SCHEDULE 14A INFORMATION
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
UNIVERSAL FOODS CORPORATION
(Name of Registrant as Specified In Its Charter)
UNIVERSAL FOODS CORPORATION
(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(j)(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 date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
LOGO UNIVERSAL FOODS CORPORATION
433 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
NOTICE OF ANNUAL MEETING
TO BE HELD JANUARY 26, 1995
To the Shareholders of
Universal Foods Corporation:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders
("Meeting") of Universal Foods Corporation, a Wisconsin corporation
("Company"), will be held at the Italian Community Center, 631 East Chicago
Street, Milwaukee, Wisconsin, on Thursday, January 26, 1995, at 2:00 p.m.,
Central Standard Time, for the following purposes:
1. To elect four directors of the Company as described in the Proxy
Statement.
2. To ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditor of the Company for fiscal 1995.
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on December 2, 1994 as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting and any adjournments thereof.
We encourage you to attend the Meeting and vote your shares in person.
However, if you are unable to attend the Meeting, please complete the enclosed
proxy card and return it promptly using the envelope provided so that your
shares will be represented at the Meeting. You may revoke your proxy at any
time before it is actually voted by notice in writing to the undersigned. Your
attention is directed to the attached proxy statement and accompanying proxy.
On Behalf of the Board of Directors,
Terrence M. O'Reilly
Secretary
Milwaukee, Wisconsin
December 16, 1994
UNIVERSAL FOODS CORPORATION
433 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
(414) 271-6755
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 26, 1995
----------------
GENERAL
This proxy statement and accompanying proxy are first being furnished to the
shareholders of Universal Foods Corporation, a Wisconsin corporation
("Company"), beginning on or about December 16, 1994 in connection with the
solicitation by the Board of Directors of the Company ("Board") of proxies for
use at the Company's 1995 Annual Meeting of Shareholders to be held at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, on
Thursday, January 26, 1995, at 2:00 p.m., Central Standard Time, and at any
adjournments thereof ("Meeting"), for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders and in this proxy statement.
Accompanying this proxy statement are a Notice of Annual Meeting of
Shareholders and a form of proxy for the Meeting solicited by the Board. The
Annual Report to Shareholders, which also accompanies this proxy statement,
contains financial statements for the three years ended September 30, 1994, and
certain other information concerning the Company. The Annual Report and such
financial statements are neither a part of this proxy statement nor
incorporated herein by reference.
Only holders of record of the Company's Common Stock ("Common Stock") as of
the close of business on December 2, 1994 are entitled to notice of, and to
vote at, the Meeting. On that date, the Company had 26,078,875 shares of Common
Stock outstanding, each of which is entitled to one vote per share for each
proposal submitted for shareholder consideration at the Meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Company or its authorized representatives or agents and not revoked will be
voted in accordance with the instructions contained therein. If no
specification is indicated on the proxy, the shares represented thereby will be
voted FOR the Board's four nominees for director, FOR ratification of the
Board's selection of the Company's 1995 independent auditor and on such other
matters that may properly come before the Meeting in accordance with the best
judgment of the individual proxies named in the proxy. The proxy may be revoked
at any time before it is exercised, and any Shareholder attending the Meeting
may vote in person whether or not the Shareholder has previously filed a proxy.
Presence at the Meeting by a Shareholder who has signed a proxy does not in
itself revoke the proxy. Any Shareholder giving a proxy may revoke it at any
time before it is exercised by delivering notice thereof to the Secretary in
writing. The shares represented by all properly executed proxies received prior
to the Meeting will be voted as directed by the Shareholders.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers or employees of the Company in person, by
telephone or by telegram. The Company will use the services of D. F. King &
Co., Inc., New York, to aid in the solicitation of proxies. Their charges will
be $7000 plus reasonable expenses. The Company will also reimburse brokerage
houses and other custodians, nominees and fiduciaries for their expenses in
sending proxy materials to the beneficial owners.
ELECTION OF DIRECTORS
The Board of Directors consists of thirteen members divided into three
classes. One class is elected each year to serve for a term of three years.
Four directors are to be elected at the Meeting, all of whom are currently
directors of the Company. The remaining nine directors will continue to serve
in accordance with their previous elections.
It is intended that the persons named as proxies in the accompanying proxy
will vote FOR the election of the Board's four nominees. If any nominee should
become unable to serve as a director prior to the Meeting, the shares
represented by proxies otherwise voted in favor of the Board's four nominees or
which do not contain any instructions will be voted FOR the election of such
other person as the Board may recommend. Under Wisconsin law, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election, assuming a quorum is present. For this purpose, "plurality" means
that the individuals receiving the largest number of votes are elected as
directors, up to the maximum number of directors to be chosen at the election.
Therefore, any shares of Common Stock which are not voted on this matter at the
Meeting, whether by abstention, broker nonvote or otherwise, will have no
effect on the election of directors at the Meeting.
Pursuant to the Company's By-laws, written notice of other qualifying
nominations by Shareholders for election to the Board must have been received
by the Secretary no later than December 7, 1994. As no notice of any such other
nominations was received, no other nominations for election to the Board of
Directors may be made by Shareholders at the Meeting.
Set forth below is certain information about the Board's nominees for
director and the nine continuing members.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
2
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
TERM EXPIRING JANUARY, 1998
YEAR FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------ --------------------- ----------
MICHAEL E. BATTEN Chairman of the Board and Chief Execu- 1980
C, F..................54 tive Officer, Twin Disc, Inc., a manu-
facturer of transmission components;
Director of Briggs & Stratton Corpora-
tion, Firstar Corporation and Walker
Forge, Inc.
GUY A. OSBORN Chairman and Chief Executive Officer 1983
E.....................58 of the Company; Director of WICOR,
Inc., Wisconsin Gas Company, Firstar
Corporation, Firstar Bank Milwaukee,
N.A., Fleming Companies, Inc. and
Northwestern Mutual Life Insurance
Company
WILLIAM U. PARFET President and Chief Executive Officer 1993
C, F..................48 of Richard-Allan Medical Industries, a
manufacturer of surgical equipment and
medical supplies; Director of The
Upjohn Company, Old Kent Financial
Corporation, CMS Energy Corporation,
Stryker Corporation and Flint Ink,
Corp(1)
ESSIE WHITELAW President and Chief Operating Officer 1993
A.....................46 of Blue Cross & Blue Shield United of
Wisconsin, a comprehensive health in-
surer, since 1992; Director of WICOR,
Inc.(2)
3
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING JANUARY, 1997
YEAR FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------ --------------------- ----------
JOHN F. BERGSTROM President and Chief Executive Officer 1994
N.....................48 of Bergstrom Corporation, which owns
automotive dealerships and commercial
real estate; Director of Wisconsin En-
ergy Corporation, Kimberly-Clark Cor-
poration, Midwest Express Airlines and
First National Bank-Fox Valley
LEON T. KENDALL Retired Chairman of the Board, MGIC, a 1985
A, E..................66 mortgage insurer; Professor of Finance
and Real Estate, Kellogg Graduate
School of Management, Northwestern
University; Director of Avatar Hold-
ings Corp., Asset Management Funds,
Inc., Chicago Board Options Exchange
and Resolution Trust Corp.
CHARLES S. MCNEER Retired Chairman of the Board and 1987
E, N..................68 Chief Executive Officer, Wisconsin En-
ergy Corporation, a supplier of elec-
tric, gas and real estate development
services
KENNETH P. MANNING President and Chief Operating Officer 1989
S, E..................52 of the Company; Director of Firstar
Trust Company
4
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING JANUARY, 1996
YEAR FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------ --------------------- ----------
JAMES L. FORBES President, Chief Executive Officer and 1989
E, C, F...............62 Director of Badger Meter, Inc., a man-
ufacturer and marketer of flow mea-
surement products; Director of WICOR,
Inc., Wisconsin Gas Company, Blue
Cross & Blue Shield United of Wiscon-
sin, United Wisconsin Services, Inc.,
Firstar Trust Company, Firstar Corpo-
ration and The Columbia Health Sys-
tems, Inc.
DR. OLAN D. FORKER Professor, Department of Agricultural, 1974
N, A..................66 Resource and Managerial Economics, New
York State College of Agriculture &
Life Sciences, Cornell University
DR. CAROL I. WASLIEN GHAZAII Professor and Department Chair--Public 1981
S, N..................54 Health Science, School of Public
Health, University of Hawaii(3)
JAMES H. KEYES Chairman of the Board and Chief Execu- 1990
C, A..................54 tive Officer of Johnson Controls,
Inc., a supplier of automated building
controls, automotive seating, batter-
ies and plastic packaging; Director of
LSI Logic Corporation, Firstar Corpo-
ration, Firstar Trust Company and
Firstar Bank Milwaukee, N.A.
JOHN L. MURRAY Retired Chairman of the Company; Di- 1971
F.....................67 rector of Twin Disc, Inc., Wisconsin
Electric Power Company, Wisconsin En-
ergy Corporation, The Marcus Corpora-
tion and Briggs & Stratton Corporation
5
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A--Audit Committee F--Finance Committee
C--Compensation and Development N--Nominating Committee
Committee S--Scientific Advisory Committee
E--Executive Committee
(1) Mr. William U. Parfet served as Corporate Vice President and Treasurer of
The Upjohn Company from July, 1984 until January, 1988, and was Corporate
Vice President for Consumer Products, HealthCare Services & Pharmaceutical
Strategic Planning until January, 1989. He served as Executive Vice
President from January, 1989 until January, 1991, when he was elected
President. In April, 1993, he was also elected Vice Chairman. He resigned
as President and Vice Chairman, effective September 30, 1993.
(2) Prior to 1992, Ms. Whitelaw served as Vice President, Southeastern Region
of Blue Cross & Blue Shield United of Wisconsin.
(3) Prior to 1990, Dr. Carol I. Waslien Ghazaii was Professor, Nutrition and
Food Science Program, School of Health Science, Hunter College, City
University of New York.
All other nominees and directors continuing in office have been employed in
their current executive positions or otherwise have served in executive officer
positions with the listed organizations for more than five years. No director,
nominee for director or executive officer had any material interest, direct or
indirect, in any business transaction of the Company or any subsidiary during
the 1994 fiscal year nor in any such proposed transaction.
The Board of Directors met 5 times during fiscal 1994, and each director
attended at least 75% of the meetings of the Board and the Board Committees on
which he or she served that were held during the period in which he or she was
a director.
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, which consists of Messrs.
Forbes, Kendall, McNeer, Osborn and Manning, did not meet during fiscal 1994.
This Committee has the power and authority of the Board of Directors in
directing the management of the business and affairs of the Company in the
intervals between Board of Directors meetings, except to the extent limited by
law.
The Audit Committee of the Board of Directors met 2 times during fiscal 1994.
Messrs. Forker, Kendall and Keyes and Ms. Whitelaw are members of the Audit
Committee. This Committee, among other things: (a) recommends the engagement of
the independent accountants of the Company, approves their fee and the scope
and timing of their audit services; (b) reviews with the independent
accountants the internal control structure; (c) reviews with the independent
accountants their report on financial and accounting personnel of the Company,
and their recommendations for improvements in the internal controls of the
Company and the implementation of such recommendations; (d) reviews the
Company's internal audit program; and (e) reviews the adequacy and
appropriateness of the various policies of the Company dealing with the
principles governing performance of corporate activities. These policies
include antitrust compliance, conflict of interest and business ethics.
Members of the Compensation and Development Committee of the Board of
Directors, which held 3 meetings during fiscal 1994, include Messrs. Batten,
Forbes, Keyes and Parfet. This Committee reviews and approves all compensation
programs for senior management of the Company including salary structure, base
salary, and short- and long-term incentive compensation plans including stock
options and nonqualified fringe benefit programs. The Committee also reviews
and approves annual changes in each elected officer's compensation including
base salary and short- and long-term incentive awards and approves all
executive employment contracts. The Committee annually recommends to the Board
of Directors the election of Company officers. In addition, the Committee
annually reviews the performance of the Chief Executive Officer and reviews and
approves the Chief Executive Officer's management development and succession
plans for the Company.
6
The Nominating Committee of the Board of Directors, which consists of Messrs.
Bergstrom, Forker and McNeer and Dr. Waslien Ghazaii, met once during fiscal
1994. This Committee studies and makes recommendations concerning the
composition of the Board of Directors and its committee structure and reviews
the compensation of Board and Committee members. The Committee also recommends
persons to be nominated by the Board of Directors for election as directors of
the Company at the Annual Meeting of Shareholders. The Committee will consider
nominees recommended by Shareholders. Recommendations by Shareholders should be
forwarded to the Secretary of the Company and should identify the nominee by
name and provide detailed information concerning his or her qualifications. The
Company's By-laws require that Shareholders give advance notice and furnish
certain information to the Company in order to nominate a person for election
as a director. See the discussion under "Future Shareholder Proposals and
Nominations" on page 16.
The Scientific Advisory Committee of the Board of Directors, which met twice
during fiscal 1994, annually reviews the Company's research and development
programs in respect to the quality and scope of work undertaken. It advises the
Company on maintaining product leadership through technological innovation,
reports on new technological trends that would significantly affect the Company
and suggests possible new emphasis in respect to its research programs. Members
of the Scientific Advisory Committee include Dr. Waslien Ghazaii and Mr.
Manning.
The Finance Committee of the Board of Directors, which met twice during
fiscal 1994, reviews and monitors the Company's financial planning and
structure to ensure conformance with the Company's requirements for growth and
fiscally sound operation. The Committee reviews and approves (a) the Company's
annual capital budget, long-term financing plans, existing credit facilities
and investments, and commercial and investment banking relationships; (b)
existing insurance programs, foreign currency management and the stock
repurchase program; (c) the Company's dividend policy including payout levels
and timing; and (d) the financial management and administrative operation of
the Company's qualified and nonqualified benefit plans. Messrs. Batten, Forbes,
Murray and Parfet are members of the Finance Committee.
DIRECTOR COMPENSATION AND BENEFITS
Directors who are not officers of the Company received during fiscal 1994 an
annual retainer of $20,000 and fees of $1,000 for each Board and Committee
meeting attended in addition to reimbursable expenses for such attendance. Each
Committee chairperson receives an additional $1,000 annually for serving in
that capacity. A portion of the annual retainer is paid in Common Stock
pursuant to the Universal Foods Corporation Director Stock Grant Plan (the
"Director Plan") as approved by the Shareholders on January 23, 1992. Under the
Director Plan each nonemployee director will receive an award of Common Stock
on October 1 of each year. The value of the award was $5,000 for fiscal 1994.
The award consists of a number of shares of Common Stock determined by dividing
the value of the award by the per share closing price of Common Stock on the
New York Stock Exchange on October 1. The shares may not be sold or otherwise
transferred for a period of six months after the grant date, except in the
event of death or disability. On October 1, 1993, 145 shares of Common Stock
were awarded to each nonemployee director (Messrs. Forbes, Forker, Keyes,
Batten, Kendall, McNeer, Murray and Parfet, Ms. Whitelaw and Dr. Waslien
Ghazaii). Such shares were transferred from the Company's treasury stock.
The Company has an unfunded retirement plan for nonemployee directors who
have at least three years of service with the Company as a director. The plan
provides a benefit equal to the annual retainer fee for directors in effect at
the time of the director's departure from the Board. This benefit, payable only
during the lifetime of the participant, continues for a period equal to the
amount of time the individual was an active director. During the benefit
period, the participant must be available to the Chairman of the Board for
consultation.
7
The Company has a Deferred Compensation Plan available to any director who is
entitled to compensation as a Board member. Under this plan, the maximum amount
that is eligible to be deferred is the total of all fees paid to the director
by reason of his or her membership on the Board or any Committee thereof other
than the portion of the annual retainer paid in Common Stock. The fees deferred
are credited to individual deferred compensation accounts which bear interest
at the rate of 8%. The amounts deferred pursuant to this plan will be paid in
either (i) a lump sum on January 31st of the calendar year following the year
in which the director ceases to be a director or (ii) five equal consecutive
annual installments commencing on January 31st of the first calendar year after
the director ceases to serve as a director. In the event of death, the balance
in a director's account will be paid in a lump sum to a designated beneficiary
or to the director's estate.
PRINCIPAL SHAREHOLDERS
MANAGEMENT
The following table sets forth certain information as of December 2, 1994
regarding the beneficial ownership of Common Stock by each of the executive
officers of the Company who is named in the Summary Compensation Table set
forth below, each director and nominee and all of the directors and executive
officers of the Company as a group. Except as otherwise indicated, all shares
listed are owned with sole voting and investment power.
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF OWNERSHIP(1) *
------------------------ -----------------
Michael E. Batten....................................... 1,328
John F. Bergstrom....................................... 1,169
James L. Forbes......................................... 1,103
Dr. Olan D. Forker(2)................................... 1,923
Dr. Carol I. Waslien Ghazaii............................ 944
John E. Heinrich........................................ 108,372
Geoffrey J. Hibner...................................... 70,656
Leon T. Kendall......................................... 2,078
James H. Keyes(3)....................................... 1,954
Charles S. McNeer....................................... 2,342
Kenneth P. Manning(4)................................... 103,194
John L. Murray(5)....................................... 130,336
Guy A. Osborn(6)........................................ 361,963
James F. Palo........................................... 91,088
William U. Parfet....................................... 1,314
Essie Whitelaw.......................................... 314
All directors and executive
officers as a group (24 persons)(7).................... 1,224,035
- --------
*No director or named executive officer owns 1% or more of the Company's
Common Stock, except Mr. Osborn, whose beneficial ownership represents 1.3%
of the Common Stock.
(1) Includes the following shares subject to stock options which are currently
exercisable or exercisable within 60 days of December 2, 1994: Mr. Osborn,
113,917 shares; Mr. Manning, 69,800 shares; Mr. Heinrich, 61,275 shares;
Mr. Hibner, 56,280 shares; Mr. Palo, 55,000 shares; and all directors and
executive officers as a group, 564,121 shares. Also includes the following
shares held under Company employee benefit plans that are attributable to
the following persons, but over which such persons have no current voting
or investment power: Mr. Osborn, 54,504 shares; Mr. Manning, 5,249 shares;
Mr. Heinrich, 15,151 shares; Mr. Hibner, 3,801 shares; Mr. Palo, 3,601
shares; and all directors and executive officers as a group, 104,719
shares.
8
(2) Includes 369 shares held by Mr. Forker's spouse.
(3) Includes 801 shares held by Mr. Keyes' spouse.
(4) Includes 750 shares held by Mr. Manning's children.
(5) Includes 31,625 shares held by Mr. Murray's spouse.
(6) Includes 22,230 shares held by Mr. Osborn's spouse and a trust of which he
is trustee.
(7) All directors and executive officers as a group own 4.5% of the Company's
Common Stock.
OTHER BENEFICIAL OWNERS
The following table sets forth information regarding beneficial ownership by
those persons whom the Company believes to be beneficial owners of more than
5% of the Common Stock of the Company. The following information is based on
reports on Schedules 13D and 13G and amendments thereto filed by those persons
with the Securities and Exchange Commission.
AMOUNT AND PERCENT OF CLASS
NAME AND ADDRESS NATURE AS OF
OF BENEFICIAL OWNERS OF OWNERSHIP DECEMBER 2, 1994
-------------------- ------------- ----------------
Marshall & Ilsley Corporation
770 North Water Street
Milwaukee, Wisconsin 53202............ 2,104,679.962(1) 7.8%
- --------
(1) Marshall & Ilsley Corporation reported that, as of February 9, 1994, it
had sole voting power as to 1,130,836.557 shares of Common Stock and
shared voting power as to 16,799 shares, and it had sole dispositive power
as to 2,087,695.962 shares of Common Stock and shared dispositive power as
to 16,985 shares. Marshall & Ilsley Corporation is the trustee of the
Universal Foods Retirement Employee Stock Ownership Plan and Universal
Foods Corporation Savings Plan.
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
Introduction
This report describes the Company's executive compensation programs and the
basis on which fiscal year 1994 compensation was determined with respect to
the executive officers of the Company. The Committee is composed entirely of
independent nonemployee directors and met 3 times during fiscal 1994. A more
complete description of the Committee functions is set forth under the heading
"Committees of the Board of Directors."
Compensation Policy and Objectives
The Company has developed an overall compensation policy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified performance goals (the "Program").
The overall objectives of this policy are to attract and retain the best
possible executive talent, to motivate these executives to achieve the
Company's business strategy goals, to link executive and shareholder interests
through equity-based plans and to provide a Program that recognizes individual
contributions.
Each year the Committee conducts a review of the Company's Program. This
review includes a report from independent compensation consultants assessing
the effectiveness of the Program and comparing it to a group of public
corporations that represent the Company's competition for executive talent.
The Committee approves the selection of comparator companies used for this
analysis. The comparator group used for compensation analysis includes
companies in the S&P Food Index in the Proxy Performance Graph. However, the
Committee believes that the Company's most direct competitors for executive
talent are not necessarily all of the companies included in the S&P Food
Index. The Committee determines the compensation for the 12 elected officers
including the 5 most highly compensated Company executives. In reviewing
individual performance, the Committee takes into account the recommendations
of Mr. Osborn. Key elements of the Company's Program are base salary, short-
term (annual) incentive and long-term incentives.
9
Base Salaries
Base salaries are initially determined by evaluating the responsibilities of
the position, the experience of the individual and by reference to the
competitive marketplace for executive talent, including a comparison with base
salaries for comparable positions at other comparator companies. The base
salary levels of the Company's executives are targeted at the 50th percentile
of the predicted base pay levels of similarly positioned executives in
comparator companies. Predicted values are determined using regression analysis
because of the difference in size between the comparator companies and the
Company. The Committee annually reviews each executive's base salary.
Adjustments are determined by evaluating the financial performance of the
Company, the performance of each executive officer against job specifications,
any new responsibilities and average percentage pay increases provided by the
comparator companies for similar positions. In the case of executive officers
with responsibility for a particular business unit, such unit's financial
results are also considered.
As reflected in the Summary Compensation Table on page 11, Mr. Osborn's base
salary was increased in fiscal 1994 by $25,000 (5.4%). In determining Mr.
Osborn's base salary, the Committee weighed the aforementioned criteria
equally, and also compared Mr. Osborn's base salary to the predicted value
using the base salaries of CEOs at the comparator companies.
Annual Bonuses
The Management Incentive Plan for Major Corporate Executives (the "Annual
Plan") promotes the Company's pay-for-performance policy by providing annual
cash payments to executives based upon achieving Company and individual
performance goals. The Annual Plan has both a Formula and Discretionary portion
subject to a maximum of 45% to 75% of fiscal base salary depending on a
participant's position in the Company. The Formula award is based on the level
of achievement of a targeted Earnings Per Share level for the fiscal year, with
65% of the maximum Formula award being paid upon achieving the target level.
The Discretionary portion is fully awarded based on each executive achieving
specific non-financial personal objectives agreed upon with his/her immediate
supervisor at the beginning of each fiscal year. Mr. Osborn's non-financial
objectives under the Discretionary portion are established by the Committee and
typically deal in such areas as acquisitions, divestitures, capital allocation
and organizational development.
Bonus awards are targeted at levels approximating the 50th percentile of
comparator companies' practices for each executive position. For performance
exceeding the targeted levels, the bonus opportunities are tied to 75th
percentile practices among comparator companies. In fiscal 1994, Mr. Osborn's
bonus opportunity was 75% of his base salary. As reflected in the Summary
Compensation Table, his bonus award under the Annual Plan was $267,525.
Stock Awards
Under the Company's 1990 Employee Stock Plan and 1994 Employee Stock Plan,
which were approved by Shareholders, restricted stock or stock options may be
granted to the Company's executive officers and other key employees. The
Committee makes annual decisions regarding appropriate stock-based grants for
each executive based on the following equally weighted factors. The Committee
considers the Company's financial performance, executives' levels of
responsibilities and predicted values at the 50-75th percentile of long-term
incentive compensation practices for similar positions at the comparator
companies. If restricted stock is awarded, the issuance price is equal to the
market price of the Common Stock on the date of grant and vests over five
years. This approach is designed to provide incentive to create shareholder
value over the long term since the full benefit of the compensation cannot be
realized unless stock price appreciation occurs over a number of years. In
fiscal 1994, Mr. Osborn received 6,000 restricted stock shares and options to
purchase 42,000 shares at their fair market value on the date of grant.
10
Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to certain executive
officers to $1,000,000, subject to several exceptions. The Committee intends to
grant awards under the 1994 Employee Stock Plan that are designed, in most
cases, to qualify for the performance-based compensation exception.
Compensation and Development Committee
Michael E. Batten
James L. Forbes
James H. Keyes, Chairperson
William U. Parfet
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information on the compensation of the Chief
Executive Officer and each of the other four most highly compensated executive
officers ("named executive officers") of the Company as of September 30, 1994.
SUMMARY COMPENSATION TABLE
ANNUAL
COMPENSATION LONG TERM COMPENSATION
----------------- -----------------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND BASE BONUS STOCK AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($)(4) ($)(5) (#) ($)(6)
------------------ ---- -------- -------- ------------ ---------- ------------
Guy A. Osborn 1994 $492,000 $267,525 $185,250 42,000 $128,652
Chairman and CEO(1) 1993 467,000 350,250 219,375 44,000 123,780
1992 445,000 166,878 0 30,000 115,753
Kenneth P. Manning 1994 $316,000 $171,825 $ 92,625 29,000 $ 52,767
President and COO(1) 1993 291,000 218,250 108,000 27,900 48,130
1992 272,000 95,200 0 20,000 40,607
John E. Heinrich 1994 $221,250 $ 96,244 $ 61,750 20,000 $ 38,337
Vice President and
Chief Financial 1993 201,500 120,900 74,250 19,200 35,285
Officer(2) 1992 190,000 57,000 0 14,000 32,053
Geoffrey J. Hibner 1994 $215,000 $ 93,525 $ 0 0 $ 31,706
Vice President--
Finance(3) 1993 201,500 114,855 57,375 19,200 29,321
1992 190,000 57,000 0 14,000 26,452
James F. Palo 1994 $177,000 $ 88,500 $ 43,225 12,000 $ 38,957
President--Rogers
Foods, Inc. 1993 167,000 83,500 54,000 12,000 36,638
1992 157,000 58,000 0 10,000 34,628
- --------
(1) Mr. Manning was elected President and Chief Operating Officer effective
January 23, 1992. Prior thereto, he served as Executive Vice President and
Mr. Osborn also held the titles of President and Chief Operating Officer.
(2) Mr. Heinrich was elected Vice President and Chief Financial Officer
effective July 1, 1994. Prior thereto he served as Vice President--
Administration. Mr. Heinrich passed away on December 6, 1994.
(3) Mr. Hibner will resign as Vice President--Finance effective January 2,
1995.
(4) Consists of awards under the Company's management incentive plans.
11
(5) The amounts in the table reflect the market value on the date of award of
restricted shares of Common Stock. Total number and value of restricted
shares held as of September 30, 1994, for each named individual are: Guy
Osborn, 20,175 shares--$597,684; Kenneth Manning, 9,800 shares--$290,325;
John Heinrich, 6,575 shares--$194,784; Geoffrey Hibner, 4,075 shares--
$120,722; James Palo, 4,675 shares--$138,497. Dividends are paid on
restricted shares when paid on Common Stock.
(6) Consists of contributions in fiscal 1994 under Company benefit plans for
the five named individuals as follows:
ESOP SAVINGS TRANSITION
------- ------- ----------
Guy A. Osborn.................................. $45,572 $33,690 $49,390
Kenneth P. Manning............................. 29,270 21,370 2,127
John E. Heinrich............................... 19,050 13,686 5,601
Geoffrey J. Hibner............................. 18,512 13,194 0
James F. Palo.................................. 15,930 10,420 12,607
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's 1990 or 1994 Employee Stock Plan during fiscal 1994
to the named executive officers.
OPTION GRANTS IN 1994 FISCAL YEAR
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
NUMBER OF GRANTED TO EXERCISE ANNUAL RATES OF STOCK
SECURITIES EMPLOYEES OR PRICE APPRECIATION
UNDERLYING IN BASE FOR TEN YEAR OPTION
OPTIONS 1994 PRICE TERM(3)
GRANTED FISCAL ($/SHARE) EXPIRATION -------------------------
NAME (#)(1) YEAR (2) DATE 5% 10%
---- ---------- ---------- --------- ---------- ----------- -------------
Guy A.
Osborn..... 42,000 12.4% 30.875 9/12/04 $ 815,519 $ 2,066,686
Kenneth P.
Manning.... 29,000 8.5% 30.875 9/12/04 563,097 1,426,997
John E.
Heinrich... 20,000 5.9% 30.875 9/12/04 388,342 984,136
Geoffrey H.
Hibner..... 0 0 0 0 0
James F. Pa-
lo......... 12,000 3.5% 30.875 9/12/04 233,005 590,482
All Share-
holders(4). -- -- -- -- 506,026,150 1,282,369,616
- --------
(1) The options reflected in the table are nonqualified stock options under the
Internal Revenue Code and were granted on September 12, 1994. The exercise
price of each option granted was equal to 100% of the fair market value of
the Common Stock on the date of grant. The options granted vest in
increments of one-third on each of the three anniversaries of the grant
date. The options are subject to early vesting in the event of the
optionee's death, disability or retirement. Upon a "change in control" of
the Company (as defined in the 1990 and 1994 Employee Stock Plans), all
options then outstanding will become immediately exercisable in full.
(2) The exercise price of options may be paid in cash, by delivering previously
issued shares of Common Stock or any combination thereof.
(3) The option values presented were calculated based on a share price of
$30.875 as of grant at assumed 5% and 10% annualized rates for the term of
the grant. The actual value, if any, that an optionee may realize upon
exercise will depend on the excess of the market price of the Common Stock
over the option exercise price on the date the option is exercised. There
is no assurance that the actual value realized by an optionee upon the
exercise of an option will be at or near the value estimated under the
model described above.
12
(4) The potential realizable value for "All Shareholders" and for the options
actually granted are determined on the assumption that the price of the
Company's Common Stock appreciated over the term of the options from the
$30.875 per share market price as of the date of grant at an annualized
rate (1) of 5% (which would result in a value on September 12, 2004 of
$50.29 per share); and (2) 10% (which would result in a value on September
12, 2004, of $80.08 per share). The "All Shareholders" information is
calculated based on 26,060,822 shares of the Company's Common Stock
outstanding as of September 30, 1994. Thus, for comparative purposes, the
total value of such Common Stock as of the date on which the options were
granted would be $804,627,879.
The following table sets forth information regarding the exercise of stock
options by each of the named executive officers during the 1994 fiscal year and
the fiscal year-end value of unexercised stock options held by such officers.
AGGREGATED OPTION EXERCISES IN 1994 FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT AT END OF FISCAL 1994
SHARES END OF FISCAL 1994 (#)(1) ($)(1)(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Guy A.
Osborn 10,000 67,917 113,917 101,333 135,938 0
Kenneth
P. Man-
ning 3,500 55,479 69,800 67,600 135,938 0
John E.
Heinrich 1,000 20,792 61,275 46,800 299,704 0
Geoffrey
J.
Hibner 225 3,475 56,280 26,800 213,425 0
James F.
Palo 0 0 55,030 30,000 347,003 0
- --------
(1) SARs are rights, granted in tandem with an option, to receive cash payments
equal to any appreciation in value of the shares subject to option from the
date of the option grant to the date of exercise, in lieu of exercise of
the option.
(2) The dollar values were calculated by determining the difference between the
fair market value of the underlying shares of Common Stock and the various
applicable exercise prices of the named executive officers' outstanding
options at the end of fiscal 1994. The last reported sale price of the
Company's Common Stock on the New York Stock Exchange on September 30, 1994
was $29.625 per share.
EMPLOYMENT AGREEMENTS
The Company has employment contracts with Messrs. Osborn, Manning, Heinrich
and Hibner. The initial term of each of these agreements is for three years
which is automatically extended for an additional one-year period except that
in no event will the term of employment extend beyond the calendar month in
which the employee's 65th birthday occurs or the employee becomes disabled or
dies. In the event of a "change of control" as defined in these agreements, the
executives will be automatically employed for a period of three years. During
this employment period, these agreements provide for the payment of base salary
subject to annual adjustment, bonus plus customary fringe benefits. The
agreements can be terminated upon 30 days' notice by the Board of Directors
with or without cause. If terminated without cause, certain termination
benefits are payable to the executive in an amount equal to the executive's
base salary then in effect plus the bonus for the most recently completed
fiscal year, and the executive continues to receive fringe benefits for not
more than one year. If an executive's employment is terminated after a "change
of control," the Company will pay the executive a lump sum equal to three times
the sum of the executive's annual base salary then in effect and the amount of
the largest bonus paid to the executive during the three years preceding
termination and continue coverage under existing benefit plans for two years.
Further, if the executive's employment terminates before he or she becomes 100%
vested in his or her entire account balance under the Universal Foods
Corporation Savings Plan or ESOP, the executive will be fully vested under both
plans. In fiscal 1995, in accordance with the provisions of his terminated
employment contract, Mr. Hibner will receive cash compensation of $253,650.
The Company also has entered into Executive Employment and Severance
Agreements with 8 other current executive officers who are part of the
executive officer group. Each of these agreements provides that
13
in the event of a "change of control," as defined in the respective agreement,
the Company will continue to employ the executive for a period of three years
following the date of such change of control; however, in no event shall the
term of the employment extend beyond the end of the calendar month in which the
executive's 65th birthday occurs. During this employment period, the executive
shall receive as compensation the base salary then in effect, subject to yearly
adjustment, bonus awards in accordance with past practice, and all other
customary fringe benefits in effect as of the date of the change of control.
The Company and the executive each retain the right to terminate employment at
any time prior to a change of control. After a change of control, the agreement
may be terminated by the Board upon 30 days' prior written notice in which
event, unless terminated for cause, the Company shall pay the executive a lump
sum equal to three times the sum of the executive's annual base salary then in
effect and the amount of the largest bonus paid to the executive during the
three years preceding termination and continue coverage under existing benefit
plans for two years. Further, if the executive's employment terminates before
he or she becomes 100% vested in his or her entire account balance under the
Universal Foods Corporation Savings Plan or ESOP, the executive will be fully
vested under both plans.
The Company provides a nonqualified supplemental executive retirement benefit
for selected officers and key employees. Participants contribute to the plan,
in each year until death or retirement, an amount equal to the term insurance
premium applicable to a life insurance benefit of two or three times the
participant's base salary in effect on the date of acceptance into the plan. A
pre-retirement survivor income benefit equal to 20%, 25% or 30% of base salary
payable for 15 or 20 years is available to designated beneficiaries if the
participant dies prior to retirement. At the time of retirement, the
participant may continue the survivor income benefit or elect to receive a
supplemental retirement income benefit equal to 20%, 25% or 30% of base salary
for 15 or 20 years or an actuarially equivalent survivor benefit. See the
"Summary Compensation Table" for the possible benefit payable to the named
executive officers. The benefit obligations under this plan are funded through
Company-owned life insurance policies. The executive officers named in the
compensation table on page 11 participate in this plan. The program is designed
so that if the assumptions made as to mortality experience, policy dividends
and other factors are realized, the Company will recover all its payments plus
an interest factor for the use of Company money. The Company has a supplemental
retirement arrangement with Mr. Osborn. Under this arrangement, he will receive
an annual payment commencing at retirement of $14,500 for 15 years.
The Company has established two so-called "Rabbi Trusts" by entering into
trust agreements with Marshall & Ilsley Trust Company (the "Trustee"). These
trusts are vehicles to assure the satisfaction of the obligations of the
Company under various plans and agreements to make deferred and other payments
to certain of its past, present and future executives, including the current
executive officers named in the executive compensation table on Page 11,
without causing such payments to be taxable to the executives until they are
paid ("Rabbi Trusts I and II"). Pursuant to Rabbi Trusts I and II, which are
irrevocable, the Company has deposited, and is obligated to maintain on
deposit, with the Trustee, either amounts of cash, marketable securities and/or
insurance policies sufficient to fund such payments. Rabbi Trusts I and II will
terminate upon the earlier of the exhaustion of the trust corpus or the final
payment to the executives pursuant to all of such plans and agreements, and any
remaining assets will be paid to the Company.
The Company has also entered into another trust agreement ("Rabbi Trust III")
with the Trustee to assure that payments to nonemployee directors will not be
improperly withheld. Rabbi Trust III was established on substantially the same
terms as Rabbi Trusts I and II, except that Rabbi Trust III is revocable under
certain circumstances and is currently funded with a nominal amount but is
required to be fully funded by the Company in the event of a potential change
in control or a change in control (as defined in Rabbi Trust III) or at such
other time as the Board of Directors may determine.
14
COMPANY STOCK PERFORMANCE
The following graph compares on a cumulative basis the yearly percentage
change since September 30, 1989 in (a) the total shareholder return on the
Common Stock with (b) the total return on the Standard & Poor's 500 Composite
Index (the "S&P 500 Index") and (c) the total return on the Standard & Poor's
Food Index (the "S&P Food Index"). Such yearly percentage change has been
measured by dividing (a) the sum of (i) the amount of dividends for the
measurement period, assuming dividend reinvestment, and (ii) the difference
between the price per share at the end of and the beginning of the measurement
period, by (b) the price per share at the beginning of the measurement period.
LOGO
RETURN RETURN RETURN RETURN RETURN RETURN
COMPANY NAME SEP 89 SEP 90 SEP 91 SEP 92 SEP 93 SEP 94
------------ ------ ------ ------ ------ ------ ------
Universal Foods Corporation 100 126.30 165.24 139.10 154.16 138.58
S&P Food Index 100 100.29 140.74 159.75 144.35 159.96
S&P 500 Index 100 90.76 119.04 132.20 149.39 154.89
APPOINTMENT OF INDEPENDENT AUDITOR
Upon the recommendation of the Audit Committee of the Board of Directors, the
Board, subject to shareholder ratification, has selected Deloitte & Touche LLP,
certified public accountants, to audit the financial statements of the Company
for the year ending September 30, 1995. Deloitte & Touche LLP has been the
independent auditor of the Company for many years and has advised the Company
that neither the firm nor any of its partners have any direct or indirect
material financial interest in the Company. The Board recommends a shareholder
vote FOR ratification of such selection. The affirmative vote of more shares
than those voted against such ratification at the Meeting is required for
ratification. Under Wisconsin law, any shares of Common Stock which are not
voted on this matter at the Meeting, whether by abstention, broker nonvote or
otherwise, will have no effect on the ratification of auditors. Representatives
of Deloitte & Touche LLP are expected to be present at the Meeting and will
have an opportunity to make a statement if they desire to do so and to respond
to appropriate shareholder questions.
15
OTHER MATTERS
Company management knows of no business which will be presented for action at
the Meeting other than those items identified in the Notice of Annual Meeting.
Pursuant to the Company's By-laws, written notice of any Shareholder proposals
to be presented at the Meeting must have been received by the Secretary no
later than December 7, 1994. As no notice of any Shareholder proposals was
received, no business may be brought before the Meeting by any Shareholders. If
other matters are brought before the Meeting by the Board of Directors, it is
intended that proxies will be voted at the Meeting in accordance with the
judgment of the person or persons exercising the authority conferred by such
proxies.
Section 16(a) of the Exchange Act requires the Company's officers and
directors to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. SEC
regulations require officers and directors to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on review of the copies of
such forms furnished to the Company, the Company believes that during the
fiscal year ended September 30, 1994 all its officers and directors complied
with Section 16(a) filing requirements.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
The Company welcomes comments or suggestions from its Shareholders. In the
event a Shareholder desires to have a proposal formally considered at the 1996
Annual Shareholders' Meeting and included in the proxy statement for that
meeting, the proposal must be in writing and received by the Secretary of the
Company on or before August 16, 1995.
In addition, the Company's By-laws establish procedures for Shareholder
nominations for elections of directors of the Company and bringing business
before any annual meeting of Shareholders of the Company. Among other things,
to bring business before an annual meeting or to nominate a person for election
as a director at an annual meeting, a Shareholder must give written notice to
the Secretary of the Company not more than 90 nor less than 50 days prior to
the fourth Thursday in the month of January next following the last annual
meeting held. The notice must contain certain information about the proposed
business or the nominee and the Shareholder making the proposal. Any
Shareholder interested in making a nomination or proposal should request a copy
of the applicable By-law provisions from the Secretary of the Company.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
ARE REQUESTED TO DATE, SIGN AND RETURN THE PROXY CARD AS SOON AS POSSIBLE. IF
YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY YOUR BROKER OR
BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE PROXY CARD ON
YOUR BEHALF.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF
THE COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY
OF THE COMPANY'S 1994 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors,
Terrence M. O'Reilly
Secretary
December 16, 1994
16
FORM OF PROXY CARD
[front]
UNIVERSAL FOODS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 26, 1995
The undersigned constitutes and appoints GUY A. OSBORN and TERRENCE M.
O'REILLY, and each of them, with full power of substitution, the true and lawful
proxies of the undersigned, to represent and vote, as designated below, all
shares of Common Stock of Universal Foods Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of such corporation to be
held at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, on Thursday, January 26, 1995, 2:00 p.m. Central Time, and at any
adjournment thereof:
1. Election of Directors [_] FOR all nominees listed [_] WITHHOLD authority
below (except as marked to vote for all
to the contrary below). nominees listed
below.
MICHAEL E. BATTEN, GUY A. OSBORN, WILLIAM U. PARFET, ESSIE WHITELAW
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. Proposal to ratify the appointment of Deloitte & Touche as the independent
auditors of the corporation.
[_] For [_] Against [_] Abstain
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Directors recommends a vote FOR Items 1 and 2.
[reverse]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2.
The undersigned acknowledges receipt of the
Notice of said Annual Meeting and the
accompanying Proxy Statement and Annual
Report.
Dated: ___________________, 19__
Signed
---------------------------------------
---------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears
on your stock certificate. Joint owners should
each sign personally. A corporation should
sign full corporate name by duly authorized
officers and affix corporate seal. When
signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF UNIVERSAL FOODS CORPORATION