SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(X) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ATLANTIC BEVERAGE COMPANY, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
ATLANTIC BEVERAGE COMPANY, INC.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
(847) 480-4000
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Atlantic Beverage Company, Inc., a Delaware corporation, to be
held at 10:00 a.m. local time on Thursday, May 15, 1997, at the Hyatt O'Hare,
9300 West Bryn Mawr Avenue, Rosemont, Illinois.
The matters to be considered at the meeting are described in the
accompanying Proxy Statement. Regardless of your plans for attending in person,
it is important that your shares be represented at the meeting. On behalf of the
Board of Directors, I urge you to please complete, sign, date and return the
enclosed proxy card in the enclosed stamped envelope. Signing this proxy will
not prevent you from voting in person should you be able to attend the meeting,
but will assure that your vote will be counted, if, for any reason, you are
unable to attend. If your shares are held in the name of a broker, you should
obtain a letter of identification from your broker and bring it to the meeting.
In order to personally vote shares held in the name of your broker, you must
obtain from the broker a proxy issued to you.
We look forward to seeing you at the 1997 Annual Meeting of
Stockholders.
Sincerely,
Merrick M. Elfman
Chairman
April __, 1997
ATLANTIC BEVERAGE COMPANY, INC.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
(847) 480-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of Atlantic Beverage Company,
Inc. (the "Corporation"), will be held at the Hyatt O'Hare, 9300 West Bryn Mawr
Avenue, Rosemont, Illinois, on Thursday, May 15, 1997, at 10:00 a.m. (central
time) for the following purposes:
1. To elect two (2) directors to the Board of Directors to serve
for a term of three (3) years and until their respective
successors are elected and qualified;
2. To consider and approve an amendment to the Corporation's
Certificate of Incorporation to change the Corporation's name
to Atlantic Premium Brands, Ltd.;
3. To consider and act upon such other business as may properly
come before the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
Tom D. Wippman
Secretary
Northbrook, Illinois
April __, 1997
ATLANTIC BEVERAGE COMPANY, INC.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
PROXY STATEMENT
Annual Meeting of Stockholders
May 15, 1997
This Proxy Statement is furnished on or about April 15, 1997, to
stockholders of Atlantic Beverage Company, Inc. (the "Corporation" or the
"Company"), in connection with the solicitation by the Board of Directors of the
Corporation of proxies to be voted at the 1997 Annual Meeting of Stockholders
(the "Annual Meeting"). The Annual Meeting will be held at 10:00 a.m. central
time on Thursday, May 15, 1997, at the Hyatt O'Hare, 9300 West Bryn Mawr Avenue,
Rosemont, Illinois.
The cost of soliciting proxies will be borne by the Corporation. Copies
of solicitation material may be furnished to brokers, custodians, nominees and
other fiduciaries for forwarding to beneficial owners of shares of the
Corporation's Common Stock, and normal handling charges may be paid for such
forwarding service. Solicitation of proxies may be made by the Corporation by
mail or by personal interview, telephone and telegraph by officers and other
management employees of the Corporation, who will receive no additional
compensation for their services.
Any stockholders giving a proxy pursuant to this solicitation may
revoke it at any time prior to exercise of the proxy by giving notice of such
revocation to the Secretary of the Corporation at its executive offices at 650
Dundee Road, Suite 370, Northbrook, Illinois 60062, or by attending the meeting
and voting in person.
At the close of business on April 1, 1997, there were 6,396,413 shares
of the Common Stock of the Corporation outstanding and entitled to vote at the
meeting. Only stockholders of record on April 1, 1997, will be entitled to vote
at the meeting, and each share will have one vote.
Voting Information
At the Annual Meeting votes will be counted by written ballot. A
majority of the shares entitled to vote will constitute a quorum for purposes of
the Annual Meeting. The election of the Board of Directors' nominees for
directors will require the affirmative vote of a plurality of the shares present
in person or represented by proxy and entitled to vote in the election of
directors. Approval of any other business which may properly come before the
Annual Meeting, or any adjournments thereof, will require the affirmative vote
of a majority of the shares present in person or represented by proxy and
entitled to vote thereon. Under Delaware law and the Corporation's Certificate
of Incorporation and By-laws, the aggregate number of votes entitled to be cast
by all stockholders present in person or represented by proxy at the Annual
Meeting, whether those stockholders vote "For", "Against" or abstain from
voting, will be counted for purposes of determining the minimum number of
affirmative votes required for approval of such matters, and the total number of
votes cast "For" each of these matters will be counted for purposes of
determining whether sufficient affirmative votes have been cast. An abstention
from voting on a matter by a stockholder present in person or represented by
proxy at the meeting has the same legal effect as a vote "Against" the matter
even though the stockholder or interested parties analyzing the results of the
voting may interpret such a vote differently. Broker non-votes will have the
effect of reducing the number of shares considered present and entitled to vote
on the matter.
A stockholder may, with respect to the election of directors, (i) vote
for the election of all named director nominees, (ii) withhold authority to vote
for all named director nominees or (iii) withhold authority to vote with respect
to any nominee, by so indicating in the appropriate space on the proxy card.
Proxies properly executed and received by the Corporation prior to the
meeting and not revoked, will be voted as directed therein on all matters
presented at the meeting. In the absence of specific direction from a
stockholder, proxies will be voted for the election of all named director
nominees. If a proxy indicates that all or a portion of the shares represented
by such proxy are not being voted with respect to a particular proposal, such
non-voted shares will not be considered present and entitled to vote on such
proposal, although such shares may be considered present and entitled to vote on
other proposals and will count for the purpose of determining the presence of a
quorum.
Proposal One
Election of Directors
The Board of Directors currently consists of eight (8) persons and will
consist of seven (7) persons following the Annual Meeting assuming the election
of all of the nominees to the Board of Directors. The Board of Directors is
divided into three classes, each of whose members serves for a staggered
three-year term. The terms of the current Class I Directors (Messrs. Becker,
O'Leary and Jordan) expire with this Annual Meeting. Only Mr. Becker and Mr.
Jordan have been nominated as Class I Directors to be elected at the 1997 Annual
Meeting. Each of the nominees, if elected, will serve for three years until the
2000 Annual Meeting of Stockholders and until a successor has been elected and
qualified. The current Class II and III Directors will continue in office until
the 1998 and 1999 Annual Meetings, respectively.
The following table presents information concerning persons nominated
for election as directors of the Corporation, including their current membership
on committees of the Board of Directors, principal occupations or affiliations
during the last five years and certain other directorships held.
Nominees for Directors
Class I - Directors to be Elected at the 1997 Annual Meeting:
Eric D. Becker. Mr. Becker, age 34, served as Chairman of the Company
from September 1993 through July 1996, and has been a director since 1991, when
the Company's business was purchased from a predecessor. Mr. Becker is also a
co-founder and Managing Principal of Sterling Capital, Ltd. ("Sterling
Capital"), a private investment firm which was founded in 1984. Since 1984, Mr.
Becker has been Chairman and Vice President of Sterling Group, Inc., an
affiliate of Sterling Capital ("Sterling Group") and the general partner of
Sterling Advisors, LP ("Sterling Advisors"). From March 1988 until December
1992, Mr. Becker served as the Chairman and a director of Castle Food Products
Corp., a Maryland food distribution company which commenced Chapter 7
liquidation proceedings in March 1993.
G. Cook Jordan, Jr. Mr. Jordan, age 45, has served as a director of the
Corporation since September 1993. Beginning in October 1996, Mr. Jordan became a
principal at C3 Holdings, LLC, a private investment firm. From 1988 through
October 1996, Mr. Jordan served as a Manager of Allstate Venture Capital, which
is affiliated with Allstate Insurance Company. Mr. Jordan is a member of the
Audit Committee and the Compensation Committee.
Members of Board of Directors Continuing in Office
Class II - Directors Serving Until 1998 Annual Meeting:
Merrick M. Elfman. Mr. Elfman, age 39, is Chairman of the Company, a
position he has held since July 1996, and has been a director of the Company
since 1991. He is also the founder of Elfman Venture Partners, Inc. ("EVP"), a
private investment firm, and serves as Chairman of Gray Supply Company, Inc., a
privately-held distributor of specialty lighting products.
Steven M. Taslitz. Mr. Taslitz, age 38, has served as a director of the
Corporation since 1991. Mr. Taslitz is a co-founder and Managing Principal of
Sterling Capital and Sterling Group. Mr. Taslitz has served as the President of
Sterling Group since 1984. Mr. Taslitz is a director of New Century Arizona LLC,
a privately-held radio broadcast company, and was the president and a director
of Arizona City Broadcasting Corporation, a Delaware corporation which filed a
petition under the Federal bankruptcy laws in January 1995.
-2-
Class III - Directors Serving Until 1999 Annual Meeting:
Alan F. Sussna. Mr. Sussna, age 40, has served as a director of the
Corporation since March 1996 and is the Company's President and Chief Executive
Officer, positions he has held since March 15, 1996. As a partner in the
consulting firms of McKinsey & Company and Bain & Company, he has opened offices
as well as led those firms' Consumer Goods practices. Mr. Sussna has also held
industry positions as Executive Vice President - Sales and Marketing for Jim
Beam Brands and in product management at Frito-Lay, Inc. Mr. Sussna is a member
of the Audit Committee.
Rick Inatome. Mr. Inatome, age 43, has served as a director of the
Corporation since September 1993. Since 1976, Mr. Inatome has served as the
Chairman of Inacom, a computer services firm.
John A. Miller. Mr. Miller, age 43, has served as a director of the
Corporation since September 1993. Mr. Miller has served as President and a
director of North American Paper Company since 1987. Mr. Miller is a member of
the Audit Committee and the Compensation Committee.
Board Committees
The Board of Directors has established an Audit Committee and a
Compensation Committee and has no nominating committee. Selection of nominees
for the Board is made by the entire Board of Directors.
The Audit Committee is composed of Mr. Sussna, Mr. Jordan and Mr.
Miller. The Audit Committee is responsible for reviewing the internal accounting
procedures of the Corporation and the results and scope of the audit and other
services provided by the Corporation's independent auditors, consulting with the
Corporation's independent auditors and recommending the appointment of
independent auditors to the Board of Directors. The Audit Committee met two
times during the year ended December 31, 1996; each member of the Audit
Committee attended one meeting and two of the three members attended the other
meeting.
The Compensation Committee is composed of Mr. Jordan and Mr. Miller.
The Compensation Committee has the authority and performs all of the duties
related to the compensation of management of the Corporation, including
determining policies and practices, changes in compensation and benefits for
management, determination of employee benefits and all other matters relating to
employee compensation, including matters relating to the administration of the
Corporation's Stock Option Plan (the "Corporation Plan"). The Compensation
Committee met two times during the year ended December 31, 1996; each member of
the Compensation Committee attended both meetings.
Attendance at Meetings
During the year ended December 31, 1996, the Board of Directors held
six meetings. All directors attended more than 75% of the meetings of the Board
of Directors, other than Mr. Becker, who attended four of the Board meetings.
Directors' Fees
Prior to the 1996 Annual Meeting, the Corporation had a policy of
paying fees to non-employee directors (other than Mr. Becker) in the amount of
$7,500 per year, plus $500 for each meeting of the Board attended and $250 for
each meeting of each committee thereof attended. Non-employee directors had also
received options to purchase an aggregate of 15,000 shares of Common Stock under
the Corporation Plan. At the 1996 Annual Meeting, the Corporation Plan was
amended and a new Director's Stock Option Plan was adopted (the "Director Plan";
the Corporation Plan and the Director Plan are referred to collectively as the
"Plans"). Since then, non-employee directors have received, in lieu of cash
directors' fees, options to purchase 10,000 shares of Common Stock per year
commencing January 1 of each year.
-3-
Beneficial Ownership of Common Stock
The following table sets forth certain information regarding the
ownership of Common Stock as of April 1, 1997, by each person known by the
Corporation to be the beneficial owner of more than five percent (5%) of the
outstanding shares of Common Stock, each director of the Corporation, each Named
Officer (as defined below), and all executive officers and directors as a group.
The information presented in the table is based upon the most recent filings
with the Securities and Exchange Commission by such persons or upon information
otherwise provided by such persons to the Corporation.
Shared Beneficially
Names of Beneficial Owners Owned(1) Percentage Owned
-------------------------- ------------------- ----------------
Douglas L. Becker............................ 357,293(4) 5.49%
Eric D. Becker............................... 422,293(4)(6) 6.26%
Merrick M. Elfman............................ 437,394(3)(4) 6.49%
Philip L. Glass.............................. 370,265(8) 5.79%
Bruce L. Goldman............................. 613,411(2) 9.59%
Rudolf Christopher Hoehn-Saric............... 388,035(4)(7) 5.97%
Rick Inatome................................. 113,240 1.53%
G. Cook Jordan, Jr........................... 33,000(4) *
William E. O'Leary........................... 185,069(9) 2.30%
John A. Miller............................... 115,240(4) 1.56%
Alan F. Sussna............................... 202,900(10) 2.37%
Steven M. Taslitz............................ 428,269(4)(5) 6.35%
Anthony J. Brocato, Jr....................... 5,500(11) *
Bobby L. Grogan.............................. 573,810(12) 8.97%
Franklin Roth................................ 97,000 1.52%
Steven E. Batchelor.......................... 30,000(13) *
--------- ------
All directors and executive officers as a group
[(14 persons)]............................... 2,086,796 30.95%
--------- ------
- ------------
*Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable
within 60 days are deemed outstanding for purposes of computing the
percentage ownership of the person holding such option or warrant but are
not deemed outstanding for purposes of computing the percentage ownership
of any other person. Except where indicated otherwise, and subject to
community property laws where applicable, the persons named in the table
above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
(2) Includes 250,346 shares of Common Stock of the Corporation held by KJT
Gift Trust dated 1/11/94, of which Mr. Goldman is a co-trustee. Mr.
Goldman disclaims beneficial ownership of the shares held by the KJT Gift
Trust.
(3) Mr. Elfman shares beneficial ownership of such shares with his wife,
Therese L. Wareham.
(4) Includes shares that may be acquired upon the exercise of options granted
under the Plans. With respect to Messrs. D. Becker, E. Becker,
Hoehn-Saric, Elfman and Taslitz, also includes options to purchase 15,000
shares granted to each of them in March 1996 at an exercise price of
$1.05 per share, the fair market value of the Common Stock on the date of
the option grants.
(5) Includes 250,346 shares held by the KJT Gift Trust of which Mr. Taslitz
is a co-trustee. Mr. Taslitz disclaims beneficial ownership of such
shares. Mr. Taslitz shares beneficial ownership of the remaining shares
with his wife, Kathy J. Taslitz and the Kathy J. Taslitz Trust, the
registered holder.
-4-
(6) Mr. Becker shares beneficial ownership of such shares with his wife, Jill
E. Becker, the registered holder of such shares.
(7) Mr. Hoehn-Saric beneficially owns these shares directly and indirectly as
custodian for Gabriella Hoehn-Saric and Rudolf Christopher Hoehn-Saric,
Jr.
(8) Philip L. Glass shares beneficial ownership of such shares with his wife,
Ellen V. Glass. Of the 370,265 shares of Common Stock attributable to the
beneficial ownership of Mr. and Mrs. Glass, 84,770 shares are held by the
Glass International Ltd. Profit Sharing Plan and Trust dated 7/1/83 (the
"Trust"). Mr. and Mrs. Glass are co-trustees and also beneficiaries of
the Trust. The balance of such shares of Common Stock of the Corporation
are held by the Mr. and Mrs. Glass jointly, either as joint tenants or
tenants in common.
(9) Includes 100,069 shares that may be acquired upon the exercise of options
granted under the Plans.
(10) Includes 152,900 shares held by Alan F. Sussna, as trustee of the Alan F.
Sussna Trust. Mr. Sussna disclaims beneficial ownership of such shares.
(11) Includes 500 shares held by Wheat First Securities for the Anthony J.
Brocato, Jr. IRA. Mr. Brocato disclaims beneficial ownership of such
shares. The other 5,000 shares are held by Mr. Brocato and his wife,
Shawn H. Brocato, in joint tenancy.
(12) Mr. Grogan shares beneficial ownership of such shares with his wife,
Betty R. Grogan.
(13) Mr. Batchelor shares beneficial ownership of such shares with his wife,
Janet M. Batchelor, in joint tenancy.
Compensation
Executive Compensation
The following table sets forth annual and long-term compensation for
the fiscal years ended December 31, 1994, 1995 and 1996 for services in all
capacities to the Corporation of (i) the Chief Executive Officer and (ii) the
Corporation's four most highly compensated executive officers other than the
Chief Executive Officer whose total annual salary and bonus exceeded $100,000
during such periods (the "Named Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
--------------------------------- -------------------------------------
Securities
Underlying All Other
Name and Position(1) Year Salary($) Bonus($) Options/SAR's Compensation($)(7)
- -------------------- ---- --------- -------- ------------- ------------------
Alan F. Sussna, 1996 177,808 -- 250,000 $13,915
President and Chief Executive
Officer(2)
William E. O'Leary, 1996 169,500 -- 10,000 4,250
President(3)-Beverage Division 1995 166,126 -- 25,000 3,000
1994 160,680 -- -- --
Anthony J. Brocato, Jr.(4), 1996 101,385 7,500 7,000 10,162
Vice President, Sales and 1995 100,000 22,433 -- 2,000
General Manager-Beverage 1994 100,000 -- -- --
Division
Franklin Roth(5) 1996 125,000 -- -- 3,410
President--Prefco Division
Steven E. Batchelor(6) 1996 110,240 -- -- 13,119
Vice President and General
Manager--Prefco Division
(1) This table presents information concerning the Corporation's Chief
Executive Officer and its four other most highly compensated executive
officers (determined by reference to total annual salary and bonuses
earned by such officers) for the fiscal year ended December 31, 1996.
-5-
(2) Mr. Sussna was named President and Chief Executive Officer of the Company
on March 15, 1996.
(3) Mr. O'Leary served as Chief Executive Officer until March 15, 1996. He
continues his duties as President of the Beverage Division.
(4) Mr. Brocato assumed his position in October 1994. His salary for 1994 is
presented on an annualized basis.
(5) Mr. Roth assumed his position as of January 1, 1996.
(6) Mr. Batchelor assumed his position as of January 1, 1996.
(7) Includes contributions by the Corporation in the amount of $1,391, $1,400
and $1,658 to its 401(k) Plan on behalf of Mr. O'Leary in 1994, 1995 and
1996, respectively. Includes contributions by the Corporation in the
amount of $1,000 and $1,117 to its 401(k) Plan on behalf of Mr. Brocato
in 1995 and 1996, respectively. Also includes life insurance premiums
paid by the Corporation in the amount of $1,566, $1,600 and $2,592 on
behalf of Mr. O'Leary in 1994, 1995 and 1996, respectively, and life
insurance premiums paid by the Corporation in the amount of $1,000 and
$174 on behalf of Mr. Brocato in 1995 and 1996, respectively. Mr. Brocato
also received $8,871 as an automobile allowance in 1996. Mr. Roth
received $1,670 pursuant to an executive medical reimbursement plan and
$1,740 as an automobile allowance in 1996. Mr. Batchelor received $2,113
pursuant to an executive medical reimbursement plan, $1,612 as an
automobile allowance and life insurance premiums of $9,394 paid by the
Company on his behalf in 1996. Mr. Sussna receives $1,500 per month in
order to fund his own benefits.
Option Grants
The following table sets forth certain information concerning
option grants to the Named Officers at December 31, 1996:
Option Grants in Last Fiscal Year
Individual Grants
- --------------------------------------------------------------------------------------
Potential Realizable
Percent Value at Assumed
Number of of Total Annual Rates of Share
Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term
Options Employees in Price Expiration --------------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5% 10%
- -------------------------------------------------------------------------------------- --------------------------
Alan F. Sussna........ 250,000 81% $1.50 03/14/06 $750,951 $1,352,391
William E. O'Leary.... 10,000 3.2% $4.00 09/04/06 6,098 32,207
Anthony J. Brocato.... 7,000 2.3% $1.25 12/31/05 22,470 38,704
Franklin Roth......... 0 0% N/A N/A N/A N/A
Steven E. Batchelor... 0 0% N/A N/A N/A N/A
The options granted in 1996 to Mr. Sussna become exercisable in five equal
annual installments beginning on the first anniversary of the date of grant. Mr.
O'Leary's options granted in 1996 are fully vested. Mr. Brocato's options vest
on January 1, 1999. All options have a term of ten years after the date of
grant.
Option Exercises
Shown below is information with respect to the exercise of stock
options by the Named Officers during the year ended December 31, 1996.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
-6-
Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired Value Unexercised Options Options
Name on Exercise(#) Realized($) at December 31, 1996 at December 31, 1996(1)
- ---- -------------- ----------- -----------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Alan F. Sussna........ 0 $0 50,000 200,000 $68,750 $275,000
William E. O'Leary.... 0 0 135,069 25,017 37,523 0
Anthony J. Brocato.... 0 0 0 7,000 N/A N/A
Franklin Roth......... 0 0 0 0 N/A N/A
Steven E. Batchelor... 0 0 0 0 N/A N/A
- ------------------------
(1) Based on closing price of $2,875 per share of Common Stock on December
31, 1996, as reported by the NASDAQ.
Performance Graphs
During the fiscal year ended December 31, 1996, the Corporation
expanded the scope of its business operations to include activities in the areas
of food processing, marketing and distribution, which collectively comprised
approximately 80% of the Corporation's overall revenues for 1996. The Board of
Directors believes that this market offers substantial growth opportunities and
that a move into this market is in the best interests of the Corporation.
The first graph below compares the Corporation's cumulative stockholder
return on its Common Stock since [the Corporation began engaging in the food
distribution business] with [to be inserted]. Because of the change in the
Corporation's business, the comparison in the first graph uses new indices which
were not used in the fiscal year ended December 31, 1995. The Board of Directors
believes these new indices more accurately reflect the Corporation's current
peer group. [At present there is no comparative index for the food distribution
industry.]
When indices used in a performance graph are different from those used
in the preceding fiscal year, the Securities and Exchange Commission ("SEC")
requires that a securities issuer also compare its cumulative stockholder return
with the indices used in the preceding fiscal year. For this reason, the second
graph below compares the Corporation's cumulative stockholder return on its
Common Stock since the Corporation's initial public offering on November 29,
1993 with the NASDAQ, New Day Beverage, Inc. and Saratoga Springs Mineral Water
Company Inc. Although the Securities and Exchange Commission ("SEC") requires
the Corporation to present such a graph for a five-year period, the Common Stock
has been publicly traded only since November 29, 1993 and, as a result, the
following graph commences as of such date.
Theses graphs are not deemed to be "soliciting material" or to be filed
with the SEC or subject to the SEC's proxy rules or to the liabilities of
Section 18 of the Securities Act of 1934 ("1934 Act"), and the graphs shall not
be deemed to be incorporated by reference into any prior or subsequent filing by
the Corporation under the Securities Act of 1933 or the 1934 Act.
-7-
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on its policies with respect to the compensation of executive
officers. The report is not deemed to be "soliciting material" or to be "filed"
with the SEC or subject to the SEC's proxy rules or to the liabilities of
Section 18 of the 1934 Act, and the report shall not be deemed to be
incorporated by reference into any prior or subsequent filing by the Corporation
under the Securities Act of 1933 or the 1934 Act.
The Corporation's Board of Directors established the Compensation
Committee at the end of 1993, and the Committee will determine and act upon
compensation decisions as described below in 1997 and future years. Decisions on
compensation of the Corporation's executives officers generally will be made by
the Compensation Committee of the Board of Directors. No member of the
Compensation Committee is an employee of the Corporation. During 1996, the
Committee consisted of Mr. Miller and Mr. Jordan. All decisions by the
Compensation Committee relating to the compensation of the Corporation's
executive officers will be reviewed by its full Board of Directors, except for
decisions concerning grants under the Plan, if approved, which will be made
solely by the Committee in order for the grants to satisfy certain requirements
under the 1934 Act.
Compensation Policies Toward Executive Officers
The Corporation's executive compensation policies are intended to
provide competitive levels of compensation that reflect the Corporation's annual
and long-term performance goals, reward superior corporate performance, and
assist the Corporation in attracting and retaining qualified executives. Total
compensation for the Named Officers as well as the other senior executives is
comprised of three principal components: base salary, annual incentive
compensation and grants of options to purchase the Corporation's Common Stock.
The base salaries are fixed at levels which the Compensation Committee believes
are comparable to those of executives of similar status in the beverage
distribution industry and food industry, as applicable. In addition to base
salary, each executive officer may be eligible to receive an annual bonus tied
to the Corporation's success in achieving certain annual performance measures,
as well as individual performance. The Board of Directors and the Compensation
Committee also believe that longer-term incentives are appropriate to motivate
and retain key personnel and that stock ownership by management is beneficial in
aligning management's and stockholders' interests in the enhancement of
stockholder value. Accordingly, the Compensation Committee intends to consider
annual grants of stock options to certain of the executive officers and other
eligible persons under the Plans.
The following describes in more specific terms the three elements of
compensation that implement the Committee's compensation reported for 1996:
Base Salary. Each year the President of each division recommends to the
Committee a base salary level for senior executives whose salaries are not fixed
by contract. In this regard, Messrs. Sussna, O'Leary, Roth, Brocato and Izzo's
base salaries are fixed by contract, and Mr. Elfman is not directly compensated
by the Corporation. In formulating such recommendations, the President may
consider local salary levels for comparable positions, informal information
regarding industry standards and performance judgments as to the past and
expected future contributions of the individual senior executives. The Committee
will review the recommendations and fix the base salaries of each of these
executive officers based on available competitive compensation data and the
Committee's assessment of each officer's past performance and its expectation as
to future contributions.
Annual Incentive Bonus. Annual incentive bonuses are primarily based
upon the achievement of measurable pre-tax earnings performance goals
established at the beginning of the fiscal year. With respect to Mr. Sussna, the
Company is to pay Mr. Sussna 20% of the operating cash flow earned above the
budgeted goal of the Corporation on a consolidated basis. In the case of Mr.
O'Leary, a bonus opportunity of up to 50% of base salary is based on achieving
100% of the pre-tax earnings goal of the Beverage Division. For John Izzo, Vice
President Finance, Controller and Treasurer, a bonus opportunity of up to 22.5%
of base salary is based on this pre-tax earnings goal of the Corporation on a
consolidated basis, and for Mr. Brocato, a bonus opportunity of up to $7,500 per
quarter based on the achievement of certain case sales at the Beverage Division.
There were no formalized incentive bonus programs of the Company's other
divisions for executive officers.
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In addition to the executive officers, some level of annual incentive
bonus may currently be earned by the Corporation's salaried employees based on
the recommendation of the President of each division.
Long-Term Stock Option Incentives. Stock options provide executives
with the opportunity to buy an equity interest in the Corporation and to share
in the appreciation of the value of the Corporation's Common Stock. Stock
options are granted at the fair market value price of the Common Stock on the
date of grant, are subject to vesting over time and only have future value for
the executives if the stock price appreciates from the date of grant. Factors
influencing stock option grants to executive officers include performance of the
Corporation, relative levels of responsibility, contributions to the business of
the Corporation and competitiveness with other growth oriented companies. Stock
options granted to executive officers and other management employees are
approved by the Compensation Committee. In 1996, Mr. Sussna was granted options
to acquire 250,000 shares of stock at an exercise price of $1.50 per share,
which options vest in five equal installments on the first through fifth
anniversaries of the date of grant. In 1993, Mr. O'Leary was granted options to
purchase 125,086 shares of stock at an exercise price of $6.50 per share, 20% of
which options vested upon stockholder approval of the Plan and 20% of which
vested or are to vest on the first through fourth anniversary dates of such
grant. In April 1995, the Board of Directors determined to reprice the then
unvested options, which new exercise price became the fair market value of the
Common Stock on the date on which the options vest. Mr. O'Leary was granted
options to acquire 10,000 shares at $4.00 per share in 1996, which options were
entirely vested as of the date of grant. Pursuant to Mr. Brocato's employment
agreement, he was granted options to acquire 7,000 shares of stock at $1.25 per
share, which options vest on the third anniversary of the date of grant. All
options have terms of ten years.
Other Compensation Plans. The Corporation maintains a defined
contribution plan (the "401(k) Plan") which is intended to satisfy the tax
qualification requirements of Sections 401(a), 401(k) and 401(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Corporation's senior
executives are eligible to participate in the 401(k) Plan and are permitted to
contribute up to the maximum percentage allowable not to exceed the limits of
Code Sections 401(k), 404 and 415 (i.e., $9,500 in 1996). All amounts deferred
under the 401(k) Plan's salary reduction feature by a participant vest
immediately in the participant's account while contributions made by the
Corporation vest over a seven year period in the participant's account. The
Corporation will make a matching contribution to the 401(k) Plan equal to 25% of
each participant's contribution, up to a maximum of 6% of the participant's
salary. The Corporation may make additional discretionary contributions.
Benefits. Benefits offered to key executives are largely those that are
offered to the general employee population, such as group health and life
insurance coverage and participation in the Company's 401(k) Plan. In addition,
Mr. O'Leary is provided a Corporation automobile. Benefits are not tied directly
to corporate performance.
Mr. Elfman's Compensation.
Although Mr. Elfman received no direct compensation from the
Corporation during 1996, the Corporation paid EVP $49,167 for certain consulting
services, including the services of Mr. Elfman, and $80,000 for certain
investment banking services. See "Certain Transactions with Management" and
"Consulting and Employment Agreements."
The Compensation Committee believes that the Corporation's executive
compensation policies and programs serve the interests of the Corporation and
its stockholders. Total compensation to the executives is linked to Corporation
performance.
Submitted by the Members of the Compensation Committee:
John A. Miller
G. Cook Jordan, Jr.
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Consulting and Employment Agreements
The Corporation entered into a Consulting Agreement (the "Consulting
Agreement") with Mr. Becker and Sterling Group (assigned by Sterling Group to
Sterling Advisors), effective November 29, 1993, pursuant to which Mr. Becker
acted as a part-time consultant to the Corporation and served as the
Corporation's Chairman of the Board and a director. The initial term of this
Consulting Agreement was from November 29, 1993 until December 31, 1998. The
term of the agreement was to extend for additional one year periods commencing
on January 1, 1999, and each January 1 thereafter, unless and until terminated
by written notice given by either party to the other 12 months prior to each
applicable termination date. The Consulting Agreement provided that the
Corporation shall pay Sterling Advisors a base fee of $140,000 per year, which
base fee shall increase by 3% on January 1 of each year the agreement remained
in effect.
The Corporation, Sterling Group and Messrs. Becker, Taslitz, D. Becker
and C. Hoehn-Saric entered into a Non-Compete and Non-Disclosure Agreement
containing certain non-competition and confidentiality provisions pursuant to
which Sterling Group and Messrs. Becker, Taslitz, D. Becker and C. Hoehn-Saric
have agreed not to compete with the Corporation for a period ending one year
after Sterling Group's consulting relationship with the Corporation is
terminated, nor will they solicit for employment any director, stockholder or
certain employees of the Corporation during such period. Such agreement also
provides that neither Sterling Group nor such persons will disclose any
confidential information concerning the Corporation and its business to any
other person or entity except as may be required by law.
Effective March 15, 1996, the Consulting Agreement was terminated and
replaced with a new Consulting Agreement (the "New Consulting Agreement")
pursuant to which Sterling Advisors and EVP agreed to provide consulting
services to the Corporation for base consulting fees in the aggregate of
$300,000 per year, increasing 5% on January 1 of each year the agreement is in
effect and increases or decreases in the event of an acquisition or divestiture
by the Company; due to certain acquisitions during 1996, the base consulting fee
increased by $50,000 on January 1, 1997. The New Consulting Agreement also
provides for the reimbursement of certain expenses incurred by Sterling Advisors
and EVP on behalf of the Corporation. Mr. Elfman acts as a consultant to the
Corporation and starting in July 1996, began serving as the Corporation's
Chairman of the Board pursuant to the New Consulting Agreement. The New
Consulting Agreement provides that the Chairman is entitled to participate in
any profit sharing plan, retirement plan, group life insurance plan or other
insurance plan or medical insurance plan maintained by the Corporation for its
non-employee directors, and reimbursement for certain fees of professional
organizations. The term of the New Consulting Agreement is from March 15, 1996
until December 31, 2001. The term of the agreement extends for additional one
year periods commencing January 1, 2002, and each January 1 thereafter, unless
and until terminated by written notice given by either party to the other 12
months prior to each applicable termination date. In 1996, an aggregate of
$400,000 in investment banking fees were paid to Sterling Advisors and EVP in
connection with the acquisitions of Prefco, Inc. and Richards Cajun Foods and
the merger of Carlton Foods, Inc. The New Consulting Agreement provides that
Sterling Advisors and EVP (or their respective principals) will receive in the
aggregate options to purchase 25,000 shares of Common Stock during each year in
which the New Consulting Agreement is in effect. Such options vest on each
December 31 of each year at an exercise price equal to the fair market value of
the Common Stock on the preceding January 1 of the same year. All compensation
payable by the Corporation under the New Consulting Agreement is payable 80% to
Sterling Advisors and 20% to EVP.
The Corporation entered into an Employment Agreement with Mr. O'Leary
in September 1993, pursuant to which Mr. O'Leary will serve as the President of
the Beverage Division of the Corporation. The initial term of the agreement is
from November 29, 1993 and continues until December 31, 1996. The term of the
agreement is to extend for additional one year periods commencing on January 1,
1997, and each January 1 thereafter, unless and until terminated by written
notice given by either party to the other three months prior to each applicable
termination date. The agreement was renewed for 1997. The agreement provides
that the Corporation shall pay Mr. O'Leary base compensation of $156,000 per
year, which base compensation shall increase by 3% on March 1 for each year the
agreement remains in effect. Commencing in 1994, Mr. O'Leary is also eligible to
receive a bonus each year equal to one-half of his base salary for such year
provided (i) Mr. O'Leary was a full-time employee of the Corporation during such
year and (ii) the Corporation achieved 100% of pre-tax earnings as set forth in
the annual budget submitted by Mr. O'Leary and approved by the Board of
Directors of the Corporation. Pursuant to the terms of the agreement, Mr.
O'Leary received options on November 29, 1993 to acquire 125,086 shares of the
Common Stock of
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the Corporation, 20% of which options vested upon stockholder approval of the
Corporation Plan and 20% of which vested or are to vest on the first through
fourth anniversary dates of such grant. The exercise price of such options is
equal to $6.50 per share for options that vested before 1995 and is equal to the
fair market value of the Common Stock on the date of vesting for the remainder
of the options. In addition, during 1996, Mr. O'Leary received options to
purchase an additional 10,000 shares at an exercise price of $4.00 per share
which options were immediately vested.
The Corporation also entered into an Employment Agreement with Mr. Izzo
in September 1993, pursuant to which Mr. Izzo is to serve as Vice
President-Finance, Controller and Treasurer of the Company. The initial term of
the agreement was from November 29, 1993 until December 31, 1996. The term of
the agreement is to extend for additional one year periods commencing on January
1, 1997, and each January 1 thereafter, unless and until terminated by written
notice given by either party to the other six months prior to each applicable
termination date. The agreement was renewed for 1997. The agreement provides
that the Corporation shall pay Mr. Izzo a base salary of $47,000 per year. On
March 15, 1996, Mr. Izzo's base salary was increased to $60,000 per year.
Mr. Robert E. Groth, who was a party to a Consulting Agreement with the
Corporation dated April 27, 1994 pursuant to which Mr. Groth acted as President
of the Corporation's Flying Fruit Fantasy Division, resigned from the
Corporation's Board of Directors in March 1996 in connection with the
Corporation's sale to Mr. Groth and related parties of certain equipment for a
purchase price of $80,000 following the Corporation's decision to discontinue
the Flying Fruit Fantasy Division.
The Corporation entered into an Employment Agreement with Mr. Brocato,
in April 1995, pursuant to which Mr. Brocato agreed to serve as Vice President,
Sales and General Manager/Beverage Division. The term of the agreement is from
April 24, 1995 and continued until December 31, 1996. The term of the agreement
is to extend for additional one year periods commencing on January 1, 1997, and
each January 1 thereafter, unless and until terminated by written notice given
by either party to the other three months prior to each applicable termination
date. The agreement was renewed for 1997. The agreement provides that the
Company shall pay Mr. Brocato base compensation of $100,000 per year. Mr.
Brocato is eligible to receive a bonus each quarter of $7,500 provided (i) Mr.
Brocato was a full-time employee of the Company during the preceding quarter and
(ii) the Company achieved 100% of the case sales budget as determined by the
Company's CEO and approved by the Board of Directors in conjunction with the
annual budget. The bonus for the first three quarters of Mr. Brocato's
employment was paid regardless of achievement of case sales budget. Pursuant to
the terms of the agreement, Mr. Brocato received options to purchase 7,000
shares on January 1 of 1996 and 1997 and will receive options to purchase an
additional 7,000 shares on January 1, 1998. The options become vested three
years from the date of grant and have an exercise price equal to the closing
price on NASDAQ on the day before the options are granted.
Effective March 15, 1996, the Corporation entered into an Employment
Agreement with Mr. Sussna, pursuant to which Mr. Sussna will serve as the
Corporation's Chief Executive Officer and President. The initial term of the
Agreement is for five years and may be extended for additional one year periods
commencing March 15, 2001 unless and until terminated by written notice given by
either party to the other six months prior to each applicable termination date.
The Agreement provides that the Corporation will pay Mr. Sussna base
compensation of $230,000 in the first year of the Agreement and $200,000 per
year thereafter, subject to normal cost of living increases, as well as those
increases permitted by the Compensation Committee. Mr. Sussna will also receive
an annual bonus equal to 20% of the amount by which the Corporation's actual
cash flow exceeds its budgeted cash flow. In addition, Mr. Sussna received
options to purchase 250,000 shares of the Corporation's common stock at an
exercise price of $1.50 per share, which options vest in five equal installments
on the first through fifth anniversaries of the Agreement, subject to
acceleration based upon the stock price as reported on NASDAQ.
All shares issuable under options granted to employees and directors
have been registered under the Securities Act on Form S-8.
Each of the Employment Agreements also contain certain non-competition
and confidentiality provisions pursuant to which each employee has agreed not to
compete with the Corporation for a period of, in the case of Mr. Sussna, three
years, in the case of Mr. Brocato, one year, and in the case of Messrs. O'Leary
and Izzo, eighteen months following termination of their employment with the
Corporation, nor will they solicit for employment any
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director, stockholder or certain employees of the Corporation during such
period. The agreement also provides that each employee will not disclose any
confidential information concerning the Corporation and its business to any
other person or entity except as may be required by law.
Compliance with Section 16 of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), requires the Corporation's officers, directors and certain
beneficial holders of common stock to file reports about their beneficial
ownership of the Corporation's common stock. Based solely on its review of the
copies of such reports furnished to the Corporation by its directors and
officers during and with respect to the year 1996, the Corporation believes that
none of its directors and officers failed to file on a timely basis any reports
required by Section 16(a) of the 1934 Act.
Certain Transactions with Management and Others
The Corporation and Sterling Advisors entered into the Consulting
Agreement in connection with the Corporation's initial public offering in
November 1993. The Consulting Agreement was terminated and replaced by the New
Consulting Agreement concurrently with the acquisition by the Company of Prefco,
Inc. and the merger of Carlton Foods, Inc. into the Company's wholly-owned
subsidiary. In connection with such acquisition and merger, the Company paid an
investment banking fee of $300,000 to Sterling Advisors and EVP.
On January 25, 1996, the Corporation, Carlton Foods Corp., and Carlton
Foods, Inc. executed an Agreement and Plan of Merger pursuant to which Carlton
Foods, Inc. was merged into Carlton Foods Corp., a wholly owned subsidiary of
the Corporation. Prior to the March 15, 1996 closing date of the transaction,
certain of the Company's shareholders collectively owned approximately 40.7% of
Carlton Foods, Inc. Carlton Foods, Inc. was merged with and into a wholly-owned
subsidiary of the Corporation in consideration of the issuance of 400,001 shares
of the Corporation's Common Stock. The Corporation also refinanced and assumed
certain indebtedness of Carlton Foods, Inc. in the amount of approximately
$2,700,000, and issued 205,517 shares of the Corporation's Common Stock in full
satisfaction of approximately $300,000 in principal and accrued interest owed by
Carlton Foods, Inc. to certain of its stockholders.
On March 15, 1996, the Corporation finalized a transaction by which
ABEV Acquisition Corp. ("ABEV"), a wholly-owned subsidiary of the Corporation,
acquired all of the capital stock of Prefco, Inc. ("Prefco"). Prefco, based in
Houston, Texas, markets and distributes its own branded meat products as well as
unbranded meat products to the retail grocery trade in Texas. Simultaneously
with the acquisition of Prefco's stock, the merger of Carlton Foods, Inc. into
Carlton Foods Corp. ("Carlton") was consummated. Carlton, based in New
Braunfels, Texas, is a manufacturer of branded and private label meat products.
The newly acquired businesses operate as separate, wholly-owned subsidiaries of
the Corporation under the names Prefco Corp. and Carlton Foods Corp.
On August 1, 1996, a wholly-owned subsidiary of the Company acquired
the business of Richards Cajun Country Food Processors. In connection with such
acquisition and pursuant to the New Consulting Agreement, the Company paid an
investment banking fee of $100,000 to Sterling Advisors and EVP.
Effective October 1, 1996, the business known as Grogan's Farms, Inc.
merged into a wholly-owned subsidiary of the Corporation. Because of such
transaction, and pursuant to the New Consulting Agreement, the base annual
consulting fee due Sterling Advisors and EVP increased by $50,000 on January 1,
1997. See "Consulting and Employment Agreements."
Proposal Two
Change of the Corporation's Business Name
In February 1996, the Board of Directors unanimously adopted a
resolution recommending that the Corporation's Certificate of Incorporation be
amended to change its name from Atlantic Beverage Company, Inc. to Atlantic
Premium Brands, Ltd.
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The Corporation has expanded beyond its origins in the beverage
distribution business, and over the course of 1996, the Corporation's business
has become increasingly focused on the food industry. While beverage
distribution still serves as an important part of the Corporation's business,
its food processing and distribution activities now comprise approximately 80%
of its overall revenues. The Board of Directors recommends the proposed new name
as it more accurately reflects the broader range of products now distributed by
the Corporation and will provide for the possibility of further expansion of the
Corporation's product line in the future. The Board of Directors believes that
the new corporate name will enable consumers to more easily identify the
Corporation with the full range of its products and will provide marketing
benefits to the Corporation.
If approved by the stockholders at the Annual Meeting, the new name
will become effective upon the filing of an amendment to the Corporation's
Certificate of Incorporation with the Department of State of the State of
Delaware. The change of corporate name will be accomplished by amending Article
First of the Corporation's Certificate of Incorporation to read as follows:
"Article First: The name of the Corporation is Atlantic Premium Brands,
Ltd."
The change in corporate name will not affect the validity or
transferability of stock certificates currently outstanding and the
Corporation's stockholders will not be required to exchange any certificates
they currently hold.
Approval of the amendment requires the affirmative vote of the holders
of a majority of the shares of Common Stock represented at the Annual Meeting.
The Board of Directors recommends a vote FOR the proposal the amend the
Corporation's Certificate of Incorporation.
Stockholder Proposals
All stockholder proposals intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Corporation no later than
December 31 , 1997 and must otherwise comply with rules of the Securities and
Exchange Commission for inclusion in the Corporation's proxy statement and form
of proxy relating to the meeting.
Other Matters
The Corporation knows of no other matters to be presented for action at
the Annual Meeting other than those mentioned above. However, if any other
matters should properly come before the meeting, it is intended that the persons
named in the accompanying proxy card will vote on such matters in accordance
with their best judgment.
A copy of the Annual Report to Stockholders
for the fiscal year ended December 31, 1996
accompanies this proxy statement.
Stockholders may obtain, free of charge, a
copy of the Company's Annual Report on
Form 10-K for the same year by writing to
Atlantic Beverage Company, Inc., Attention:
John Izzo, 8106 Stayton Drive, Jessup,
Maryland 20794.
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