SCHEDULE 14A INFORMATION
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Bob Evans Farms, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
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(1) Amount Previously Paid:
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(4) Date Filed:
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[BOB EVANS FARMS LOGO]
3776 S. HIGH ST.
COLUMBUS, OHIO 43207
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Monday, Sept. 9, 2002, at 9 a.m.
Southern Theatre
21 E. Main St.
Columbus, Ohio 43215
July 31, 2002
To Our Stockholders:
We are pleased to invite you to the annual meeting of stockholders of Bob Evans
Farms, Inc. on Monday, Sept. 9, 2002, 9 a.m., Eastern Daylight Time, at the
Southern Theatre at 21 E. Main St. in Columbus, Ohio. Business for the meeting
includes:
(1) to elect three directors to serve for terms of three years each,
(2) to consider and vote upon a company proposal to approve and adopt the
Bob Evans Farms, Inc. 2002 Incentive Growth Plan,
(3) to consider and vote upon a stockholder proposal to eliminate awards of
stock options, bonuses and restricted stock to top executives and
(4) to transact other business that may properly come before the meeting.
Juice, coffee and pastries will be available between 8 a.m. and 9 a.m. We hope
you will take this opportunity to become acquainted with the officers and
directors of your company.
Only stockholders of record at the close of business on July 12, 2002, will be
entitled to vote by proxy or in person at the annual meeting. We look forward to
seeing you at the meeting.
Sincerely,
/s/ Stewart K. Owens
Stewart K. Owens
Chairman of the Board and Chief
Executive Officer
BOB EVANS FARMS, INC.
3776 S. HIGH ST.
COLUMBUS, OHIO 43207
GENERAL INFORMATION
The board of directors of Bob Evans Farms, Inc. is soliciting your proxy in
connection with our 2002 annual meeting of stockholders. This proxy statement
summarizes information that you will need in order to vote.
MAILING
We began mailing this proxy statement and the enclosed proxy card on or about
July 31, 2002, to Bob Evans stockholders of record at the close of business on
July 12, 2002. We also are sending the Bob Evans Farms, Inc. 2002 annual report,
which includes financial statements for the fiscal year ended April 26, 2002.
MULTIPLE STOCKHOLDERS SHARING THE SAME ADDRESS
In December of 2000, the Securities and Exchange Commission ("SEC") adopted new
rules concerning the delivery of annual reports and proxy statements. The rules
permit companies and intermediaries (e.g., brokers) to deliver a single set of
these documents to any household at which two or more stockholders reside if the
company believes those stockholders are members of the same family or
otherwise share the same address. This process, which is commonly referred to as
"householding," reduces the volume of duplicative information stockholders
receive and reduces the company's printing and mailing expenses. Each
stockholder will continue to receive a separate proxy card.
In accordance with a notice sent earlier this year to eligible stockholders who
share the same address, the company and a number of brokers are sending only one
proxy statement and annual report to stockholders residing at the same address,
unless different instructions have been received from an affected stockholder.
The company will promptly deliver, upon written or oral request, a separate copy
of this proxy statement and/or the annual report to any stockholder residing at
an address to which only one copy was mailed. Requests for additional copies
should be directed to the Stock Transfer Department at Bob Evans Farms, Inc.,
3776 S. High Street, Columbus, Ohio 43207, or (614) 492-4952.
Stockholders residing at the same address and currently receiving only one copy
of the proxy statement and annual report may request that multiple copies of
these documents be delivered in the future by contacting their broker or the
company at the address or telephone number set forth above.
Stockholders residing at the same address who currently receive multiple copies
of the proxy statement and annual report may request that only a single copy of
these materials be mailed in the future by contacting their broker or the
company at the address or telephone number set forth above.
1
VOTING INFORMATION
WHO MAY VOTE?
Only stockholders of record at the close of business on July 12, 2002, are
entitled to vote at the annual meeting or any adjournment of the meeting. At the
close of business on July 12, 2002, there were 35,697,189 shares of common
stock, par value $.01 per share, outstanding.
HOW DO I VOTE?
Whether or not you plan to attend the annual meeting, we urge you to vote in
advance by proxy. To do so, you may:
- - call (800) 690-6903,
- - log onto www.proxyvote.com or
- - complete, sign and date the enclosed proxy card and return it promptly in
the envelope provided.
MAY I CHANGE MY VOTE?
Yes, you may revoke a proxy at any time before it is voted by any of the
following ways:
- - sending written notice to the secretary of the company at the address given
previously,
- - submitting a later-dated proxy which must be received by the company prior to
the annual meeting,
- - casting a new vote via the Internet or by calling (800) 690-6903 or
- - attending the annual meeting and giving notice of such revocation in person.
Simply attending the annual meeting will not constitute revocation of a proxy.
WHO PAYS THE COST OF PROXY SOLICITATION?
The company will pay the expenses of soliciting proxies. Officers and employees
of the company may solicit proxies by further mailings, by telephone or by
personal contact without receiving any additional compensation for such
solicitations. Also, we may hire Morrow & Co., Inc., an independent solicitation
firm, to help us solicit proxies. The company would pay Morrow & Co. $7,500 for
this service. The company will also pay the standard charges and expenses of
brokerage houses, voting trustees, banks, associations and other custodians,
nominees and fiduciaries for forwarding proxy materials to the beneficial
stockholders.
WHAT CONSTITUTES A QUORUM?
Under our by-laws, a quorum is a majority of the voting power of the outstanding
shares of stock entitled to vote. Each common share entitles the holder to one
vote per each item to be voted upon at the annual meeting.
Common shares that have the authority to vote withheld will be counted for
quorum purposes, but will not be counted toward the election of directors or
toward the election of the individual nominees specified on the proxy card.
WHAT IF I DON'T VOTE FOR SOME OF THE MATTERS LISTED ON MY PROXY CARD?
If you return a proxy card without indicating your vote, your shares will be
voted for the nominees listed on the card, for approval of the Bob Evans Farms,
Inc. 2002 Incentive Growth Plan and against the stockholder proposal.
CAN I ABSTAIN?
Yes. Boxes and a designated blank space are provided on the proxy card for
stockholders to mark if they wish to abstain from voting on the Bob Evans Farms,
Inc. 2002 Incentive Growth Plan or the stockholder proposal or to withhold
authority to vote for one or more nominees for election as a director of the
company.
HOW ARE ABSTENTIONS COUNTED?
Abstentions are counted as present for quorum purposes. A vote to abstain on any
matter will be the same as a "no" vote.
WHAT IF MY SHARES ARE HELD IN STREET NAME THROUGH A BROKER?
If you do not furnish voting instructions to the broker/dealer who holds your
common shares, the broker/dealer may sign and submit a proxy for those common
shares and may vote those common shares on routine matters, including the
election of directors. The broker/dealer may not vote your common shares on the
proposal to adopt the Bob Evans Farms, Inc. 2002 Incentive Growth Plan or the
stockholder proposal without specific instructions from you.
2
Proxies signed and submitted to the company by broker/dealers which have not
been voted on certain matters are referred to as broker non-votes. Broker
non-votes will be counted toward the establishment of a quorum. However, broker
non-votes and votes withheld will not be counted toward the election of
directors or toward the election of individual nominees named in the form of
proxy. As to all other proposals to be voted upon at the annual meeting, a
broker non-vote will not be considered as a vote entitled to be cast.
STOCK OWNERSHIP
The following table shows the only stockholder known to the company to be the
beneficial owner of more than five percent of the company's outstanding common
shares.
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- -------------------------------------------------------------------------------
Ariel Capital Management, Inc. 5,435,799(2) 15%
307 N. Michigan Ave.
Chicago, Ill. 60601
(1) The percent of class is based upon 35,697,189 common shares outstanding
on July 12, 2002.
(2) This number is based on information contained in correspondence
received by the company from Ariel Capital Management, Inc. as reported
May 31, 2002. Ariel Capital Management, Inc. is a registered investment
adviser and all of these common shares are owned by its investment
advisory clients. John W. Rogers Jr., chairman, chief executive
officer and principal shareholder of Ariel, has disclaimed beneficial
ownership of the common shares held by Ariel.
The following table summarizes the company's common shares beneficially owned by
each director and each executive officer named in the summary compensation table
(page 12) and by all directors and executive officers of the company as a group,
as of July 12, 2002:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
--------------------------------------------
COMMON SHARES WHICH
CAN BE ACQUIRED
UPON EXERCISE OF
NAME OF BENEFICIAL COMMON SHARES OPTIONS EXERCISABLE PERCENT OF
OWNER OR GROUP PRESENTLY HELD WITHIN 60 DAYS TOTAL CLASS(2)
- ---------------------------------------------------------------------------------------------
Howard J. Berrey(3) 20,029 0 20,029 (4)
Larry C. Corbin(3) 40,939 80,369 121,308 (4)
Daniel E. Evans 192,161(5) 266,946 459,107 1.3%
Daniel A. Fronk 21,676(6) 6,742 28,418 (4)
Michael J. Gasser 6,769 6,742 13,511 (4)
E.W. (Bill) Ingram III 7,369 11,875 19,244 (4)
Cheryl L. Krueger-Horn 4,686 6,742 11,428 (4)
G. Robert Lucas 8,616(7) 6,742 15,358 (4)
Stewart K. Owens(3) 212,124 262,361 474,485 1.3%
Robert E.H. Rabold 5,382 6,742 12,124 (4)
Donald J. Radkoski(3) 13,864(8) 39,975 53,839 (4)
Roger D. Williams(3) 18,470 42,651 61,121 (4)
All directors and
executive officers
as a group
(14 persons) 561,149 737,887 1,299,036 3.6%
3
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to all of the common shares reflected in the
table. All fractional common shares have been rounded to the nearest whole
common share.
(2) The percent of class is based on 35,697,189 common shares outstanding on
July 12, 2002, and includes the number of common shares that the named
person has the right to acquire beneficial ownership of upon the exercise
of stock options exercisable within 60 days of July 12, 2002.
(3) Executive officer of the company named in the summary compensation table.
(4) Represents ownership of less than 1 percent of the outstanding common
shares of the company.
(5) Includes 37,226 common shares held by Evans Enterprises, Inc. In his
capacity as chairman, chief executive officer and sole shareholder of Evans
Enterprises, Inc., Mr. Evans may be deemed to have sole voting and
investment power with respect to the common shares held by that
corporation. Also includes 200 shares held by his stepchildren.
(6) Includes 5,133 common shares held in the Josephine A. Fronk Trust for which
Mr. Fronk serves as trustee and exercises sole voting and investment power.
(7) Includes 3,652 common shares held by Mr. Lucas in a KEOGH plan for the
benefit of Mr. Lucas.
(8) Includes 21 common shares held by Mr. Radkoski as custodian for the benefit
of his son and 14 common shares held by Mr. Radkoski as custodian for the
benefit of his daughter.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The company's directors, executive officers and any persons holding more than 10
percent of the company's outstanding common shares are required to report
their initial ownership of common shares and any subsequent changes in their
ownership to the SEC. Specific due dates have been established by the SEC, and
the company is required to disclose in this proxy statement any failure to file
by those dates. Based on its review of (1) Section 16(a) reports filed on behalf
of these individuals for their transactions during the company's 2002 fiscal
year and (2) documentation received from one or more of these individuals that
no annual Form 5 reports were required to be filed for them for the company's
2002 fiscal year, the company believes that all SEC filing requirements were
met, except for those listed below.
Larry C. Corbin, a director and an executive officer of the company, failed to
timely file a Form 4 for April 2002 reporting 19 transactions related to
stock-for-stock option exercises. Mary L. Cusick, an executive officer of the
company, failed to timely file a Form 4 for April 2002 reporting two
transactions related to a stock-for-stock option exercise. Daniel E. Evans, a
director of the company, failed to timely report on a Form 5 the receipt of 974
of the company's common shares as director fees for the 2002 fiscal year, the
disposition of 4,850 of the company's common shares through gifts to 20
different recipients, and the acquisition of 50 of the company's common shares
as a gift. Daniel A. Fronk, a director of the company, failed to timely report
on a Form 5 the receipt of 974 of the company's common shares as director fees
for the 2002 fiscal year. Michael J. Gasser, a director of the company, failed
to timely file a Form 4 for April 2002 reporting two transactions related to a
stock-for-stock option exercise. Mr. Gasser also failed to timely report on a
Form 5 the receipt of 974 of the company's common shares as director fees for
the 2002 fiscal year. E.W. (Bill) Ingram III, a director of the company, failed
to timely report on a Form 5 the receipt of 974 of the company's common shares
as director fees for the 2002 fiscal year. Cheryl L. Krueger-Horn, a director of
the company, failed to timely report on a Form 5 the receipt of 974 of the
company's common shares as director fees for the 2002 fiscal year. G. Robert
Lucas, a director of the company, failed to timely report on a Form 5 the
receipt of 974 of the company's common shares and a single non-qualified stock
option grant for 2,669 of the company's common shares as director fees for the
2002 fiscal year. Robert E.H. Rabold, a director of the company, failed to
timely report on a Form 5 the
4
receipt of 974 of the company's common shares as director fees for the 2002
fiscal year. Donald J. Radkoski, an executive officer of the company, failed to
timely file a Form 4 for April 2002 reporting two transactions related to a
stock-for-stock option exercise.
All transactions that were not timely reported on Forms 4 were subsequently
reported on Forms 5 and all transactions that were not timely reported on Forms
5 were subsequently reported on amended Forms 5.
ELECTION OF DIRECTORS
There are currently nine members of the board of directors. Based on the bylaws
of the company, the directors have been divided into three classes of three
directors each. Class I directors currently serve until the annual meeting in
2002, class II directors currently serve until the annual meeting in 2003, and
class III directors currently serve until the annual meeting in 2004. At the
annual meeting, three class I directors will be elected for three-year terms.
Based on the recommendation of the nominating committee, the board of directors
has designated Daniel A. Fronk, Cheryl L. Krueger-Horn and G. Robert Lucas as
nominees for election as class I directors of the company for terms expiring in
2005. The common shares represented by the enclosed proxy will be voted as
specified, or if no instructions are given, for the board's nominees. The board
of directors believes that all of the nominees will be available and able to
serve if elected to the board. However, if a nominee is unavailable for
election, the persons designated as management proxies will have complete
discretion to vote for the remaining nominees, as well as any substitute
nominee(s) proposed by the board of directors.
Under Delaware law and the company's bylaws, the three nominees for election as
class I directors receiving the greatest number of votes will be elected as
class I directors.
The following table shows the nominees for election to the board of directors,
the directors of the company whose terms in office will continue after the
annual meeting and information about each nominee and continuing director.
Unless otherwise indicated, each person has held his or her principal occupation
for more than five years.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ELECTION OF ALL NOMINEES LISTED BELOW.
NAME, AGE, POSITION(S) WITH THE COMPANY PRINCIPAL OCCUPATION FOR PAST
AND YEAR BECAME DIRECTOR; FIVE YEARS AND OTHER INFORMATION
- --------------------------------------- ----------------------------------
NOMINEES - TERMS TO EXPIRE IN 2005 (CLASS I)
Daniel A. Fronk, age 66; Retired Senior Executive Vice President and Board
Director since 1981. Member since 1997 of The Ohio Company, an
investment banking firm, Columbus, Ohio.
Cheryl L. Krueger-Horn, age 50; President and Chief Executive Officer since 1986
Director since 1993. of Cheryl & Co. Inc., a manufacturer and retailer of
gourmet foods and gifts, Columbus, Ohio.
G. Robert Lucas, age 58; Of Counsel Attorney since 2001 of Vorys, Sater,
Director since 1986. Seymour and Pease LLP, Attorneys at Law,
Columbus, Ohio; Executive Vice President,
General Counsel and Secretary from 1997 to
2001 of The Scotts Company, a manufacturer
of lawn and garden products, Marysville,
Ohio.
5
CONTINUING DIRECTORS - TERMS TO EXPIRE IN 2003 (Class II)
Larry C. Corbin, age 60; Executive Vice President of Restaurant Division of
Executive Vice President of the company since 1995.
Restaurant Division;
Director since 1981.
Stewart K. Owens, age 47; Chairman of the Board, Chief Executive Officer,
Chairman of the Board, Chief President and Chief Operating Officer since 2001;
Executive Officer, President, Chief Executive Officer, President and Chief
and Chief Operating Officer; Operating Officer from 2000 to 2001; President
Director since 1987. and Chief Operating Officer from 1995 to 2000; in
each case of the company.
Robert E.H. Rabold, age 63; Retired Chairman since 2001; Chairman of the
Director since 1994. Board and Chief Executive Officer from 1988 to 2001;
President from 1986 to 2000; in each case of The
Motorists Mutual Insurance Co., Columbus, Ohio.
<Caption>
CONTINUING DIRECTORS - TERMS TO EXPIRE IN 2004 (CLASS III)
Daniel E. Evans, age 65; Retired Chairman since 2001; Chairman of the
Director since 1957. Board from 2000 to 2001; Chairman of the Board, Chief
Executive Officer and Secretary from 1971 to
2000; in each case of the company.
Michael J. Gasser, age 51; Chairman of the Board and Chief Executive
Director since 1997. Officer since 1994 of Greif Bros.
Corporation, a manufacturer of shipping
containers and container board, Delaware,
Ohio.
E.W. (Bill) Ingram III, age 51; President and Chief Executive Officer since
Director since 1998. 1972 of White Castle System, Inc., a quick-service
hamburger chain, Columbus, Ohio.
Daniel E. Evans, a director of The Sherwin-Williams Company and National City
Corporation, and Michael J. Gasser, a director of Greif Bros. Corporation, are
the only directors of the company who are also directors of another company with
a class of securities registered pursuant to the Exchange Act or which is
otherwise subject to the reporting requirements of the Exchange Act, or any
company registered as an investment company under the Investment Company Act of
1940.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the 2002 fiscal year, the company purchased a piece of real property in
Brookpark, Ohio, from Hall of Fame Developers Ohio GP, a general partnership in
which Howard Berrey, an executive officer of the company at that time, is a
general partner, for a purchase price of $675,000. The company acquired the
property in the ordinary course of business for the purpose of constructing a
restaurant. In the opinion of the company, the terms of the acquisition were no
less favorable than the company and its subsidiaries could have obtained in a
comparable transaction from an unrelated third party.
Vorys, Sater, Seymour and Pease LLPis general counsel to the company. It
rendered legal services to the company during the 2002 fiscal year and
continues to do so. G. Robert Lucas, a director of the company, was a partner of
Vorys, Sater, Seymour and Pease LLP until 1997 and returned to the firm as an of
counsel attorney in October 2001.
6
THE BOARD AND COMMITTEES OF THE BOARD
The board of directors of the company held four meetings during the 2002 fiscal
year. During this time, all of the directors attended at least 75 percent of the
total number of board meetings and the total number of meetings held by the
board committees on which he or she served.
The company's board of directors has standing audit, compensation and nominating
committees. The following table indicates the directors who currently serve on
these committees and the number of committee meetings held during fiscal 2002.
Mr. Ingram replaced Mr. Lucas as a member of the compensation committee on May
7, 2002.
AUDIT COMPENSATION NOMINATING
NAME COMMITTEE COMMITTEE COMMITTEE
- -------------------------------------------------------------------------------
Larry C. Corbin
- -------------------------------------------------------------------------------
Daniel E. Evans
- -------------------------------------------------------------------------------
Daniel A. Fronk* - - -
- -------------------------------------------------------------------------------
Michael J. Gasser* C -
- -------------------------------------------------------------------------------
E.W. (Bill) Ingram III* - -
- -------------------------------------------------------------------------------
Cheryl L. Krueger-Horn* - C
- -------------------------------------------------------------------------------
G. Robert Lucas* -
- -------------------------------------------------------------------------------
Stewart K. Owens -
- -------------------------------------------------------------------------------
Robert E.H. Rabold* - C
- -------------------------------------------------------------------------------
Number of committee meetings
held during fiscal 2002 3 4 1
- -------------------------------------------------------------------------------
* Independent director. Robert E.H. Rabold serves as the lead independent
director.
C committee chairperson
- - committee member
NOMINATING COMMITTEE
The nominating committee identifies and recommends to the board of directors
nominees for election or re-election to the board of directors of the company.
According to the company's bylaws, nominations of persons for election to the
board of directors may be made at a meeting of stockholders by the board of
directors of the company or by any stockholder of the company who:
- - is a stockholder of record as of the record date for the meeting of
stockholders,
- - is entitled to vote for the election of directors at such meeting and
- - complies with the notice procedures below.
Stockholder nominations must be received at the Bob Evans Farms, Inc. corporate
office not less than 60 nor more than 90 days prior to the applicable
stockholders' meeting. However, if less than 70 days' notice or prior public
disclosure of the date of the stockholders' meeting is given to stockholders, a
nomination by the stockholder must be received by the company no later than the
close of business on the 10th day following when the notice or prior public
disclosure of the stockholders' meeting was given.
A stockholder's notice must include:
- - information about each person whom the stockholder wants to nominate as
required by Regulation 14Aunder the Exchange Act, which includes the
person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected,
- - the name and address, as they appear on the company's books, of the
stockholder giving the notice and
- - the class and number of common shares of the company which are
beneficially owned by the stockholder giving the notice.
Only director nominations that meet the requirements of section 3.04 of article
III of the company's bylaws will be valid.
7
REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
The board of directors and the audit committee, which is composed of five
outside directors, believe that the audit committee's current member
composition satisfies the rule of the National Association of Securities Dealers
(NASD) that governs audit committee composition, including the requirement that
audit committee members all be "independent directors" as that term is defined
by NASD Rule 4200(a)(15).
In accordance with its written charter adopted by the board of directors, the
audit committee assists the board of directors with fulfilling its oversight
responsibilities regarding the quality and integrity of the accounting, auditing
and financial reporting practices of Bob Evans Farms, Inc. The committee
reviewed the audited financial statements in the fiscal 2002 annual report with
management including a discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgements and the
clarity of disclosures in the financial statements.
The committee reviewed with the independent auditors (who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles) their judgements as to the
quality, not just the acceptability, of the company's accounting principles and
such other matters as are required to be discussed with the committee under
generally accepted auditing standards (including Statement on Auditing Standards
No. 61). In addition, the committee has discussed with the independent auditors
the auditors' independence from management and the company, including the
matters in the written disclosures required by the Independence Standards Board
(including Independence Standards Board Standard No. 1) and considered the
compatibility of non-audit services with the auditors' independence.
The committee discussed with the company's internal and independent auditors the
overall scope and plans for their respective audits. The committee met with the
internal and independent auditors, with and without management present, to
discuss:
- - the results of their examinations,
- - their evaluations of the company's internal controls and
- - the overall quality of the company's financial reporting.
AUDIT AND RELATED FEES
Audit Fees: The fees billed by Ernst & Young LLP, the company's independent
auditors, for professional services for the audit of the company's annual
consolidated financial statements for the 2002 fiscal year and the review of the
consolidated financial statements included in the company's quarterly reports
on Form 10-Q for the 2002 fiscal year were $137,600.
Financial Information Systems Design and Implementation Fees: There were no fees
billed by Ernst & Young LLP to the company for financial information systems
design and implementation for the 2002 fiscal year.
All Other Fees: All other Ernst & Young LLP fees totaled $250,400 in fiscal
2002. This included $40,400 for audit-related services and $210,000 for
non-audit-related services. Audit-related services were employee benefit plan
audits and accounting consultations. Non-audit-related services were tax
compliance and tax consulting services. The audit committee determined that the
provision of these other services was compatible with maintaining Ernst & Young
LLP's independence.
In reliance on the reviews and discussions referred to above, the committee
recommended to the board of directors (and the board has approved) that the
audited financial statements be included in the annual report on Form 10-K for
the fiscal year ended April 26, 2002, for filing with the SEC. The committee
and board have also approved the selection of Ernst & Young LLP as the company's
independent auditors for the 2003 fiscal year.
Submitted by: Audit Committee Members
Michael J. Gasser (chairperson), Daniel A. Fronk, E.W. (Bill) Ingram III, G.
Robert Lucas and Robert E.H. Rabold
8
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors (for purposes of this
report, the "committee") has the responsibility of recommending to the board
appropriate salaries, annual bonuses and other compensation for the executive
officers of the company. The committee, composed entirely of outside
directors, also administers the company's stock option and other long-term
incentive plans.
COMPENSATION PHILOSOPHY
The company has identified several key principles upon which compensation
practices are based. These principles are as follows:
- - Compensation practices should enhance the company's financial
performance by aligning the financial interests of the company's
executive officers with those of the stockholders.
- - Financial rewards should be based on both corporate and individual
performance.
- - A majority of the executive officers' compensation should be "at risk."
By tying a majority of the executives' compensation to the company's
financial results, Bob Evans achieves a greater degree of "pay for
performance."
- - Stock-based compensation should form a significant portion of the
at-risk compensation, ensuring that significant awards are received by
executive officers only when stockholder value is created.
- - Compensation levels are set at competitive levels in the marketplace in
order to attract and retain key executives. Generally, the company
considers pay levels in relation to those in a peer group of companies
in the restaurant and food products businesses.
BASE SALARY
Salaries are targeted to be competitive with those paid to individuals in
similar positions at other companies in the company's peer group. In June
2001, the committee met to review the base salaries of the company's executive
officers. As a result of this meeting, the committee recommended to the board of
directors that the company increase the base salaries of the executive officers
named in the summary compensation table, except Mr. Berrey whose compensation
and benefits were governed by a separate agreement with the company which
expired on July 1, 2002. This recommendation was based upon the committee's
assessment of the individual performance of the respective executive officer,
the performance of the company and comparative data of peer group companies
relating to executive compensation.
BONUSES
The company's overall philosophy with respect to the granting of bonus awards to
executive officers is that a significant portion of each executive officer's
total compensation should be based on:
- - individual performance, including the performance of the individual's
business unit, where appropriate, and
- - the company's overall performance.
At the beginning of the 2002 fiscal year, individual performance goals were
established for each executive officer, including in some cases, but not limited
to, business unit financial results, department budget goals, special project
goals and personnel management goals. In addition, goals relating to overall
company performance, including net income and earnings per share, were also
established. At the end of fiscal 2002, each executive officer (except Mr.
Berrey) was evaluated based upon his or her individual performance goals for the
year, as well as the goals relating to overall company and business unit
performance. Based on these evaluations, initial bonus levels were established
for each executive officer and reviewed by management. Management's
recommendations were then reviewed by the committee, which made
recommendations to the board of directors.
For fiscal 2002, excluding the impact of a gain on a divestiture and disposal of
assets, the company's diluted earnings per share increased 27.8 percent, while
net income increased 28.7 percent over the previous fiscal year, primarily due
to improved operating margins in the restaurant division. This overall
performance was significantly above the targets set by the committee for the
2002 fiscal year. Due to these financial results, and in consideration of the
individual performance of each executive officer, bonuses were awarded that
ranged from 100 percent to 208 percent of the target awards for the executive
officers.
9
CHAIRMAN AND CHIEF EXECUTIVE OFFICER COMPENSATION
As of April 28, 2001, Stewart Owens assumed the role of chairman of the board,
along with his position as chief executive officer, president and chief
operating officer. As a result of this promotion, the committee voted to
increase Mr. Owens' salary to $482,300 for fiscal 2002. This amount is
consistent with the lower end of the competitive range for other chief executive
officers in the peer group. Future salary increases are subject to the review
and discretion of the board.
For fiscal 2002, the committee reviewed the performance of Mr. Owens relative to
the goals established at the start of the fiscal year. The company's record
financial results, along with an increase in Bob Evans' stock price of
approximately 57 percent over the 2001 fiscal year, were well above the average
results of the industry. As a result, the committee voted to award Mr. Owens a
bonus of $601,910 for the 2002 fiscal year. The committee also granted Mr. Owens
options in fiscal 2002 to purchase 174,000 common shares, as a reward for
performance and as an incentive for continuing to increase stockholder value.
The total value of these actions results in a substantial portion of at-risk
compensation for Mr. Owens, consistent with the committee's philosophy.
LONG-TERM INCENTIVES
In addition to the salary and bonus compensation outlined above, the company
maintains plans which provide executive officers with additional compensation,
including stock options. These plans are briefly described below. Awards under
these plans are made under the supervision of the committee and in accordance
with the criteria described below.
Stock options are the company's primary long-term incentive vehicle. The company
has from time to time implemented various stock option plans for the purpose of
providing employees and directors long-term incentive based compensation.
Under the Bob Evans Farms, Inc. First Amended and Restated 1998 Stock Option and
Incentive Plan (the "1998 Stock Option Plan"), the committee may grant incentive
stock options ("ISOs") to executive officers and other employees. Also, under
the 1998 Stock Option Plan, the committee may grant nonqualified stock options
("NQSOs") to executive officers, other employees and directors. All options
are granted with an exercise price equal to the fair market value of the
company's common shares on the date of grant. If there is no appreciation in the
market value of the company's common shares, the ISOs and NQSOs are valueless.
On June 11, 2001, the committee approved the grant of ISOs to certain key
employees, including the five executive officers named in the summary
compensation table. During the 2002 fiscal year, the company also issued NQSOs
to directors and to the five executive officers named in the summary
compensation table. The option grant table included in this proxy statement
provides information with respect to the options granted to the five executive
officers named in the summary compensation table.
The committee authorized a comprehensive review of the existing compensation
program by an independent consultant in 1999 and again in 2001. These
independent executive compensation analyses revealed that long-term incentive
award opportunities were significantly lacking at Bob Evans Farms compared to
market practices. Stock options play a crucial role in the retention of top
executive talent and in the creation of stockholder/management alignment.
Accordingly, increases were made to the option grant levels for fiscal 2001 and
2002, and the committee has recommended an increase in grant levels in order
to bring the executive officers' long-term incentive opportunity to par with
those prevailing in the marketplace.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The company maintains a supplemental executive retirement plan which we refer to
as the "SERP." The SERP is a "top hat" plan under Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and is not
intended to qualify under section 401(a) of the Internal Revenue Code of 1986,
as amended (the "code"). The SERP is a defined contribution plan designed to
supplement, through annual company contributions, the retirement benefits of its
participants. Employees of the company and its subsidiaries are eligible to
participate in the SERP only to the extent, and for the period, that they are
members of a select group of management or highly compensated employees, as this
group is described under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
Participation in the SERP is at the discretion of the committee.
10
Under the SERP, an annual company contribution is determined, based upon an
actuarially determined "target" benefit for each participant. Generally, this
target benefit is equal to:
- - 55 percent of a participant's average compensation over the
five-consecutive-year period (in the last 10 years of employment prior
to age 62) during which such compensation is the highest
-- less the participant's benefit under the company's qualified
retirement plan derived from company contributions and
-- less 50 percent of the participant's projected Social Security
benefit.
Each year, upon determination of the company's contribution, a participant in
the SERP may elect to have the amount of such contribution allocated to an
account, in his or her name, under the SERP or the participant may elect to
receive NQSOs equal in value to the amount of such contribution. If the
participant elects to receive NQSOs in lieu of an allocation to his or her
account under the SERP, no portion of such contribution shall be credited to any
account on behalf of such participant under the SERP. Generally, a participant
in the SERP is entitled to receive a distribution of his or her account upon
early retirement (age 55 and 10 or more years of service), normal retirement
(age 62), or total and permanent disability (as determined by the company). In
addition, in the event of a participant's death while employed by the company,
the participant's beneficiary will be entitled to a distribution of such
account.
BOB EVANS FARMS, INC. AND AFFILIATES 401(K) RETIREMENT PLAN
Each of the company's executive officers participates in the Bob Evans Farms,
Inc. and Affiliates 401(k) Retirement Plan (the "401(k) plan"), the company's
qualified retirement plan. Following the conclusion of calendar year 2001, the
board of directors voted to contribute $3,958,878 to the 401(k) plan. Each
participant in the 401(k) plan received a pro rata share of this contribution
and a pro rata share of forfeitures reallocated to participants (such pro rata
share, in each case, based upon such participant's eligible compensation). In
cases where participants made deferrals to the 401(k) plan, the company
contributed $0.50 for each $1.00 of deferrals (subject to a limitation of 6
percent of total compensation of each participant making voluntary
contributions). Each executive officer had the option of contributing up to 4
percent of his or her compensation (up to a maximum contribution of $6,800) to
the 401(k) plan.
EXECUTIVE DEFERRAL PROGRAM
The company maintains an executive deferral program (the "Executive Deferral
Program"), which is a "top hat" plan under Title I of ERISA and is not intended
to qualify under section 401(a) of the code. The Executive Deferral Program is a
defined contribution plan designed primarily to allow its participants to defer
a portion of their current compensation in excess of the maximum amount
permitted under the applicable provisions of the code with respect to the
company's 401(k) plan. Employees of the company and its subsidiaries are
eligible to participate in the Executive Deferral Program only to the extent,
and for the period, that they are members of a select group of management or
highly compensated employees, as this group is described under sections 201(2),
301(a)(3) and 401(a)(1) of ERISA. Participation in the Executive Deferral
Program is at the discretion of the committee.
Under the terms of the Executive Deferral Program, a participant may elect to
defer up to 25 percent of his or her current compensation otherwise payable
during the year by the company and up to 100 percent of his or her bonus. The
amount deferred will be credited to an account established on the participant's
behalf under the Executive Deferral Program. Also, the company will credit an
additional amount to the participants' accounts. This amount is based on par-
ticipants' deferrals and is the same as the rate of the company's contribution
to the 401(k) plan. Generally, a participant will be eligible to receive a
distribution of his or her account at termination of employment or at an earlier
date specified by the participant. In addition, in the event of a participant's
death while employed by the company, the participant's beneficiary will be
entitled to a distribution of such account.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the code places certain restrictions on the amount of
compensation in excess of $1,000,000 which may be deducted for each executive
officer of the company. It is the committee's policy to continually review its
compensation plans and to take steps to ensure that compensation paid to its
executive officers is deductible by the company. For fiscal 2002, Mr. Owens'
compensation exceeded $1,000,000. The board of directors and the committee are
requesting stockholder approval to adopt the Bob Evans Farms, Inc. 2002
Incentive Growth Plan, which would ensure deductibility of compensation
exceeding $1,000,000.
11
CONCLUSION
The committee believes that the compensation program outlined in this report and
the compensation paid to the executive officers is consistent with the goals and
objectives of the company.
Submitted by: Compensation Committee Members
Robert E.H. Rabold (chairperson), Daniel A. Fronk, Cheryl L. Krueger-Horn and G.
Robert Lucas*
* Mr. Lucas' name appears beneath this report because he served on the
compensation committee during the 2002 fiscal year. Mr. Ingram replaced Mr.
Lucas as a member of the compensation committee on May 7, 2002.
COMPENSATION COMMITTEE INTER LOCKS AND INSIDER PARTICIPATION
Vorys, Sater, Seymour and Pease LLPis general counsel to the company. It
rendered legal services to the company during the 2002 fiscal year and continues
to do so. G. Robert Lucas, a director of the company, was a partner of Vorys,
Sater, Seymour and Pease LLP until 1997 and returned to the firm as an of
counsel attorney in October 2001. Mr. Lucas served on the company's compensation
committee until May 7, 2002.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary of Cash and Certain Other Compensation The following table summarizes,
for the past three fiscal years, annual and long-term compensation for the
company's chief executive officer and the four other most highly compensated
executive officers ("named executive officers") of the company.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- -------------------------------
NAME AND SECURITIES
PRINCIPAL FISCAL SALARY UNDERLYING ALL OTHER
POSITION YEAR (1) BONUS OPTIONS COMPENSATION
- ---------------------------------------------------------------------------------------------------------
Stewart K. Owens: 2002 $496,700 $601,910 174,000(2) $243,700(3)
Chairman of the Board, 2001 $470,400 $207,708 145,477 $ 5,654
Chief Executive Officer, 2000 $389,225 $ 85,247 79,076 $ 47,627
President and Chief
Operating Officer
Larry C. Corbin: 2002 $335,917 $321,357 94,000(2) $108,870(3)
Executive Vice 2001 $323,550 $102,706 87,238 $ 93,037
President of 2000 $311,660 $113,488 56,576 $ 94,044
Restaurant Division
Roger D. Williams: 2002 $307,316 $206,055 79,000(2) $ 52,595(3)
Executive Vice 2001 $295,500 $104,623 76,406 $ 7,017
President of 2000 $284,131 $ 42,603 43,750 $ 40,913
Food Products
Division
Donald J. Radkoski: 2002 $283,475 $255,128 60,678(2) $ 58,918(3)
Chief Financial 2001 $267,430 $ 97,344 51,808 $ 7,210
Officer, Treasurer 2000 $257,143 $ 76,217 31,431 $ 15,103
and Secretary
Howard J. Berrey: 2002 $163,834 $ 52,289 38,848(2) $ 8,808(3)
Group Vice 2001 $242,400 $ 88,816 53,919 $ 7,178
President of Real 2000 $228,273 $ 95,737 28,986 $ 68,195
Estate and Construction
12
(1) "Salary" includes directors' fees received by both Messrs. Owens and Corbin
during the 2002, 2001 and 2000 fiscal years in the amounts of $14,400 each
year except for $15,400 received by Mr. Owens in 2001.
(2) See the table under "Grants of Options."
(3) Includes company contributions to the 401(k) plan for each of the executive
officers listed during the 2002 fiscal year in the amount of $3,400. Also,
includes amounts related to deferred compensation programs for Messrs.
Owens, Corbin, Williams, Radkoski and Berrey during the 2002 fiscal year of
$240,300; $105,470; $49,195; $55,518; and $5,408, respectively.
GRANTS OF OPTIONS
The following table sets forth information concerning individual grants of ISOs
and NQSOs made during the 2002 fiscal year to each of the named executive
officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL
----------------------------------------------------- REALIZABLE VALUE AT
NUMBER OF % OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISE MARKET EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR PRICE($/SH) PRICE($/SH) DATE 0% 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------------
Stewart K. Owens 174,000(1) 19.1% 17.46 17.46 6/6/11 -- 1,910,607 4,841,853
Larry C. Corbin 94,000(1) 10.3% 17.46 17.46 6/6/11 -- 1,032,167 2,615,714
Roger D. Williams 79,000(1) 8.7% 17.46 17.46 6/6/11 -- 867,460 2,198,312
Donald J. Radkoski 59,000(1) 6.7% 17.46 17.46 6/6/11 -- 647,850 1,641,778
1,678(3) 9.50 19.00 4/24/25 15,941 86,799 297,597
Howard J. Berrey 30,000(1) 4.3% 17.46 17.46 6/6/11 -- 329,415 834,802
8,848(3) 9.50 19.00 11/13/11 84,056 197,088 375,001
(1) The options consist of both ISOs and NQSOs, which were granted under the
1998 Stock Option and Incentive Plan on June 6, 2001, and become exercisable
in three equal annual installments beginning one year from the date of
grant. Upon a change in control (as defined in the plan) of the company,
these ISOs and NQSOs will become fully exercisable as of the date of the
change in control.
- If a participant's employment or service as a director is terminated for
any reason other than disability, death, retirement or for cause, the
participant must exercise his or her stock options by the end of the
original term of the stock options or 90 days after the date of
termination of employment, whichever comes first.
- If a participant's employment or service as a director is terminated due
to disability, the participant must exercise his or her stock options by
the end of the original term of the stock options or one year after the
termination of employment, whichever comes first.
- If a participant should die while employed or serving as a director, his
or her successor in interest must exercise any stock options held by the
participant by the end of the original term of the stock options or one
year after the participant's death, whichever comes first.
- If a participant is terminated for cause, the participant's right to
exercise his or her stock options immediately terminates.
- If a participant retires, the participant must exercise his or her ISOs
by the earlier to occur of the end of the original term of the ISOs or
90 days after the date of retirement; provided, however, that if the
ISOs are not exercised within 90 days of the date of retirement, they
will convert automatically into NQSOs and the participant's right to
exercise the ISOs converted into NQSOs will terminate at the end of the
original term of the option; and the participant must exercise his or
her NQSOs by the end of the term of the NQSOs.
13
(2) The amounts reflected in this table represent certain assumed rates of
appreciation only. Actual realized values, if any, on option exercises will
be dependent on the actual appreciation in the price of the common shares of
the company over the term of the options. There can be no assurances that
the potential realizable values reflected in this table will be achieved.
(3) These are NQSOs granted to fund and settle benefits earned under the SERP.
Generally, a participant in the SERP is entitled to receive a distribution
of his or her account upon:
- early retirement (age 55 and 10 or more years of service),
- normal retirement (age 62),
- total and permanent disability (as determined by the company) or
- the occurrence of change in control of the company (subject to the
limitation that they be exercised within three months following the
change in control or the restrictions on exercisability again apply).
No NQSOs granted under the 1992 Nonqualified Stock Option Plan may be exercised,
however, for a period of six months following the date of grant. If the
executive officer terminates employment with the company for any reason other
than death or retirement, his or her NQSOs will be forfeited unless the
compensation committee of the company's board of directors permits the exercise
of the NQSOs. The NQSOs expire on the date which is five years after the earlier
of the date the executive officer attains age 65 or the date of his or her
death. The potential realizable values of the NQSOs assume an expiration date of
five years after the executive officer attains age 65.
OPTION EXERCISES AND HOLDINGS
The following table outlines options exercised during the 2002 fiscal year by
each of the named executive officers and unexercised options held as of the end
of the 2002 fiscal year by such executive officers.
AGGREGATE OPTION EXERCISES IN FISCAL2002
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY
SECURITIES UNEXERCISED OPTIONS AT OPTIONS AT FISCAL
UNDERLYING FISCAL YEAR-END YEAR-END(1)(2)
OPTIONS VALUE ------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------
Stewart K. Owens -- -- 129,511 308,475 $1,591,444 $4,068,322
Larry C. Corbin 114,625 $1,707,770 1,099 171,016 $ 11,225 $2,213,923
Roger D. Williams 48,668 $ 533,686 28,068 158,441 $ 286,687 $2,154,543
Donald J. Radkoski 9,150 $ 140,530 46,867 112,700 $ 543,167 $1,524,737
Howard J. Berrey -- -- 49,610 94,888 $ 596,097 $1,448,696
(1) All values are shown pretax and are rounded to the nearest whole dollar.
(2) Based on the 2002 fiscal year-end closing price of $29.59 per common share.
EQUITY COMPENSATION PLAN INFORMATION
The company has several compensation plans under which it may issue equity
securities to its directors, officers and employees in exchange for goods or
services:
- - the Bob Evans Farms, Inc. First Amended and Restated 1992 Nonqualified Stock
Option Plan (the "1992 Stock Option Plan"),
- - the Bob Evans Farms, Inc. First Amended and Restated 1993 Long-Term
Incentive Plan for Managers (the "1993 LTIP"),
- - Bob Evans Farms, Inc. First Amended and Restated 1994 Long-Term Incentive
Plan (the "1994 LTIP"), and
- - the Bob Evans Farms, Inc. First Amended and Restated 1998 Stock Option and
Incentive Plan (the "1998 Stock Option Plan").
14
In addition, there are outstanding stock options that were issued under the Bob
Evans Farms, Inc. 1989 Stock Option Plan for Nonemployee Directors (the "1989
Stock Option Plan") and the Bob Evans Farms, Inc. 1991 Incentive Stock Option
Plan (the "1991 Stock Option Plan"). The company cannot grant additional awards
under the 1989 Stock Option Plan or the 1991 Stock Option Plan. Each of the
previously mentioned plans has been approved by the company's stockholders.
The following table shows, as of April 26, 2002, the number of common shares
issuable upon exercise of outstanding stock options, the weighted average
exercise price of those stock options and the number of common shares remaining
for future issuance under the plans, excluding shares issuable upon exercise of
outstanding stock options.
- -------------------------------------------------------------------------------------------------------------
(a) (b) (c)
- -------------------------------------------------------------------------------------------------------------
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation
exercise of exercise price of plans (excluding
outstanding options, outstanding options, securities
Plan Category warrants and rights warrants and rights reflected in column (a))
- ------------- ------------------- ------------------- ------------------------
- -------------------------------------------------------------------------------------------------------------
Equity compensation 2,463,567(1) $16.11 3,376,636(2)
plans approved by
security holders
- -------------------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by N/A N/A N/A
security holders
- -------------------------------------------------------------------------------------------------------------
Total 2,463,567(1) $16.11 3,376,636(2)
- -------------------------------------------------------------------------------------------------------------
(1) Includes:
- 6,273 common shares issuable upon exercise of options granted under the
1989 Stock Option Plan,
- 19,693 common shares issuable upon exercise of options granted under the
1991 Stock Option Plan,
- 362,455 common shares issuable upon exercise of options granted under
the 1992 Stock Option Plan,
- 288,282 common shares issuable upon exercise of options granted under
the 1994 LTIP and
- 1,786,864 common shares issuable upon exercise of options granted under
the 1998 Stock Option Plan.
(2) Includes:
- 102,788 common shares remaining available for issuance under the 1992
Stock Option Plan,
- 282,368 common shares remaining available for issuance under the 1993
LTIP,
- 90,957 common shares remaining available for issuance under the 1994
LTIP and
- 2,900,523 common shares remaining available for issuance under the 1998
Stock Option Plan.
The 1993 LTIP authorizes the grant of performance awards if the company's
actual performance level (i.e., the amount by which the company's
consolidated net income for the fiscal year exceeds the company's
consolidated net income for the immediately preceding fiscal year) exceeds a
threshold performance level established by the compensation committee for
that fiscal year. Each performance award is equal to a percentage of the
participant's compensation, not in excess of 8 percent, determined through
a formula described in the 1993 LTIP. The dollar amount of each
participant's performance award is converted into a number of common shares
based on the fair market value of a common share as of the close of business
on the last day of the applicable fiscal year. If the participant has not
satisfied the vesting requirements described in the 1993 LTIP, the common
shares issued will be restricted and subject to forfeiture. The 1994 LTIP
authorizes the award of performance share awards in addition to stock
options. Performance share awards will be paid in cash, common shares or a
combination of cash and common shares if the company's performance (or the
performance of any subsidiary selected by the compensation commit-
15
tee) meets certain goals established by the compensation committee. In
addition to establishing performance goals, the compensation committee will
determine the length of a performance period, the maximum value of a
performance share award and the minimum performance required before a
payment will be made. The 1994 LTIP does not allocate a specific portion of
the common shares available for issuance under the plan to the award of
stock options or performance share awards. As of April 26, 2002, no
performance share awards had been issued under the 1994 LTIP. The 1998 Stock
Option Plan authorizes the award of performance share awards and restricted
stock in addition to stock options. The performance share awards authorized
under the 1998 Stock Option Plan have the same terms as the performance
share awards described above with respect to the 1994 LTIP. Awards of
restricted stock consist of awards of common shares that may be subject to
forfeiture, restrictions on transfer and other specified conditions as
determined by the compensation committee. Participants are not required to
pay for the common shares covered by the restricted stock award, except as
otherwise provided by applicable law.
CHANGE IN CONTROL AND SEVERANCE ARRANGEMENTS
Effective May 1, 2002, the company entered into agreements with each of the
executive officers listed in the Summary Compensation Table, except Mr. Berrey
whose employment with the company ended on July 1, 2002. These agreements
superceded and replaced the agreements that the company had previously entered
into with these executive officers. The new agreements are substantially
identical, except as noted below, and provide the executive officers with
severance benefits if their employment is terminated under certain circumstances
related to a "change in control" (as defined in the agreements) of the company.
TERMINATION BY THE COMPANY WITHOUT CAUSE
Each agreement provides that the company may terminate the executive officer
without cause effective as of a date specified by the company. If the
termination date specified by the company falls within the period beginning six
months before and ending 36 months after a change in control, the company must
continue to pay the executive officer's compensation and benefits through the
date of termination. In addition, the company must pay the executive officer an
amount we refer to as the "Severance Payment," which is equal to the sum of:
- the value of the executive officer's unused vacation and compensation
days,
- 2.99 times the executive officer's average annual taxable compensation
for the five fiscal years ending before the change in control,
- a prorated portion of the executive officer's average cash bonus for the
three fiscal years ending before the date his or her employment is
terminated and
- any other change in control benefit the executive officer is entitled to
receive under any other plan, program or agreement with the company or
any of its subsidiaries.
The company will also continue health and life insurance and other employee
welfare benefit plans for the executive officer and his or her family for a
period of 36 months following the employment termination date.
TERMINATION BY THE EXECUTIVE OFFICER FOR GOOD REASON
Each agreement provides that the executive officer may terminate his or her
employment for "good reason" effective as of a date specified by the executive
officer. The executive officer will have "good reason" to terminate his or her
employment if, among other things, the company does any of the following without
his or her consent at any time after a change in control:
- breaches the agreement,
- reduces the executive officer's title, duties, responsibilities or
status,
- assigns duties to the executive officer that are inconsistent with the
executive officer's position,
- reduces the executive officer's total cash compensation by 10 percent or
more,
- requires the executive officer to relocate to an office more than 50
miles away from his or her current office or
- fails to continue or adversely modifies any material fringe benefit,
compensation, retirement or insurance plan in which the executive
officer participated before the change in control.
16
If the employment termination date specified by the executive officer falls
within the period beginning six months before and ending 36 months after the
change in control and the executive officer has "good reason" for terminating
his or her employment, the company must:
- pay the executive officer's compensation and benefits through the date
of termination,
- pay the executive officer the Severance Payment and
- continue health and life insurance and other employee welfare benefit
plans for the executive officer and his or her family for a period of 36
months following the employment termination date.
DISABILITY
If the executive officer becomes disabled (as defined in the agreement), the
company may terminate the executive officer's employment effective as of a
date specified by the company. If the executive officer does not return to work
full-time before the specified date, and the specified date falls within the
36-month period following a change in control, the executive officer's
employment and the agreement will terminate effective as of that date and the
executive officer will receive a lump sum payment equal to the Severance Payment
less:
- one-half of the Social Security disability benefit payable,
- the amount by which the executive officer's company-funded benefit under
any retirement or deferred compensation plan is enhanced because of the
disability and
- the value of any company-funded disability income or other benefits the
executive officer is entitled to receive under any disability plan or
program.
The company will continue to pay the executive officer's compensation and
benefits through the date of termination and will continue health and life
insurance and other employee welfare benefit plans for the executive officer and
his or her family for a period of 36 months following the employment termination
date.
If the company fails to notify the executive officer within 30 days after the
date his or her disability began that his or her employment is going to be
terminated, the executive officer may terminate his or her employment. In this
event, the executive officer will be entitled to the same benefits and payments
described above.
DEATH, TERMINATION FOR CAUSE AND RETIREMENT
Each agreement provides that it will terminate and no amounts will be paid to
the executive officer if:
- the executive dies,
- the company terminates the executive officer's employment "for cause"
(which is defined to include the executive officer's breach of the
agreement, willful refusal to perform assigned duties and gross
misconduct) or
- the executive officer retires after attaining the normal or mandatory
retirement age specified in the company's retirement policy or any
individual retirement agreement between the executive officer and the
company.
EFFECT OF SECTION 280G OF THE INTERNAL REVENUE CODE
If any portion of the payments and benefits provided for in an agreement would
be considered "excess parachute payments" under section 280G(b)(1) of the
Internal Revenue Code and subject to excise tax, the company will either make
tax reimbursement payments to the executive officer or reduce the executive
officer's payments to an amount which is $1.00 less than the amount that would
be an "excess parachute payment." The company will select the alternative that
provides the executive officer with a greater after-tax amount. Notwithstanding
the foregoing, if any portion of the payments and benefits provided for in Mr.
Owens' agreement (or any other agreement between the company and Mr. Owens)
would be considered an "excess parachute payment," the company will pay Mr.
Owens an additional amount which, after deduction of any income, withholding and
excise tax thereon, equals the excise tax.
17
TERM AND TERMINATION
Each agreement has a one-year term that is automatically extended for one-year
periods unless the agreement is otherwise terminated. An agreement may be
terminated if, among other things, the company notifies the executive officer
(no later than the February 28 preceding the end of the term) that it does not
want to continue the agreement, provided that the company cannot give such
notice during the 36-month period following a change in control or at any time
after the company learns that activities have begun which would result in a
change in control if completed.
COMPENSATION OF DIRECTORS
The 1998 Directors Compensation Plan was replaced with a new Compensation
Program for Directors which became effective May 7, 2002. Each plan provides
that all directors who are employees of the company receive a monthly director
fee of $1,200 in cash. All nonemployee directors receive a monthly director fee
of $1,250 in cash. In addition, each director who serves on the audit or
compensation committees receives a fee of $1,250 for each committee meeting
attended, unless the director is the chairperson of the committee, in which case
the director receives a fee of $2,000 for each committee meeting attended. Each
director who serves on the nominating committee receives a fee of $750 for each
committee meeting attended, unless the director is the chairperson of the
committee, in which case the director receives a fee of $1,000 for each
committee meeting attended.
The 1998 Directors Compensation Plan and the new Compensation Program for
Directors also provide that each nonemployee director annually receives common
shares of the company with a value equal to $17,000. The number of common shares
issued to the nonemployee directors each year is based on the price of the
company's common shares on the third business day following the release of
fiscal year-end earnings. These common shares are awarded out of the 1998 Stock
Option and Incentive Plan.
The 1998 Directors Compensation Plan and the new Compensation Program for
Directors provide for the award of NQSOs annually on the third business day
following the release of fiscal year-end earnings. The NQSOs are awarded out of
the 1998 Stock Option and Incentive Plan following compensation committee
approval. The number of NQSOs granted to each nonemployee director is based upon
the amount of the nonemployee director's annual retainer (excluding any fees
received for attending committee meetings) and the application of the
Black-Scholes option pricing model. The Black-Scholes option pricing model is a
mathematical formula designed to price options "fairly" based upon certain
variables including: (i) the price of the underlying shares, (ii) the exercise
price of the option, (iii) the current riskfree interest rate, (iv) the time
to expiration of the option and (v) the volatility of the underlying shares. The
first four variables are readily obtainable, with volatility being the only
variable that has to be estimated. The company estimates the volatility of the
underlying shares based upon the historical volatility of the company's common
shares.
The compensation committee, with the approval of the board of directors of the
company, may amend or terminate the Directors Compensation Program at any time
without the approval of the stockholders of the company.
Pursuant to the terms of the 1998 Directors Compensation Plan and the new
Compensation Program for Directors, the company will continue to maintain a life
insurance policy with a death benefit of $50,000 on behalf of each director of
the company. In addition, group health care is available to nonemployee
directors.
18
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following line graph compares the yearly percentage change in the company's
cumulative total stockholder return (as measured by dividing (i) the sum of the
cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and the difference between the price of the company's common
shares at the end and the beginning of the measurement period; by (ii) the
difference between the price of the common shares at the beginning and the end
of the measurement period) against the cumulative total return of the Standard &
Poor's 500 Stock Index ("S&P 500") and the weighted average of the Nasdaq
Restaurants and Food Manufacturers Indices (restaurants are weighted 70 percent
and food manufacturers 30 percent) for the five-year period ended April 26,
2002.
TOTAL CUMULATIVE SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING APRIL 26, 2002
[GRAPH]
CUMULATIVE VALUE OF $100 INVESTMENT
1997 1998 1999 2000 2001 2002
Nasdaq Restaurant/
Food Mfg. Peer Group $100.00 $118.04 $97.38 $86.97 $117.68 $178.42
S&P500 $100.00 $147.60 $180.50 $199.30 $174.10 $151.60
Bob Evans Farms, Inc. $100.00 $157.20 $144.50 $105.40 $155.40 $248.20
19
APPROVAL OF BOB EVANS FARMS, INC. 2002 INCENTIVE GROWTH PLAN
The board of directors proposes that the stockholders approve the adoption of
the Bob Evans Farms, Inc. 2002 Incentive Growth Plan (the "plan"). Set forth
below is a summary of the plan, which is qualified in its entirety by reference
to the plan in the form attached as Appendix I.
PURPOSE
The purpose of the plan is to foster and promote the company's long-term
financial success and to increase stockholder value by:
- providing participants in the plan an opportunity to earn incentive
compensation if specified objectives are met and
- enabling the company to attract and retain the services of outstanding
persons upon whose judgment, interest and dedication the successful
conduct of the company's business is largely dependent.
The plan provides for the award of target bonuses for plan participants.
Pursuant to the plan, a participant must satisfy specified performance criteria
over the course of a performance cycle in order to receive some or all of the
designated target bonus.
The plan is designed to take into account Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Section 162(m)"). Section 162(m) governs the
corporate tax deductibility of annual compensation exceeding $1.0 million paid
to the chief executive officer and the four other most highly compensated
executive officers of a public company. Corporate tax deductions for certain
types of compensation, including performance-based compensation, are generally
allowed. The plan is being submitted to the stockholders for approval at the
2002 annual meeting in an effort to ensure that the compensation payable under
the plan will be deductible as performance-based compensation. By approving the
plan, the stockholders will also be approving, among other things, the
performance measures, eligibility requirements and limits on the awards that
may be made pursuant to the plan.
RELATIONSHIP WITH CHANGE IN CONTROL AGREEMENTS
If a plan participant has entered into a separate change in control agreement
with the company, any target bonus payable to a participant under the plan will
be deemed to be a bonus for purposes of his or her change in control agreement,
and any target bonus that is payable subject to a change in control agreement
will be treated as having been paid through and subject to his or her change in
control agreement. If any term, condition or feature of the plan relates to an
item that is also dealt with in a participant's change in control agreement, the
term, condition or feature which provides the participant with the greater
benefit will apply. The change in control agreements entered into by the company
and its executive officers are described generally in this proxy statement under
the caption "Compensation of Executive Officers and Directors -- Change in
Control and Severance Arrangements."
ADMINISTRATION
The plan will be administered by the compensation committee of the board of
directors. Each compensation committee member will be an "outside director"
within the meaning of Section 162(m). The compensation committee will have the
authority to:
- - prescribe, amend and rescind rules and regulations relating to the plan,
- - provide for conditions deemed necessary or advisable to protect the
interests of the company and
- - interpret the plan and supply any missing terms needed to administer the
plan.
The compensation committee also will have the authority to determine the
performance cycle, the amount of each target bonus that may be awarded to a
participant under the plan and the performance criteria that the participant
must satisfy in order to receive some or all of that bonus. All decisions made
by the compensation committee will be final and binding.
20
ELIGIBILITY
Only those employees whose compensation is subject to limitation under Section
162(m) as of the last day of any calendar year ending with or within any
performance cycle are eligible to participate in the plan. It is anticipated
that Stewart K. Owens, chairman of the board, chief executive officer, president
and chief operating officer of the company, will be the only eligible officer
during the 2003 fiscal year.
The compensation committee will send each of the eligible officers a
participation agreement specifying the conditions that must be met if the
participant is to receive a bonus at the end of a designated performance cycle
and the basis upon which the amount will be calculated. Each eligible officer
may become a participant in the plan only if he or she returns to the
compensation committee a signed participation agreement within 60 days of
receiving it from the compensation committee.
PERFORMANCE CRITERIA
The compensation committee is responsible for establishing for each plan
participant (1) the performance cycle, (2) a target bonus and (3) the
performance criteria used to determine the portion of the target bonus that the
participant will receive at the end of any given performance cycle under the
plan. In establishing each participant's performance criteria, the
compensation committee will consider the relevance of each participant's
assigned duties and responsibilities to factors that preserve and increase the
company's value. These factors will include:
- - gross revenues, either throughout the company or within any specified
division or geographic area,
- - net income, either throughout the company or within any specified division
or geographic area,
- - earnings per common share,
- - new products and lines of revenue,
- - customer satisfaction, either throughout the company or within any specified
division or geographic area,
- - market share,
- - developing and managing relationships with regulatory and other governmental
agencies,
- - managing claims against the company or any of its subsidiaries, including
litigation,
- - the company's book value or the book value of any designated subsidiary or
division,
- - the trading value of the company's common shares,
- - completion of assigned corporate transactions, such as mergers, acquisitions
or divestitures and
- - controlling expenses.
At the end of each performance cycle, the compensation committee will certify to
the board of directors the extent to which each participant has or has not met
his or her performance criteria and the portion, if any, of the target bonus
that is to be paid to each participant.
The compensation committee will make appropriate adjustments to reflect:
- - any substantive change in a participant's job description or assigned duties
and responsibilities and/or
- - the effect on any performance criteria of any stock dividend or stock split,
recapitalization, merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares or similar
corporate change.
The compensation committee will make the adjustment to the extent the
performance criteria are based on common shares, as of the effective date of the
event, and for the performance cycle in which the event occurs. The compensation
committee will make a similar adjustment to any portion of the performance
criteria that is not based on common shares, but which is affected by an event
having an effect similar to those previously described.
The compensation committee will establish performance criteria and communicate
them in writing to each affected participant in a participation agreement, no
later than the earlier of:
- - 90 days after the beginning of the applicable performance cycle or
- - the expiration of 25 percent of the applicable performance cycle.
21
TERMINATION OF EMPLOYMENT DURING PERFORMANCE CYCLE
Subject to any change in control agreement or other contrary agreement between
the company and a participant, a participant who terminates employment before
the end of a performance cycle (other than due to retirement, death, disability
or voluntarily for "good reason" (as defined in the plan)) or is terminated by
the company for "cause" (as defined by the plan) will forfeit all right to
receive any amount under the plan. In all cases, however, the participant will
receive any amounts earned during any performance cycle that ended before his or
her termination. Except as otherwise provided in a participant's change in
control agreement, a participant who retires, dies, becomes disabled, terminates
voluntarily for "good reason" or is terminated by the company without cause
during a performance cycle will receive a prorated distribution at the end of
the performance cycle during which he or she retired, died, became disabled,
terminated voluntarily for good reason or was terminated by the company without
cause, but only if the performance criteria for that performance cycle are met.
This amount will be calculated in accordance with the proration formula set
forth in the plan.
CHANGE IN CONTROL
If, within 36 months of a change in control (as defined in the plan) of the
company:
- - with respect to all participants, the plan is terminated and not replaced
with a similar program providing comparable benefits and features or
- - with respect to a participant who has entered into a separate change in
control agreement, an event occurs which obligates the company to make a
payment to the participant pursuant to the terms of the change in control
agreement,
the company will distribute to the affected plan participant his or her target
bonus for the year in which the triggering event occurred. The company will make
the distribution within 30 days after the event which triggers payment of the
performance bonus whether or not the performance criteria for that period have
been met and whether or not the pending performance cycle has been completed.
If, however, the sum of all payments made upon a change in control as described
in the plan, and those provided under all other plans, programs or agreements
between the participant and the company and its subsidiaries, constitutes an
"excess parachute payment," then the company will, subject to any contrary
agreement between the company and the participant, either (1) reimburse the
participant for the specified amount owed as excise tax, as described in the
plan, or (2) reduce the amount paid to the participant under the plan so that
the participant's total payment would be $1.00 less than the amount that would
be considered an "excess parachute payment." The company will use the procedure
which provides the affected participant with the greatest after-tax benefit.
Notwithstanding the foregoing, if any portion of the payments and benefits
provided to Mr. Owens would be considered an "excess parachute payment," the
company will pay Mr. Owens an additional amount which, after deduction of any
income, withholding and excise tax thereon, equals the excise tax.
FORM AND TIME OF DISTRIBUTION
In general, the company will distribute all amounts under the plan in a single
lump sum cash payment no later than 90 days after the end of the applicable
performance cycle. Each participant, however, may direct the company to defer
all or any portion of a distribution by electing to have that amount credited to
the participant's account under any nonqualified deferred compensation plan
maintained by the company and designated by the compensation committee and
having that amount distributed under the terms of that plan. The participant
must make this election in his or her participation agreement that relates to
the performance cycle during which the deferred amount may be earned. Once
filed, the election is irrevocable. Before distributing any amount under the
plan (other than a deferral to a nonqualified plan), the company will withhold
an amount sufficient to satisfy federal, state and local income and employment
tax withholding requirements imposed on the amount of any distribution under the
plan. Plan amounts deferred to a nonqualified plan will be taxed to the plan
participant (and deductible by the company), when they are distributed from the
nonqualified plan. Before distributing amounts from the nonqualified plan, the
company will withhold an amount sufficient to satisfy federal, state and local
income and employment tax withholding requirements imposed on the distribution.
22
AMENDMENT AND TERMINATION
Subject to any contrary agreement between the company and the participant, the
board of directors and the compensation committee each have authority to
terminate, suspend or amend the plan at any time without stockholder approval,
except to the extent approval is required under applicable requirements of the
Internal Revenue Code or any securities exchange on which the company's
securities are listed. In addition, no plan amendment may, without the consent
of the affected participant, adversely affect the participant's ability to earn
any target bonus for which performance criteria were established before the
amendment, modification or termination of the plan.
TRANSFERABILITY
Except for a deferral to a nonqualified plan maintained by the company (as
described above), plan participants generally may not transfer, alienate,
pledge, hypothecate or otherwise assign their rights to receive a distribution
under the plan to any other person, and any attempt to do so will be void. The
plan, however, does permit a participant to designate one or more
beneficiaries to whom the company will pay any amount under the plan upon the
death of the participant. In the absence of a beneficiary designation, the
company will pay amounts remaining unpaid on the participant's death to the
deceased participant's surviving spouse, if any, or otherwise to the
participant's estate.
NEW PLAN BENEFITS
Pursuant to the plan, the company may not pay a bonus that is larger than
$2,000,000 for any performance cycle.
The exact amount of the benefits or amounts, if any, that will be allocated to
or received by the company's eligible officers is at the discretion of the
compensation committee and dependent upon the future performance of the company,
and therefore cannot be determined at this time. However, the annual cash
bonuses paid to the executive officers of the company for the 2002 fiscal year
and for the two prior fiscal years are set forth in the bonus column of the
Summary Compensation Table of this proxy statement. In addition, information
concerning the total number of common shares subject to options, warrants and
rights issued by the company pursuant to its equity compensation plans, and the
number of common shares remaining available for issuance pursuant to those
plans, is set forth in the table titled "Equity Compensation Plan Information."
RECOMMENDATION AND VOTE
ADOPTION OF THE PLAN REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY
OF THE OUTSTANDING SHARES OF COMMON STOCK PRESENT IN PERSON OR BY PROXY AND
ENTITLED TO VOTE ON THE ADOPTION OF THE PLAN. THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE ADOPTION OF THE PLAN.
PROXY STATEMENT STOCKHOLDER PROPOSALS
Each year the board of directors submits its nominations for election of
directors at the annual meeting of stockholders. Other proposals may be
submitted by the board of directors or stockholders for inclusion in the proxy
statement for action at each year's annual meeting. Any proposal submitted by a
stockholder for inclusion in the proxy statement for the fiscal 2003 annual
meeting, presently scheduled for Sept. 8, 2003, must be received by the company
on or before April 3, 2003. A stockholder proposal received after April 3, 2003,
but on or before June 17, 2003, will not be included in the proxy materials, but
may be presented at the 2003 annual meeting. The individuals named as proxies
for the
23
2003 annual meeting will be entitled to use their discretionary voting authority
for proposals received after June 23, 2003, without any discussion of the matter
in the company's proxy materials.
The following stockholder proposal, presented here exactly as it was given to
the company, has been submitted for inclusion in the 2002 proxy statement. The
board of directors of the company recommends that stockholders vote "AGAINST"
the following stockholder proposal.
STOCKHOLDER PROPOSAL REGARDING ELIMINATION OF
STOCK OPTIONS, BONUSES AND RESTRICTED SHARES
E. Kay Mitchell, 2855 Lander Road, Pepper Pike, Ohio 44124, claiming ownership
for more than one (1) year of common shares of the company with a market value
in excess of $2,000 and that she will continue to hold the same through the date
of the annual meeting, has submitted the following resolution and supporting
statement for inclusion in this proxy statement and stated her intention to
present same at the annual meeting.
STOCK OPTION - BONUS - RESTRICTED SHARE RESOLUTION
Resolved "that as soon as practicable, and in conformity with contractual
obligations, that the board of directors will take under consideration that all
members of top corporate management listed in the proxy Statement as the
companies chief executive officer and the other four most highly compensated
executive officers no longer be remunerated with stock options, bonuses, or
restricted shares.
SUPPORTING STATEMENT
The major rationale for offering stock options and bonuses to management is that
they provide a major incentive for management to insure corporate profitability.
These forms of management compensation are designed as rewards for achievement
in corporate profitability and long-term growth. I believe that in many
instances bonuses, options, and restricted shares are given for corporate
performances, which range poor, to mediocre, to adequate profitability.
However, the essential thrust of this resolution is that those members of
management that hold a significant share of company assets should not require
additional monetary Incentives as motivators to insure corporate profitability.
Any reasonable individual would understand that growth and corporate
profitability would directly accrue to the shareholders including the executives
indicated in the resolution above. How many more motivators do they require?
In my opinion these unnecessary incentives become a raid on corporate assets and
hardly meet the standards of reasonableness and fairness. I believe that
compensation of this type is hardly a rationale for inducing higher levels of
performance of management.
I believe those members of management who are supremely confident in their
abilities to Expand corporate profitability and desire greater shares in its
success are always free to buy stock on the open market, taking the same risks
as the common shareholder.
- ------------------------------------------------------------------------------
24
RESPONSE OF THE BOB EVANS FARMS, INC. BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST"
THE ABOVE PROPOSAL FOR THE FOLLOWING REASONS:
The board strongly believes that implementation of the proposal described above
would not be in the best interests of the stockholders of the company for the
following reasons:
- - The company's executive compensation program must be competitive, allowing
the company to attract and retain talented, experienced executives to lead
the company in the competitive environment in which it operates. The
elimination of stock options and bonuses would jeopardize this goal.
- - Bonuses and long-term incentives such as stock options align the financial
interests of the company's executive officers with those of its stockholders
by tying the compensation received to the performance of the company and the
value of the company's common stock. For example, with a typical stock
option, the share price of the company's common stock must increase for the
stock option to have any value at all.
- - An alternative compensation program likely would result in a greater cost to
the company because it would require a higher level of cash compensation to
replace the current levels of performance-based incentive compensation.
In summary, the board of directors strongly believes that the company and its
stockholders are best served by an executive compensation program that includes
performance-based bonuses and long-term incentive compensation components that
are directly tied to the performance of the company and the value of the
company's common stock. Even if this resolution is approved by the stockholders,
as a matter of law it will not be binding on the board of directors, and the
board will still be required to consider whether a change in the present system
of compensating executive officers is in the best interests of the company.
APPROVAL OF THIS STOCKHOLDER PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF
A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK PRESENT IN PERSON OR BY
PROXY AND ENTITLED TO VOTE ON THE STOCKHOLDER PROPOSAL. UNLESS OTHERWISE
DIRECTED, THE PERSONS NAMED IN THE ENCLOSED PROXY WILL VOTE THE COMMON SHARES
REPRESENTED BY ALL PROXIES RECEIVED PRIOR TO THE ANNUAL MEETING, AND NOT
PROPERLY REVOKED, EXCLUDING BROKER NON-VOTES, AGAINST THIS STOCKHOLDER PROPOSAL.
INFORMATION CONCERNING INDEPENDENT AUDITORS
Ernst & Young LLP, which has served as independent auditors for the company
since 1980, has been selected by the company to serve in that capacity for
fiscal 2003. Representatives of Ernst & Young LLP are expected to be present at
the annual meeting, will be given the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
REPORTS TO BE PRESENTED AT THE ANNUAL MEETING
The company's annual report for the fiscal year ended April 26, 2002, which
contains financial statements for such fiscal year and the signed report of
Ernst & Young LLP, independent auditors, with respect to such financial
statements, will be presented at the annual meeting. The annual report is not to
be regarded as proxy soliciting material, and management of the company does
not intend to ask, suggest or solicit any action from the stockholders with
respect to such report.
25
OTHER MATTERS
As of the date of this proxy statement, the only business which management
intends to present at the annual meeting consists of the matters set forth in
this proxy statement. Management knows of no other matters to be brought before
the annual meeting by any other person or group. If any other matters should
properly come before the annual meeting, or any adjournment(s) thereof, the
proxy holders will vote thereon in their discretion, in accordance with their
best judgement in light of the conditions then prevailing. All proxies received
duly executed and not properly revoked will be voted.
You are requested to vote by either calling (800) 690-6903; visiting the
proxyvote.com Web site as indicated on the proxy card; or signing and dating the
enclosed proxy card and mailing it promptly in the enclosed envelope. If you
later desire to vote in person, you may revoke your proxy, either by written
notice delivered to the company or in person at the annual meeting.
By Order of the
Board of Directors,
/s/ Stewart K. Owens
Stewart K. Owens
Chairman of the Board and
Chief Executive Officer
26
APPENDIX I
BOB EVANS FARMS, INC.
2002 INCENTIVE GROWTH PLAN
27
BOB EVANS FARMS, INC.
2002 INCENTIVE GROWTH PLAN
SECTION l.00
PURPOSE
This Plan is intended to foster and promote the Company's long-term financial
success and to increase stockholder value by [1] providing Participants an
opportunity to earn incentive compensation if specified objectives are met and
[2] enabling the Company to attract and retain the services of outstanding
persons upon whose judgment, interest and dedication the successful conduct of
the Company's business is largely dependent.
SECTION 2.00
DEFINITIONS
When used in this Plan, the following terms will have the meanings given to them
in this section unless another meaning is expressly provided elsewhere in this
document. When applying these definitions, the form of any term or word will
include any of its other forms.
ACT. The Securities Exchange Act of 1934, as amended.
BOARD. The Company's Board of Directors.
CAUSE.
[1] With respect to a Participant who is a party to a Change in Control
Agreement, "Cause" as defined in (and subject to the terms of) that
Participant's Change in Control Agreement; or
[2] With respect to all Participants, a Participant's [a] willful and
continued refusal to substantially perform assigned duties (other
than any refusal resulting from in capacity due to physical or
mental illness), [b] willful engagement in gross misconduct
materially and demonstrably injurious to the Company or any Related
Entity or [c] breach of any material agreement between the
Participant and the Company or any Related Entity. However, [d]
Cause will not arise [i] solely because the Participant is absent
from active employment during periods of vacation, consistent with
the Company's applicable vacation policy, or other period of
absence initiated by the Participant and approved by the Employer
or [ii] due to any event that constitutes Good Reason.
CODE. The Internal Revenue Code of 1986, as amended.
CHANGE IN CONTROL.
[1] With respect to a Participant who is a party to a Change in Control
Agreement, a "change in control" as defined in (and subject to the
terms of) that Participant's Change in Control Agreement; or
[2] With respect to all Participants, approval by the Company's
stockholders of a definitive agreement [a] to merge or consolidate
the Company with or into another corporation in which the Company
is not the continuing or surviving corporation or pursuant to which
any Common Shares would be converted into cash,
28
securities or other property of another corporation, other than a
merger of the Company in which holders of Common Shares immediately
before the merger have the same proportionate ownership of shares
of the surviving corporation immediately after the merger as
immediately before or [b] within a 12-consecutive calendar month
period, to sell or otherwise dispose of 50 percent or more of the
book value of the combined assets of the Company and all
Subsidiaries.
[3] For purposes of this definition, "book value" will be established on
the basis of the latest consolidated financial statement the Company
filed with the Securities and Exchange Commission before the date
any 12-consecutive calendar month measurement period began.
CHANGE IN CONTROL AGREEMENT. Any individual agreement between the Company and a
Participant describing the effect of a Change in Control on that Participant.
COMMITTEE. The Board's Compensation Committee.
COMMON SHARES. The Company's shares of common stock or any security issued in
substitution, exchange or in place of the Company's common stock.
COMPANY. Bob Evans Farms, Inc., a Delaware corporation, and any successor to it.
DISABILITY.
[1] With respect to a Participant who is a party to a Change in Control
Agreement, a "disability" as defined in (and subject to the terms
of) the Participant's Change in Control Agreement, if any; or
[2] With respect all Participants, a Participant's inability due to
illness accident or otherwise to perform his duties for the period
of time during which benefits are payable to the Participant under
the Company's Short-Term Disability Plan, as determined by an
independent physician selected by the Committee and reasonably
acceptable to the Participant (or to his or her legal
representative), provided that the Participant does not return to
work on a substantially full-time basis within 30 days after the
Company notifies the Participant that his employment is being
terminated because of his or her Disability.
GOOD REASON.
[1] With respect to a Participant who is a party to a Change in Control
Agreement, "Good Reason" as defined in (and subject to the terms of)
the Participant's Change in Control Agreement; or
[2] With respect to all Participants, any of the following to which the
Participant has not consented in writing and which has not been
cured by the Company (or accepted by the Participant) within 30 days
after the Participant notifies the Company, in writing, that he or
she believes Good Reason has arisen:
[a] Any material breach of this Plan of any nature whatsoever by or
in behalf of the Company or any Related Entity;
[b] A reduction in the Participant's title, duties, responsibilities
or status, as compared to either [i] the Participant's title,
duties, responsibilities or status immediately before the date
he or she becomes a Participant or [ii] any enhanced or
increased title, duties, responsibilities or status to which the
Participant accedes after becoming a Participant;
29
[c] The assignment to a Participant of duties that are inconsistent
with [i] the Participant's office immediately before the date he
or she became a Participant or [ii] any more senior office to
which the Participant is promoted after becoming a Participant;
[d] During any calendar year ending after the date the Participant
becomes a Participant, a 10 percent (or larger) reduction (other
than a reduction attributable to any termination of employment
for death, Disability or Cause or for any period the Participant
is temporarily absent from active employment) in the highest of
[i] the Participant's total cash compensation for the preceding
calendar year or, if higher, [i] the Participant's total cash
compensation for the preceding calendar year but [ii] in both
cases, determined without regard to any amounts described in
this Plan;
[e] A requirement that a Participant relocate to a principal office
or worksite (or accept indefinite assignment) to a location more
than 50 miles distant from [i] the principal office or worksite
to which the Participant was assigned immediately before the
relocation or [ii] any location to which the Participant agreed
to be assigned;
[f] The imposition on a Participant of business travel obligations
substantially greater than the Participant's business travel
obligations during the preceding 12 consecutive calendar months;
or
[g] [i] failure to continue in effect any material fringe benefit or
compensation plan, retirement or deferred compensation plan,
life insurance plan, health and accident plan or disability plan
in which the Participant participated; [ii] modification of any
of the plans or programs just described that adversely affects
the value of the Participant's benefits under those plans; or
[iii] failure to provide the Participant with the same number of
paid vacation days to which the Participant was entitled for the
immediately preceding calendar year under the terms of the
Employer's vacation policy or program. However, Good Reason will
not arise under this subsection solely because [iv] the Company
terminates or modifies any program solely to comply with
applicable law but only to the extent of the change required or
[v] a plan or benefit program expires under self-executing terms
contained in that plan or benefit program.
OFFICER. Those employees whose compensation is subject to limitation under Code
Section 162(m) as of the last day of any calendar year ending with or within any
Performance Cycle.
PARTICIPATION AGREEMENT. The form that the Committee and each Participant must
complete within the period described in Section 3.02.
PARTICIPANT. Any Officer designated as a Participant under Section 3.01 who has
returned a completed Participation Agreement to the Committee within the period
described in Section 3.02.
PERFORMANCE CRITERIA. The criteria established by the Committee as of the
beginning of each Performance Cycle and applied at the end of the same
Performance Cycle to determine the portion (if any) of the Target Bonus payable
under this Plan to any Participant.
PERFORMANCE CYCLE. The period over which the Committee will apply the
Performance Criteria to establish the portion (if any) of the Target Bonus
payable under this Plan to each Participant.
PLAN. The Bob Evans Farms, Inc. 2002 Incentive Growth Plan.
RELATED ENTITY. [1] an entity related to the Company by application of Code
Sections 414(b) and (c), as modified by Code Section 415(h) or [2] an affiliated
service group [as defined in Code Section 414(m)] or other organization
described in Code Section 414(o) that includes the Company.
30
RETIREMENT.
[1] With respect to a Participant who is a party to a Change in Control
Agreement, "Retirement" as defined in (and subject to the terms of) that
Participant's Change in Control Agreement; or
[2] With respect to all Participants, termination of a Participant's
employment at or after age 55.
SUBSIDIARY. Any corporation, partnership or limited liability company in which
the Company owns, directly or indirectly, 50 percent or more of the total
combined voting power of all classes of stock of that corporation or of the
capital or profits interest of a partnership or limited liability company.
TARGET BONUS. The cash amount that a Participant will receive if he or she fully
meets the Performance Criteria established under Section 4.01 as of the
beginning of the Performance Cycle. As determined by the Committee, the bonus
paid may be larger or smaller than the Target Bonus to the extent that
Performance Criteria are exceeded or are partially, but not fully, met during
a Performance Cycle. However, no Participant may receive a distribution under
this Plan for any Performance Cycle that is larger than $2,000,000.
SECTION 3.00
PARTICIPATION
3.01 DESIGNATION OF PARTICIPANTS. Subject to Section 3.02, all Officers may
participate in this Plan. The Committee will send each Participant a
Participation Agreement specifying [1] the conditions that must be met if he or
she is to receive a bonus at the end of the Performance Cycle and [2] the basis
on which that amount will be calculated.
3.02 CONDITIONS OF PARTICIPATION. An Officer may become a Participant for any
Performance Cycle only if he or she:
[1] Before the beginning of a Performance Cycle, is designated by the
Committee as a Participant for that Performance Cycle; and
[2] Returns to the Committee a signed Participation Agreement within 60 days
after receiving that form from the Committee.
SECTION 4.00
ADMINISTRATION
4.01 PERFORMANCE CRITERIA.
[1] For each Performance Cycle, the Committee will [a] establish each
Participant's Target Bonus and the extent to which a bonus will be paid
if established Performance Criteria are exceeded or are partially, but
not fully, met, [b] develop the Performance Criteria that will be
applied to determine the portion of the Target Bonus that will be paid
at the end of the Performance Cycle and [c] establish the Performance
Cycle over which Performance Criteria will be measured.
31
[2] In establishing each Participant's Performance Criteria, the Committee
will consider the relevance of each Participant's assigned duties and
responsibilities to factors that preserve and increase the Company's
value. These factors will include:
[a] Gross revenues, either throughout the Company or within any
specified division or geographic area;
[b] Net income, either throughout the Company or within any specified
division or geographic area;
[c] Gross sales, either throughout the Company or within any specified
division or geographic area;
[d] Earnings per Common Share;
[e] New products and lines of revenue;
[f] Customer satisfaction, either throughout the Company or within any
specified division or geographic area;
[g] Market share;
[h] Developing and managing relationships with regulatory and other
governmental agencies;
[i] Managing claims against the Company or any of its Subsidiaries,
including litigation;
[j] The Company's book value or the book value of any designated
Subsidiary or division;
[k] The trading value of the Common Shares;
[l] Completion of assigned corporate transactions, such as mergers,
acquisitions or divestitures; and
[m] Controlling expenses.
[3] The Committee will make appropriate adjustments to reflect:
[a] The effect on any Performance Criteria of any Common Shares dividend
or Common Shares split, recapitalization (including, without
limitation, the payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to
stockholders, exchange of shares or similar corporate change. This
adjustment to the Performance Criteria will be made [i] to the
extent the Performance Criteria is based on Common Shares, [ii] as
of the effective date of the event and [iii] for the Performance
Cycle in which the event occurs. Also, the Committee will make a
similar adjustment to any portion of a Performance Criteria that is
not based on Common Shares but which is affected by an event having
an effect similar to those just described.
[b] A substantive change in a Participant's job description or assigned
duties and responsibilities.
32
[4] Performance Criteria will be established and communicated to each
affected Participant in a Participation Agreement no later than the
earlier of:
[a] 90 days after the beginning of the applicable Performance Cycle; or
[b] The expiration of 25 percent of the applicable Performance Cycle.
4.02 CERTIFICATION. As of the end of each Performance Cycle, the Committee will
certify to the Board the extent to which each Participant has or has not met his
or her Performance Criteria and the portion (if any) of the Target Bonus that is
to be paid to each Participant.
4.03 ADMINISTRATION. The Committee is responsible for administering the Plan. In
addition to the duties described elsewhere in this Plan, the Committee, by
majority action, may [1] prescribe, amend and rescind rules and regulations
relating to the Plan; [2] provide for conditions deemed necessary or advisable
to protect the interests of the Company; and [3] interpret the Plan and supply
any missing terms needed to administer the Plan. Determinations, interpretations
or other actions made or taken by the Committee under the provisions of this
document will be final, binding and conclusive for all purposes and upon all
persons.
SECTION 5.00
EFFECT OF TERMINATION OF EMPLOYMENT DURING PERFORMANCE CYCLE;
CHANGE IN CONTROL
5.01 EFFECT OF TERMINATION OF EMPLOYMENT DURING PERFORMANCE CYCLE FOR REASONS
OTHER THAN RETIREMENT, DEATH, DISABILITY, GOOD REASON OR WITHOUT CAUSE. Except
as provided in Sections 5.02 and 5.03 and under any Participant's Change in
Control Agreement, a Participant who terminates employment before the end of a
Performance Cycle will forfeit all right to receive any amount under this Plan.
However, in all cases a terminated Participant will receive any amounts earned
during any Performance Cycle that ended before his or her termination (e.g., if
the Committee has not then valued or distributed amounts earned during a
Performance Cycle that ended before the Participant terminated).
5.02 EFFECT OF RETIREMENT, DEATH, DISABILITY, TERMINATION FOR GOOD REASON
OR TERMINATION WITHOUT CAUSE DURING PERFORMANCE CYCLE. Except as provided in a
Participant's Change in Control Agreement, a Participant who Retires, dies or
becomes Disabled during a Performance Cycle or is terminated by the Company
without Cause or terminates employment voluntarily for Good Reason will
receive a prorated distribution at the end of the Performance Cycle during which
he or she Retired, died, became Disabled, is terminated without Cause or
terminates for Good Reason. The amount of this distribution will be calculated
at the end of the Performance Cycle by applying the following procedure:
[1] As of the end of the Performance Cycle during which the affected
Participant Retired, died, became Disabled is terminated without Cause
or terminates for Good Reason, the Committee will apply the Performance
Criteria to measure the portion of the Target Bonus to be distributed.
This calculation will be made in the manner described in Section 4.02
and will be made as if the Retired, deceased, Disabled or terminated
Participant had remained actively employed throughout the Performance
Cycle.
[2] The Committee then will multiply the amount produced under Section
5.02[1] by a fraction, the numerator of which is the number of whole
calendar months during which the Retired, deceased, Disabled or
terminated Participant was actively employed during the Performance
Cycle and the denominator of which is the number of whole calendar
months in the Performance Cycle.
33
[3] Then, the Committee will direct the Company to distribute the amount
calculated in the form and at the time described in Section 6.00 to, as
appropriate, the Retired, Disabled or terminated Participant or to the
beneficiary of the deceased Participant.
5.03 CHANGE IN CONTROL. Subject to the terms of any Change in Control Agreement,
if, within 36 months after a Change in Control:
[1] With respect to all Participants, the Plan is terminated and not
replaced with a similar program providing comparable benefits and
features; or
[2] With respect to a Participant who is a party to a Change in Control
Agreement, an event occurs that generates a change in control payment
under that Participant's Change in Control Agreement,
within 30 days after an event described in Section 5.03[1] or [2], the Company
will distribute to each affected Participant their Target Bonus for the year in
which the Change in Control occurs. This distribution will be made whether or
not the Performance Criteria for that period have been met and whether or not
the pending Performance Cycle has been completed.
5.04 EFFECT OF CODE SECTION 280G. Subject to a Participant's Change in Control
Agreement, if the sum of the payments described in this section and those
provided under all other plans, programs or agreements between the Participant
and the Company or any Subsidiary constitutes an "excess parachute payment" as
defined in Code Section 280G(b)(1), the Company will either:
[1] Reimburse the Participant for the amount of any excise tax due under
Code Section 4999 (but not for any income taxes or additional excise
taxes associated with this initial payment), if this procedure provides
the affected Participant with an after-tax amount that is larger than
the after-tax amount produced under Section 5.04[2]; or
[2] Reduce the amounts paid to the Participant under this Plan so that his
or her total "parachute payment" as defined in Code Section
280G(b)(2)(A) under this and all other plans, programs or agreements
between the Participant and the Company or Subsidiary will be $1.00 less
than the amount that would be an "excess parachute payment," if this
procedure provides the Participant with an after-tax amount that is
larger than the aftertax amount produced under Section 5.04[1].
SECTION 6.00
FORM AND TIME OF DISTRIBUTION
6.01 DISTRIBUTION. Subject to Sections 6.02 and 8.04, the amount determined by
applying the procedures described in Sections 4.00 and 5.00 will be distributed
in a single lump sum cash payment no later than 90 days after the end of the
applicable Performance Cycle.
6.02 DEFERRAL OF DISTRIBUTION. Each Participant may direct the Company to defer
all or any portion of his or her Plan distribution by electing to have that
amount [1] credited to his or her account under any nonqualified deferred
compensation plan [as defined in Section 201(2) of the Employee Retirement
Income Security Act of 1974, as amended] maintained by the Company and
designated by the Committee or any successor plan and [2] distributed under the
terms of that plan. This election must be made in the Participation Agreement
that relates to the Performance Cycle during which the deferred amount may be
earned. Once filed, this election will be irrevocable.
34
SECTION 7.00
AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
The Board or the Committee may terminate, suspend or amend the Plan at any time
without stockholder approval except to the extent prohibited under the terms of
the Participant's Change in Control Agreement or to the extent that stockholder
approval is required to satisfy applicable requirements imposed by [1]
applicable requirements of the Code or [2] any securities exchange on which the
Company's securities are listed. Also, no Plan amendment may, without the
consent of the affected Participant, adversely affect his or her ability to earn
any Target Bonus for which Performance Criteria were established before the
amendment, modification or termination of the Plan.
SECTION 8.00
MISCELLANEOUS PROVISIONS
8.01 ASSIGNABILITY. Except as provided in Section 8.02, no Participant may
transfer, alienate, pledge, hypothecate, transfer or otherwise assign his or her
rights to receive a distribution under the Plan to any other person and any
attempt to do so will be void.
8.02 BENEFICIARY DESIGNATION. Each Participant may from time to time name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any amount under the Plan will be paid as provided in Section 5.00. Each
designation must be made on a form acceptable to the Committee and will be
effective only after it is delivered to the Committee. In the absence of any
beneficiary designation, amounts remaining unpaid at the Participant's death
will be paid to the deceased Participant's surviving spouse, if any, or
otherwise to his or her estate. The Participant (and his or her beneficiary) and
not the Company or the Committee is responsible for keeping the Committee
apprised of the beneficiary's address. Also, neither the Company nor the
Committee is required to search for any beneficiary beyond sending a registered
letter to the beneficiary at the latest address given to it by the Participant
or beneficiary. Any amount otherwise payable to a beneficiary whom the Committee
cannot locate at this address will be forfeited. However, if, within one year of
the Participant's death, the beneficiary files a claim and establishes that he
or she is the deceased Participant's beneficiary, the Committee will direct the
Company to pay (and the Company will pay) any amount that was payable at the
death of the Participant. However, no amount will be paid representing the time
value of the delayed distribution. If this claim is not filed within one year of
the Participant's death, the amount will be forfeited irrevocably.
8.03 NO GUARANTEE OF EMPLOYMENT OR PARTICIPATION. Nothing in the Plan will
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or any
Subsidiary. Also, [1] receipt of a Target Bonus for any Performance Cycle is no
guarantee that a Participant will receive a similar (or any) Target Bonus for
any subsequent Performance Cycle and [2] establishment of Performance Criteria
for any Performance Cycle is no guarantee that identical or similar criteria
will be established for any subsequent Performance Cycle.
8.04 TAX WITHHOLDING. Before distributing any amount under the Plan, the Company
will withhold an amount sufficient to satisfy federal, state and local income
and employment tax withholding requirements imposed on the amount of any
distribution under the Plan.
35
8.05 INDEMNIFICATION. Each person who is or has been a member of the Committee
or of the Board will be indemnified and held harmless by the Company against
and from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit or proceeding against him
or her, provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification is not
exclusive and is independent of any other rights of indemnification to which
such persons may be entitled under the Company's Code of Regulations, by
contract, as a matter of law or otherwise.
8.06 NO LIMITATION ON COMPENSATION. Nothing in the Plan is to be construed to
limit the right of the Company to establish other plans or to pay compensation
to its employees, in cash or property, in a manner not expressly authorized
under this document.
8.07 GOVERNING LAW. The Plan, and all agreements under it, will be construed in
accordance with and governed by the laws of the State of Ohio.
8.08 RESOLUTION OF DISPUTES.
[1] Any controversy of claim arising out of, or relating to, this Plan
(other than those arising under Section 5.00 with respect to a
Participant who is a party to a Change in Control Agreement when the
controversy or claim arises) will be settled by arbitration in the city
in which the Participant's principal place of employment with the
Company is located or another place the Participant and the Company
mutually select immediately before the arbitration. The arbitration will
be conducted in accordance with the Rules of the American Arbitration
Association, and judgement on the award rendered by the arbitrator or
arbitrators may be entered in any court of competent jurisdiction.
[2] If the Company refuses or otherwise fails to make a payment when due and
it is ultimately decided that the Participant is entitled to that
payment, the payment will be increased to reflect an interest equivalent
for the period of delay, calculated at the prime rate quoted in the Wall
Street Journal and in effect as of the date the payment was first due.
[3] The costs of arbitration will be borne solely by the person by which
they are incurred.
[4] Any controversy or claim arising out of, or relating to, any matter
within Section 5.03 will:
[a] With respect to a Participant who is a party to a Change in Control
Agreement when the controversy or claim arose, be resolved under the
terms of the Participant's Change in Control Agreement; or
[b] With respect to a Participant who is not a party to a Change in
Control Agreement when the controversy or claim arose, will be
resolved as otherwise provided in this section.
8.09 TERM OF PLAN. The Plan will be effective upon its adoption by the
Committee, subject to approval by the Board and approval by the affirmative vote
of the holders of a majority of the shares of voting stock present in person or
represented by proxy at the first annual meeting of stockholders occurring after
the Board approves the Plan.
36
8.10 RELATIONSHIP TO CHANGE IN CONTROL AGREEMENT. Regardless of any implication
to the contrary, the Company intends that:
[1] Any Target Bonus paid or payable through this Plan will be a "bonus"
for purposes of any Participant's Change in Control Agreement;
[2] If any term, condition or feature of this Plan relates to an item
that also is dealt with in the Participant's Change in Control
Agreement, [a] the terms of the Change in Control Agreement will
apply if those terms provide the Participant a larger benefit than
otherwise would have been generated under the terms of the Plan,
without regard to this section or [b] the terms of this Plan (other
than Section 5.04) will apply if those terms provide the Participant
a larger benefit than would have been generated under the terms of
the Change in Control Agreement; and
[3] Any Target Benefit that is payable subject to a Participant's Change
in Control Agreement as described in Section 5.03 will be deemed to
have been paid through and subject to the Participant's Change in
Control Agreement.
37
BOB EVANS FARMS(R) VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to
3776 SOUTH HIGH STREET transmit your voting instructions
COLUMBUS, OH 43207 up until 11:59 p.m. Eastern
Daylight Time the day before the
meeting. Have your proxy card in
hand when you call. You will be
prompted to enter your 12-digit
control number which is located
below and then follow the simple
instructions the Proxy Voting
Service provides you.
AUTO DATA PROCESSING VOTE BY INTERNET - www.proxyvote.com
INVESTOR COMM SERVICES Use the internet to transmit
ATTENTION: your voting instructions up until
TEST PRINT 11:59 p.m. Eastern Daylight Time
51 MERCEDES WAY the day before the meeting. Have
EDGEWOOD, NY your proxy card in hand when you
11717 access the Web site. You will be
prompted to enter your 12-digit
control number which is located
below to obtain your records and
create an electronic proxy voting
instruction form.
VOTE BY MAIL
Indicate your vote, sign your name
as it appears on this card and
fill in the date and return it in
the postage-paid envelope we have
provided or return it to Bob Evans
Farms, Inc., c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717. Proxies
must be received by 11:59 p.m.
Eastern Daylight Time the day
before the meeting.
123,456,789,012.00000
CONTROL NUMBER 000000000000
ACCOUNT NUMBER 1234567890123456789
PAGE 1 OF 2
<Table>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X BOBEVS KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
____________________________________________________________________________________________________________________________________
BOB EVANS FARMS, INC.
Proxy for annual meeting of stockholders to be held on ___
Sept. 9, 2002. THIS PROXY IS SOLICITED ON BEHALF OF THE 02 0000000000 215063169272 |
BOARD OF DIRECTORS.
YOUR BOARD RECOMMENDS YOU VOTE "FOR" ALL NOMINEES.
DIRECTORS FOR WITHHOLD FOR ALL To withold authority to
1. Election of three class I directors to serve for terms of three ALL ALL EXCEPT vote, mark "For All Except"
years each: 01) Daniel A. Fronk, 02) Cheryl L. Krueger-Horn, and write the nominee's
03) G. Robert Lucas [ ] [ ] [ ] number on the line below.
_____________________________
PROPOSALS
FOR AGAINST ABSTAIN
YOUR BOARD RECOMMENDS YOU VOTE "FOR" THE BOB EVANS FARMS, INC. 2002 INCENTIVE GROWTH PLAN.
2. Approval and adoption of the Bob Evans Farms, Inc. 2002 Incentive Growth Plan [ ] [ ] [ ]
YOUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE "AGAINST" THE STOCKHOLDER PROPOSAL.
3. Adoption of the stockholder proposal to eliminate awards of stock options, bonuses and
restricted stock to top executives [ ] [ ] [ ]
THE UNDERSIGNED STOCKHOLDERS(S) AUTHORIZES THE PROXIES TO VOTE UPON SUCH OTHER MATTERS
(NONE KNOWN AT THE TIME OF SOLICITATION OF THIS PROXY) AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT(S) THEREOF IN THEIR DISCRETION.
If you plan on attending the meeting, please check box to the right. [ ] AUTO DATA PROCESSING
INVESTOR COMM SERVICES
The undersigned hereby acknowledges receipt of the notice of the ATTENTION:
annual meeting of stockholders, dated July 31, 2002; the enclosed TEST PRINT
proxy statement; and the annual report of the company for the fiscal 51 MERCEDES WAY
year ended April 26, 2002. EDGEWOOD, NY
11717
------------------------------------- -------------- ----------------------------------- ------------ 123,456,789,012
_____________________________________ ______________ ___________________________________ ____________ 096761101
Signature (PLEASE SIGN WITHIN BOX) Date P56598 Signature (Joint Owners) Date 27
____________________________________________________________________________________________________________________________________
</Table>
July 31, 2002
Dear Stockholders:
At the 2002 Bob Evans Farms, Inc. annual meeting of stockholders, we look
forward to celebrating a year of record financial results, while planning ahead
to keep the successes coming our way. I do hope you will be able to join us on
Monday, Sept. 9, 2002, for the meeting which will again be held at the Southern
Theatre in Columbus, Ohio, at 9 a.m. Beginning at 8 a.m., officers and
directors of the company will be available to talk with you, and juice, coffee
and pastries will be offered as refreshments.
We will discuss three areas of business at the meeting upon which we are asking
you to vote. The board of directors is asking for your support in the
re-election of class I directors and the approval and adoption of the Bob Evans
Farms, Inc. 2002 Incentive Growth Plan, both of which we feel will keep our
company strong. On the contrary, the board is asking you to vote against the
stockholder proposal which we believe would weaken our leadership team.
These issues are very important to the investment you have made in Bob Evans
Farms, Inc. and your vote counts. WHETHER OR NOT YOU ARE ABLE TO JOIN US AT THE
MEETING, PLEASE TAKE THE TIME TO VOTE YOUR PROXY. THERE ARE INSTRUCTIONS ON THE
REVERSE SIDE OF THIS CARD FOR VOTING BY INTERNET, PHONE OR MAIL. If you choose
to vote by Internet, I encourage you to sign up for electronic delivery of the
proxy materials and annual report next year to expedite delivery, reduce paper
usage and decrease mailing costs.
Again, I do hope you can join us on Sept. 9.
Sincerely,
/s/ Stewart K. Owens
Stewart K. Owens
Chairman of the Board and
Chief Executive Officer
BOBEVB
- --------------------------------------------------------------------------------
The stockholder(s) of Bob Evans Farms, Inc. (the "company"), identified on this
card, appoints Stewart K. Owens and Donald J. Radkoski as the proxies of such
stockholder(s), with full power of substitution, to attend the annual meeting
of stockholders of the company to be held at the Southern Theatre, 21 E. Main
St., Columbus, Ohio 43215, on Monday, Sept. 9, 2002, at 9 a.m., Eastern
Daylight Time, and to vote all of the shares of common stock which such
stockholder(s) is entitled to vote at the annual meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BOB EVANS FARMS, INC.
You may vote using any of the above mentioned methods. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a signer is a corporation, please sign the full corporate name by
authorized officer. Joint owners should both sign.
VOTES WILL BE COUNTED AS FOLLOWS: WHERE A CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED.
IF NO CHOICE IS INDICATED ON THE REVERSE SIDE OF THIS CARD, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED (i) FOR THE ELECTION OF THE NOMINEES
LISTED ON PROPOSAL NO. 1 AS DIRECTORS OF THE COMPANY; (ii) FOR PROPOSAL NO. 2
PERTAINING TO THE APPROVAL OF THE BOB EVANS FARMS, INC. 2002 INCENTIVE GROWTH
PLAN; AND (iii) AGAINST PROPOSAL NO. 3 TO ELIMINATE AWARDS OF STOCK OPTIONS,
BONUSES AND RESTRICTED STOCK TO TOP EXECUTIVES. IF PRIOR PROXIES HAVE BEEN
SUBMITTED FOR THE SAME SHARES REPRESENTED BY THIS CARD, THIS PROXY WILL REPLACE
EARLIER PROXIES.
IF SHARES OF COMMON STOCK OF THE COMPANY ARE ALLOCATED TO THE ACCOUNT OF THE
STOCKHOLDER IDENTIFIED ON THIS CARD UNDER THE BOB EVANS FARMS, INC. AND
AFFILIATES 401(k) RETIREMENT PLAN (THE "401(k) PLAN"), THEN SUCH STOCKHOLDER
HEREBY DIRECTS WILMINGTON TRUST COMPANY, THE TRUSTEE OF THE 401(k) PLAN (THE
"TRUSTEE"), TO VOTE (i) ALL OF THE SHARES OF COMMON STOCK OF THE COMPANY
ALLOCATED TO SUCH STOCKHOLDER'S ACCOUNT UNDER THE 401(k) PLAN AND (ii) THE
PORTION OF THE SHARES OF COMMON STOCK ALLOCATED TO ACCOUNTS OF PARTICIPANTS IN
THE 401(k) PLAN FROM WHOM VOTING INSTRUCTIONS HAVE NOT BEEN RECEIVED ("UNVOTED
SHARES"), IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN HEREIN AT THE ANNUAL
MEETING AND ANY ADJOURNMENT, ON THE MATTERS SET FORTH ON THE REVERSE SIDE. YOUR
INSTRUCTIONS TO THE TRUSTEE ARE CONFIDENTIAL. IF NO INSTRUCTIONS ARE GIVEN, THE
SHARES ALLOCATED TO SUCH STOCKHOLDER'S ACCOUNT IN THE 401(k) PLAN WILL BE
VOTED IN THE SOLE DISCRETION OF THE TRUSTEE.