<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
Tootsie Roll Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
7401 SOUTH CICERO AVENUE, CHICAGO, ILLINOIS 60629
March 30, 1994
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
your Company to be held on Monday, May 2, 1994, at 9:00 A.M., Eastern Daylight
Savings Time, in Room 1200, Mutual Building, 909 East Main Street, Richmond,
Virginia.
At the meeting, you will be asked to consider and vote upon the election of
five directors and a proposal to ratify the appointment of Price Waterhouse as
independent auditors of the Company.
The formal Notice of the Annual Meeting of Shareholders and the Proxy
Statement follow. It is important that your shares be represented and voted at
the meeting, regardless of the size of your holdings. Accordingly, please
promptly mark, sign and date the enclosed proxy and return it in the enclosed
envelope, whether or not you intend to be present at the Annual Meeting of
Shareholders.
Sincerely,
<TABLE>
<S> <C>
Melvin J. Gordon Ellen R. Gordon
CHAIRMAN OF THE BOARD AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF OPERATING
OFFICER
</TABLE>
<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
7401 SOUTH CICERO AVENUE, CHICAGO, ILLINOIS 60629
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 2, 1994
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of TOOTSIE
ROLL INDUSTRIES, INC. will be held in Room 1200, Mutual Building, 909 East Main
Street, Richmond, Virginia, on Monday, May 2, 1994, at 9:00 A.M., Eastern
Daylight Savings Time, for the following purposes:
1. To elect five directors;
2. To consider and act upon ratification of the appointment of Price
Waterhouse as independent auditors of the Company for the fiscal year
ending December 31, 1994; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on March 11, 1994 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. The relative voting rights of the Company's Common Stock and Class B
Common Stock in respect of the Annual Meeting and the matters to be acted upon
at such meeting are described in the accompanying Proxy Statement.
Your attention is directed to the accompanying Proxy, Proxy Statement and
Annual Report of Tootsie Roll Industries, Inc. for 1993.
By Order of the Board of Directors
William Touretz, Secretary
Chicago, Illinois
March 30, 1994
NOTE: PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
7401 SOUTH CICERO AVENUE
CHICAGO, ILLINOIS 60629
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MAY 2, 1994
------------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Tootsie Roll Industries, Inc. of the accompanying proxy
for the Annual Meeting of Shareholders of the Company to be held on Monday, May
2, 1994, and at any adjournments thereof. The purpose of the meeting is for the
shareholders of the Company to: (1) elect five directors to terms of office
expiring at the 1995 Annual Meeting of Shareholders; (2) consider and act upon a
proposal to ratify the appointment of Price Waterhouse as independent auditors
of the Company for the fiscal year ending December 31, 1994; and (3) transact
such other business as may properly come before the meeting and any adjournments
thereof.
Proxies in the accompanying form, properly executed and received by the
Company prior to the meeting and not revoked, will be voted as directed therein
on all matters presented at the meeting. In the absence of a specific direction
from the shareholder, proxies will be voted for the election of all named
director nominees and for ratification of the appointment of Price Waterhouse as
the Company's independent auditors. The Board of Directors does not know of any
other matters to be brought before the meeting; however, if other matters should
properly come before the meeting it is intended that the persons named in the
accompanying proxy will vote thereon at their discretion. Any shareholder may
revoke his or her proxy by giving written notice of revocation to the Secretary
of the Company at any time before it is voted, by executing a later-dated proxy
or by attending the meeting and voting his or her shares in person.
The Board of Directors has fixed the close of business on March 11, 1994 as
the record date for the determination of shareholders of the Company entitled to
receive notice of and to vote at the Annual Meeting of Shareholders to be held
on May 2, 1994, and at any adjournments thereof. As of the close of business on
March 11, 1994, there were outstanding and entitled to vote 7,078,671 shares of
Common Stock and 3,451,695 shares of Class B Common Stock. Each share of Common
Stock is entitled to one vote and each share of Class B Common Stock is entitled
to ten votes, and therefore the Common Stock will be entitled to a total of
7,078,671 votes and the Class B Common Stock will be entitled to a total of
34,516,950 votes. The Common Stock and the Class B Common Stock will vote
together as a single class with respect to the election of directors and all
other matters submitted to the Company's shareholders at the meeting. This Proxy
Statement and the enclosed form of proxy are being mailed to shareholders of the
Company on or about March 30, 1994.
The entire cost of soliciting proxies in the accompanying form will be borne
by the Company. Proxies will be solicited by mail, and may be solicited
personally by directors, officers or regular employees of the Company who will
not receive special compensation for such services. Upon request, the Company
will reimburse brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of shares of the Company's Common Stock and Class B Common Stock.
VOTING INFORMATION
A shareholder may, with respect to the election of directors (i) vote for
the election of all named director nominees, (ii) withhold authority to vote for
all named director nominees or (iii) vote for the election of all named director
nominees other than any nominee with respect to whom the shareholder withholds
authority to vote by striking a line through such nominee's name. A shareholder
may, with respect to the proposal to ratify the appointment of Price Waterhouse
as the Company's independent auditors (i) vote "FOR" ratification, (ii) vote
"AGAINST" ratification or (iii) "ABSTAIN" from voting on the
1
<PAGE>
proposal. Proxies properly executed and received by the Company prior to the
meeting and not revoked, will be voted as directed therein on all matters
presented at the meeting. In the absence of a specific direction from the
shareholder, proxies will be voted for the election of all named director
nominees and for ratification of the appointment of Price Waterhouse as the
Company's independent auditors. If a proxy indicates that all or a portion of
the votes represented by such proxy are not being voted with respect to a
particular matter, such non-votes will not be considered present and entitled to
vote on such matter, although such votes may be considered present and entitled
to vote on other matters and will count for purposes of determining the presence
of a quorum.
The affirmative vote of a plurality of the votes present in person or by
proxy at the meeting and entitled to vote in the election of directors is
required to elect directors. Accordingly, if a quorum is present at the meeting,
the five persons receiving the greatest number of votes will be elected to serve
as directors. Withholding authority to vote for a director(s) and non-votes with
respect to the election of directors will not affect the outcome of the election
of directors. If a quorum is present at the meeting, in order to ratify the
appointment of Price Waterhouse as the Company's independent auditors, the
number of votes cast favoring the action must exceed the number of votes cast
opposing the action. Accordingly, non-votes and abstentions with respect to such
matter will not affect the determination of whether such matter is approved.
ELECTION OF DIRECTORS
It is the intention of the persons named in the accompanying proxy to vote
for the election of Melvin J. Gordon, Ellen R. Gordon, Charles W. Seibert,
William Touretz and Lana Jane Lewis-Brent as directors of the Company to serve
until the 1995 Annual Meeting of Shareholders and until his or her successor is
duly elected and qualified. All of such nominees are now directors of the
Company, having been previously elected as directors by the shareholders of the
Company. Daniel G. Ross, currently a director of the Company, has informed the
Company of his intention to retire upon the expiration of his term and,
accordingly, will not be standing for re-election. In the event any of the
nominees, all of whom have expressed an intention to serve if elected, fail to
stand for election, the persons named in the proxy presently intend to vote for
a substitute nominee designated by the Board of Directors.
The following table sets forth information with respect to the five nominees
for election as directors and Daniel G. Ross who is retiring from the Board of
Directors:
<TABLE>
<CAPTION>
NAME, AGE AND OTHER POSITIONS, IF ANY,
WITH COMPANY PERIOD SERVED AS DIRECTOR AND BUSINESS EXPERIENCE
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Melvin J. Gordon, 74; Chairman of the
Board and Chief Executive Director since 1952; Chairman of the Board since 1962; Director and
Officer(1)(2) President of HDI Investment Corp., a family investment company.
Ellen R. Gordon, 62, President and Director since 1969; President since 1978; Director and Vice-President
Chief Operating Officer(1)(2) of HDI Investment Corp., a family investment company; director of CPC
International since 1991.
Charles W. Seibert, 79(3) Director since 1978; retired; Vice-President of Citibank through
February, 1974 and consultant to several banks since 1974.
William Touretz, 79, Secretary(1) Director since 1974; Treasurer 1969-79; Secretary since 1978; part-time
consultant to Company and subsidiaries since 1980.
Lana Jane Lewis-Brent, 47(3)(4) Director since 1988; President of Paul Brent Designer, Inc. since spring
1992 (art publishing); former President of Sunshine-Jr. Stores, Inc.
(convenience stores).
Daniel G. Ross, 89(5) Director since 1958; partner, Becker Ross Stone DeStefano & Klein
(attorneys).
<FN>
- ------------------------
(1) Member of the Executive Committee. When the Board of Directors is not in
session, the Executive Committee has the powers of the Board in the
management of the business and affairs of the Company, other than certain
actions which under the laws of the State of Virginia must be approved by
the Board of Directors. The Executive Committee held four meetings in 1993.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(2) Melvin J. Gordon and Ellen R. Gordon are husband and wife. Mr. and Mrs.
Gordon may be deemed to be control persons of the Company.
(3) Member of the Audit Committee. The Audit Committee (a) annually recommends
to the Board of Directors the appointment of independent public accountants
for the Company and subsidiaries; (b) reviews the scope of audits; (c)
approves the non-audit services of the independent public accountants for
the Company and subsidiaries and their fees for audit and non-audit
services; and (d) receives, reviews and takes action deemed appropriate
with respect to audit reports submitted. The Audit Committee held two
meetings during 1993.
(4) Each of the existing directors who was a director prior to 1988 has agreed
(so long as they remain directors) to nominate an independent director at
the Company's annual meeting of shareholders to be held in each of the
years 1989 through 1994 and Mr. and Mrs. Gordon have agreed to vote their
shares (and certain other shares in respect of which they exercise voting
power) for the election of such person (or successor person).
(5) Mr. Ross is a partner of the law firm of Becker Ross Stone DeStefano &
Klein, which firm has served as general counsel to the Company for many
years. The Company proposes to retain said firm in the current fiscal year.
</TABLE>
The Company does not have a nominating committee or compensation committee.
The Board of Directors held four meetings during 1993. Mr. and Mrs. Gordon
do not receive fees for their service on the Board of Directors or committees.
Other directors receive an annual fee of $14,500 plus $1,250 per meeting
attended for service on the Board of Directors. Each member of the Audit
Committee receives $1,000 per meeting attended. Mr. Seibert, as the Chairman of
the Audit Committee, receives an additional annual fee of $5,500. Additionally,
William Touretz receives an annual fee of $3,000 for service on the Executive
Committee. During 1993, all of the directors attended at least 75 percent of the
meetings of the Board of Directors and (if they were members of the Executive
Committee or Audit Committee) the Executive Committee and Audit Committee.
3
<PAGE>
OWNERSHIP OF COMMON STOCK AND CLASS B COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 11, 1994, information with
respect to the beneficial ownership of the Company's Common Stock and Class B
Common Stock by each person known to the Company to be the beneficial owner of
more than five percent of such Common Stock or Class B Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK AND
CLASS B COMMON STOCK
OWNED BENEFICIALLY
AND NATURE OF
BENEFICIAL PERCENTAGE OF
OWNERSHIP (1) OUTSTANDING
--------------------- SHARES OF
NAME DIRECT INDIRECT CLASS
- ------------------------------------ --------- ---------- --------------
<S> <C> <C> <C> <C>
Melvin J. Gordon.................... Common 218,269 -- 3.1%
..................... Class B 218,269 -- 6.3%
Ellen R. Gordon..................... Common 1,402,071 6,633(2) 19.9%
..................... Class B 1,402,071 6,633(2) 40.8%
Melvin J. Gordon
and Ellen R. Gordon,
jointly as fiduciaries............. Common -- 882,104(3) 12.5%
..................... Class B -- 882,104(3) 25.6%
Leigh R. Weiner..................... Common 302,711 68,296(4) 5.2%
..................... Class B 369,999 80,496(4) 13.1%
<FN>
- ------------------------
* The address of Mr. and Mrs. Gordon is c/o Tootsie Roll Industries, Inc.,
7401 South Cicero Avenue, Chicago, Illinois 60629. The address of Mr.
Weiner is c/o Becker Ross Stone DeStefano & Klein, 41 East 42nd Street, New
York, New York 10017-5372.
(1) The persons named in the above table have sole investment and voting power
over the shares indicated therein as being owned directly and share
investment and voting power over the shares indicated therein as being
owned indirectly.
(2) Held as co-trustee of the Company's pension plan.
(3) Includes 784,855 shares each of Common Stock and Class B Common Stock held
by Mr. and Mrs. Gordon as fiduciaries for their children and 97,249 shares
each of Common Stock and Class B Common Stock owned by a charitable
foundation in which members of the Gordon family are interested.
(4) Includes 12,539 shares of Common Stock and 7,861 shares of Class B Common
Stock held by Mr. Weiner's wife (of which he disclaims beneficial
ownership), 30,243 shares of Common Stock and 23,928 shares of Class B
Common Stock held Mr. Weiner or by his wife as custodian for their children
and 25,514 shares of Common Stock and 48,707 shares of Class B Common Stock
held by a charitable foundation in which Mr. Weiner and members of his
family are interested.
</TABLE>
4
<PAGE>
OWNERSHIP OF COMMON STOCK AND CLASS B COMMON STOCK BY MANAGEMENT
The following table sets forth as of March 11, 1994 information with respect
to the beneficial ownership of the Company's Common Stock and Class B Common
Stock by each director, by each executive officer who is named in the summary
compensation table included in this proxy statement, and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
AND CLASS B
COMMON STOCK
OWNED
BENEFICIALLY AND
NATURE OF
BENEFICIAL PERCENTAGE OF
OWNERSHIP (1) OUTSTANDING
---------------- SHARES OF
NAME DIRECT INDIRECT CLASS
- ------------------------------------------ ------ -------- --------------
<S> <C> <C> <C> <C>
Melvin J. Gordon.......................... Common (2) (2) (2)
........................... Class B (2) (2) (2)
Ellen R. Gordon........................... Common (2) (2) (2)
........................... Class B (2) (2) (2)
Daniel G. Ross............................ Common 6,439 -- (3)
........................... Class B 6,439 -- (3)
Charles W. Seibert........................ Common 225 -- (3)
........................... Class B 225 -- (3)
William Touretz........................... Common -- -- (3)
........................... Class B 613 1,619 (3)
Lana Jane Lewis-Brent..................... Common 739 2,225 (3)
........................... Class B -- -- (3)
John W. Newlin, Jr........................ Common 2,022 252 (3)
........................... Class B 2,022 252 (3)
Thomas E. Corr............................ Common -- -- (3)
........................... Class B -- -- (3)
G. Howard Ember........................... Common -- -- (3)
........................... Class B -- -- (3)
All directors and executive officers as a
group (10 persons)....................... Common 1,629,765 891,214 35.6%
........................... Class B 1,629,639 890,608 73.0%
<FN>
- ------------------------
(1) The persons named in the above table have sole investment and voting power
over the shares indicated therein as being owned directly and share
investment and voting power over the shares indicated therein as being
owned indirectly.
(2) See the table under the caption "Ownership of Common Stock and Class B
Common Stock by Certain Beneficial Owners" above for shareholdings of Mr.
and Mrs. Gordon.
(3) Less than 1% of the outstanding shares.
</TABLE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following summary compensation table sets forth the compensation of the
Chairman and Chief Executive Officer of the Company and the four other most
highly compensated executive officers of the Company for services rendered
during the year ended December 31, 1993.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------ PAYOUTS
-------------------------------------- RESTRICTED -------
NAME AND PRINCIPAL OTHER ANNUAL STOCK LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION(1)(2)
- ---------------------- ---- -------- -------- ------------ ---------- ------------ ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Melvin J. Gordon 1993 $610,000 $360,000 $ 0 $ 0 0 $ 0 $ 394,281 (3)
Chairman and CEO 1992 555,000 300,000 0 0 0 0 347,224
1991 495,000 245,000 0 0 0 0
Ellen R. Gordon 1993 $545,000 $355,000 $ 0 $ 0 0 $ 0 $ 374,921 (3)
President and Chief 1992 490,000 295,000 0 0 0 0 308,324
Operating Officer 1991 430,000 240,000 0 0 0 0
John W. Newlin, Jr. 1993 $327,000 $120,000 $ 0 $ 0 0 $ 0 $ 122,044
Vice President/ 1992 297,000 100,000 0 0 0 0 108,848
Manufacturing 1991 263,000 80,000 0 0 0 0
Thomas E. Corr 1993 $277,000 $122,000 $ 0 $ 0 0 $ 0 $ 108,972
Vice President/ 1992 252,000 101,000 0 0 0 0 95,150
Marketing and Sales 1991 220,000 77,000 0 0 0 0
G. Howard Ember 1993 $187,000 $ 70,000 $ 0 $ 0 0 $ 0 $ 68,342
Vice President/ 1992 170,000 48,000 0 0 0 0 57,140
Finance 1991 153,000 30,000 0 0 0 0
<FN>
- ------------------------------
(1) "All Other Compensation" includes (i) contributions to the Company's
pension, profit sharing and excess benefit plans, (ii) annual awards to the
Company's Career Achievement Plan ("CAP") in the form of deferred
compensation with vesting and forfeiture provisions and (iii) benefits
under the Company's 1993 split dollar life insurance plan. In accordance
with the rules and regulations of the Securities and Exchange Commission,
amounts for 1991 are not presented.
(2) For 1993, (i) contributions under the Company's pension, profit-sharing and
excess benefit plans, (ii) CAP awards and (iii) split dollar life insurance
benefits were, respectively, as follows: $115,248, $0 and $269,333 for
Melvin J. Gordon; $105,588, $0 and $269,333 for Ellen R. Gordon; $52,044,
$70,000 and $0 for John W. Newlin; $45,972, $63,000 and $0 for Thomas E.
Corr; and $27,342, $41,000 and $0 for G. Howard Ember. In 1993, both Melvin
J. Gordon and Ellen R. Gordon forfeited their CAP benefits accrued during
1992 and agreed not to participate in future CAP awards in exchange for the
split dollar life insurance plan described in (3) below.
(3) The Company's 1993 split dollar life insurance plan for Melvin J. Gordon
and Ellen R. Gordon in part replaces benefits that were already earned
under the Company's CAP. The 1993 split dollar life insurance plan also
provides additional benefits. Although the Company will fully recover all
premiums paid for the split dollar life insurance after approximately 15
years, the plan includes a compensation element for the additional benefits
attributable to the Company's cost for advancing the premium payments. The
compensation element represents the total expected cost of the benefits
provided allocable to the service provided by Melvin J.Gordon and Ellen R.
Gordon during the year. For more information on the split dollar life
insurance plan, see "Report of the Board of Directors on Executive
Compensation."
</TABLE>
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The entire Board of Directors is responsible for determining the
compensation structure and amounts for the executive officers of the Company.
This report describes the policies and rationale for the Board in establishing
the principal components of compensation for the executive officers during 1993.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to encourage and reward both
individual effort and teamwork leading to improvement in the Company's financial
performance and attainment of the Company's principal long-term objective of
profitably building the Company's well-known brands. The Company's executive
officer compensation program is comprised of base salary, annual cash incentive
bonuses, annual awards to the Company's Career Achievement Plan ("CAP"), split
dollar life insurance and pension, profit sharing and excess benefit plans
generally available to employees of the Company. The Board of Directors believes
that this program will lead to increased shareholder value on a long-term basis.
6
<PAGE>
BASE SALARY
The Board of Directors annually reviews each executive officer's salary. The
Board considers the following with respect to the determination of an individual
executive officer's base salary:
- Performance and contribution to the Company, including length
of service in the position;
- Comparative compensation levels of other companies, including
periodic compensation studies performed by independent
compensation and benefit consultants;
- Overall competitive environment for executives and the level of
compensation considered necessary to attract and retain
executive talent; and
- Historical compensation and performance levels for the Company.
Companies used in comparative analyses for the purpose of determining each
executive officer's salary are selected with the assistance of professional
compensation consultants. Selection of such companies is based on a variety of
factors, including market capitalization and industry classification. The
companies used in these comparative analyses include some of the companies in
the Peer Group used in the Performance Graph, as well as other companies. The
Board of Directors believes that the Company's primary competitors for executive
talent are companies with a similar market capitalization and, accordingly,
relies on a broad array of companies in various industries for comparative
analyses.
ANNUAL INCENTIVES AND OTHER AWARDS
Annual incentive bonuses and other awards are made at the discretion of the
Board of Directors to executive corporate officers to recognize and reward each
individual executive officer's contribution to the Company's overall performance
in terms of both financial results and attainment of individual and Company
goals.
The annual cash incentive bonus is designed to reward executives, as well as
other management personnel, for their contributions to the Company's financial
performance during the prior year.
The annual CAP award and split dollar life insurance is principally designed
to provide an incentive to executive corporate officers to achieve both
short-term and long-term financial and other goals, including strategic
objectives. These programs are also designed to provide an incentive for the
executive to remain with the Company on a long-term basis. The CAP award is
determined annually by the Board of Directors based on the performance of the
Company and the executive's contribution to the success of the Company and vests
ratably over five years from the date of grant.
The Board of Directors considers both achievement of strategic objectives
and financial performance measures in determining compensation levels. Although
the Board of Directors does not use a fixed formula for determining annual
incentive and other awards, the following measures of Company performance were
considered in the determination of 1993 bonuses and incentive awards:
- Earnings per share;
- Return on assets;
- Return on equity; and
- Net earnings as a percentage of sales.
The awards for 1993 recognize the Company's achievement of record
profitability for the year and the high level of achievement on other measures
of financial performance.
RATIONALE OF CEO COMPENSATION
The Board of Directors established the compensation of Melvin J. Gordon,
Chairman of the Board of Directors and Chief Executive Officer, using the same
criteria that were used to determine the other executive officers' compensation
as discussed above. In addition, the Board considered Mr. Gordon's leadership of
the Company in achieving the Company's strategic and long-term objectives. A
substantial
7
<PAGE>
portion of his compensation was at risk, in the form of annual cash incentive
bonus. It is the Board's opinion that Mr. Gordon's compensation package was
based on an appropriate assessment of the Company's performance, his individual
performance and competitive standards.
SPLIT DOLLAR LIFE INSURANCE PLANS
During 1993, the Board of Directors approved a split dollar life insurance
plan that accomplishes the Company's objectives of rewarding achievement of
short-term and long-term financial and other goals and provides an incentive to
remain with the Company on a long-term basis. The split dollar life insurance
plan provides for the purchase of survivorship life insurance policies on the
lives of Melvin J. Gordon, Chairman of the Board and CEO, and Ellen R. Gordon,
President and Chief Operating Officer. Mr. and Mrs. Gordon pay a portion of the
annual premium with the remainder of the premium paid by the Company. The split
dollar life insurance policy includes provisions which provide for the repayment
to the Company of all premiums paid within approximately 15 years (or earlier in
the event of the death of both Mr. and Mrs. Gordon).
The split dollar life insurance plan includes an amount of life insurance
intended to replace coverage previously provided and funded by the Company under
a previous incentive compensation plan which was in place from 1982 through
1992. The replacement of previously provided insurance was required as a result
of the deterioration of the financial condition of the insurance carrier
underwriting such policies. A portion of the premiums paid under the previous
policies was recovered prior to allowing the related life insurance policies to
lapse.
The Board of Directors believes the split dollar life insurance plan to be
in the best interests of the Company because it encourages Mr. and Mrs. Gordon
to continue their efforts on behalf of and to provide services to the Company.
The Board of Directors further believes that the compensation feature of the
split dollar life insurance plan is reasonable in relation to the value of the
contributions of Mr. and Mrs. Gordon to the growth and success of the Company.
The total cost to the Company will be the time value of money from the time
premiums are paid until such time the premiums are recovered. In considering the
split dollar life insurance plan, the Board of Directors projected the total
benefit to Mr. and Mrs. Gordon to be substantially similar to the total benefit
the Board of Directors projected would have been provided under previous
compensation plans, including the Career Achievement Plan. Mr. and Mrs. Gordon
have forfeited their rights to participate in the Career Achievement Plan.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code limits the tax deductibility of executive
compensation in certain circumstances. In the event a portion of executive
compensation were not tax deductible, the Board of Directors may require the
executive to defer the non-deductible portion of compensation until such time
the compensation may be deductible by the Company.
The foregoing report has been approved by the Board of Directors, the
members of which are:
Melvin J. Gordon
Ellen R. Gordon
Daniel G. Ross
Charles W. Siebert
William Touretz
Lana Jane Lewis-Brent
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above under "Report on Executive Compensation," the Board of
Directors of the Company is responsible for determining the compensation of the
executive officers of the Company. Mr. Gordon is the Chairman of the Board and
Chief Executive Officer of the Company, Mrs. Gordon is President and Chief
Operating Officer of the Company, and Mr. Touretz is the Secretary of the
Company. As described above under "Election of Directors," Mr. and Mrs. Gordon
each serves as a director and executive officer of
8
<PAGE>
HDI Investment Corp. ("HDI"), a family investment company. The board of
directors of HDI is responsible for determining the compensation of the
executive officers of HDI, two of whose executive officers (Mr. and Mrs. Gordon)
serve on the Board of Directors of the Company.
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
shareholder return on the Company's Common Stock for a five-year period
(December 31, 1988 to December 31, 1993) with the cumulative total return of
Standard & Poor's 500 Stock Index ("S&P 500") and the Dow Jones Industry Food
Index ("Peer Group," which includes the Company).
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
Tootsie Roll 100.00 126.21 145.99 271.96 297.00 281.60
S&P 500 100.00 131.69 127.60 166.47 179.15 197.21
Peer Group 100.00 134.89 147.27 206.59 208.02 195.04
<FN>
- ------------------------
*Assumes (i) $100 invested on December 31, 1988 in each of the Company's Common
Stock, S&P 500 and the Dow Jones Industry Food Index and (ii) the reinvestment
of dividends.
</TABLE>
RATIFICATION OF THE APPOINTMENT OF
PRICE WATERHOUSE AS INDEPENDENT AUDITORS
The Board of Directors has appointed Price Waterhouse, independent public
accountants, as the independent auditors of the Company for the fiscal year
ending December 31, 1994. Price Waterhouse has been the Company's independent
auditors since 1968. Although not required by the Company's articles of
incorporation or bylaws, the Board of Directors deems it to be in the best
interest of the Company to submit to the shareholders a proposal to ratify the
appointment of Price Waterhouse and recommends a vote in favor of such
ratification. It is not expected that representatives of Price Waterhouse will
attend the Annual Meeting.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials for
the 1995 Annual Meeting of Shareholders, any shareholder proposals should be
addressed to Tootsie Roll Industries, Inc., 7401 South Cicero Avenue, Chicago,
Illinois 60629, Attention: Ellen R. Gordon, President, and must be received no
later than December 1, 1994.
9
<PAGE>
A COPY OF THE COMPANY'S 1993 ANNUAL REPORT ON FORM 10-K WITHOUT EXHIBITS MAY
BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO TOOTSIE ROLL INDUSTRIES,
INC., 7401 SOUTH CICERO AVENUE, CHICAGO, ILLINOIS 60629, ATTENTION: G. HOWARD
EMBER, VICE PRESIDENT/FINANCE. A REASONABLE CHARGE WILL BE MADE FOR REQUESTED
EXHIBITS.
By Order of the Board of Directors
William Touretz
SECRETARY
Chicago, Illinois
March 30, 1994
10
<PAGE>
PROXY
TOOTSIE ROLL INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS--MAY 2, 1994
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of TOOTSIE ROLL INDUSTRIES, INC. (the
"Company") hereby appoints ELLEN R. GORDON, WILLIAM TOURETZ, MICHAEL L. SOFFIN
and AUGUSTUS C. EPPS, JR., and each of them, as the undersigned's proxies (with
the power of substitution) to vote all the shares of Common Stock and/or Class B
Common Stock of the Company which the undersigned would be entitled to vote at
the annual meeting of shareholders of such Company to be held on May 2, 1994 at
9:00 A.M. (EDST) and any adjournment thereof, on the matters set forth on the
reverse side hereof.
This Proxy will be voted in accordance with instructions specified on the
reverse side, but in the absence of any instructions will be voted "FOR" Items
(1), (2) and (3). If any other business is presented at the meeting, the
proxies are authorized to vote thereon in their discretion. The undersigned
hereby revokes any proxy heretofore given.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
A RETURN ENVELOPE IS ENCLOSED.
<PAGE>
__________________ _________________ ____________________
ACCOUNT NUMBER COMMON CLASS-B COMMON
(1)--Election of Directors: Melvin J. Gordon, Ellen R. Gordon, Lana Jane
Lewis-Brent, Charles W. Siebert, William Touretz.
FOR all nominees listed above (except as marked to the contrary above)
WITHHOLD AUTHORITY to vote for all nominees listed above
(Instructions: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
(2)--Proposal to ratify the appointment of Price Waterhouse as auditors for the
fiscal year 1994.
FOR
AGAINST
ABSTAIN
(3)--In their discretion in the transaction of any other business that may
properly come before such meeting.
FOR
AGAINST
ABSTAIN
The undersigned hereby revokes any proxy heretofore given. This proxy will be
voted in accordance with instructions specified above, but in the absence of any
instructions will be voted "FOR" Items (1), (2) and (3). If any other business
is presented at the meeting, the proxies are authorized to vote thereon in their
discretion.
DATED:____________________________________________________________________, 1994
_______________________________________________________________________________
_______________________________________________________________________________
Signature(s) of Shareholder
PLEASE MARK YOUR CHOICE LIKE THIS / / IN BLUE OR BLACK INK
Please date and sign exactly as name appears hereon. Executors, administrators,
Trustees, etc. should so indicate when signing. If shares are held jointly,
both shareholders should sign.
