UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement |_| Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Pepsi-Cola Puerto Rico Bottling Company
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
Carretera 865 Km. 0.4
Bo. Candelaria Arenas
Toa Baja, Puerto Rico
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 2, 1998
----------
TO THE SHAREHOLDERS OF
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Pepsi-Cola Puerto Rico Bottling Company (the "Company") will be
held at the Bankers Club of Puerto Rico, Hato Rey Clubhouse, Banco Popular
Center Building, Hato Rey, Puerto Rico on Monday, February 2, 1998 at 2:00 P.M.
for the following purposes:
1. To elect seven (7) directors to constitute the Board of Directors,
each to serve until the next annual meeting of shareholders or until
their successors have been duly elected and shall have qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent public accountants for the fiscal year ending September
30, 1998; and
3. To consider and act upon such other business as may properly come
before the Annual Meeting.
The close of business on December 29, 1997 has been fixed as the record
date for the determination of all shareholders entitled to receive notice of the
Annual Meeting and to vote at such meeting for any adjournment thereof.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
ADDRESSED ENVELOPE, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE ANNUAL MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE USED.
By Order of the Board of Directors,
LAWRENCE ODELL
Secretary
Dated: December 31, 1997
Toa Baja, Puerto Rico
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PEPSI-COLA PUERTO RICO BOTTLING COMPANY
Carretera 865 Km. 0.4
Bo. Candelaria Arenas
Toa Baja, Puerto Rico
----------
ANNUAL MEETING OF SHAREHOLDERS
To be held on
February 2, 1998
----------
PROXY STATEMENT
This Proxy Statement is being mailed to shareholders of PEPSI-COLA PUERTO
RICO BOTTLING COMPANY (the "Company") on or about December 31, 1997 in
connection with the solicitation by the Board of Directors of the Company of
proxies for use at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held at the Bankers Club of Puerto Rico, Hato Rey
Clubhouse, Banco Popular Center Building, Hato Rey, Puerto Rico on Monday,
February 2, 1998 at 2:00 P.M. The Annual Meeting has been called for the
following purposes: (1) to elect seven (7) directors to constitute the Board of
Directors, each to serve until the next annual meeting of shareholders or until
their successors have been duly elected and shall have qualified; (2) to ratify
the appointment of KPMG Peat Marwick LLP as the Company's independent public
accountants for the fiscal year ending September 30, 1998; and (3) to consider
and act upon such other business as may properly come before the Annual Meeting.
PROXIES AND VOTING RIGHTS
The voting securities of the Company outstanding on December 1, 1997
consisted of 5,000,000 shares of class A common stock, par value $.01 per share
(the "Class A Shares"), entitling the holders thereof to six votes per share,
and 16,500,000 shares of class B common stock, par value $.01 per share (the
"Class B Shares" and together with the Class A Shares, the "Common Stock"),
entitling the holders thereof to one vote per share. Only shareholders of record
at the close of business on December 29, 1997 (the "Record Date") are entitled
to notice of and to vote at the Annual Meeting. There was no other class of
voting securities of the Company outstanding on the Record Date. A majority of
the shares entitled to vote must be present in person or by proxy to constitute
a quorum at the meeting of the shareholders.
The enclosed proxy is being solicited by the Board of Directors of the
Company in order to provide every shareholder with an opportunity to vote on all
matters that properly come before the Annual Meeting, whether or not the
shareholder attends in person. The Company is bearing the cost of the
solicitation of the enclosed proxy. Shares cannot be voted at the Annual Meeting
unless the owner of record is present to vote or is represented by a proxy
executed in writing by the shareholder or his duly authorized attorney-in-fact.
When the enclosed proxy is properly signed, dated and returned, the shares
represented by such proxy will be voted by the persons named as proxies in
accordance with the shareholder's directions. Except as otherwise specified in
the proxy, shares will be voted for the election of the nominees for director
named herein, for the ratification of the appointment of KPMG Peat Marwick LLP
as independent accountants for the year ending September 30, 1998, and for any
other matter that may properly be brought before the Annual Meeting in
accordance with the judgement of the person voting the proxy. Any person who has
signed and returned a proxy may revoke it at any time before it is exercised by
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submitting a subsequently executed proxy, by giving notice of revocation to the
Secretary of the Company or by voting in person at the Annual Meeting.
Holders of Class A Shares and Class B Shares generally vote as a single
class on all matters submitted to a vote of shareholders at the Annual Meeting,
including the election of directors, except for matters where applicable law
requires the approval of one or both classes of Common Stock voting as separate
classes. The Class A Shares entitle holders thereof to six votes per share and
the Class B Shares entitle the holders thereof to one vote per share on all
matters submitted to a vote of shareholders. If a quorum is present, the
affirmative vote of the majority of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, in all matters other than the election of
directors. Directors are elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote.
After a quorum has been established at a shareholders' meeting, a withdrawal of
shareholders that reduces the number of shareholders entitled to vote at the
meeting below the number required for a quorum does not affect the validity of
an adjournment of the meeting or any action taken at the meeting prior to the
shareholder's withdrawal. Shares that are not present at the meeting, either in
person or by proxy, cannot count towards a quorum. Also, shares are not
considered present for quorum purposes if a shareholder attends the meeting only
to protest the legality of the meeting. Treasury shares, shares of stock of the
Company owned by another corporation, the majority of the voting stock of which
is owned or controlled by the Company, and shares of stock of the Company that
it holds in a fiduciary capacity shall not be voted directly or indirectly, at
any meeting, and shall not be counted in determining the total number of
outstanding shares at any time. Abstentions and broker non-votes are not counted
in determining the number of votes of the shares voted for or against any
nominee for director or any other voting matter. They are, however, counted in
determining the presence of a quorum. Under the rules of the New York Stock
Exchange, Inc. ("NYSE"), brokers who hold shares in street name for customers
have the authority to vote on certain items when they: have transmitted proxy
soliciting material to the beneficial owner of the shares; have not received
instructions from beneficial owners; and the broker giving or authorizing the
proxy has no knowledge of any contest as to action to be taken at the meeting
and the action to be taken at the meeting has been disclosed adequately to the
shareholders and does not include authorization for a merger, consolidation, or
any matter which may substantially affect the rights and powers of the shares.
SECURITY OWNERSHIP
The Company's Common Stock is currently divided into Class A Shares, each
of which is entitled to six votes per share, and Class B Shares, each of which
is entitled to one vote per share.
CLASS A SHARES
In September, 1996 in connection with his continued service as President
and Chief Executive Officer, Mr. Rafael Nin requested and was granted by the
members of the Charles H. Beach Voting Trust and the Michael J. Gerrits Voting
Trust (together, the "Essential Shareholders") and certain other shareholders, a
ten-year voting trust (the "Nin Voting Trust") which entitles him to vote, but
not own, 5,000,000 Class A Shares representing a controlling interest in the
Company. Under the Company's franchise agreements (the "Franchise Agreements")
relating to its Pepsi-Cola and other Pepsi-Cola International products, the
Franchise Agreements may be terminated by PepsiCo, Inc. ("PepsiCo"), if without
PepsiCo's consent the Essential Shareholders do not maintain effective control
of the Company. In connection with the execution of the Nin Voting Trust,
PepsiCo consented to the change of effective control of the Company from the
Essential Shareholders to Mr. Nin, acting as voting trustee (the "Trustee"). The
initial term of the Nin Voting Trust is five years and is automatically renewed
for an additional five-year period unless either PepsiCo or the Trustee notifies
the other party of non-renewal at least six months prior to the end of the
initial five-year term, provided that PepsiCo may not unreasonably withhold its
consent to the additional five-year term. Under the terms of the Nin Voting
Trust, Mr. Nin is entitled to resign as Trustee at any time, which will result
in the termination of the Nin Voting Trust. If the Nin Voting Trust is
terminated because of the resignation or death of the Trustee, PepsiCo has the
right for a period of ninety days after such resignation or death to appoint a
new Trustee to replace Mr. Nin for the remaining term of the Nin Voting Trust,
subject to
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the approval of the beneficial owners of a majority of the Class A Shares. Upon
the termination of the Nin Voting Trust at the expiration of its term, the Class
A Shares held in the Nin Voting Trust will be returned to the Essential
Shareholders and the other beneficial owners of the Class A Shares and the terms
of the Franchise Agreements applicable to the Essential Shareholders will again
become effective. Additionally, in connection with the Nin Voting Trust, Rafael
Nin, the Company and the shareholders of the Company's Class A Shares entered
into a stock option agreement (the "Stock Option Agreement"), pursuant to which
those shareholders granted Rafael Nin a two-year option to purchase all or a
portion of the Company's 5,000,000 Class A Shares, par value $0.01 per share of
the Company, at a price of $1.00 per share, subject to adjustment from time to
time. Mr. Nin may not exercise the option, but is only permitted to transfer the
option in whole or with respect to some shares to third parties (including the
Company) for the benefit of the Company.
The following table sets forth information regarding beneficial ownership
of the Class A Shares outstanding as of December 1, 1997 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the Class A
Shares, (ii) each director and nominee for election as a director, (iii) each of
the executive officers named in the summary compensation table and (iv) all
directors and executive officers of the Company as a group. Information with
respect to beneficial ownership of Company's Common Stock is based upon the
Company's Common Stock records and data supplied to the Company by its
shareholders.
<TABLE>
<CAPTION>
Percentage
Number of of
Class A Class A
Shares Shares
Beneficially Beneficially
Directors, Executive Officers and 5% Shareholders* Owned Owned(1)
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Rafael Nin, as Trustee(2)................................... 5,000,000 100%
Charles H. and Patricia Beach(3)............................ 2,218,368 44.4
Michael J. Gerrits Investment Ltd.(4)....................... 417,488 8.3
Anton Schedlbauer(5)........................................ 377,443 7.5
Patrick T. Gerrits Investment Ltd.(4)....................... 341,146 6.8
John W. Beck(6)............................................. 339,698 6.8
Dorothy D'Angelo(7)......................................... 251,628 5.0
Charles R. Krauser(7)....................................... 209,355 4.2
All Directors and Executive Officers as a Group............. 5,000,000 100%
</TABLE>
- ----------
* The address of the directors, executive officers and 5% shareholders is
Pepsi-Cola Puerto Rico Bottling Company, Carretera 865Km. 0.4, Bo.
Candelaria Arenas, Toa Baja, Puerto Rico 00949, except for Charles H. Beach
and Patricia Beach, whose address is 700 South Federal Highway, Suite 100,
Boca Raton, FL 33432, and Michael J. Gerrits and Patrick T. Gerrits, whose
address is Gerrits Construction, Inc., 3465 N. W. 2nd Avenue, Miami, FL
33127.
(1) Based on 5,000,000 total outstanding Class A Shares on December 1, 1997.
(2) Rafael Nin is deemed to be the beneficial owner of 5,000,000 Class A Shares
which are held in the Nin Voting Trust because he holds sole voting power
with respect to such shares and, pursuant to the two-year option to
purchase all of such Class A Shares for the exclusive benefit of the
Company, currently holds sole dispositive power with respect to such
shares. However, Mr. Nin may not exercise the option and has no pecuniary
interest in such shares. In addition to direct ownership of 156,579 Class B
Shares, Mr. Nin beneficially owns 1,516,667 Class B Shares and 190,000
Class B Shares that may be acquired upon the exercise of a currently
exercisable option granted under the Stock Option Agreement dated October
15, 1996 between the Company and Mr. Nin, and the Company's Qualified Stock
Option Plan, respectively. As a result of his right to vote the 5,000,000
Class A Shares held in the Nin Voting Trust, his direct ownership of
156,579 Class B Shares, and assuming that Mr. Nin exercised the options
granted under the Stock Option Agreement and Company's Qualified Stock
Option Plan, Rafael Nin has the right to vote 29.57% of the total
outstanding capital stock of the Company and the right to exercise 66.09%
of the total voting rights outstanding.
(3) Charles and Patricia Beach are deemed to be the beneficial owners of
2,218,368 Class A Shares, which are held in the Nin Voting Trust, because
they are entitled to receive dividends and other distributions on such
Class A Shares while they are in the Nin Voting Trust, and are entitled to
receive a return of such Class A Shares upon the termination of the Nin
Voting Trust. An Additional 25,578 Class A Shares owned by members of Mr.
Beach's immediate family are also held in the Nin Voting Trust, and Mr.
Beach may be deemed to be the
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<PAGE>
beneficial owner (as that term is defined in Rule 13d-3 ("Rule 13d-3") of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
the Class A Shares owned by the members of his family. Mr. Beach disclaims
such beneficial ownership with respect to such Class A Shares owned by
members of his immediate family.
(4) Michael J. Gerrits, through Michael J. Gerrits Investment Ltd., is deemed
to be the beneficial owner of 417,488 Class A Shares, which are held in the
Nin Voting Trust, because Michael J. Gerrits Investment Ltd. is entitled to
receive dividends and other distributions on such Class A Shares while they
are in the Nin Voting Trust, and is entitled to receive a return of such
Class A Shares upon the termination of the Nin Voting Trust. An additional
341,146 Class A Shares owned by Patrick T. Gerrits Investment Ltd. and
336,675 Class A Shares owned by other members of Mr. Gerrits's immediate
family and his affiliates, who are Mr. Gerrits's former business partners
or employees and their respective families, are also held in the Nin Voting
Trust, and Mr. Gerrits may be deemed to be the beneficial owner (as that
term is defined in Rule 13d-3) of the Class A Shares owned by the members
of his family and affiliates. Mr. Gerrits disclaims such beneficial
ownership with respect to such Class A Shares owned by members of his
immediate family and affiliates.
(5) Anton Schedlbauer is a director of the Company who will not stand for
re-election as a director of the Company at the Annual Meeting. Lumiye
International S.A., a company controlled by Mr. Schedlbauer, is deemed to
beneficially own 264,210 Class A Shares, or 5.3% of Class A Shares and
Girasol Enterprises, a company controlled by Mr. Schedlbauer's wife, is
deemed to beneficially own 113,233 Class A Shares, or 2.2% of the Class A
Shares. All of these Class A Shares are held in the Nin Voting Trust and
are deemed beneficially owned because of the right to receive dividends and
other distributions on such Class A Shares while they are in the Nin Voting
Trust and a return of such Class A Shares upon termination of the Trust.
(6) John W. Beck is a director of the Company. All of these Class A Shares are
held in the Nin Voting Trust and are deemed beneficially owned by Mr. Beck
because of Mr. Beck's right to receive dividends and other distributions on
such Class A Shares while they are in the Nin Voting Trust and a return of
such Class A Shares upon termination of the Nin Voting Trust.
(7) Charles R. Krauser is a director of the Company. All of these Class A
Shares are held in the Nin Voting Trust and are deemed beneficially owned
by Mr. Krauser because of the right to receive dividends and other
distributions on such Class A Shares while they are in the Nin Voting Trust
and a return of such Class A Shares upon termination of the Nin Voting
Trust. Additionally, Mr. Krauser may be deemed to be the beneficial owner
(as the term is defined under Rule 13d-3) of 545,528 Class A Shares
beneficially owned by his affiliates, including 251,628 Class A Shares
beneficially owned by Dorothy D'Angelo. Mr. Krauser disclaims such
beneficial ownership with respect to such Class A Shares owned by his
affiliates, who are Mr. Krauser's business partners and their respective
family members. See "Voting Trust Agreements."
CLASS B SHARES
The following table sets forth information regarding beneficial ownership
of the Class B Shares outstanding as of December 1, 1997 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the Class B
Shares, (ii) each director and nominee for election as a director, (iii) each of
the executive officers named in the summary compensation table and (iv) all
directors and executive officers of the Company as a group. Unless otherwise
indicated herein, each shareholder has sole voting power and sole dispositive
power with respect to the indicated shares. Information with respect to
beneficial ownership is based upon the Company's Common Stock records and data
supplied to the Company by its shareholders.
<TABLE>
<CAPTION>
Percentage
Number of of
Class B Class B
Shares Shares
Beneficially Beneficially
Directors, Executive Officers and 5% Shareholders** Owned Owned(1)
- --------------------------------------------------- ------------ ------------
<S> <C> <C>
Charles H. and Patricia Beach(2)......................... 2,721,197 16.5%
Claims Administrator -- Pepsi Puerto Rico Security
Litigation(3)........................................... 2,000,000 12.1
Shapiro Capital Management(4)............................ 2,368,425 14.3
Michael J. Gerrits(5).................................... 1,385,036 8.4
Pioneering Management Corporation(6)..................... 829,000 5.0
Anton Schedlbauer(7)..................................... 504,779 3.1
John W. Beck(8).......................................... 454,301 2.8
Charles R. Krauser(9).................................... 217,520 1.3
Rafael Nin(10)........................................... 156,579 0.1
David L. Virginia(11).................................... 18,000 *
Richard Reiss(12)........................................ 1,547 *
</TABLE>
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<TABLE>
<S> <C> <C>
C. Leon Timothy(13)...................................... 1,000 *
Basil Vasiliou (14)...................................... 67,920 *
All Directors, Nominee for director and Executive
Officers as a Group...................................... 1,421,646 8.6
</TABLE>
- ----------
* Less than 1%
** The address of the directors, executive officers and 5% shareholders is
Pepsi-Cola Puerto Rico Bottling Company, Carretera 865Km. 0.4, Bo.
Candelaria Arenas, Toa Baja, Puerto Rico 00949, except for Charles H. Beach
and Patricia Beach, whose address is 700 South Federal Highway, Suite 100,
Boca Raton, FL 33432, Michael J. Gerrits whose address is Gerrits
Construction, Inc., 3465 N. W. 2nd Avenue, Miami, FL 33127, Shapiro Capital
Management whose address is 3060 Peachtree Road NW, Suite 1555, Atlanta, GA
30305 and Pioneering Management Corporation whose address is 60 State
Street, Boston, MA 02109.
(1) Based on 16,500,000 total outstanding Class B Shares on December 1, 1997.
(2) Charles and Patricia Beach own 2,721,197 Class B Shares, each of which is
entitled to one vote. Pursuant to the Charles H. Beach Voting Trust
described below, Mr. Beach has sole voting power with respect to 2,767,619
Class B Shares which include 46,422 Class B Shares owned by members of his
immediate family. Thus, Mr. Beach may be deemed to be the beneficial owner
(as that term is defined in Rule 13d-3) of such shares owned by members of
his immediate family. Mr. Beach disclaims such beneficial ownership with
respect to such Class B Shares owned by members of his immediate family.
See "Voting Trust Agreements." Each member of the Charles H. Beach Voting
Trust has sole dispositive power with respect to his or her Class B Shares,
subject to certain restrictions on transfer described below. See
"Shareholders Agreement."
(3) In September 1997, 2,500,000 Class B Shares were used by the Company to pay
a portion of the settlement payment made in connection with the settlement
of certain class action securities law suits in which the Company and some
of its directors were defendants. These 2,500,000 Class B Shares were
acquired by the Company from a number of the Company's shareholders,
including the original organizers of the Company in connection with the
settlement of the litigation. Pursuant to the settlement terms, 500,000
Class B Shares were delivered to lawyers for the plaintiffs in the
litigation and 2,000,000 Class B Shares were delivered to the
court-appointed claims administrator for the settlement.
(4) The information shown is derived from information set forth in the latest
statement filed by Shapiro Capital Management with the Securities and
Exchange Commission (the "SEC") with respect to its ownership of Class B
Shares and information supplied by Shapiro Capital Management with respect
to Class B Shares acquired after its latest filing with the SEC.
(5) Michael J. Gerrits is the trustee of the Michael J. Gerrits Voting Trust.
The members of the Michael J. Gerrits Voting Trust include Mr. Gerrits and
members of his family and his affiliates, who are Mr. Gerrits's former
business partners or employees and their respective families. Mr. Gerrits,
pursuant to the Michael J. Gerrits Voting Trust, has the sole power to vote
1,385,036 Class B Shares which include 514,418 Class B Shares that Mr.
Gerrits owns through Michael J. Gerrits Investment Ltd.
(6) The information shown is derived from information set forth in the latest
statement filed by Pioneering Management Corporation with the SEC with
respect to its ownership of Class B Shares.
(7) Anton Schedlbauer is a director of the Company who will not stand for
re-election as a director of the Company at the Annual Meeting. Lumiye
International S.A., a company controlled by Mr. Schedlbauer, owns 353,345
Class B Shares, or 2.1% of the Class B Shares and Girasol Enterprises, a
company controlled by Mr. Schedlbauer's wife, owns 151,434 Class B Shares,
or 0.9% of the Class B Shares.
(8) John W. Beck is a director of the Company and Chairman of the Board of
Directors of the Company.
(9) Charles R. Krauser is a director of the Company. All of these Class B
Shares are held by Krauser Family Investment Ltd. Charles R. Krauser
through Krauser Family Investment Ltd. owns 217,520 Class B Shares.
Pursuant to the Charles R. Krauser Voting Trust described below, Mr.
Krauser has sole voting power with respect to 1,009,559 Class B Shares,
which include 792,039 Class B Shares, owned by his affiliates, who are Mr.
Krauser's business partners and their respective family members. Thus, Mr.
Krauser may be deemed to be the beneficial owner (as the term is defined
under Rule 13d-3) of such shares. Mr. Krauser disclaims such beneficial
ownership with respect to such Class B Shares owned by his affiliates. See
"Voting Trust Agreements." Each member of the Voting Trust has sole
dispositive power with respect to his or her shares, subject to certain
restrictions on transfer described below. See "--Shareholders Agreement."
(10) Rafael Nin is a director of the Company and President and Chief Executive
Officer of the Company. In addition to direct ownership of 156,579 Class B
Shares, Mr. Nin beneficially owns 1,516,667 Class B Shares and 190,000
Class B Shares that may be acquired upon the exercise of a currently
exercisable option granted under the Stock Option Agreement dated October
15, 1996 between the Company and Mr. Nin, and the Company's Qualified Stock
Option Plan, respectively.
(11) David L. Virginia is Vice President-Chief Financial Officer of the Company.
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(12) Richard Reiss is a director of the Company.
(13) C. Leon Timothy is a director of the Company.
(14) Basil Vasiliou is a nominee for director of the Company. Mr. Vasiliou owns
43,500 Class B Shares through two Investment Retirement Accounts. Mr.
Vasiliou's wife, Jane T. Vasiliou, owns 17,000 Class B Shares, of which Mr.
Vasiliou has dispositive power. Pursuant to the Jane T. Vasiliou Trust, Mr.
Vasiliou has dispositive power with respect to 4,000 Class B Shares.
Pursuant to the K&S Vasiliou Trust, Mr. Vasiliou has dispositive power with
respect to 3,000 Class B Shares. Mr. Vasiliou also beneficially owns 420
Class B Shares of the Company as beneficiary of the Vasiliou & Company,
Inc. Retirement Plan.
VOTING TRUST AGREEMENTS
On September 28, 1996, Rafael Nin, as trustee, the Company and the
shareholders of the Company's outstanding Class A Shares entered into the Nin
Voting Trust pursuant to which the shareholders created an irrevocable voting
trust. See "Security Ownership."
The trustee of the Charles H. Beach Voting Trust is Charles H. Beach and
the other members of the trust are members of his immediate family. Charles H.
Beach, pursuant to the Charles H. Beach Voting Trust, has the sole power to vote
2,767,619 Class B Shares, which collectively represent 12.9% of the total
outstanding capital stock of the Company and 6.0% of the total voting rights
outstanding. The trustee of the Michael J. Gerrits Voting Trust is Michael J.
Gerrits and the other members of the trust are members of his immediate family
and his affiliates. Michael J. Gerrits, pursuant to the Michael J. Gerrits
Voting Trust, has the sole power to vote 1,385,036 Class B Shares, which
collectively represent 6.4% of the total outstanding capital stock of the
Company and 3.0% of the total voting rights outstanding. The trustee of the
Charles R. Krauser Voting Trust is Charles R. Krauser, a director of the
Company, and the other members of the Trust are affiliates of Mr. Krauser. Mr.
Krauser, pursuant to the Charles R. Krauser Voting Trust, has the sole power to
vote 1,009,559 Class B Shares which represent 4.7% of the outstanding capital
stock of the Company and 2.2% of the total voting rights outstanding. The Class
B Shares with respect to which Messrs. Beach, Gerrits and Krauser have sole
voting power pursuant to their respective voting trusts include shares which are
owned by members of their immediate family and/or affiliates. See footnotes 2, 5
and 9 to the table regarding beneficial ownership of the Class B Shares of the
Company.
The agreements creating the Charles H. Beach Voting Trust, the Michael J.
Gerrits Voting Trust and the Charles R. Krauser Voting Trust described in the
preceding paragraph (the "Voting Trust Agreements") govern the exercise of the
voting rights associated with the shares of Common Stock of the Company owned by
shareholders who are members of such voting trusts. Pursuant to the Voting Trust
Agreements, the trustee of each voting trust has the right to vote the shares
owned by the members of such voting trust. The provisions of the Shareholders
Agreement restrict transfer of the shares held pursuant to the Voting Trust
Agreements. See "Shareholders Agreement." In addition, the other members of the
relevant voting trusts have a right of first refusal to acquire any shares,
which are withdrawn from the trust account. The voting trusts terminate without
notice by, or action of, the respective trustees in 2005; provided, however,
that within two years prior to the termination of the current term or any
extension term thereof, the members of the relevant trust who are then
shareholders may agree to extend the duration of the relevant Voting Trust
Agreement for an additional period, not to exceed ten years. The Voting Trust
Agreements may be terminated prior to August 28, 2005 (i) upon termination of
the Exclusive Bottling Appointments, each dated April 27, 1987 and entered into
by the Company and PepsiCo pursuant to which the Company has certain exclusive
franchise rights with respect to certain PepsiCo products, or the Shareholders
Agreement, (ii) if none of the members of the relevant voting trust are holders
of record of shares of Common Stock of the Company held in such voting trust or
(iii) by written agreement of the relevant trustee of the voting trust.
SHAREHOLDERS AGREEMENT
The Essential Shareholders and the Company's other shareholders existing
prior to the Company's public offering on September 20, 1995 (the "Non-Essential
Shareholders" and together with the Essential Shareholders, the "Initial
Shareholders"), entered into a Shareholders Agreement governing the transfer of
the shares of the Company by such shareholders. Under the Shareholders
Agreement, the Essential Shareholders may not sell or
7
<PAGE>
otherwise transfer any shares of the Company if such sale or transfer would give
PepsiCo the right to terminate any of the Franchise Agreements relating to the
Company's Pepsi-Cola products. In addition, under the Shareholders Agreement,
the holders of Class A Shares may not sell any Class A Shares, even after the
termination of the Nin Voting Trust, without the consent of the Company, and are
required, at the request of the Company, and to the extent that such Franchise
Agreements require the Essential Shareholders to maintain voting control of the
Company, to transfer to the Essential Shareholders, in exchange for Class B
Shares held by the Essential Shareholders, as many Class A Shares as shall be
necessary, so that, after the termination of the Nin Voting Trust, the Essential
Shareholders maintain voting control of the Company.
Except for the above restrictions, all of the Class B Shares owned by the
Initial Shareholders are, as a result of the settlement of certain class action
securities lawsuits against the Company in September 1997, no longer subject to
the restrictions on transferability previously contained in the Shareholders
Agreement. The Company has undertaken in the Shareholders Agreement to register
under the Securities Act of 1933 for resale by the Initial Shareholders all of
such Class B Shares and to pay all expenses related thereto, except for
underwriting commissions. Pursuant to that undertaking, the Company has filed a
registration statement on Form S-3 with the Securities and Exchange Commission
to register for resale the 7,000,000 Class B Shares owned by the Initial
Shareholders.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting of Shareholders of
the Company to serve one-year terms until the next annual meeting of
shareholders and until their respective successors are elected and shall
qualify. The persons named in the accompanying proxy intend to vote for the
election of the nominees identified below unless authority to vote for one or
more of such nominees is specifically withheld in the proxy:
John W. Beck
Charles R. Krauser
Rafael Nin
C. Leon Timothy
Richard Reiss
Sutton Keany
Basil K. Vasiliou
The Board of Directors has been informed that all the nominees are willing
to serve as directors, but if any of them should decline to serve or become
unavailable for election as a director at the Annual Meeting, an event which the
Board of Directors does not anticipate, the persons named in the proxy will vote
for such nominee or nominees as may be designated by the Board of Directors,
unless the Board of Directors reduces the number of directors accordingly.
INFORMATION CONCERNING NOMINEES AND MEMBERS OF THE BOARD OF DIRECTORS
The following table sets forth certain information concerning each of the
Company's current directors and the nominee for director:
Name Age Position Director Since
---- --- -------- --------------
John W. Beck 60 Director 1987
Charles R. Krauser 63 Director 1987
Rafael Nin 53 Director 1987
Anton Schedlbauer* 57 Director 1991
C. Leon Timothy 62 Director 1992
8
<PAGE>
Richard Reiss 50 Director 1996
Sutton Keany 54 Director 1997
Basil K. Vasiliou 48 Nominee --
- ----------
* Anton Schedlbauer will not be standing for re-election as a director of the
Company in the Annual Meeting, and accordingly will resign as a director of the
Company at the end of his term as a director of the Company. Mr. Basil K.
Vasiliou was nominated by the Board of Directors to fill the vacancy which will
be created by Mr. Schedlbauer.
All directors serve until their successors have been elected.
The following is a brief description of the business background of each of
the current directors and the nominee for director of the Company.
John W. Beck has been a director of the Company since 1987 and currently
serves as the Chairman of the Board of Directors of the Company. Mr. Beck has
served as President of Economics Corp., an economic consulting firm, since 1972;
he also served as President and Chief Executive Officer of First National Bank,
Winter Park from 1973 to 1986, and as Chairman and director of WMFE-TV/FM, a PBS
broadcasting station from 1985 to 1994.
Charles R. Krauser has been a director of the Company since 1987 and was a
director of Buenos Aires Embotelladora S. A. ("BAESA") from 1993 until December
1995. He has served as President of Atlantic Development & Management, Inc., a
real estate development company, since 1979. He was elected a director of
International Bioimmune Systems, Inc., a cancer diagnostics and therapeutics
company, in 1996.
Rafael Nin has been a director of the Company since May 1987 and has been
the President and Chief Executive Officer of the Company since June 1996. He has
been a director of Bestov Foods, S.A., a Pizza Hut franchisee in Argentina,
since 1992, and has been President and Chief Executive Officer of Kana
Development, Inc., a land development company, since 1983.
Anton Schedlbauer has been a director of the Company since August 1991. He
is President and Director of Operations of Prisma, S.A. de C.V. in San Salvador,
El Salvador. Mr. Schedlbauer has served as Chief Executive Officer of ELMAC,
S.A., a printing and packaging machinery broker, since 1980.
C. Leon Timothy has been a director of the Company since December 1992. He
was a Senior Vice President of the Company from February 1990 through December
31, 1997, when he retired from that position. He continues to be available as a
consultant on an as-needed basis. He was a director of BAESA from April 1990
until June 1996 and a Senior Vice President of BAESA, responsible for
shareholder relations from November 1989 until June 1996.
Richard Reiss has been a director of the Company since February 1996.
Currently, Mr. Reiss specializes in the area of financial and management
consulting and has been the owner of Reiss and Associates since 1979. He was
President of Nova Comm., Inc., a start-up company manufacturing access control
units, from 1994 to 1996. Mr. Reiss has been a director of Banco Santander
Puerto Rico since 1979. He was President and Chief Executive Officer of Clear
Comm, LP from 1996 until early December 1997.
Sutton Keany has been a director of the Company since January 1997. He has
been a partner of Winthrop, Stimson, Putnam & Roberts, a law firm based in New
York City, since 1976.
Basil K. Vasiliou is a nominee for director of the Company. He is currently
the Chairman of Vasiliou & Co., Inc., a registered broker-dealer. Mr. Vasiliou
was the general partner of Smith-Vasiliou Special Situations Fund, L.P., a
partnership organized to invest in the financial obligations of troubled
corporations, from 1984 to 1994. Mr. Vasiliou has also been a director of
Costain Group PLC from November 1997. Mr. Vasiliou was a director of Interco
Inc. ("Interco") from 1992 to 1995.
9
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES.
MEETINGS AND COMMITTEES
The Board of Directors met or took action by unanimous written consent on
twelve occasions during the fiscal year ended September 30, 1997. There are
three committees of the Board of Directors: the Audit Committee, the
Compensation Committee and the Stock Option Committee. The members of the Audit
Committee are Richard Reiss and Charles R. Krauser, neither of whom are officers
or employees of the Company. The members of the Compensation Committee and the
Stock Option Committee for the fiscal year ended September 30, 1997 were John W.
Beck, Anton Schedlbauer and Richard Reiss. The Audit Committee met on five
occasions during the fiscal year ended September 30, 1997. The Audit Committee
annually recommends to the Board of Directors independent public accountants to
serve as auditors of the Company's books, records and accounts, reviews the
scope of the audits performed by such auditors and the audit reports prepared by
them and reviews related party transactions. The Stock Option Committee assists
in the management and administration of the Company's stock option plans and may
make recommendations to the Board of Directors as to action to be taken under
such plans. The Stock Option Committee does not have any decision-making
authority. The Compensation Committee and the Stock Option Committee met,
together, three times during the fiscal year ended September 30, 1997.
During the Company's last fiscal year, each of the incumbent directors
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board of Directors and (ii) the total number of meetings held by all
committees on which such director was a member during the period he was a member
of the Board of Directors and such committees, with the exception of Anton
Schedlbauer, who attended seven of the twelve Board of Directors meetings.
Directors of the Company do not receive compensation for serving as a
director on the Board of Directors of the Company, with the exception of Richard
Reiss and Sutton Keany, each of whom receives $2,000 per month and $1,000 per
Board meeting attended in person, as compensation for serving as a director.
Richard Reiss receives an additional $1,000 per month for acting as Chairman of
the Audit Committee. All directors are reimbursed for travel expenses incurred
in attending meetings of the Company.
The members of the Compensation Committee and the Stock Option Committee
are John W. Beck, Anton Schedlbauer and Richard Reiss, none of whom are officers
or employees of the Company. Mr. Beck serves as Chairman of the Board of
Directors of the Company.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the personal liability of a director of the
Company for monetary damages for breach of fiduciary duty of care as a director.
Liability is not eliminated for (i) any breach of the director's duty of loyalty
to the Company or its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unlawful payment of dividends or stock purchases or redemptions pursuant to
Section 174 of the Delaware General Corporation Law, or (iv) any transaction
from which the director derived an improper personal benefit.
The Company will indemnify any officer or director who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation). Indemnification
will be provided if the action, suit or proceeding arose by reason of the fact
that a director or officer of the Company is or was serving at the request of
the Company as a director, trustee, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
Indemnification will be provided against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such
10
<PAGE>
action, suit or proceeding if he acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Company. Indemnification will be allowed with respect to any criminal action or
proceeding if the director or officer involved had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of NOLO
CONTENDERE or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the Company. With
respect to any criminal action or proceeding, termination by one of the above
dispositions shall not, of itself, create a presumption that the person involved
had reasonable cause to believe that his conduct was unlawful.
The Company shall indemnify any director or officer who was or is a party,
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a director or officer of the
Company. This includes situations where the director or officer involved was
serving at the request of the Company as a director, trustee, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise. Under these circumstances, the Company shall indemnify the director
or officer against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of the action or
suit, if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company. No indemnification will be
made by the Company for any claim, issue or matter as to which a director or
officer shall have been adjudged to be liable to the Company. However, the Court
of Chancery of the State of Delaware or the court in which such action or suit
was brought may determine that, despite the adjudication of liability but in
view of all the circumstances of the case, the director or officer is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
To the extent that any director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding described
above, or in defense of any claim, issue or matter described above, the Company
will indemnify him against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Any indemnification will be made by the Company only as authorized in the
specific case upon a determination that indemnification of the director or
officer is proper in the circumstances because he has met the applicable
standard of conduct set forth above. This determination will be made (1) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
shareholders.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding shall be paid by the Company in advance of
the final disposition of such action, suit or proceeding upon receipt of any
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company under its indemnification policies described in Article Tenth of the
Certificate of Incorporation. The Company may pay such expenses incurred by its
other employees and agents upon such terms and conditions, if any, as the Board
of Directors deems appropriate.
The indemnification and advancement of expenses provided by, or granted
pursuant to, Article Tenth of the Certificate of Incorporation shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any statute, by-law, agreement, vote of shareholders or
disinterested directors or otherwise both as to action in his official capacity
and as to action in another capacity while holding such office.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the Certificate of Incorporation shall, unless otherwise provided
when authorized or ratified, continue to a person who has ceased to be a
director or officer of the Company and shall inure to the benefit of the heirs,
executors and administrators of such a person.
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16 OF THE EXCHANGE ACT
11
<PAGE>
Under Section 16(a) of the Exchange Act, the Company's executive officers
and any persons holding 10% or more of the Company's Common Stock are required
to report their ownership of Common Stock and changes in that ownership to the
SEC and to furnish the Company with copies of such report. Specific due dates
for these reports have been established and the Company is required to report in
this Proxy Statement any failure to file on a timely basis by such persons.
During the fiscal year ended September 30, 1997, all reports required to be
filed by the Company's directors, executive officers and 10% shareholders have
been timely filed with the SEC.
12
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended September 30,
1995, 1996 and 1997, each component of compensation paid or awarded to, or
earned by the Chief Executive Officer (the "CEO") of the Company and each of the
executive officers whose total annual salary and bonus exceeded $100,000 in the
fiscal years ended September 30, 1995, 1996 and 1997 (collectively referred to
as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------------------------- Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation(1)
--------------------------- ---- ------ ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Rafael Nin(2)(21) 1997 $291,500 $0 $100,000(2) $0
President and Chief 1996 $92,304 $0 $0 $0
Executive Officer 1995 $0 $0 $0 $0
David Cuthbertson(3)(4)(5) 1997 $56,640 $0 $175,052(4) $749
(6)(7)(21)
Vice President $358,004(5)
1996 $103,391 $23,430 $52,646(6) $1,593
1995 $91,972 $16,585 $106,109(7) $1,487
C. Leon Timothy(8) 1997 $125,120 $0 $0 $2,761
Sr. Vice President-- 1996 $12,308(8) $0 $0 $0
Investor Relations
David L. Virginia(9)(10)(21) 1997 $95,146 $0 $97,000(10) $1,796
Vice President--Chief 1996 $12,096(11) $0 $11,695(12) $0
Financial Officer
Reinaldo 1997 $81,092 $25,000 $122,200(14) $1,370
Rodriguez(13)(14)(21)
Vice President-- 1996 $0 $0 $19,863(12) $0
Human Resources
And Government
Affairs
Jose A. 1997 $97,923 $0 $12,000(16) $0
Gonzalez(15)(16)(17)(18)
Vice President-- 1996 $39,423(17) $2,500 $8,258(18) $0
Internal Auditor
Angel David 1997 $76,558 $0 $56,000(20) $0
Velez(19)(20)(21)
Vice President--Chief
Operating Officer
</TABLE>
- ----------
(1) Amounts in this column, except for (5), represent contributions by the
Company to the account of the CEO and Named Executive Officers under the
Company's Section 165(e) Plan (equivalent to a Section 401(K) Plan).
13
<PAGE>
(2) Mr. Nin assumed the office of President and Chief Executive Officer of the
Company on June 11, 1996. $100,000 represents compensation received by Mr.
Nin in the form of dividends on management stock paid by Beverage Plastics,
a wholly owned subsidiary of the Company ("Beverage Plastics").
(3) Mr. Cuthbertson's employment with the Company was terminated on May 1,
1997.
(4) Of this amount, $7,000 represents compensation received by Mr. Cuthbertson
as car allowance, $23,750 represents compensation received by Mr.
Cuthbertson as reimbursements for repatriation expenses and $109,052
represents compensation received by Mr. Cuthbertson as a severance payment.
Additionally, of this amount, $35,250 represents compensation received by
Mr. Cuthbertson in the form of dividends on management stock paid by
Beverage Plastics.
(5) Mr. Cuthbertson received $358,004 to cash-out his retirement plan.
(6) Of this amount, $5,646 represents compensation received by Mr. Cuthbertson
as reimbursement for the payment of taxes and $47,000 represents
compensation received by Mr. Cuthbertson in the form of dividends on
Management Stock paid by Beverage Plastics.
(7) Of this amount, $48,309 represents compensation received by Mr. Cuthbertson
reimbursement for the payment of taxes, $10,800 represents compensation
received by Mr. Cuthbertson as car allowance and $47,000 represents
compensation received by Mr. Cuthbertson in the form of dividends on
management stock paid by Beverage Plastics.
(8) Mr. Timothy has been a Senior Vice President of the Company since February
1990 and a director of the Company since December 1992. He was a Director
of BAESA from April 1990 until June 1996 and a Senior Vice President of
BAESA responsible for shareholder relations until June 1996. During fiscal
years 1995 and 1996, the Company did not pay compensation to Mr. Timothy
directly; however, the Company paid a management fee to BAESA for the
management services in the amount of $0.8 million and $0.9 million for the
fiscal years ended September 30, 1995 and 1996, which includes amounts paid
as compensation for Mr. Timothy's management services to the Company. In
July 1996, Mr. Timothy resigned as an officer and director of BAESA and was
added to the Company's payroll on August 8, 1996. This amount represents
compensation earned by Mr. Timothy in the fiscal year 1996 during the
period from August to September 1996.
(9) Prior to Mr. Virginia's employment with the Company as Vice
President--Chief Financial Officer, Mr. Virginia was hired as a consultant
to the Company on July 2, 1996.
(10) Of this amount, $12,000 represents compensation received by Mr. Virginia as
car allowance and $85,000 represents compensation received by Mr. Virginia
in the form of dividends on management stock paid by Beverage Plastics.
(11) This amount represents compensation earned by Mr. Virginia in the fiscal
year 1996 during July to September 1996. On September 28, 1996, Mr.
Virginia was elected to become Vice President--Chief Financial Officer,
assuming his duties as such on October 1, 1996.
(12) Messrs. Virginia and Rodriguez received these amounts, respectively, as a
consultant fee.
(13) Mr. Rodriguez was hired as a consultant to the Company on August 1, 1996
and on September 28, 1996, Mr. Rodriguez was elected to the position of
Vice President--Human Resources and Government Affairs, assuming his duties
as such on October 1, 1996.
(14) Of this amount, $12,000 represents compensation received by Mr. Rodriguez
as a car allowance, $30,000 represents compensation received by Mr.
Rodriguez as a consulting fee and $5,200 represents compensation received
by Mr. Rodriguez as a housing allowance. Additionally, of this amount
$75,000 represents compensation received by Mr. Rodriguez in the form of
dividends on management stock paid by Beverage Plastics.
(15) Mr. Gonzalez was employed as the Company's internal auditor on December 11,
1995.
(16) $12,000 represents compensation received by Mr. Gonzalez as a car
allowance.
(17) This amount represents compensation received by Mr. Gonzalez in the fiscal
year 1996 during the period from December 1995 to September 1996. On
September 28, 1996, Mr. Gonzalez was elected to become Vice
President--Internal Auditor, assuming his duties as such on October 1,
1996.
(18) Of this amount, $3,858 represents compensation received by Mr. Gonzalez as
a car allowance and $4,400 represents compensation received by Mr. Gonzalez
as reimbursement for the payment of his child's school education.
(19) Mr. Velez was employed by the Company as Vice President-Chief Operating
Officer on March 1, 1997.
(20) Of this amount, $6,000 represents compensation received by Mr. Velez as a
car allowance and $50,000 represents compensation received by Mr. Velez in
the form of dividends on management stock paid by Beverage Plastics.
14
<PAGE>
(21) Mr. Cuthbertson previously owned, and Mr. Nin, Mr. Virginia, Mr. Rodriguez,
and Mr. Velez currently own, management stock in Beverage Plastics. The
management stock has no voting rights and no actual ownership interest. It
is similar to preferred stock entitling holders to a certain amount of
dividends based on surplus of exempt income under Puerto Rican Industrial
Incentives Laws.
OPTION GRANTS FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Number of Percent of Potential Realizable Value at
Securities Total Options Exercise Assumed Annual Rates of Stock
Underlying Granted to or Base Price Appreciation for Option
Options Employees Price Expiration Term
Name Granted in Fiscal Year Per Share Date 5% 10%
(a) (b) (c) (d) (e) (f) (g)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rafael Nin, President & CEO 190,000 11.1% $5.00 10-15-06(1) $597,450 $1,514,055
Rafael Nin, President & CEO 1,516,667 88.9% $5.00 Unlimited(1) $4,769,119(2) $12,085,883(2)
</TABLE>
- ----------
(1) On October 15, 1996, Rafael Nin was granted an option to purchase 190,000
Class B Shares, at an exercise price of $5.00, per share pursuant to the
Qualified Stock Option Plan. Additionally, on October 15, 1996, the Company
granted to Rafael Nin a stock option (the "Nin Option") to acquire
1,516,667 Class B Shares, at an exercise price of $5.00 per share.
(2) The Expiration Date on this Option is unlimited. Potential realizable value
at assumed annual rates of stock price appreciation for option is
calculated on an assumed ten-year expiration date.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Numbers of
Securities Value of
Underlying Unexercised
Unexercised In-The-
Options Money Option
At Fiscal At Fiscal
Shares Year-End Year End
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rafael Nin, President & None(1) None(1) 190,000(2) $368,125(3)
CEO Class B Shares
Rafael Nin, President & None(1) None(1) 1,516,667(2) $2,938,542(4)
CEO Class B Shares
</TABLE>
- ----------
(1) On October 15, 1996, Rafael Nin was granted options to purchase (a) 190,000
Class B Shares, at an exercise price of $5.00 per share, pursuant to the
Company's Qualified Stock Option Plan and (b) 1,516,667 Class B Shares, at
an exercise price of $5.00 per share, pursuant to the Stock Option
Agreement. These options are exercisable in whole or in part. However, none
of these options have been exercised by Mr. Nin in the fiscal year ended
September 30, 1997.
(2) Both the option to purchase 190,000 Class B Shares and 1,516,667 Class B
Shares, are exercisable options.
(3) This value represents the difference between the market value of 190,000
Class B Shares and the exercise price of the option on September 30, 1997.
On September 30, 1997, the market value of 190,000 Class B Shares was
$1,318,125, which is the product of 190,000 Class B Shares and $6.9375, the
last reported sale price of Class B Shares on the New York Stock Exchange
on September 30, 1997. The exercise price of the option was $950,000, which
is the product of 190,000 Class B Shares and exercise price of $5.00 per
Share.
(4) This value represents the difference between the market value of 1,516,667
Class B Shares and the exercise price of the option at September 30, 1997.
On September 30, 1997, the market value of the Class B Shares was
$10,521,877, which is the product of 1,516,667 Class B Shares and $6.9375,
the last reported sale price of Class B Shares on the New York Stock
Exchange on September 30, 1997. The exercise price of the option is
$7,583,335, which is the product of 1,516,667 Class B Shares and exercise
price of $5.00 per Share.
EMPLOYMENT AGREEMENT
15
<PAGE>
On June 11, 1996, the Company entered into an employment agreement with
Rafael Nin providing for an annual base salary of $300,000 which is subject to
yearly review, as well as a year-end bonus of 50% of the annual salary,
predicated on the satisfactory completion of established and agreed-upon
objectives. The Company has also agreed to give Mr. Nin a management stock
dividend from Beverage Plastics of $100,000 annually payable in four quarterly
installments of $25,000. Under the employment agreement, Mr. Nin is also
entitled to receive other benefits including an automobile with all operating
expenses paid, and health and life insurance. During the fiscal year ended
September 30, 1997, Mr. Nin did not receive any bonus, and he voluntarily
accepted a salary reduction as of April 1, 1997.
EMPLOYEE BENEFIT PLAN
SALARIED EMPLOYEES' RETIREMENT PLAN. The formula used to determine
retirement benefits under the Company's salaried employees' retirement plan (the
"Employees' Retirement Plan") considers the participant's (i) Highest Average
Monthly Compensation, (ii) years of service and (iii) normal or early
retirement. Highest Average Monthly Compensation is 1 2/3% of the total
compensation (including wages, salary, commissions and bonuses but excluding
contributions to pension or welfare plans) paid during the employee's five
consecutive most highly compensated calendar years, up to a maximum of $150,000.
In general, the monthly benefit payable at normal retirement age (age 65)
is equal to (i) the sum of (a) 3% of the participant's Highest Average Monthly
Compensation multiplied by the participant's years of service (and fractions
thereof) up to 10 years, plus (b) 1% of such participant's Highest Average
Monthly Compensation multiplied by the participant's years of service (and
fractions thereof) in excess of 10 years and (ii) reduced by 1 2/3% of the
participant's Primary Social Security Benefit (as defined in the plan)
multiplied by the participant's years of service, up to 30 years. The pension
plan's normal form of benefit for a married participant is a qualified joint and
survivor annuity and is a single life annuity for an unmarried participant.
The table below sets forth the estimated annual retirement benefits
(contributory and non-contributory) payable on a straight life annuity basis to
all eligible salaried employees, including employees who are officers, who meet
the credited service requirement for retirement at age 65. Normal retirement
benefits are not subject to deduction for social Security benefits or other
offset amounts.
Average Yearly
Compensation Credit Years of Service
- -----------------------------------------------------------------------------
15 20 25 30 35
- -----------------------------------------------------------------------------
$125,000 $40,400 $45,600 $50,700 $55,800 $62,150
150,000 49,200 55,600 62,000 68,400 75,900
175,000 49,200 55,600 62,000 68,400 75,900
200,000 49,200 55,600 62,000 68,400 75,900
225,000 49,200 55,600 62,000 68,400 75,900
250,000 49,200 55,600 62,000 68,400 75,900
300,000 49,200 55,600 62,000 68,400 75,900
400,000 49,200 55,600 62,000 68,400 75,900
450,000 49,200 55,600 62,000 68,400 75,900
500,000 49,200 55,600 62,000 68,400 75,900
As of December 31, 1996, David Cuthbertson had accrued an estimated annual
benefit of $36,551 for an estimated 13 credited years of service, payable upon
his retirement date, Reinaldo Rodriguez had accrued an estimated annual benefit
of $25,085 for an estimated 15 credited years of service, payable upon his
retirement date, C. Leon Timothy had accrued an estimated annual benefit of
$44,243 for an estimated 13 credited years of service, payable upon his
retirement date and David L. Virginia had accrued an estimated annual benefit of
$16,463 for an estimated 10 credited years of service, payable upon his
retirement date.
The Company has taken an action to freeze the Employees' Retirement Plan as
of December 31, 1996. Under this action, after December 31, 1996, no accruals
have been, or will be, made with respect to the retirement benefits of the
employees under the Employees' Retirement Plan.
16
<PAGE>
STOCK OPTION PLANS. The Company has established two Stock Option Plans
(collectively, the "Stock Option Plans") for the granting of stock options to
purchase Class B Shares ("Options") to certain employees and directors of the
Company and its affiliates ("Key Employees") who have served in such capacities
for at least one year prior to the date Options are granted. One Stock Option
Plan (the "Qualified Stock Option Plan") permits the grant of "incentive stock
options" ("ISOs") under Section 422 of the U.S. Internal Revenue Code of 1986,
as amended (the "Code"). The other Stock Option Plan does not permit the grant
of ISOs (the "Non-Qualified Stock Option Plan"). The purposes of the Stock
Option Plans are to attract and retain individuals of experience and ability, as
well as to motivate such persons to exert their best efforts on behalf of the
Company.
Key Employees of the Company and its subsidiaries and affiliates are
eligible to participate under the Stock Option Plans, as deemed appropriate by
the Company's Board of Directors. However, the Stock Option Plans do not permit
the granting of Options to employees or directors prior to their being employed
by or serving as director, for one year. The Stock Option Plans are administered
by the Board of Directors. The Board of Directors has appointed a committee (the
"Stock Option Committee") to assist in the management and administration of the
Stock Option Plans. The Stock Option Committee may recommend to the Board of
Directors any action to be taken under the Stock Option Plans but does not have
any decision-making authority.
The total number of Class B Shares reserved and available for issuance
under each of the Stock Option Plans in connection with grants of Options is
500,000, subject to adjustment in the case of any change in the outstanding
Class B Shares by reason of any stock split, stock dividend, recapitalization or
exchange of such shares. No Option shall be transferable by the Option holder
otherwise than by will or the laws of descent and distribution, and each Option
shall be exercisable during the Option holder's lifetime only by the Option
holder.
The Options granted pursuant to the Company's Qualified Stock Option Plan
will have exercise prices equal to the fair market value of the Class B Shares
at the date of grant. The "fair market value" of the Class B Shares shall be the
mean of the sales price for the Class B Shares on the New York Stock Exchange at
the close of business on the date of grant of the relevant Option (or, if the
Class B Shares are not publicly traded on such date, a value determined by an
independent appraiser selected by the Stock Option Committee). Pursuant to the
Non-Qualified Stock Option Plan, under certain circumstances the Company may
grant options, which will have an exercise price below fair market value. An
Option holder is able to exercise Options from time to time as specified in the
grantee's individual Option agreement. Options must be exercised during the
grantee's employment with the Company, except that (i) upon an Option holder's
death, total disability or retirement, all vested Options immediately become
exercisable and may be exercised until the expiration of such Options and (ii)
upon voluntary resignation or termination of an Option holder's employment
without cause, vested Options are exercisable for a period of thirty days
following the date of resignation or termination. Upon the occurrence of an
event specified in (i) and (ii) above, all unvested Options held by an Option
holder will automatically expire and terminate. Subject to the foregoing, the
Board of Directors will have the sole discretion to determine the timing,
amount, vesting and exercise periods of any Options granted pursuant to the
Stock Option Plan and the manner in which such options are exercised.
The Company has undertaken, upon notice by any Option holder of his intent
to exercise any part of any options to take all necessary actions to enable such
holder to immediately resell to the public any Class B Shares acquired pursuant
to such exercise, in compliance with all applicable securities laws. The Company
has agreed to pay for all costs and expenses associated with this undertaking,
including but not limited to costs and expenses incurred in the preparation of
any applicable registration statements. Pursuant to the undertaking, the Company
filed a registration statement on Form S-8 with the SEC to register for resale
the Class B Shares that may be acquired upon exercise of the Option and such
shares are now registered.
NIN STOCK OPTION. On October 15, 1996 the Company granted to Rafael Nin a
stock option (the "Nin Stock Option") to acquire 1,516,667 Class B Shares, at an
exercise price of $5.00 per share. The number of Class B Shares that Mr. Nin may
acquire pursuant to the Nin Stock Option will be subject to adjustment under
certain
17
<PAGE>
circumstances. The Nin Stock Option may be exercised in whole or in part and
will be unlimited in duration until exercised in full.
Under the terms of the Nin Stock Option, Mr. Nin may not transfer any Class
B Shares acquired pursuant to such option (the "Option Shares") unless (i) a
registration statement under the Securities Act with respect to the Option
Shares shall have become effective or (ii) Mr. Nin shall have notified the
Company of the proposed transfer and shall have furnished the Company with (a) a
detailed statement of the circumstances surrounding the proposed disposition and
(b) an opinion of counsel in form and substance satisfactory to the Company and
its counsel that no registration of the Option Shares under the Securities Act
or qualification of the Option Shares under any other securities laws is
required. The Company has undertaken to register under the Securities Act any
Option Shares requested to be registered by the holders of such Option Shares
and to pay for all costs and expenses associated with this undertaking,
including but not limited to, costs and expenses incurred in the preparation of
any applicable registration statements. Pursuant to the undertaking, the Company
filed a registration statement on Form S-8 with the SEC to register for resale
the 1,516,667 Option Shares and such Option Shares are now registered.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") has the responsibility for developing the Company's
executive compensation policies. The Committee determines the compensation and
annual incentives to be paid to the Chief Executive Officer and each of the
senior executive officers of the Company. In addition, the Compensation
Committee develops the long-term incentive plans and the methods for relating
them to performance.
The Compensation Committee consists of three directors, none of whom is an
employee of the Company or eligible to participate in the Company's executive
compensation programs.
There are three elements in the Company's executive compensation program.
The three elements are the base salary compensation, short-term incentive
compensation (bonuses) and long-term incentive compensation (stock options).
In designing its compensation program, the Company believes that executive
compensation should reflect value created for shareholders and support the
Company's strategic goals. Specifically, the objectives of the program are as
follows: to attract and retain key executives important to the long-term success
of the Company; to provide incentives for performance with respect to the goals
established for each executive by management; to provide incentives for
performance with respect to the Company's profit and long-term goals; to align
the executive's interests with those of the Company's shareholders through
participation in stock-based plans; and to reward individuals for outstanding
contributions to the Company's success.
COMPONENTS OF EXECUTIVE COMPENSATION
BASE SALARY AND SHORT-TERM INCENTIVE COMPENSATION
The Company's general approach to base salary and short-term incentive
compensation is to pay salaries which when combined with bonuses are competitive
with the salaries and bonuses paid to executives of other companies in the
industry based upon the individual's experience and past and potential
contribution to the Company. The base salary for the Company's executive
officers for fiscal year 1997 reflects levels deemed by the Company to be
appropriate in view of the prior and expected contribution of the executives to
the Company's development and the environment in which the Company operated. The
Company believes that a significant part of the overall compensation paid to
executives should consist of bonuses paid annually based on the ability of the
executive to achieve specified Company and individual goals.
18
<PAGE>
A publicly held corporation may not, subject to limited exceptions, deduct
for federal income tax purposes certain compensation paid to certain executives
in excess of $1 million in any taxable year (the "Deduction Limitation"). It is
not expected that compensation to executives of the Company will exceed the
Deduction Limitation in the foreseeable future, and, therefore, the Company
generally has not attempted to qualify any of its existing compensation plans,
programs and arrangements for any of the exceptions to the Deduction Limitation.
STOCK OPTION PLANS
The Board of Directors and the Compensation Committee believe that stock
ownership is a significant incentive in building shareholder wealth and aligning
the interest of employees and shareholders. Stock options will only have value
if the Company's stock price increases. Stock options utilize vesting periods to
encourage key employees to contribute while they are employed by the Company.
The Stock Option Plans authorize the Board of Directors to award key employees
stock options at an exercise price, vesting schedules and with terms established
by the Board of Directors.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation for the fiscal year ended September
30, 1997 was $391,500 which included an annual salary of $300,000 reduced
voluntarily to $231,600 as of May 1, 1997 by the Chief Executive Officer.
COMPENSATION COMMITTEE
John W. Beck (Chairman)
Anton Schedlbauer
Richard Reiss
19
<PAGE>
PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the Company's total shareholder
return on Common Stock with the S&P 500 Index ("S&P") and the S&P Beverage Index
as of the market close on September 30, 1997. The Company's Class B Common Stock
began trading on the NYSE on September 20, 1995.
PPO PERFORMANCE RELATIVE TO THE
S&P 500 AND THE S&P BEV INDEX
OCTOBER 1, 1996 -- SEPTEMBER 30, 1997
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
P.P.O. S&P 500 S&P Bev.
------ ------- --------
October 31, 1996 ............. .00% .00% .00%
November 29, 1996 ............ - 7.50% 7.55% 1.31%
December 31, 1996 ............ -20.00% 5.42% 3.03%
January 31, 1997 ............. - 7.50% 12.00% 15.77%
February 28, 1997 ............ -15.00% 12.88% 18.50%
March 31, 1997 ............... -15.00% 8.25% 11.13%
April 30, 1997 ............... - 2.50% 14.71% 24.47%
May 30, 1997 ................. .00% 21.69% 32.92%
June 30, 1997 ................ 20.00% 27.14% 32.87%
July 31, 1997 ................ 55.00% 37.25% 36.11%
August 29, 1997 .............. 55.00% 29.57% 16.54%
September 30, 1997 ........... 38.75% 36.66% 26.29%
20
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
The Company entered into agreements with Badillo/Saatchi & Saatchi and
Comstat/Rowland, pursuant to which such companies provide advertising and public
relations services to the Company. Both companies are controlled by Angel
Collado-Schwarz, a shareholder of the Company. The Company paid $3,671,058
pursuant to these agreements in the fiscal year ended September 30, 1997.
The Company uses the services of the law firm of McConnell Valdes. A
partner of such firm, Ana Matilde Nin is the sister of the President and Chief
Executive Officer of the Company. The Company paid $411,050 pursuant to the
services provided by McConnell Valdes in the fiscal year ended September 30,
1997.
The Company has requested that the law firm of Winthrop, Stimson, Putnam &
Roberts perform certain legal services for the Company. Sutton Keany, a director
of the Company, has been a partner at such firm since 1976. Billing for such
services has been minimal during the fiscal year ended September 30, 1997.
The Company has established stock option plans for certain employees and
directors. In addition, the Company has granted stock options to Rafael Nin. See
"Executive Compensation--Employee Benefit Plans--Stock Option Plans" and
"Executive Compensation--Employee Benefit Plans--Nin Stock Option."
PROPOSAL NO. 2 - INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG Peat Marwick LLP has been selected as the
independent public accountants for the company for the fiscal year ending
September 30, 1998. Although the selection of accountants does not require
ratification, the Board of Directors has directed that the appointment of KPMG
Peat Marwick LLP be submitted to shareholders for ratification due to the
significance of their appointment by the Company. If the shareholders do not
ratify the appointment of KPMG Peat Marwick LLP, the Board of Directors will
consider the appointment of other certified public accountants. A representative
of that firm, which served as the Company's independent public accountants for
the fiscal year ended September 30, 1997, is expected to be present at the
Annual Meeting and, if he or she so desires, will have the opportunity to make a
statement, and in any event will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 2.
SOLICITATION STATEMENT
All expenses in connection with the solicitation of proxies will be borne
by the Company. In addition to the use of the mails, solicitations may be made
by regular employees of the Company by telephone, telegraph or personal contact,
without additional compensation. The Company will, upon request, reimburse
brokerage houses and persons holding shares of Common Stock in the names of
their nominees for their reasonable expenses in sending solicitation materials
to their principals.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next annual meeting of shareholders of the
Company, shareholder proposals for such meeting must be submitted to the Company
no later than August 31, 1998.
21
<PAGE>
OTHER MATTERS
So far as now known, there is no business other than that described above
to be presented for action by the shareholders at the Annual Meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the Annual Meeting or any adjournment thereof, in
accordance with the discretion of the persons named therein.
ANNUAL REPORT
All shareholders of record as of December 29, 1997 have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report for the
fiscal year ended September 30, 1997. Such report contains certified
consolidated financial statements of the Company and its subsidiaries for the
fiscal year ended September 30, 1996. THE COMPANY WILL FURNISH, WITHOUT CHARGE,
A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1997 (WITHOUT EXHIBITS) TO SHAREHOLDERS OF RECORD ON THE RECORD DATE WHO MAKE
WRITTEN REQUEST THEREFOR TO INVESTOR RELATIONS, PEPSI-COLA PUERTO RICO BOTTLING
COMPANY, P.O. BOX 191709, SAN JUAN, PUERTO RICO 00919-1709.
By Order of the Company,
Lawrence Odell, Secretary
Hato Rey, Puerto Rico
Dated: December 31, 1997
22
<PAGE>
PLEASE MARK, SIGN AND DATE THIS PROXY Votes must be indicated [X]
PROMPTLY AND MAIL IT IN THE ENCLOSED (X) in black or Blue ink.
ENVELOPE. TO BE VALID, THIS PROXY
MUST BE SIGNED AND DATED.
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
Carretera 865 Km. 0.4, Bo. Candelaria Arenas, Toa Baja, Puerto Rico 00949
PROXY
This proxy is solicited on behalf of the Board of Directors of
Pepsi-Cola Puerto Rico Bottling Company
Rafael Nin, with full powers of substitution, is hereby appointed the proxy
of, and authorized to represent, the undersigned and to vote all of the shares
of Common Stock of Pepsi-Cola Puerto Rico Bottling Company entitled to be voted
by the undersigned as of December 29, 1997 as directed below and, in his
discretion, on all other matters which may properly come before the Annual
Meeting of Shareholders (the "Meeting") to be held at the Bankers Club of Puerto
Rico, Hato Rey Clubhouse, Banco Popular Center Building, Hato Rey, Puerto Rico,
on Monday, February 2, 1998, at 2:00 P.M. and at any adjournment thereof as if
the undersigned were present and voting at the Meeting.
Whether or not you expect to attend the Meeting, you are urged to execute
and return this proxy, which you may revoke at any time prior to its use.
IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED FOR ALL ITEMS.
(Continued and to be dated and signed on the reverse side.)
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
P.O. BOX 11132
NEW YORK, N.Y. 10203-0132
<TABLE>
<S> <C> <C> <C>
1. Election of the following FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_]
nominees: listed below for all nominees listed below.
</TABLE>
Nominees: Charles R. Krauser, Rafael Nin, John W. Beck, C. Leon Timothy, Richard
Reiss, Sutton Keany, Basil K. Vasiliou
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions ____________________________________________________________________
2. Ratification of appointment of KPMG Peat Marwick LLP as independent public
accountants for the year ending September 30, 1998.
FOR [_] AGAINST [_] ABSTAIN [_]
Change of Address and [_]
or Comments Mark here
Please date and sign this Proxy exactly
as your name appears to the left on the
Proxy and return it promptly in the
postage-paid return envelope. When
shares are held by joint tenants, both
should sign. If a corporation, please
sign the full corporate name by any
authorized officer. If a partnership,
please sign the partnership name by an
authorized person.
Dated: ___________________________, 1998
________________________________________
Signature
________________________________________
Signature
