1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 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 Section 240.14a-11(c) or Section 240.14a-12 THE ROBERT MONDAVI CORPORATION (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) THE ROBERT MONDAVI 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:(A) (4) Proposed maximum aggregate value of transaction: [ ] 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: (A) Set forth the amount on which the filing fee is calculated and state how it was determined. 2 THE ROBERT MONDAVI CORPORATION 7801 ST. HELENA HIGHWAY OAKVILLE, CALIFORNIA 94562 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF THE ROBERT MONDAVI CORPORATION TO BE HELD NOVEMBER 4, 1996 To the Shareholders: The Annual Meeting of Shareholders of The Robert Mondavi Corporation (the "Company") will be held at the Robert Mondavi Winery, 7801 St. Helena Highway, Oakville, California 94562, on Monday, November 4, 1996, at 10:00 a.m. local time, for the following purposes: 1. The election of three Class A Directors and six Class B Directors; 2. To ratify the appointment of Price Waterhouse as the Company's independent auditors for the 1997 fiscal year; and 3. To transact such other business as may properly come before the meeting and any adjournment thereof. All of the above matters are more fully described in the accompanying Proxy Statement. Only Shareholders of record at the close of business on September 13, 1996 are entitled to notice of and to vote at the meeting or any postponement or adjournment thereof. By Order of the Board of Directors /s/ Mike Beyer ---------------------------- Mike Beyer, Secretary Napa, California September 20, 1996 - - - ------------------------------------------------------------------------------ WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED REPLY ENVELOPE. THIS WILL NOT LIMIT YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING. - - - ------------------------------------------------------------------------------ 3 THE ROBERT MONDAVI CORPORATION 7801 ST. HELENA HIGHWAY OAKVILLE, CALIFORNIA 94562 ------------------------------------- PROXY STATEMENT ------------------------------------- Your proxy in the form enclosed is solicited by the Board of Directors of The Robert Mondavi Corporation (the "Company") for use in voting at the Annual Meeting of Shareholders to be held on Monday, November 4, 1996 at 10:00 a.m. local time, or at any adjournment thereof. The Annual Meeting will be held at the Robert Mondavi Winery, 7801 St. Helena Highway, Oakville, California 94562. This Proxy Statement and the enclosed form of proxy, together with the Company's Annual Report for fiscal 1996, were first mailed to shareholders on or about September 20, 1996. The Company's principal executive offices are located at 7801 St. Helena Highway, Oakville, California 94562, and its telephone number is (707) 259-9463. D.F. King & Co., Inc., who is assisting with the mechanics of the return of the proxies, may be contacted at (212) 269-5550. The shares represented by those proxies received, properly dated and executed, and not revoked, will be voted at the Annual Meeting. A proxy may be revoked at any time before it is exercised by delivering to the Secretary of the Company at the Company's principal executive offices, no later than the start of the Annual Meeting, a written notice of revocation or a duly executed proxy relating to the same shares bearing a later date than the revoked proxy, or by attending the Annual Meeting and voting the shares covered by the proxy in person. All shares represented by proxies that are properly dated, executed and returned, and which have not been revoked, will be voted in accordance with the specifications on the enclosed proxy. If no such specifications are made, shares of Class A Common Stock will be voted FOR the election of the three nominees for Class A Directors listed in this Proxy Statement and FOR approval of proposal 2 set forth in the Notice of Annual Meeting of Shareholders and described in this Proxy Statement. Similarly, if no specifications are made, shares of Class B Common Stock will be voted FOR the election of the six Class B Directors listed in this Proxy Statement and FOR approval of proposal 2. The Company will bear the expense of preparing, printing and mailing this Proxy Statement and the proxies solicited hereby and will reimburse brokerage firms and nominees for their reasonable expenses in forwarding solicitation materials to beneficial owners of shares held of record by such brokerage firms and nominees. In addition to the solicitation of proxies by mail, officers and regular employees of the Company may communicate with shareholders either in person or by telephone or facsimile for the purpose of soliciting such proxies; no additional compensation will be paid for such solicitation. The Company has retained D.F. King & Co., Inc., at an estimated cost of $2,500, plus reimbursement of expenses, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. OUTSTANDING SHARES AND VOTING RIGHTS September 13, 1996 has been fixed as the record date for determining the holders of Class A Common Stock and the holders of Class B Common Stock entitled to notice of and to vote at the Annual Meeting. As of the close of business on the record date, the Company had outstanding 7,341,779 shares of Class A 1 4 Common Stock and 7,676,012 shares of Class B Common Stock. Only holders of Class A Common Stock are entitled to vote in the election of Class A Directors. Only holders of Class B Common Stock are entitled to vote in the election of Class B Directors. On all matters other than the election of Directors, the holders of Class A Common Stock and the holders of Class B Common Stock vote together as a single class, with each Class A share entitled to one (1) vote, or a total of 7,341,779 Class A votes, and each Class B share entitled to ten (10) votes, or a total of 76,760,120 Class B votes. A majority of the outstanding shares of Class A Common Stock, represented in person or by proxy, will constitute a quorum for purposes of electing Class A Directors, and a majority of the outstanding shares of Class B Common Stock, represented in person or by proxy, will constitute a quorum for purposes of electing Class B Directors. On all other matters that may be presented at the meeting, the holders of shares entitled to cast a majority of the votes which could be voted thereon will constitute a quorum. ELECTION OF DIRECTORS (PROPOSAL 1 ON PROXY) There are currently nine members of the Board of Directors, divided into two classes. At the Annual Meeting, three Class A Directors will be elected by the holders of the outstanding Class A Common Stock and six Class B Directors will be elected by the holders of the outstanding Class B Common Stock. Unless you request on your proxy card that voting of your proxy be withheld from any one or more of the following nominees for director, each of whom currently serves as a member of the Board, proxies of Class A Common Stock will be voted for the election of the three nominees for Class A Directors named below and proxies of Class B Common Stock will be voted for the election of the six nominees for Class B Directors named below. In the event any nominee named below becomes unavailable for election, the proxies in the form solicited will be voted for an alternative or alternatives designated by the present Board of Directors. Directors serve until the next Annual Meeting of Shareholders and until their successors are elected or chosen. NOMINEES FOR CLASS A DIRECTORS Philip Greer, age 60, became a director of the Company in 1992. He is chairman of the Audit Committee and a member of the Compensation Committee. Mr. Greer is a Senior Managing Principal of Weiss, Peck & Greer, L.L.C. ("WPG"), an investment company. He was a general partner of WPG's predecessor, Weiss, Peck & Greer, for over twenty-five years. Mr. Greer is also a director of Federal Express Corporation and Network Computing Devices, Inc. He graduated from Princeton University and the Harvard Graduate School of Business. Frank E. Farella, age 67, has been a partner in the law firm of Farella, Braun & Martel since 1962. He has been a director of the Company since 1992. He is a member of the Audit Committee and the Compensation Committee. Mr. Farella is also a director of Security First Group, Security First Life Insurance Company and Fidelity Standard Life Insurance Company, members of The London Insurance Group of Companies, the separate accounts of which are registered under the Investment Company Act of 1940. He is a graduate of San Francisco State University and Stanford University Law School. James L. Barksdale, age 53, became a director in 1996. He is the President, CEO and a member of the Board of Directors of Netscape Communications Corporation. From January 1992 to January 1995 Mr. Barksdale served as President and Chief Operating Officer, and, as of September 1994, Chief Executive Officer, of AT&T Wireless Services. From April 1983 to January 1992 he was Executive Vice President and Chief Operating Officer of Federal Express Corporation. Mr. Barksdale is also a director of 3Com Corporation, Harrah's Entertainment and @Home Corporation. He is a graduate of the University of Mississippi. 2 5 NOMINEES FOR CLASS B DIRECTORS Robert G. Mondavi, age 83, founded the Company in 1966 and has been Chairman of the Board since that time. Robert Mondavi was also Chief Executive Officer of the Company from its founding to 1990. He began making wine in California in 1937 and in 1943 his family purchased the Charles Krug winery in the Napa Valley where he served as General Manager until 1966. He has been inducted into Fortune Magazine's Business Hall of Fame. He is a member of the American Institute of Wine and Food, the American Wine Society and the Commanderie de Bordeaux. He graduated from Stanford University. Robert Mondavi is the father of Michael and Timothy Mondavi and Marcia Mondavi Borger. R. Michael Mondavi, age 53, is the Company's President and Chief Executive Officer. He helped found the Robert Mondavi Winery with his father in 1966 and has been a member of the Board of Directors since that time. Michael Mondavi has served as Chairman of the Wine Institute and of the Napa Valley Vintners Association and as a director of the American Vineyard Foundation. He graduated from Santa Clara University. Marcia Mondavi Borger, age 49, has been a director of the Company since 1978. She has worked for the Company in various capacities since 1967. From 1982 to 1992, she was the Company's Vice President, Eastern Sales. She is a graduate of Santa Clara University. Timothy J. Mondavi, age 45, is the Company's Managing Director and Winegrower. He began working at the Robert Mondavi Winery in 1974 and has been a member of the Board of Directors since 1978. Timothy Mondavi is a member of the Napa Valley Wine Technical Group and has served as a director of the Wine Institute. He graduated from the University of California at Davis, where he studied viticulture and enology. Clifford S. Adams, age 52, has been a member of the Board of Directors since 1978. He served as Executive Vice President from 1979 until March 1996 when he became the Executive Director of The American Center for Wine, Food and the Arts. Mr. Adams is a graduate of Duke University and Boalt Hall School of Law of the University of California. Bartlett R. Rhoades, age 58, became a director of the Company in 1989. He is chairman of the Compensation Committee and a member of the Audit Committee. He is an independent investor and consultant. Mr. Rhoades is a member of the Board of Directors of Digital Discriptor Systems, Inc., a digital imaging software company. From 1991 to 1994 he was the Chief Executive Officer, President and a director of Medical SelfCare Inc., a publisher of a mail order catalog. From 1989 to 1991, he was the President, Chief Operating Officer and a director of Age Wave, Inc., a business consulting and research firm. He graduated from Harvard College and the Harvard Graduate School of Business. RECOMMENDATION The Board of Directors recommends that Class A shareholders vote FOR re-election of the above-named Class A Directors and that Class B shareholders vote FOR re-election of the above-named Class B Directors. VOTE REQUIRED The three nominees for Class A Directors and the six nominees for Class B Directors receiving the highest number of affirmative votes of the shares entitled to be voted for them shall be elected as Class A Directors and Class B Directors, respectively. Votes withheld from any director are counted for purposes of determining the presence or absence of a quorum, but have no legal effect under California 3 6 law. While there is no definitive statutory or case law authority in California as to the proper treatment of abstentions and broker non-votes in the election of directors, the Company believes that both abstentions and broker non-votes should be counted for purposes of determining whether a quorum is present at the Annual Meeting. In the absence of precedent to the contrary, the Company intends to treat abstentions and broker non-votes with respect to the election of directors in this manner. OTHER EXECUTIVE OFFICERS The following are additional executive officers of the Company. All executive officers serve at the discretion of the Board of Directors, subject to the terms of any employment agreement. Gregory M. Evans, age 46, has been the Company's Chief Financial Officer since 1983. Mr. Evans graduated from the University of California at Berkeley and holds an M.B.A. degree from the Harvard Graduate School of Business. Peter Mattei, age 44, has been the Company's Senior Vice President, Production and Vineyards since 1991. From 1989 to 1991 he was Vice President, Operations. Mr. Mattei holds a B.S. degree from the University of California at Davis and an M.B.A. degree from Stanford University. Michael K. Beyer, age 47, became the Company's Senior Vice President, General Counsel and Secretary in 1992. From 1978 to 1992, he was a member of the law firm of Feldman, Waldman and Kline. Mr. Beyer graduated from Harvard College and Boalt Hall School of Law of the University of California. Alan E. Schnur, age 43, joined the Company in August 1994 as Senior Vice President, Human Resources. From 1989 to 1994 he was a principal in Towers Perrin, a management consulting firm. He has a B.A. and Ph.D. from the University of California at Berkeley. Mitchell J. Clark, age 47, began working for the Company in 1979 and became Senior Vice President, Sales in 1994. He is a graduate of San Diego State University. Martin C. Johnson, age 45, joined the Company in 1992 and became Senior Vice President, Marketing in 1994. Prior to joining the Company, Mr. Johnson was Vice President, Marketing of Heublein Fine Wine Group. He is a graduate of Northern Arizona University. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors held a total of four meetings during fiscal 1996. The Board of Directors has a Compensation Committee and an Audit Committee. Messrs. Greer, Rhoades and Farella sit on those committees. The Compensation Committee adopts and administers compensation plans for executive officers of the Company, including the Company's 1993 Equity Incentive Plan. The Compensation Committee held nine meetings in fiscal 1996. The Audit Committee selects the independent auditors for the Company (subject to ratification by the shareholders), reviews the scope and results of the annual audit, approves the services to be performed by the independent auditors, and reviews the independence of the auditors, the performance and fees of the independent auditors, the effectiveness and adequacy of the system of financial reporting and internal accounting controls, and the scope and results of internal auditing procedures. The Audit Committee held four meetings during fiscal 1996. 4 7 During fiscal 1996, no director attended fewer than 75% of the aggregate of all meetings of the Board of Directors and the committees, if any, upon which such director served and which were held during the period of time that such person served on the Board or such committee. PRINCIPAL SHAREHOLDERS The following table sets forth certain information as of September 13, 1996 with respect to the beneficial ownership of the outstanding shares of Class A Common Stock and Class B Common Stock by (i) all persons known by the Company to own more than five percent of either class of the Company's Common Stock, (ii) each director and director nominee and the executive officers named below under "Executive Compensation -- Summary Compensation Table", and (iii) all directors and executive officers as a group. Except as indicated in the footnotes to the table, the Company believes that the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable. CLASS A COMMON STOCK CLASS B COMMON STOCK (1) ------------------------------------------ -------------------------- SHARES THAT MAY BE ACQUIRED WITHIN 60 DAYS OUTSTANDING BY EXERCISE OF SHARES OPTIONS OR PERCENT SHARES PERCENT BENEFICIALLY CONVERSION OF OF BENEFICIALLY OF BENEFICIAL OWNER OWNED CLASS B SHARES CLASS (2) OWNED CLASS - - - ---------------- ----- -------------- ----- ----- ----- Robert G. Mondavi - 2,332,757 (3) 24.1 2,332,757 30.4 7801 St. Helena Hwy. Oakville, CA 94562 R. Michael Mondavi 1,000 1,808,985 (4) 19.8 1,688,985 (7) 22.0 7801 St. Helena Hwy. Oakville, CA 94562 Timothy J. Mondavi - 1,725,285 (5) 19.0 1,690,285 (8) 22.0 7801 St. Helena Hwy. Oakville, CA 94562 Marcia Mondavi Borger - 1,644,344 (6) 18.3 1,628,055 (9) 21.2 7801 St. Helena Hwy. Oakville, CA 94562 Capital Group Cos. 1,152,420 (10) - 15.7 - - Pimco Advisors 590,000 (10) - 8.0 - - Northwestern Mutual Life 564,000 (10) - 7.7 - - Mellon Bank Corporation 413,000 (10) - 5.6 - - Clifford S. Adams 33,612 (11) 135,000 (12) 2.2 - - Gregory M. Evans - 109,833 (12) 1.5 - - Mitchell J. Clark 328 21,833 (12) * - - Frank E. Farella - 14,300 (12) * - - Philip Greer - 14,300 (12) * - - Bartlett R. Rhoades 800 14,300 (12) * - - All executive officers and 35,740 7,928,271 (13) 52.0 7,340,082 (14) 95.6 directors as a group (15 persons) - - - -------------------- * Less than 1% 5 8 (1) 214,209 shares of Class B Common Stock held by Robert Mondavi Properties, Inc., a wholly-owned subsidiary of the Company, are not considered outstanding for purposes of these calculations. (2) Under Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a holder of Class B Common Stock is deemed to own beneficially the same number of shares of Class A Common Stock since the holder has the right, subject to the terms of the Stock Buy-Sell Agreement among the Company and the holders of the outstanding shares of Class B Common Stock, to convert his Class B Common Stock to Class A Common Stock. Pursuant to the same Rule, for purposes of calculating the percentage of the outstanding shares of Class A Common Stock owned by each named shareholder, the shares of Class A Common Stock which a holder of Class B Common Stock may acquire by conversion are considered outstanding only with respect to that holder. As a result, the stated percentages of ownership of the Class A Common Stock do not reflect the beneficial ownership of the Class A Common Stock which is actually outstanding as of September 13, 1996. (3) Represents shares of Class A Common Stock which the holder has the right to acquire upon conversion of Class B Common Stock. (4) Includes 1,688,985 shares of Class A Common Stock which the holder has the right to acquire upon conversion of Class B Common Stock and 120,000 shares of Class A Common Stock issuable pursuant to options exercisable within 60 days of September 13, 1996. (5) Includes 1,690,285 shares of Class A Common Stock which the holder has the right to acquire upon conversion of Class B Common Stock and 35,000 shares of Class A Common Stock issuable pursuant to options exercisable within 60 days of September 13, 1996. (6) Represents 1,628,055 shares of Class A Common Stock which the holder has the right to acquire upon conversion of Class B Common Stock and 16,289 shares of Class A Common Stock issuable pursuant to options exercisable within 60 days of September 13, 1996. (7) Excludes 80,000 shares of Class B Common Stock held by irrevocable trusts for the benefit of Michael Mondavi's children. Michael Mondavi is not the trustee of such trusts and has neither voting nor dispositive power with respect to such shares. (8) Excludes 80,000 shares of Class B Common Stock held by irrevocable trusts for the benefit of Timothy Mondavi's children. Timothy Mondavi is not the trustee of such trusts and has neither voting nor dispositive power with respect to such shares. (9) Excludes 142,230 shares of Class B Common Stock held by irrevocable trusts for the benefit of Ms. Borger's children. Ms. Borger is not the trustee of such trusts and has neither voting nor dispositive power with respect to such shares. Also excludes 80,000 shares of Class B Common Stock held in trusts for the benefit of Timothy Mondavi's children, for which Ms. Borger serves as trustee and with respect to which she disclaims beneficial ownership. (10) Based on most recent available filings on Form 13F. (11) Excludes 500 shares owned by Mr. Adams as trustee. Mr. Adams disclaims any beneficial interest in the shares owned in his capacity as trustee. (12) Represents shares of Class A Common Stock issuable pursuant to outstanding options exercisable within 60 days of September 13, 1996. (13) Includes an aggregate of 588,189 shares of Class A Common Stock issuable pursuant to outstanding options exercisable within 60 days of September 13, 1996. (14) Excludes an aggregate of 32,400 shares of Class B Common Stock gifted by Robert G. Mondavi to his nine grandchildren. AGREEMENT AMONG HOLDERS OF CLASS B COMMON STOCK The holders of the outstanding shares of Class B Common Stock and the Company are parties to a Stock Buy-Sell Agreement (the "Buy-Sell Agreement"). Pursuant to the Buy-Sell Agreement, no holder of shares of Class B Common Stock may, with limited exceptions, transfer Class B Common Stock or convert Class B Common Stock into Class A Common Stock without first offering such stock to 6 9 the Company and then to the other parties to the Buy-Sell Agreement. The Buy-Sell Agreement applies to a broad range of transfers and dispositions other than (i) certain lifetime or testamentary transfers to issue of Robert and Marjorie Mondavi, (ii) transfers to or in trust for charitable institutions or (iii) certain other permitted transfers. EXECUTIVE COMPENSATION The following table sets forth all compensation received for services rendered to the Company in all capacities during the fiscal years ended June 30, 1996, 1995 and 1994, respectively, by (i) the Company's Chief Executive Officer and (ii) the Company's four other most highly compensated executive officers (together, the "Named Executive Officers"): SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION LONG-TERM COMPENSATION --------------------------------------- ----------------------------------------- OTHER # SECURITIES PAYOUTS NAME AND PRINCIPAL FISCAL ANNUAL UNDERLYING LONG-TERM ALL OTHER POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS INCENTIVE COMPENSATION - - - -------- ---- ------ ----- --------------- ------- ---------- ------------ Robert Mondavi 1996 $450,000 - - (2) - - - Chairman of the Board 1995 450,000 $ 50,000 - (2) - - - 1994 451,923 - - (2) - - - R. Michael Mondavi 1996 429,016 400,000 $81,984(3) 70,000 $181,584 $356,785 Chief Executive Officer 1995 444,377 250,000 82,044(4) - 183,624 287,349 1994 445,020 - 97,072(5) - 191,096 214,055 Timothy J. Mondavi 1996 429,016 150,000 63,697(6) 35,000 181,584 356,785 Managing Director, 1995 444,377 100,000 60,200(7) - 183,624 287,349 Winegrower 1994 445,020 - 77,481(8) - 191,096 214,055 Gregory M. Evans 1996 292,065 150,000 - (2) - 100,027 269,390 Chief Financial Officer 1995 292,065 120,000 - (2) 25,000 95,138 229,649 1994 292,065 - 36,502(9) - 97,415 185,642 Mitchell J. Clark 1996 189,615 150,000 - (2) - - 13,273 Sr. Vice President Sales 1995 150,000 99,000 - (2) 25,000 - 10,500 1994 95,994 41,778 - (2) - - 9,644 - - - ---------------- (1) Includes perquisites, none of which exceeded 25% of total perquisites for the Named Executive Officer, except as noted. (2) Individual perquisites do not exceed the lesser of $50,000 or 10% of salary and bonus. (3) Includes $35,500 in life insurance benefits and $30,752 in financial planning services. (4) Includes $35,500 in life insurance benefits and $20,379 in financial planning services. (5) Includes $46,521 in life insurance benefits. (6) Includes $18,524 in life insurance benefits and $24,640 in financial planning services. (7) Includes $18,524 in life insurance benefits and $19,630 in financial planning services. (8) Includes $31,515 in life insurance benefits. (9) Includes $14,121 in life insurance benefits and $12,435 in automobile allowance. (10) Represents that portion paid in fiscal 1994, 1995 and 1996, respectively, of the named executive's accumulated earnings on 1989, 1990 and 1991 units granted under the terms of the Company's Executive Incentive Compensation Plan (the "E.I.C.P."). Under the E.I.C.P., the Compensation Committee of the Board of Directors may make annual awards of units to senior management plan participants. Each unit earns a percentage of plan income, based on the Company's pre-tax earnings as calculated on a FIFO basis, for a period of five years. The percentage of plan income earned varies from 0.01% to 0.014%. Unit earnings vest at the rate of 20% per year over the same 7 10 five-year period. At the end of five years, a portion of the earnings is distributed to the participant and any balance is deferred and earns interest at the Company's average borrowing rate until distribution under the terms of the E.I.C.P. For units granted prior to fiscal 1989, up to 30% of the earnings were initially distributed to the participant. For units granted during and after fiscal 1989, the participant may elect in the year of grant to receive up to 100% of earnings in the initial distribution or to defer any portion of such amount. Upon termination of employment due to death, disability, retirement or involuntary termination without cause, the participant's units become fully vested and the participant is entitled to receive all earnings accumulated on units through the end of the fiscal year in which the termination occurs. Upon termination of employment for cause or certain voluntary terminations, the participant is entitled to receive all earnings accumulated on units through the end of the fiscal year prior to the year the termination occurs. The Company has the option to distribute plan balances over a ten-year period. (11) Includes the Company's contribution on behalf of the Named Executive Officers to the Company's defined contribution retirement plan and supplemental executive retirement plan. Retirement plan contributions in fiscal 1996 were $42,742 for R. Michael Mondavi; $42,742 for Timothy J. Mondavi; $13,273 for Mitchell J. Clark; and $27,446 for Gregory M. Evans. Also includes earnings as a percentage of fiscal 1996 plan income under the E.I.C.P. described at Note 10 above. Fiscal 1996 E.I.C.P. earnings were $314,043 for R. Michael Mondavi; $314,043 for Timothy J. Mondavi; and $241,944 for Gregory M. Evans. In fiscal 1992, no earnings were declared on outstanding units under the E.I.C.P. and the plan was amended to provide participants with higher accrual rates over the 1993 through 1996 fiscal years with respect to outstanding units. Outstanding units will continue to accrue earnings in future years, but the Board of Directors has determined that no new unit awards will be made under the E.I.C.P. subsequent to fiscal 1993. Amounts indicated do not include interest on plan balances. Amounts reported as E.I.C.P. earnings are reported again as Long Term Incentive Plan Payouts in the year payment is made. The accrued but unpaid balances, exclusive of interest earnings, for all participants as a group under the E.I.C.P. at June 30, 1994, 1995 and 1996, respectively, were $4,908,839, $5,189,348 and $5,761,179. OPTION GRANTS The following table sets forth information with respect to options granted to the Named Executive Officers during the 1996 fiscal year: OPTION GRANTS IN LAST FISCAL YEAR (1) POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR INDIVIDUAL GRANTS OPTION TERM(2) ------------------------------------------------------- ----------------------------- NUMBER OF PERCENT OF SECURITIES TOTAL OPTIONS UNDERLYING GRANTED TO EXERCISE OR OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10% ---- ------- ----------- ----- ---- -- --- Robert Mondavi - - - - - - R. Michael Mondavi 70,000 65.1 $27.625 12/29/05 $1,216,125 $3,081,899 Timothy J. Mondavi 35,000 32.6 27.625 12/29/05 608,062 1,540,950 Gregory M. Evans - - - - - - Mitchell J. Clark - - - - - - - - - ------------------------ (1) All options in this table relate to shares of Class A Common Stock. (2) Potential realizable value is based on an assumption that the stock price appreciates at the annual rate shown (compounded annually) from the date of grant until the end of the option term (ten years). These numbers are calculated based on the requirements promulgated by the Securities and Exchange Commission and do not reflect the Company's estimate of future stock price growth. Actual gains, if any, on stock option exercises are dependent on the Company's future financial performance, overall market conditions and the optionee's continued employment during the prescribed vesting period. OPTION EXERCISES No stock options were exercised by any of the Named Executive Officers during the fiscal year ended June 30, 1996. The following table sets forth information regarding the number and value of unexercised stock options held by the Named Executive Officers at June 30, 1996: 8 11 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES (1) NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS AT FISCAL YEAR END(2) -------------------------------------- ----------------------------------------- NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - - - ---- --------------- ---------------- -------------- ---------------- Robert Mondavi - - - - R. Michael Mondavi 120,000 - $1,171,250 - Timothy J. Mondavi 85,000 - 1,035,625 - Gregory M. Evans 98,750 61,250 1,970,719 $1,265,906 Mitchell J. Clark 18,750 21,250 402,719 481,906 - - - -------------- (1) All options in this table relate to shares of Class A Common Stock. (2) Represents the fair value of the underlying securities at fiscal year-end ($31.50 per share based on the NASDAQ closing price) minus the exercise price. BOARD COMPENSATION Directors who are not employed by the Company are paid a $12,000 annual retainer, $1,000 for each Board meeting attended and $500 for each committee meeting attended. Non-employee directors are also reimbursed for expenses incurred in attending meetings. Prior to the Company's initial public offering in June 1993, Messrs. Greer, Farella and Rhoades were each granted options under the Company's 1993 Non-Employee Directors' Stock Option Plan to buy 12,000 shares of Class A Common Stock at $11.90 per share. The options are exercisable over a ten-year period beginning February 26, 1993, the date of grant, and vest at the rate of 1.667% per month over a period of five years. Pursuant to the Company's 1993 Non-Employee Directors' Stock Option Plan, any new non-employee Director of the Company is similarly entitled, on the date of his or her initial election, to a grant of options to acquire shares of Class A Common Stock. On joining the board on May 29, 1996, Mr. Barksdale was granted options to buy 5,345 shares of Class A Common Stock at $28.0625 per share. The Non-Employee Directors' Stock Option Plan also provides for additional annual grants to the outside directors of 3,000 options in 1994, 2,500 options in 1995 and 2,000 options each year thereafter. REPORT OF THE COMPENSATION COMMITTEE General The Compensation Committee of the Board of Directors administers the Company's executive compensation program. The Compensation Committee is composed entirely of directors who are not employees of the Company. The objective of the Company's executive compensation program is to develop and maintain executive reward programs which (i) contribute to the enhancement of shareholder value, (ii) are competitive with the pay practices of other industry-leading companies and (iii) attract, motivate and retain key executives who are critical to the long-term success of the Company. As discussed in detail below, the Company's executive compensation program consists of both fixed (base salary) and variable (incentive) compensation elements. Variable compensation consists of annual cash incentives, stock option grants under the Company's 1993 Equity Incentive Plan (the "1993 Equity Plan") and unit awards under the Company's Executive Incentive Compensation Plan (the "E.I.C.P."). These elements are designed to operate on an integrated basis and together comprise total compensation value. 9 12 The Compensation Committee reviews executive compensation in light of the Company's performance during the fiscal year and compensation data at companies that are considered comparable. In reviewing the Company's performance during fiscal 1996, the Compensation Committee considered a variety of factors. Net revenues increased by 20.7% to $240.8 million in fiscal 1996 from $199.5 million in fiscal 1995. At the same time net income increased by 37.1% to $24.4 million in fiscal 1996 from $17.8 million in fiscal 1995, and operating expenses as a percentage of net revenues were reduced. The Company also extended distribution of its new Robert Mondavi Coastal wines, initiated other product line extensions, pursued the expansion of the Woodbridge Winery and Napa Valley vineyard replantings, and embarked on important new joint venture opportunities in Chile and Italy. In reviewing Company performance, the Compensation Committee considered these factors as a whole without assigning specific weights to particular factors. Base Salary Base salary levels for the Company's executives are determined by the Compensation Committee based on factors such as individual performance (e.g. leadership, level of responsibility, management skills and industry activities), Company performance (as discussed above) and competitive pay practices. The base salary level for Mr. Robert Mondavi is established by his employment agreement described below. Base compensation for Michael Mondavi, the Company's Chief Executive Officer, was reviewed by the Compensation Committee in the context of compensation packages awarded to senior executive officers at comparable companies selected by an outside compensation consultant. The companies included in the comparison are not the same as the companies included in the peer group index in the performance graph included elsewhere herein. The Compensation Committee believes that the Company's most direct competitors for executive talent in the San Francisco Bay Area are not necessarily the same companies to which the Company would be compared for stock performance purposes. The Chief Executive Officer's base salary was reviewed against the 75th percentile of the comparative data. Annual Cash Incentives The annual cash incentive is designed to provide a short-term (one-year) incentive to executives, is based on the Company meeting certain predetermined levels of pre-tax operating income, and is allocated among the executives based on the Committee's assessment of the performance of each executive, following consultation with the Chief Executive Officer. In addition, cash incentive compensation may be granted by the Committee to certain executives based on their performance of individual goals established in advance by the Committee. These individual goals may include objective and subjective factors, such as leadership and management skills, successful acquisitions or financings and improved performance of assets. Annual cash incentives were awarded to the Named Executive Officers, as indicated in the above Summary Compensation Table, based on the Committee's evaluation of each Named Executive Officer's contribution to the Company's performance in fiscal 1996. Stock Options Stock options are designed to provide long-term (ten-year) incentives and rewards tied to the price of the Company's Class A Common Stock. Given the fluctuations of the stock market, stock price performance and financial performance are not always consistent. The Compensation Committee believes that stock options, which provide value to participants only when the Company's shareholders benefit from stock price appreciation, are an important component of the Company's executive compensation program. The Compensation Committee has not established any target level of ownership 10 13 of Company Class A Common Stock by the Company's executives. However, retention of shares of Company stock by executives is encouraged. Prior to the Company's initial public offering, the Compensation Committee established a pool of 1,835,294 stock options to be granted to senior executive officers as well as to other executives and key employees across the Company. Through the end of fiscal 1995 a total of 1,445,500 options were granted from that pool. On December 29, 1995 the Board of Directors, on recommendation of the Compensation Committee, awarded 70,000 options to Michael Mondavi and 35,000 options to Timothy Mondavi, exercisable at $27.625 per share. E.I.C.P. Like the 1993 Equity Plan, the E.I.C.P. is designed to provide long-term (five-year) incentives and rewards tied to Company performance. Under the E.I.C.P., the Compensation Committee may make annual awards of units to executive officers which earn a percentage of plan income based on the Company's pre-tax net income, as more fully described in footnote 12 to the Summary Compensation Table. The use of the E.I.C.P. as a regular element of compensation for executive officers was discontinued upon adoption of the 1993 Equity Plan and no awards were made during fiscal 1996. However, pursuant to the terms of the E.I.C.P., outstanding units will continue to accrue earnings in future years. The Summary Compensation Table shows under the caption "Payouts Long Term Incentive Plan" the cash payments made to the Named Executive Officers under the E.I.C.P. during fiscal 1996. While use of E.I.C.P. awards will no longer be a regular element of long-term compensation, the Compensation Committee believes that the E.I.C.P. has and continues to serve as a valuable long-term incentive for executive officers and as a strong and direct link between corporate performance and compensation. The foregoing report is given by the members of the Compensation Committee, namely: Frank E. Farella Philip Greer Bartlett R. Rhoades COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee of the Company's Board of Directors consists of Frank Farella, Philip Greer and Bartlett Rhoades. Mr. Farella is a partner in the law firm of Farella, Braun & Martel which provides certain legal services to the Company. The Company also buys wine grapes from Mr. Farella at market prices pursuant to a written agreement. The Company paid Mr. Farella $43,000 for grapes during the fiscal year ended June 30, 1996. Mr. Greer is the managing general partner of a series of investment partnerships that indirectly own minority interests in Arizona Beverage Distributing Co. ("Arizona Beverage"), which distributes the Company's wines in Arizona, and in Ben Arnold-Heritage Beverage Company ("Heritage"), which distributes the Company's wines in South Carolina. The Company sold a total of $7,725,000 of wine to Arizona Beverage and Heritage during the 1996 fiscal year. PERFORMANCE GRAPH The line graph below compares the cumulative total return to holders of the Company's Common Stock in the period from June 10, 1993 (the date the Company was admitted to trading on the NASDAQ National Market System) to June 30, 1996, with the cumulative total return in the same period on (i) the 11 14 NASDAQ Stock Market Index (U.S.) and (ii) a peer group index comprised of the following companies whose returns have been weighted based on market capitalization as of June 30, 1996: Chalone Wine Group, Ltd., Canandaigua Wine Inc., Adolph Coors Company, Anheuser-Busch Companies, Inc., Brown-Forman Corporation and Genesee Corporation. The graph assumes an investment of $100.00 on June 10, 1993 in the Company and in the two comparison indices. "Total return," for purposes of the graph, assumes reinvestment of all dividends. [GRAPH] The information contained in the performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Exchange Act"), except to the extent that the Company specifically incorporates it by reference into such filing. SECTION 16 REPORTS The Company's executive officers, directors and greater-than-ten-percent beneficial owners are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Copies of those reports must also be furnished to the Company. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that during fiscal 1996 all filing requirements applicable to the Company's officers, directors and greater-than-ten-percent beneficial owners under Section 16(a) of the Exchange Act were complied with. EMPLOYMENT AGREEMENT In February 1993, Robert Mondavi entered into an agreement with the Company which replaced his Personal Services Agreement executed in 1979. The current agreement provides for a fixed annual salary of up to $500,000. 12 15 CERTAIN TRANSACTIONS Clifford Adams, a director and former Executive Vice President of the Company, received an executive home loan from the Company in August 1987. The highest balance owed on the loan since the beginning of the Company's 1996 fiscal year was $174,000 with interest due at the annual rate of 8%. The loan was repaid in full in June 1996. The Company buys wine grapes from Frank Farella at market prices pursuant to a written agreement. Philip Greer is affiliated with a distributor of the Company's wine. See "Executive Compensation--Compensation Committee Interlocks and Insider Participation." It is the Company's current policy that all transactions by the Company with its officers, directors, 5% shareholders and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are on terms no less favorable to the Company than could be obtained from unaffiliated parties and are reasonably expected to benefit the Company. APPOINTMENT OF AUDITORS (PROPOSAL 2 ON PROXY) The firm of Price Waterhouse LLP has served as independent auditors for the Company since fiscal 1978 and has been appointed by the Audit Committee of the Board of Directors as the Company's independent auditors for the fiscal year 1997, subject to ratification by the shareholders at the Annual Meeting. Representatives of Price Waterhouse LLP are expected to be available at the annual meeting to respond to appropriate questions from shareholders and will have the opportunity to make a statement if they wish. RECOMMENDATION The Board of Directors recommends that shareholders vote FOR ratification of the appointment of Price Waterhouse LLP as the Company's independent auditors. OTHER MATTERS GENERAL The Board of Directors does not know of any business to be presented at the Annual Meeting other than the matters described above. If any other business should properly come before the meeting, it is the intention of the persons named in the proxies to vote in accordance with the recommendation of the Board of Directors. Discretionary authority for them to do so is contained in the proxy cards. DEADLINE FOR SHAREHOLDER PROPOSALS Any shareholder proposal intended for presentation at the 1997 Annual Meeting must be received by the Secretary of the Company at the Company's principal executive offices located at 7801 St. Helena Highway, Oakville, California 94562 by May 23, 1997 for inclusion in the Company's proxy materials related to that meeting. The Bylaws of the Company provide that in order for a shareholder to bring business before or propose director nominations at an Annual Meeting, the shareholder must give written notice to the 13 16 Secretary of the Company not less than sixty (60) days nor more than ninety (90) days prior to the date of the Annual Meeting. The notice must contain specified information about the proposed business or each nominee and about the shareholder making the proposal or nomination. In the event that less than 70 days' notice or prior public disclosure of the date of the Annual Meeting is given or made to shareholders, notice by the shareholder in order to be timely must be received no later than the close of business on the tenth day following the date on which such notice of the Annual Meeting date was mailed or public disclosure of the date of the Annual Meeting was made, whichever first occurs. By Order of the Board of Directors, /s/ Mike Beyer Mike Beyer Secretary September 20, 1996 14 17 PROXY THE ROBERT MONDAVI CORPORATION CLASS A COMMON STOCK PROXY FOR ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 4, 1996 The undersigned hereby appoints Gregory M. Evans and Michael K. Beyer, or either of them, each with the power of substitution, as proxies to represent the undersigned at the Annual Meeting of Shareholders of THE ROBERT MONDAVI CORPORATION to be held at the Robert Mondavi Winery, 7801 St. Helena Highway, Oakville, California on November 4, 1996 at 10:00 a.m., and any adjournment thereof, and to vote the number of shares of the CLASS A COMMON STOCK OF THE ROBERT MONDAVI CORPORATION that the undersigned would be entitled to vote if personally present. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE ROBERT MONDAVI CORPORATION. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION AND FOR THE RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE. In their discretion, the proxy holders are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities and Exchange Commission and by applicable state laws (including matters that the proxy holders do not know, a reasonable time before this solicitation, are to be presented). (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) - - - ------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 18 /X/ "PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" ELECTION OF DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK, VOTING AS A CLASS. / / FOR the nominees listed at right (except as marked to the contrary). / / WITHHOLD AUTHORITY to vote for the nominees listed at right. Nominees: Philip Greer, Frank E. Farella, James L. Barksdale _______________________________________________________________________________ PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR. / / FOR / / AGAINST / / ABSTAIN THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTORS AND FOR PROPOSAL 2 LISTED BELOW. / / I plan to attend the meeting. PROXY INSTRUCTIONS 1. Please sign exactly as the name or names appear on your stock certificates (as indicated hereon). 2. If the shares are issued in the name of two or more persons, all of them must sign the proxy. 3. A proxy executed by a corporation must be signed by its name by an authorized officer. 4. Executors, administrators, trustees and partners should indicate their capacity when signing. The undersigned acknowledges receipt of (a) the Notice of 1996 Annual Meeting of Shareholders, (b) the accompanying Proxy Statement and (c) Company's Annual Report pursuant to SEC Rule 14a-3 for the fiscal year ended June 30, 1996. Signature(s)__________________________________________________________________ Dated:_________________, 1996 - - - ------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 19 PROXY THE ROBERT MONDAVI CORPORATION CLASS A COMMON STOCK PROXY FOR ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 4, 1996 The undersigned hereby appoints Gregory M. Evans and Michael K. Beyer, or either of them, each with the power of substitution, as proxies to represent the undersigned at the Annual Meeting of Shareholders of THE ROBERT MONDAVI CORPORATION to be held at the Robert Mondavi Winery, 7801 St. Helena Highway, Oakville, California on November 4, 1996 at 10:00 a.m., and any adjournment thereof, and to vote the number of shares of the CLASS A COMMON STOCK OF THE ROBERT MONDAVI CORPORATION that the undesigned would be entitled to vote if personally present. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE ROBERT MONDAVI CORPORATION. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION AND FOR THE RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE. In their discretion, the proxy holders are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities and Exchange Commission and by applicable state laws (including matters that the proxy holders do not know, a reasonable time before this solicitation, are to be presented). THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTORS AND FOR PROPOSAL 2 LISTED BELOW. (continued and to be signed on reverse side) 20 (continued from other side) 1. ELECTION OF DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK, VOTING AS A CLASS / / FOR THE NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY). / / WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEES LISTED BELOW. NOMINEES: PHILLIP GREER, FRANK E. FARELLA, JAMES L. BARKSDALE. TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, WRITE SUCH NOMINEE'S NAME BELOW: 2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS FOR THE CURRENT FISCAL YEAR: / / FOR / / AGAINST / / ABSTAIN PROXY INSTRUCTIONS: 1. Please sign exactly as the name or names appear on your stock certificates (as indicated hereon). 2. If the shares are issued in the name of two or more persons, all of them must sign the proxy. 3. A proxy executed by a corporation must be signed by its name by an authorized officer. 4. Executors, administrators, trustees and partners should indicate their capacity when signing. The undersigned acknowledges receipt of (a) the Notice of 1996 Annual Meeting of Shareholders, (b) the accompanying Proxy Statement and (c) Company's Annual Report pursuant to SEC Rule 14a-3 for the fiscal year ended June 30, 1996. Dated , 1996 ----------------------------------- Signature ----------------------------------- Signature