior thereto Senior Vice President
of Dibrell.
Henry F. Frigon 62 Private Investor and Consultant; prior
thereto 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 57 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 66 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, Series Trust;
Fuqua School of Business, Duke Hatteras Income
University. Securities, Inc.; Wendy's
International, Inc.;
Biogen Inc.
Anthony C. B. Taberer 61 Non-executive Chairman of Intabex
Holdings Worldwide, S.A. Consultant
to DIMON Incorporated since April,
1997; prior thereto Chairman of the
Board and Chief Executive Officer of
Intabex Holdings Worldwide, S.A.
Class I Directors (term expiring at the 1998 annual meeting of shareholders)
R. Stuart Dickson 68 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.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Business Experience Other Public
Name Age During Past Five Years Directorships Held
---- --- ---------------------- ------------------
<S> <C> <C> <C>
Albert C. Monk III (1) 58 President of DIMON
since 1994 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.
Claude B. Owen, Jr. 52 Chairman of the Board and Chief American National
Executive Officer of DIMON since Bankshares, Inc.;
1994; 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 59 Executive Vice President and Chief Tredegar Industries, Inc.
Financial Officer of Tredegar Industries,
Inc., a plastics and metal products
manufacturer, Richmond, Virginia.
Class II Directors (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. 65 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) 49 Retired Senior Vice President of
DIMON International since
June 1997; prior thereto
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.
__________________
(1) Messrs. A. C. Monk III and R. T. Monk, Jr. are first cousins
</TABLE>
-4-
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Seven meetings of the Company's Board of Directors were held during
fiscal year 1997. 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),
Hines, Albert C. Monk III, and Scher. 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 twice during fiscal year 1997.
The Board's Audit Committee is composed of Dr. Keller (Chairman),
and Messrs. Frigon, Johnson and Slee. 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 twice
during fiscal year 1997.
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 twice during fiscal year 1997.
The Board's Nominating Committee is composed of Messrs. Frigon
(Chairman), Dickson, Lanier 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 once during fiscal
year 1997.
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 1997, directors who were neither employees nor 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 neither an employee of
the Company or its subsidiaries nor 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.
-5-
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides information as of September 15, 1997,
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 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>
Louis N. Dibrell, III 467,898 0 467,898 1.05
R. Stuart Dickson 3,000 0 3,000
Henry F. Frigon 2,000 5,000 7,000
John M. Hines 40,000 10,550 50,550
James E. Johnson, Jr. 4,000 0 4,000
Thomas F. Keller 4,000 1,000 5,000
Joseph L. Lanier, Jr. 9,500 0 9,500
Albert C. Monk III1, 665,404 0 1,665,404 3.76
Robert T. Monk, Jr. 1,277,844 0 1,277,844 2.88
Claude B. Owen, Jr. 185,322 87,396 272,718
Norman A. Scher 12,122 0 12,122
William R. Slee 1,000 0 1,000
A. C. B. Taberer 0 0 0
All Officers, Directors
and Nominees for
Director as a group 3,850,371 104,586 3,954,957 8.86
(24 persons)
________________
(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, 1997: Messrs. Dibrell,
43,800 shares; Dickson, 2,000 shares; Frigon, 2,000 shares; Hines,
40,000 shares; Johnson, 2,000 shares; Keller, 2,000 shares; Lanier,
2,000 shares; Owen, 90,630 shares; Scher, 2,000 shares; Slee 1,000
shares, and the officers, Directors and nominees as a group, 504,328
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, 1997.
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table presents information relating to total
compensation for the three fiscal years ended June 30, 1997, 1996 and
1995, of the Chief Executive Officer and the three most highly
compensated executive officers of the Company during fiscal year 1997.
Prior to April 1, 1995, Mr. Owen was employed by Dibrell Brothers,
Incorporated and Messrs. Albert C. Monk III and Harker were employed by
Monk-Austin, Inc. Prior to May 1995, Mr. O'Reilly was employed by
Sweetheart Cup Company, Inc.
-6-
<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 $ (3)
------------------ ------ ------ ------ ------------ -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Claude B. Owen, Jr. 1997 450,000 400,050 0 40,000 0 119,869
Chairman of the Board and 1996 405,000 303,750 0 33,000 0 33,969
Chief Executive Officer 1995 391,800 0 0 30,000 0 30,118
and Director
Albert C. Monk III 1997 367,000 338,007 0 30,000 0 75,582
President and Director 1996 355,000 266,250 0 25,500 0 5,958
1995 205,000 175,000 0 0 0 15,421
Brian J. Harker 1997 235,497 159,995 51,253 16,000 0 52,078
Executive Vice President 1996 180,000 81,000 0 9,000 0 4,500
Chief Financial Officer 1995 140,000 50,000 0 0 0 3,800
Richard D. O'Reilly 1997 156,000 83,304 0 9,000 0 33,770
Senior Vice President 1996 140,000 63,000 0 0 0 2,660
Human Resources (2) 1995 23,333 0 46,274 0 0 0
________________
(1)None of the named executive officers other than those noted 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 1997.
(2)Mr. O'Reilly was hired by the Company on May 16, 1995. Other annual
compensation was $46,274 for relocation expenses.
</TABLE>
(3)Includes contributions to the Company's 401(k) Plans and Profit
Sharing Plans, accruals in the Dibrell Deferred Compensation Plan
and premiums in the Pension Equalization Plan ("PEP") and
Supplemental Executive Retirement Plan ("SERP") for fiscal years
1997, 1996 and 1995 as follows:
<TABLE>
<CAPTION>
Corporate
Match
401(k) Deferred PEP/SERP
Fiscal Plans Comp. Premiums Total
Name Year $ $ $ $
---- ------ --------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Claude B. Owen, Jr. 1997 3,200 12,144 104,525 119,869
1996 6,000 12,144 15,825 33,969
1995 2,149 12,144 15,825 30,118
Albert C. Monk III 1997 3,242 0 72,340 75,582
1996 5,958 0 0 5,958
1995 15,421 0 0 15,421
Brian J. Harker 1997 2,800 0 49,278 52,078
1996 4,500 0 0 4,500
1995 3,800 0 0 3,800
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Corporate Pension
Match Equalization
401(k) Deferred Plan
Fiscal Plans Comp. Premiums Total
Name Year $ $ $ $
---- ------ --------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Richard D. O'Reilly 1997 3,020 0 30,750 33,770
1996 2,660 0 0 2,660
1995 0 0 0 0
</TABLE>
Stock Option Grants
The following table contains information concerning the grant of
options made during fiscal year 1997 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. 40,000 9.2 $18.125 8/22/06 $292,000
Albert C. Monk III 30,000 7.0 $18.125 8/22/06 $219,000
Brian J. Harker 16,000 3.7 $18.125 8/22/06 $116,800
Richard D. O'Reilly 9,000 2.1 $18.125 8/22/06 $ 65,700
__________________
(1)All option grants consisted of incentive and nonqualified stock
options. These grants become exercisable on August 22, 1999.
(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 $7.30 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 3.1 percent, a riskless rate of return of
6.91 percent and a stock price volatility of .335 (based on the
variance of return for the Common Stock over the 250 trading days
prior to June 30, 1997). 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.
</TABLE>
-8-
<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 1997 and unexercised options and Stock Appreciation Rights
("SARs") held by them on June 30, 1997:
<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 Unexercisable
(2) (1)(2)
--------------- -------- --------------- ------------------
<S> <C> <C> <C> <C>
Claude B. Owen, Jr. 0 0 60,630/103,000 $603,967/$1,098,500
Albert C. Monk III 0 0 0/55,500 0/$493,500
Brian Harker 0 0 35,000/25,000 $350,000/$219,500
Richard D. O'Reilly 0 0 0/9,000 0/$75,375
__________________
(1)At year end June 30, 1997, the closing price of the Company's Common
Stock as quoted on the New York Stock Exchange was $26.50.
(2)The options represented as unexercisable could not be exercised by
the named executive on June 30, 1997, 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, Harker, Hines, Robert T. Monk, Jr. and Dibrell. The Company
agreed to honor these agreements following the Reorganization. The
agreements with Messrs. Owen and Dibrell and that with Mr. Albert C.
Monk III provide for their employment until November 1, 1999, and June
30, 1999, respectively. Mr. Harker's agreement was subsequently amended
effective October 1, 1996, to provide for employment until September 30,
1999. Both Messrs. Robert T. Monk, Jr. and Hines retired from the
Company effective June 30, 1997, and July 1, 1996, respectively. 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, Harker and Dibrell are entitled to annual base
salaries of $391,800, $380,000, $250,000 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
-9-
<PAGE>
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,
Harker and Dibrell, under the Long-Term Disability Plan and, for Mr.
Albert C. Monk III, equal to 50 percent of his average base salary 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 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
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 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, 1997 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>
<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. As of July 1, 1997, Messrs.
Harker's, Monk's, O'Reilly's and Owen's age and credited service equaled
52, 91, 48 and 76, respectively. The estimated annual benefit from the
-10-
<PAGE>
Cash Balance Plan for Messrs. Harker, Monk, O'Reilly and Owen, assuming
a four percent annual salary increase is $38,135, $16,317, $23,171 and
$84,825 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 1997 is
6.15 %.
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 $160,000 for
calendar year 1997. 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 Defined
Benefit Plans. Under the PEP, some participants receive a benefit that
- - when added to their Defined Benefit Plans - 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 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 Mr.
Owen 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.
The following table sets forth, as of June 30, 1997, the estimated
annual benefits payable as a straight life annuity under the PEP 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.
-11-
<PAGE>
<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
800,000 88,000 176,000 264,000 352,000
</TABLE>
The PEP'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. 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 June 30, 1997, Mr. Owen had 26 years of Credited Service
under the PEP. Messrs. Harker, Albert C. Monk III and O'Reilly were
not participants in the PEP as of June 30, 1997.
Supplemental Executive Retirement Plan (SERP)
Effective January 1, 1997 the Executive Compensation Committee
recommended and the Board of Directors approved the establishment of the
SERP.
The SERP provides an annual retirement benefit equal to 50% of the
participant's final average fiscal year cash compensation. The final
average fiscal year cash compensation is the average of the three
highest years cash compensation during the last ten preceding fiscal
years. The benefit is payable in the form of a life annuity. The SERP
also provides that, upon death, a life annuity equal to 50% of the
participant's benefit will be payable to the surviving spouse.
Participants can elect lesser forms of benefits to provide a higher
surviving spouse's benefit. Benefits under the SERP do not vest until
the participant reaches age 60 and has 20 years of service. Benefits
from the SERP are offset by all other Company funded benefits which
include the Cash Balance Plan, the PEP, the Profit Sharing Plan or
benefits provided under an employment agreement.
As of June 30, 1997, all executive officers were participants in the
SERP. As of June 30, 1997, the final average fiscal year salaries for
Mr. Owen, Harker, Monk, and O'Reilly were $650,200, $282,164, $568,752,
and $155,212 respectively.
-12-
<PAGE>
CONSULTING AGREEMENTS
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, 1997, Mr. Robert T. Monk, Jr. retired from the
Company as Senior Vice President DIMON International, pursuant to his
employment agreement, Mr. Monk will be paid $136,750 annually until
2007.
EXECUTIVE COMPENSATION COMMITTEE REPORT ON COMPENSATION
Compensation Philosophy and Programs
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 for the Company's
executive officers. The Committee met twice during the 1997 fiscal
year.
The Committee's principal objectives in fulfilling its role for DIMON
include:
o Enhance the Company's ability to attract, encourage, and retain
highly qualified and knowledgeable executives who are critical to
the long-term success of DIMON.
o Establish and maintain executive compensation levels and programs
that are fully competitive with comparable organizations.
o Develop and maintain executive compensation programs which encourage
higher levels of job performance through the use of performance-
based short- and long-term incentives.
o Reinforce management's commitment to enhance shareholder value by
aligning the interests of key executives with those of the Company's
shareholders.
In achieving the above objectives, the Committee reviews extensive
survey information on pay levels and compensation practices compiled
with the help of an independent consultant. The comparison group for
competitive compensation information includes the peer group in the
proxy performance graph, 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 payments, and long-term incentives, primarily in
the form of stock option grants.
Section 162(m) of the Internal Revenue Code, as amended, ("the Code")
restricts the deductibility, for federal income tax purposes, of annual
compensation paid to the chief executive officer and each of the four
other most highly compensated executive officers to the extent that such
compensation exceeds $1 million or does not qualify as "performance-
based" as defined under the Code. 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
1997 is believed to be fully deductible.
-13-
<PAGE>
Base Salary - The base salary levels for executive officers, other than
the Chief Executive Officer of DIMON Incorporated ("CEO"), are
established by the Committee upon recommendations from the CEO and
reflect comparable salaries for similar positions in the comparison
group described above. The Committee determines the CEO base salary
using similar competitive pay information. Because DIMON places
substantial emphasis on performance driven pay delivered through
incentives, base salary ranges are established so that the range maximum
is equivalent to the average salary of the broader comparison group.
Base salaries are adjusted periodically, based on competitive market
changes, individual and corporate performance, modifications in job
responsibilities, and the executive's position within his or her
respective salary range.
Annual Bonus - DIMON's Cash Bonus Plan ( the "Plan") allows the
Committee to provide direct financial incentives in the form of annual
cash bonuses to executive officers and other employees upon the
achievement of predetermined performance objectives. At the beginning
of each fiscal year, the Committee establishes a threshold, goal, and
"stretch" bonus payment for key employees, with the limitation expressed
as a percentage of base salary. The Plan provides for a maximum award
of up to 100 percent of base salary for the CEO and President and
reduced maximum potential awards to other executives and key employees.
Awards under the plan are based on fiscal year pretax return on
beginning shareholders' equity compared to a preestablished target
level.
Long-Term Incentives - The Committee administers the DIMON Omnibus Stock
Incentive Plan as the principal mechanism to provide long-term
incentives to executives, officers and key employees. The DIMON Omnibus
Stock Incentive 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 to award
performance unit shares to executive officers or other key employees.
Historically, the Company has utilized stock options as its primary long-
term financial incentive. Options are generally granted at 100 percent
of the fair market value on the date of grant, expire ten years from the
date of grant, and vest over a three-year period. The Committee's
primary objective in granting stock options and other long-term
incentives is to allow key employees to participate in the success of
the Company through stock ownership, to provide a strong and direct link
between employee compensation and the interests of shareholders, and to
encourage recipients to focus on the long term performance of the
Company.
Compensation Actions in Fiscal 1997
During Fiscal 1997, the Committee reviewed the CEO's base salary versus
the comparison company group and increased his base salary by 11%, from
$405,000 to $450,000. The adjusted salary was determined following a
comprehensive review of the base salaries paid to chief executive
officers within DIMON's comparator groups, as described above, as well
as a review of Mr. Owen's individual performance and increased scope of
responsibilities.
The annual bonuses for DIMON executives were determined by the Company's
actual pretax return on equity versus a preset target. During fiscal
1997, the company exceeded its targeted level of performance. Mr. Owen
received a bonus of $400,050, equivalent to 88.9% of his base salary,
and other executives received a similar award relative to their maximum
bonus opportunity.
As a long-term incentive, Mr. Owen was granted an option to purchase
40,000 shares of Common Stock under the DIMON Omnibus Stock Incentive
Plan during fiscal 1997. The option shares were issued at the fair
market value of DIMON's Common Stock on the date of grant. The annual
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 to Mr. Owen for his
leadership role in the 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.
-14-
<PAGE>
Executive Compensation Committee:
N. A. Scher - Chairman
R. Stuart Dickson
J. E. Johnson, Jr.
J. L. Lanier, Jr.
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, the first trading date following the
reorganization, to June 30, 1997, to the total returns for the S&P 500
Index, the S&P SmallCap 600 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 27 MONTH CUMULATIVE TOTAL RETURN*
AMONG DIMON INCORPORATED, THE S & P 500 INDEX,
THE S & P SMALLCAP 600 INDEX AND A PEER GROUP
(PERFORMANCE GRAPH)
4/95 6/95 6/96 6/97
---- ---- ---- ----
<S> <C> <C> <C> <C>
DIMON INCORPORATED $100 $114 $129 $193
PEER GROUP 100 107 128 174
S & P 500 100 110 138 186
S & P SMALLCAP 600 100 110 138 168
</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.
-15-
<PAGE>
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,
1997, 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, 1998,
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 1997 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.
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 10, 1998, if the
shareholder desires it to be considered for inclusion in the Company's
Proxy Statement and form of proxy relating to that meeting.
For the 1998 annual meeting, nominations must be delivered or
mailed to the Secretary not earlier than July 27, 1998, and not later
than August 21, 1998. 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.
-16-
<PAGE>
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,
1997, is being mailed to shareholders with this Proxy Statement.
By Order of the Board of
Directors
J. O. HUNNICUTT III
Secretary
October 13, 1997
-17-
<PAGE>
DIMON INCORPORATED PROXY
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 Mr. James E. Johnson, Jr., Mr.
Robert T. Monk, Jr., Mr. William R. Slee 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 14, 1997, 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: Louis N. Dibrell, III, Henry F. Frigon, John M. Hines,
Thomas F. Keller and Anthony C. B. Taberer
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.
<PAGE>
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 _________________, 1997
___________________________________________
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.
