SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Under Rule 14a-12
The Chalone Wine Group, Ltd.
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previously. Identify the previous filing by registration statement number, or
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JULY 7, 2000
======================================
CHALONE
Wine Group
======================================
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
THE CHALONE WINE GROUP, LTD.
TO BE HELD ON AUGUST 24, 2000
TO ALL SHAREHOLDERS:
It is with great pleasure that we invite you to the Annual Meeting of
Shareholders of The Chalone Wine Group, Ltd., which will be held at 10:00 a.m.,
Pacific time, on Thursday, August 24, 2000, at the Company's executive offices,
621 Airpark Road, Napa, California, for the following purposes:
1. Election of directors for the ensuing year.
2. Ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending March 31, 2001.
3. Consideration and action on any other matter properly brought before
the meeting.
Shareholders of record as of the close of business on June 30, 2000,
the record date, are entitled to notice of, and to vote at, the annual meeting
and any postponement or adjournment thereof.
You are requested to date, complete and sign the enclosed proxy, which
is solicited by the Company's Board, and to return it promptly in the envelope
provided. Even if you return this proxy, and you later decide to attend the
annual meeting, you may vote your shares in person by completing a ballot or
proxy at the meeting.
By Order of the Board of Directors,
/s/ W. PHILIP WOODWARD
-------------------------
W. Philip Woodward
Chairman of the Board
Napa, California
July 7, 2000
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. YOU MAY REVOKE YOUR PROXY AT
ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING.
======================================
CHALONE
Wine Group
======================================
Acacia Winery Canoe Ridge Vineyard Carmenet Winery Chalone Vineyard Edna
Valley Vineyard Chateau Duhart-Milon Echelon Vineyards Sagelands Winery Jade
Mountain
PROXY STATEMENT
------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 24, 2000
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VOTING PROCEDURES AND INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of The Chalone Wine Group,
Ltd., a California corporation (the "Company"), for use at the 2000 Annual
Meeting of Shareholders of the Company (the "Meeting"), to be held at 10:00
a.m., Pacific time, on Thursday, August 24, 2000, at the Company's executive
offices, 621 Airpark Road, Napa, California 94558-6272 and any adjournments
thereof (the "Meeting").
Only holders of the Company's common stock (the "Common Stock") of
record as of the close of business on June 30, 2000, the record date fixed by
the Board, will be entitled to notice of, and to vote at, the Meeting. As of the
record date, 10,224,521 shares of Common Stock were issued and outstanding.
Holders of Common Stock are entitled to cast one vote for each share held of
record by them on each proposal submitted to a vote at the Meeting except that,
for the election of directors, upon request made prior to the commencement of
voting, each shareholder will be accorded cumulative voting rights, under which
he or she will be entitled to as many votes as equals the number of shares held,
multiplied by the number of directorship positions to be filled (11), all of
which may be cast for a single candidate or distributed among any or all
candidates in such proportions as each shareholder sees fit. Shareholders may
vote in person or by proxy. Execution of a proxy will not in any way affect a
shareholder's right to attend the Meeting and vote in person. Any shareholder
giving a proxy has the right to revoke that proxy by (i) filing a later-dated
proxy or a written notice of revocation with the Secretary of the Company at the
address set forth above at any time before it is exercised, or (ii) voting in
person at the Meeting.
1
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HOW YOU CAN VOTE
Shareholders of record can give a proxy to be voted at the
Meeting either (i) over the telephone by calling a toll-free number,
(ii) electronically, using the Internet, or (iii) by mail.
The telephone and Internet voting procedures are designed to
authenticate each shareholder's identity, to permit voting and to
confirm that such votes are recorded accurately. Any shareholder of
record who wishes to vote by telephone or the Internet should refer to
the specific instructions set forth on the enclosed proxy card.
Shareholders who prefer to vote by mail should return a signed proxy
card to the Company before the Meeting.
Whether voting by telephone, the Internet or by mail,
shareholders may specify whether shares should be voted for all, some,
or none of the nominees for director (Proxy Item No. 1) and approve,
disapprove, or abstain from the ratification of the Company's
independent auditors
(Proxy Item No. 2).
================================================================================
The Company's Secretary and Chairman were appointed by the Board as the
persons to receive and vote the proxies at the Meeting. All properly executed
proxies returned in time to be counted at the Meeting will be voted as stated
below under "Voting Procedures." Any shareholder giving a proxy has the right to
withhold authority to vote for any individual nominee to the Board by so marking
the proxy in the space provided thereon. Where a choice has been specified on
the proxy with respect to the foregoing matters, including the election of
directors, the shares represented by the proxy will be voted in accordance with
the choice specified. If no choice is specified, the proxy will be voted as
follows:
Proxy Item No. 1. FOR election of management's proposed slate of
directors, as set forth herein.
Proxy Item No. 2. FOR ratification of the appointment of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year ending
March 31, 2001.
The Board knows of no other matters to be presented at the Meeting. If
any other matter should be presented at the Meeting upon which a vote properly
may be taken, including any proposal to adjourn the Meeting, shares represented
by all proxies received by the Board will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
An Annual Report to Shareholders on Form 10-K, containing financial
statements for the
2
fiscal year ended March 31, 2000, is being mailed concurrently to all
shareholders entitled to vote. This Proxy Statement and the form of proxy were
first mailed to shareholders on or about July 7, 2000. All costs of this
solicitation will be borne by the Company.
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Shares represented by
proxies pursuant to which votes have been withheld from any nominee for
director, or which contain one or more abstentions, including broker non-votes,
are counted as present for purposes of determining the presence or absence of a
quorum for the Meeting.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Meeting as specified in such proxies. The
eleven director-nominees receiving the highest number of affirmative votes of
the shares present or represented and voting on the election of directors at the
Meeting will be elected as directors.
For all other matters being submitted to shareholders at the Meeting,
the affirmative vote of the majority of shares present, in person or represented
by proxy, and voting on that matter is required for approval.
ELECTION OF DIRECTORS
(PROXY ITEM NO. 1)
Management is proposing and supports re-election of all eleven of the
nominees named herein, all of whom are currently members of the Company's Board.
Three (3) nominees, Messrs. Istel, de Rothschild, and Salin, have been
designated by Les Domaines Barons de Rothschild (Lafite) ("DBR (Lafite)") and
two (2) nominees, Messrs. Hojel and Plant, have been designated by SFI
Intermediate, Ltd. ("SFI"), pursuant to the terms of a voting agreement between
the Company, DBR (Lafite), SFI, and W. Philip Woodward, as more fully described
below under the caption "Voting Agreement."
At the Meeting, directors will be elected to serve until the 2001
Annual Meeting or until their successors have been duly elected and qualified.
Each nominee has consented to be named in this proxy statement and has consented
to serve as a director if so elected and qualified. The Company has no reason to
believe that any of the nominees will not be available to serve; if, however,
any nominee should for any reason become unable or unwilling to serve, the Board
may vote to fix the number of directors at a lesser number, but not less than
seven (7), or direct that the shares represented by proxies received by the
Company be voted for the election of such person as the Board may recommend, in
place of the unavailable nominee.
DIRECTOR-NOMINEES
W. PHILIP WOODWARD. Age 61. Mr. Woodward is a co-founder of the Company
and has been a director of the Company since 1972. He has been its chairman
since August 1997, and is
3
a member of the Board's Operating Committee. From 1974 to July 1998, Mr.
Woodward was the Company's Chief Executive Officer. Mr. Woodward is a director
of DBR (Lafite), the Northern Trust Bank of California, the Wine Institute, the
American Vintners' Association, the American Center for Wine, Food and the Arts,
The Marin Theatre Company, Edna Valley Vineyard and Canoe Ridge Vineyard. He
also is a director and member of the compensation committee of the board of Hog
Island Oyster Company. Mr. Woodward also serves as president and as a director
of The Chalone Wine Foundation.
THOMAS B. SELFRIDGE. Age 56. Mr. Selfridge joined the Company as
President on January 1, 1998 and was appointed the Company's Chief Executive
Officer as of July 1, 1998. He has been a director of the Company since May 1998
and is a member of the Board's Operating Committee. Mr. Selfridge also is a
director of Edna Valley Vineyard and Canoe Ridge Vineyard. Before joining the
Company, Mr. Selfridge was Vice President-Production of Kendall-Jackson Winery,
Ltd. He also serves as secretary and as a director of The Chalone Wine
Foundation.
CRISTINA G. BANKS. Age 47. Dr. Banks has been a director of the
Company since January 1999 and is a member of the Board's Compensation
Committee. She is a principal and co-owner of Terranova Consulting Group, a
management consulting firm. Since 1985, Dr. Banks has served as a senior
lecturer at the University of California's Walter A. Haas School of Business in
Berkeley, California. Until March 1999, Dr. Banks also was a director of Whole
Foods Market, Inc.
MARK A. HOJEL. Age 31. Mr. Hojel has been a director of the Company
since 1995 and is a member of the Board's Operating and Audit Committees. Since
1996, Mr. Hojel has been President of Monte Xanic, a premium winery located in
Mexico City, Mexico.
YVES-ANDRE ISTEL. Age 64. Mr. Istel has been a director of the Company
since 1995 and is a member of the Board's Audit Committee. From 1993 to 1997,
Mr. Istel was Vice Chairman of Rothschild Inc. He is Vice Chairman of Rothschild
Europe, B.V., and Director of Rothschild et Cie. Banque, Paris, France,
Compagnie Financiere Richemont and Valeo S.A.
C. RICHARD KRAMLICH. Age 65. Mr. Kramlich has been a director of the
Company since 1990 and is a member of the Board's Compensation Committee. He was
a director of Carmenet Winery, Inc. from its inception until its merger into the
Company in 1984. Between 1984 and 1990, he served as an advisor to the Board.
Since 1978, Mr. Kramlich has been General Partner of New Enterprise Associates,
a San Francisco-based venture capital firm. He also is a director of Juniper
Networks, Lumisys, Inc., Silicon Graphics, Inc., Com 21, Inc., NetSolve, Inc.
and various private companies.
WILLIAM G. MYERS. Age 73. Mr. Myers has been a director of the Company
since 1996 and is a member of the Board's Audit Committee. Since 1962, Mr. Myers
has been Chief Executive Officer of Ojai Ranch and Investment Company, Inc. Mr.
Myers also serves as a director of ProLogis Trust and several not-for-profit
entities including The Library of Congress, James Madison Council; California
Historical Foundation; H.C. and R.C. Merritt Trusts; Santa Barbara Botanic
Garden; The Nature Conservancy; and St. Joseph's Health & Retirement Center
4
Foundation.
JAMES H. NIVEN. Age 57. Mr. Niven has been a director of the Company
since 1993 and is a member of the Board's Audit Committee. Since 1995, Mr. Niven
has been President of Paragon Vineyard Co., Inc., the Company's partner in the
Edna Valley Vineyard Joint Venture. He also is a partner of Niven & Smith, a San
Francisco law firm, and chairman of the management committee of Independence
Wine Company, which owns and operates the Seven Peaks Winery. Mr. Niven also is
a director of The Chalone Wine Foundation and several private companies.
PHILLIP M. PLANT. Age 54. Mr. Plant has been a director of the Company
since 1996 and is a member of the Board's Compensation Committee. Since 1998,
Mr. Plant has been a partner in the firm of Herndon Plant Oakley, Ltd.
Previously, he was Senior Vice-President, Investment Counsel, of Dain Rauscher
Corp. (formerly Rauscher, Pierce, Refsnes, Inc.). Mr. Plant also serves as an
advisory director of RPC Ltd. and the American National Bank of Corpus Cristi,
Texas and as a director of The Trust Company of San Antonio, Texas and various
private companies.
CHRISTOPHE SALIN. Age 45. Mr. Salin has been a director of the Company
since 1989, is chairman of the Board's Operating Committee and a member of the
Board's Compensation Committee. Since 1990, he has been President and a director
of DBR (Lafite), which he joined in 1985. Mr. Salin also is chairman of Les
Domaines Barons de Rothschild (Lafite) Distribution and of Societe de Gestion et
d'Assistance Viticole. He serves as a director of Chateau Rieussec, Societe
Financiere Viticole, Les Domaines Barons de Rothschild (Lafite) Development,
Vina Los Vascos (Chile), Quinta do Carmo (Portugal), La Viticole de
Participation and Domaines d'Aussieres. Mr. Salin is also a director of The
Chalone Wine Foundation.
ERIC DE ROTHSCHILD. Age 59. Baron Eric de Rothschild has been a
director of the Company since 1989. Since 1982, he has been a Managing Partner
of DBR (Lafite). Baron de Rothschild also is chairman of Paris-Orleans, S.A., a
publicly held French company which is one of DBR (Lafite)'s major shareholders;
chairman of Francarep, a subsidiary of Paris-Orleans, S.A., Rothschild Asset
Management and a Managing Partner of Chateau Lafite-Rothschild, a shareholder of
DBR (Lafite).
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" MANAGEMENT'S NOMINEES
OTHER EXECUTIVE OFFICERS
The information required by this Item is included in Part I of the
Company's Annual Report filed under the caption "Executive Officers of the
Registrant" on Form 10-K.
BOARD MEETINGS AND COMPENSATION
The Company's Board met five times during the year ended March 31,
2000. Each
5
director attended at least 75% of the aggregate of those meetings, except
Messrs. Istel, Niven, and Baron Eric de Rothschild.
Each director who is not an employee of the Company is paid
compensation of $500 per year plus $100 for each Board meeting attended and
reimbursement of extraordinary travel costs to attend meetings. Additionally,
each non-employee director receives quarterly grants of options to purchase the
Company's Common Stock ("Automatic Quarterly Options") and is eligible to
receive additional stock options as set forth below ("Additional Options"), in
each case pursuant to the Company's 1997 Stock Option Plan.
The exercise price of the Automatic Quarterly Options is the fair
market value of the Company's Common Stock as of the final day of each calendar
quarter. The exercise price of the Additional Options is the fair market value
of the Company's Common Stock as of the date of the grant. The number of
Automatic Quarterly Options granted is equal to ten (10) shares per each 100,000
shares of the Company's Common Stock outstanding as the same date. Additional
Options are granted in amounts established annually by the Board to recognize
and encourage active participation by non-employee directors in the committees
established by the Board for various purposes. For the fiscal year ended March
31, 2000, non-employee directors were eligible for additional grants as follows:
to each member of the Compensation Committee, 1,500 additional shares per
meeting attended; to each member of the Operating Committee, 750 additional
shares per meeting attended; to each member of the Audit Committee, 500
additional shares per meeting attended; to each of the vice chairman of the
Board and the chairman of the operating committee, 10,000 additional shares;
and, to the chairman of the compensation committee, 1,000 additional shares.
For the fiscal year ended March 31, 2000, Automatic Quarterly Options
covering a total of 31,500 shares were granted to and among the Company's nine
non-employee directors. The weighted average per-share exercise price of all
Automatic Quarterly Options is $8.95.
In May 2000, the Board granted Additional Options to certain
non-employee directors for the fiscal year ended March 31, 2000 covering a total
of 44,500 shares. The exercise price is $8.38, the closing price of the
Company's Common Stock on May 18, 2000 (the grant date). Although these
Additional Options are intended to reward non-employee directors for their
services rendered during the fiscal year ended March 31, 2000, they were granted
subsequent to the end of the fiscal year and, therefore, will be included in the
directors' compensation for the 2001 fiscal year, rather than the 2000 fiscal
year.
COMMITTEES
The Board of Directors has established three standing committees to
which it has delegated certain responsibilities: an Operating Committee, Audit
Committee and Compensation Committee. It does not have a standing Nominating
Committee. Nominees for election to the Board are selected by the Board.
OPERATING COMMITTEE. The Operating Committee, which was formed in 1999,
consists of
6
Messrs. Woodward, Salin, Hojel, and Selfridge. The Operating Committee may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, subject to the
limitations prescribed by the Board of Directors, the Bylaws of the Company and
California law. The Operating Committee met six times during the year ended
March 31, 2000.
AUDIT COMMITTEE. The Audit Committee, comprised of Messrs. Hojel,
Niven, Myers, and Istel, concerns itself with the Company's internal accounting
controls as well as meeting and conferring with the Company's independent
auditors and reviewing the results of their auditing engagement. In accordance
with new rules adopted by the National Association of Securities Dealers,
Inc.,(1) at a regular meeting on May 18, 2000, the Company's Board of Directors
adopted a formal written audit committee charter which, among other things,
specifies:
(1) the scope of the Audit Committee's responsibilities and the pro-
cesses by which they will be carried out;
(2) the Audit Committee's responsibility for ensuring its receipt from
the outside auditors of a formal written statement delineating all relationships
between the auditor and the Company, the Audit Committee's responsibility for
actively engaging in a dialogue with the auditor with respect to any disclosed
relationship or services that may impact the objectivity and independence of the
auditor and for taking, or recommending that the full Board of Directors take,
appropriate action to oversee the independence of the outside auditor; and
(3) the outside auditor's ultimate accountability to the Board and the
Audit Committee, as representatives of the shareholders, and the ultimate
authority of the Board to select, evaluate and, where appropriate, replace the
outside auditor (or to nominate the outside auditor to be proposed for
shareholder approval in any proxy statement).
The foregoing summary is qualified in its entirety by the complete text
of the Audit Committee Charter adopted by the Board of Directors which is
attached as Appendix B to this Proxy Statement.
The Audit Committee met twice during the Company 2000 fiscal year.
COMPENSATION COMMITTEE. The Compensation Committee of the Board is comprised of
Cristina Banks, C. Richard Kramlich, Phillip M. Plant, and Christophe Salin. It
administers the Company's executive compensation program by recommending for the
approval of the Company's Board of Directors appropriate actions to insure that
the objectives of the Company's Executive Compensation program are carried out.
The Compensation Committee met twice during the Company's 2000 fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
__________________
(1) Self-Regulatory Organizations; Order Approving Proposed Rule Change by the
National Association of Securities Dealers, Inc. Amending Its Audit Committee
Requirements, Sec. Release No. 34-42231 (File No. SR-NASD-99-48).
7
The Compensation Committee is comprised entirely of directors who are
not officers or employees of the Company or a parent or subsidiary of the
Company. However, Mr. Salin does not meet the definition of NON-EMPLOYEE
DIRECTOR as set forth in Rule 16b-3 of the Securities Exchange Act of 1934, as
amended and, therefore, may be subject to conflicts of interest that could
interfere with the exercise of independent judgment as a member of this
committee. Specifically, Mr. Salin is the President of DBR (Lafite) and the
Company, and DBR (Lafite) is engaged in certain related transactions which are
described in more detail below under the caption "Certain Relationships and
Related Transactions."
SHAREHOLDING INFORMATION AS TO DIRECTORS, DIRECTOR NOMINEES AND MANAGEMENT
The following table sets forth information as of March 31, 2000
respecting the beneficial ownership of the Common Stock, the Company's only
class of voting securities, by (i) all persons known by the Company to own more
than five percent of the Common Stock, (ii) each director, director-nominee, and
the executive officers named below under "Executive Compensation--Summary
Compensation Table," and (iii) all directors and executive officers as a group.
Except as may be noted in the footnotes to the table, the Company
believes that the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws where applicable.
BENEFICIAL OWNER(2) SHARES BENEFICIALLY OWNED(3) PERCENT OF CLASS
- - - ------------------- ---------------------------- ----------------
Les Domaines Barons de Rothschild 4,535,376 44.4%
(Lafite)
33 rue de la Baume
75008 Paris, France
The Hojel Family(4) 1,816,314 17.8%
c/o Phillip Plant
Herndon Plant Oakley, Ltd.
One Shoreline Plaza
Suite 2200, North Tower
Corpus Christi, TX 78401-3700
__________________
(2) Pursuant to Item 403(a) of Regulation S-K, addresses are provided only for
beneficial owners of more than 5% of the Company's Common Stock.
(3) Except as otherwise noted, all shareholding information is reported as of
March 31, 2000. Shares of Common Stock subject to stock options exercisable
within 60 days from March 31, 2000 are deemed outstanding for computing the
percentage of the class of securities owned by the person or group holding such
securities.
(4) Includes the following: 845,238 shares owned by Hook Financial, Inc.;
914,306 shares owned by SFI Intermediate, Ltd. and 56,770 shares owned by HC
Holding Company, Ltd. SFI Intermediate, Ltd. is a Texas limited partnership of
which GHA 1 Holdings, Inc. is the general partner. Phyllis S. Hojel, mother of
Mark A. Hojel, is the sole stockholder and director of GHA 1 Holdings, Inc. Mrs.
Hojel, GHA 1 Holdings, Inc., and SFI Intermediate, Ltd. share voting power and
the power to dispose or direct the disposition of such shares. Excludes the
personal holdings of Mark A. Hojel set forth elsewhere herein.
8
BENEFICIAL OWNER(2) SHARES BENEFICIALLY OWNED(3) PERCENT OF CLASS
- - - ------------------- ---------------------------- ----------------
W. Philip Woodward(5) 555,547 5.4%
621 Airpark Road
Napa, CA 94558-6272
William G. Myers(6) 398,246 3.9%
Thomas B. Selfridge(7) 134,462 1.3%
C. Richard Kramlich(8) 51,796 *
Robert B. Farver(9) 69,018 *
Christophe Salin(10) 75,290 *
Eric de Rothschild(11) 18,100 *
James H. Niven(12) 18,210 *
Mark A. Hojel(13) 20,480 *
Phillip M. Plant(14) 17,570 *
Yves-Andre Istel(15) 13,980 *
Cristina G. Banks(16) 8,790 *
__________________
(5) Includes 192,560 shares held by various family members as to which Mr.
Woodward may have shared voting power. Includes certain shares held by trusts of
which Mr. Woodward is the beneficiary, and 122,000 shares issuable on exercise
of options which are vested or will vest within the next 60 days.
(6) Includes 385,686 shares held by various family members as to which Myers may
have shared voting power. Includes 12,560 shares issuable to Mr. Myers on
exercise of options which are vested or will vest within the next 60 days.
(7) Includes 134,375 shares issuable to Mr. Selfridge on exercise of options
which are vested or will vest within the next 60 days.
(8) Includes 26,790 shares issuable to Mr. Kramlich on exercise of options which
are vested or will vest within the next 60 days.
(9) Includes 7518 shares held by various family members as to which Mr. Farver
may have shared voting power. Includes 61,500 shares issuable to Mr. Farver on
exercise of options which are vested or will vest within the next 60 days.
(10)Consists of 75,290 shares issuable on exercise of options which are vested
or will vest within the next 60 days. Excludes shares held and acquirable by DBR
(Lafite), of which Mr. Salin is President, which holdings are set forth
separately above and as to which Mr. Salin disclaims beneficial ownership.
(11)Consists of 18,100 shares issuable on exercise of options which are vested
or will vest within the next 60 days. Excludes shares held and acquirable by DBR
(Lafite), of which Baron de Rothschild is Managing Partner, which holdings are
set forth separately above and as to which he disclaims beneficial ownership.
(12)Consists of 18,210 shares issuable on exercise of options which are vested
or will vest within the next 60 days. Excludes 10,000 shares held by Paragon
Vineyard Co., Inc., of which Mr. Niven is President, as to which Mr. Niven
disclaims beneficial ownership.
(13)Includes 19,480 shares issuable to Mr. Hojel on exercise of options which
are vested or will vest within the next 60 days. Excludes shares held and
acquirable by the Hojel family as set forth above, as to which Mr. Hojel
disclaims beneficial ownership.
(14)Includes 300 shares owned by Mr. Plant's family members as to which Mr.
Plant disclaims beneficial ownership. Includes 16,270 shares issuable to Mr.
Plant on the exercise of options which are vested or will vest within the next
60 days.
(15) Includes 13,980 shares issuable to Mr. Istel on exercise of options which
are vested or will vest within the next 60 days.
(16)Includes 870 shares issuable to Dr. Banks upon exercise of options which are
vested or will vest within the next 60 days.
9
BENEFICIAL OWNER(2) SHARES BENEFICIALLY OWNED(3) PERCENT OF CLASS
- - - ------------------- ---------------------------- ----------------
All directors, director-nominees and 1,381,489 12.9%
executive officers as a group (12
persons)
VOTING AGREEMENT
In 1995, DBR (Lafite), SFI, and Mr. Woodward entered into a voting
agreement which provides that they will vote their shares (and use their best
efforts to have certain others vote their shares) for the other signatories'
designees to the Company's Board, including the nomination of such designees for
directorship positions. The agreement provides for a signatory's right to
designate one or more nominees, according to the percentage of total shares
outstanding then held by the particular signatory, as follows: 26% or greater,
three designees; 12%-26%, two designees; and 5%-12%, one designee. The
agreement, which terminates on October 25, 2000, supersedes a prior 1993 voting
agreement among the parties and certain other directors and officers of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended March 31,
1998, March 31, 1999 and March 31, 2000 a summary of compensation awarded to,
earned by, or paid to, the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers who were serving
as of March 31, 2000 (the "Named Executive Officers").
10
SUMMARY COMPENSATION TABLE
- - - -----------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
- - - -----------------------------------------------------------------------------------------------------------------------
Securities
Other Under-
Annual Restricted lying
Compen- Stock Options/ LTIP
Name And Principal Year Salary Bonus sation Award SARs Payouts
Position ($) ($) ($) (1) ($) ($) (#) (2) ($)
- - - -----------------------------------------------------------------------------------------------------------------------
Thomas B. Selfridge 3/ 2000 $210,000 $75,000 $ 5,000 -- 37,500 --
Chief Executive Officer 1999 199,500 60,000 -- -- 37,500 --
1998 48,750 12,188 -- -- 150,000
W. Philip Woodward 2000 $150,000 38,000 $2,446 -- 20,000
1999 116,058 38,000 3,600 -- 20,000
1998 155,000 48,825 4,750 -- --
Robert B. Farver 4/ 2000 $115,000 86,000 $13,784 -- 15,000
Vice President, Sales and 1999 105,808 67,000 13,761 -- 15,000
Distribution 1998 100,417 75,713 4,750 -- --
__________________
(1) Bonuses of each of the Named Executive Officers for the fiscal year ended
March 31, 2000 were approved at a regular meeting of the Board on May 18,
2000 and paid in June 2000.
(2) All of the options were incentive stock options, granted pursuant to the
Company's 1987 and 1997 Stock Option Plan.
(3) Mr. Selfridge joined the Company on January 1, 1998 at a base salary of
$195,000 per annum.
(4) Other Annual Compensation includes $8,784 for the lease of a Company auto-
mobile and $5,000 in contributions under The Chalone Wine Group, Ltd.
Profit Sharing 401(k) Plan.
OPTION GRANTS IN FISCAL YEAR 2000
The following table sets forth certain information regarding options
granted during the fiscal year ended March 31, 2000 to the Company's Named
Executive Officers:
Individual Grants
- - - ----------------------------------------------------------------------------------------
Percentage Of Potential Realizable
Number Of Total Value at Assumed
Securities Options/SARs Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation For
Option/SARs Employees or Expiration Option TERM (1)
Name Granted(#) In Fiscal Year Base Price Date 5% 10%
- - - -------------------------------------------------------------------------------------------------------------------
Thomas B. Selfridge (2) 37,500 42.9% $9.50 5/19/09 $224,044 $567,771
W. Philip Woodward 20,000 22.9% $9.50 5/19/09 $119,490 $302,811
Robert B. Farver 15,000 17.1% $9.50 5/19/09 $89,617 $227,108
__________________
1. Potential realizable value is calculated based on an assumption that the
price of the Common Stock appreciates
11
at the annual rate shown (compounded annually) from the date of grant of
the option until the end of the option term (10 years). The value is net of
the exercise price but is not adjusted for the taxes that would be due
upon exercise. The assumed rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of future stock prices. Actual
gains, if any, will depend on the future performance of the Company,
overall market conditions and the continued employment of the executive
officer during the applicable vesting period.
2. Includes 12,500 options which were granted to Mr. Selfridge pursuant to an
employment agreement dated November 10, 1997.
AGGREGATE OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END VALUE OF
UNEXERCISED OPTIONS
The following table sets forth information regarding each exercise of
stock options during the fiscal year ended March 31, 2000, and the number and
value of unexercised stock options held by each Named Executive Officer as of
the same date. The closing price of the Common Stock on March 31, 2000 was $8.25
per share based on the NASDAQ closing price.
Number of
Securities
Underlying Value of Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
Value at Fiscal Year-End at Fiscal Year-
Net (#) End ($)
Shares Acquired Realized Exercisable/ Exercisable/
Name On Exercise (#) ($) Unexercisable Unexercisable
- - - ----------------------------------------------------------------------------------------------------
Thomas B. Selfridge 112,500/75,000 $0/$0
W. Philip Woodward 20,000 122,000/0 $41,250/$0
Robert B. Farver 61,500/0 $8,125/$0
PROFIT SHARING 401(K) PLAN
The Company's Profit Sharing 401(k) Plan (the "401(k) Plan") is
intended to be a qualified retirement plan under Section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"). Under this plan, participating
employees (including the Named Executive Officers) may contribute up to 15% of
their compensation, but not exceeding the maximum amount allowed under
applicable tax laws. All employees of the Company with one year of service,
unless covered by a collective bargaining agreement, are eligible to participate
in the 401(k) Plan. The Company's Edna Valley Vineyard joint venture has a
similar plan.
EMPLOYEE STOCK PURCHASE PLAN
Under the Company's Employee Stock Purchase Plan (the "Stock Purchase
Plan"),
12
pursuant to Section 423 of the Code, all Company employees, with one year of
service (including the Named Executive Officers) may contribute up to 10% of
their compensation during each 27-month period of the Stock Purchase Plan. At
the end of the period, the employee's contributions are invested in the Common
Stock at 85% of the market price of said shares on the commencement or ending
date of the offering period, whichever is lower. On January 20, 1998, the Board
renewed the Stock Purchase Plan for the period February 1, 1998 through January
31, 2001.
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS
GENERAL. The objective of the Company's executive compensation program
is to develop and maintain executive reward programs which (i) contribute to the
enhancement of shareholder value, (ii) are competitive with the pay practices of
other industry-leading companies and (iii) attract, motivate and retain key
executives who are critical to the long-term success of the Company. As
discussed below, the Company's executive compensation program consists of both
fixed (base salary) and variable (incentive) compensation elements. Variable
compensation consists of annual cash incentives and stock option grants under
the Company's 1997 Stock Option Plan (the "Plan"). These elements are designed
to operate on an integrated basis and together comprise total compensation
value.
The Committee reviews executive compensation in light of the Company's
performance during the year. In reviewing the Company's performance during the
2000 fiscal year, the Committee considered a variety of factors. Consolidated
sales increased by 18% for the year to the highest dollar level achieved in the
Company's history. In addition, the Committee considered the continued success
of the new Echelon brand, the acquisition of Staton Hills Winery and prospects
for the Sagelands Winery brand, the purchase of the Jade Mountain Winery, the
purchases of the Hewitt Ranch and Suscol Ranch properties and the continued
progress toward the launch of a new luxury-priced red wine brand. In reviewing
Company performance, the Committee considered these factors as a whole without
assigning specific weight to particular factors.
BASE SALARY. Base salary levels for the Company's executives are
determined by the Committee based on factors such as individual performance
(e.g., leadership, level of responsibility, management skills, and industry
activities) and Company performance (as discussed above). For fiscal year 2000,
base salaries for the Named Executive Officers, including that of the Chief
Executive Officer, were established as above.
ANNUAL CASH INCENTIVES. The annual cash incentive, typically paid as a
bonus, is designed to provide a short-term (one-year) incentive. The Company
does not adhere to any firmly established formula for the award of annual cash
incentives. Rather, incentive awards are based on the achievement of corporate
and individual goals for the year, including subjective factors. The Summary
Compensation Table shows annual cash incentives paid to the Named Executive
Officers during the fiscal years ended March 31, 1998, 1999 and 2000.
STOCK OPTIONS. Stock options are designed to provide long-term
incentives and rewards
13
tied to the price of the Common Stock. Given the fluctuations of the stock
market, stock price performance and financial performance are not always
consistent. The Committee believes that stock options, which provide value to
recipients only when the Company's shareholders benefit from stock price
appreciation, are an important component of the Company's executive compensation
program. The number of options or shares of stock currently held by an executive
is not a factor in determining individual grants, and the Committee has not
established any target level of ownership of the Common Stock by its executives.
However, retention of shares by executives is encouraged.
The Company does not adhere to any firmly established formula for the
issuance of options. The Summary Compensation Table shows the options granted to
the Named Executive Officers during the past three years. In determining the
size of the grants to the Named Executive Officers, the Committee assessed
relative levels of responsibility and the long-term incentive practices of other
comparable companies.
In accordance with the provisions of the Plan, the exercise price of
all options granted was equal to the market value of the underlying Common Stock
on the date of grant. Accordingly, the value of these grants to the officers is
dependent solely upon the future growth and share value of the Common Stock.
The foregoing report is given by the members of the Committee, namely:
Cristina Banks
C. Richard Kramlich
Phillip M. Plant
Christophe Salin
PERFORMANCE GRAPH
The line graph below compares the cumulative total return to holders of
the Common Stock in the period from April 1, 1995 to March 31, 2000, with the
cumulative total return in the same period on (i) the NASDAQ Stock Market Index
(U.S.) and (ii) a peer group index comprised of nine companies whose returns
have been weighted based on market capitalization as of the beginning of each
period for which a return is indicated: Beringer Wine Estates Holdings Inc.,
Brown-Forman Corporation, Robert Mondavi Corp., Canandaigua Brands, Inc., R.H.
Phillips, Inc., Golden State Vintners, Ravenswood Winery, Inc., Scheid
Vineyards, and Willamette Valley Vineyards. The graph assumes an investment of
$100.00 on April 1, 1994 in the Company and in the two comparison indices.
"Total return," for purposes of the graph, assumes reinvestment of all
dividends.
The information contained in the performance graph shall not be deemed
to be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any of the Company's existing
shelf registrations or future filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates it by reference into such filing.
14
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG THE CHALONE WINE GROUP, LTD.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T.
COMPARISION OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG THE CHALONE WINE GROUP, LTD.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00
(in dollars)
THE CHOLONE WINE GROUP, LTD. 100.00 131.03 151.72 158.62 108.62 113.79
PEER GROUP 100.00 115.31 126.06 167.86 157.02 151.95
NASDAQ STOCK MARKET (U.S.) 100.00 135.80 150.95 228.88 309.19 574.04
<FN>
* $100 INVESTED ON 3/31/95 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCH 31.
</FN>
Graph produced by Research Data Group, Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE EDNA VALLEY VINEYARD JOINT VENTURE (the "EVV Joint Venture"). Mr.
Niven, a director of the Company, is the President and a substantial shareholder
of Paragon Vineyard Co., Inc. ("Paragon"), the Company's partner in the EVV
Joint Venture. In December 1996, the Company and Paragon entered into an
agreement (the "Joint Venture Amendment") which amended and restated the terms
of the EVV Joint Venture. Under the terms of the Joint Venture Amendment, the
Company is obligated to make substantial payments in order to maintain its 50%
ownership interest in the EVV Joint Venture and to extend its term indefinitely.
Specifically, the Company previously paid Paragon $1,070,000 (the "Deposit") as
a deposit toward future payments due for the foregoing purposes and the sum of
$4,403,334 in three installments, the most recent of which was paid in December
1999. The Company's future obligations in respect of the foregoing rights
require a single future payment $1,206,667 (consisting of $850,000 in cash and
$356,667 by application of the balance of the Deposit) in 2001. In the year
2001, the Company will also have an option to purchase 50% of the "EDNA VALLEY"
brand-name for $200,000. If the Company fails to make the foregoing payment, it
may be removed as the managing joint venture partner in the EVV Joint Venture.
In addition to the foregoing payments by the Company to Paragon in respect of
the Joint Venture Amendment and ground lease, in fiscal 2000 the EVV Joint
Venture made distributions to Paragon of approximately $700,000.
Under the terms of a grape purchase agreement, Paragon sells fixed
quantities of Chardonnay grapes to the Edna Valley Joint Venture at prices
calculated by reference to the average prices paid for Chardonnay grapes in Napa
County during the preceding year, with certain adjustments depending on the
grapes' sugar content. Paragon also supplies grapes to Carmenet Winery. During
2000, the value of the grapes sold by Paragon to the Edna Valley Joint Venture
and Carmenet Winery pursuant to the foregoing contracts was approximately
$2,611,525.
On December 28, 1995, the Company loaned $500,000 to Paragon pursuant
to a secured promissory note which provides for repayment of principal and
interest in the amount of $132,430.54 during 1997 and four (4) equal annual
installments of $130,218.21 commencing on January 15, 1998. Paragon has made
each of the payments required in 1997-2000. The unpaid principal balance on the
note is $118,921. The note bears interest at the rate of 9-1/2% per annum and is
secured by a pledge of Paragon's interest in the Edna Valley Joint Venture.
15
LES DOMAINES BARONS DE ROTHSCHILD (LAFITE). Certain directors-
nominees have a relationship with DBR (Lafite). Baron Eric de Rothschild and Mr.
Salin are, respectively, a Managing Partner and President of DBR (Lafite), and
Mr. Istel is a director of certain affiliates of DBR (Lafite).
Pursuant to DBR (Lafite)'s investment in the Company, the Company
receives an allocation of the wines of DBR (Lafite), including the wines of
Chateau Lafite-Rothschild and Duhart-Milon. During the 2000 fiscal year, the
Company paid approximately $2,384,298 to DBR (Lafite), of which approximately
$1,214,526 represents deposits for wine which will be delivered in future years
(i.e., wine "futures").
OTHER
During February 2000, Francois P. Muse resigned as the Company's Chief
Financial Officer. At that time, the Company and Mr. Muse entered into a
Resignation Agreement and General Release which, among other things, provides
for Mr. Muse to receive certain severance benefits with a total value of
approximately $70,000, all of which have been paid to Mr. Muse.
As of June 21, 2000, the Company entered into an indemnification
agreement with Paul R. Ogorzelec, the Company's Chief Financial Officer,
eliminating certain potential liabilities arising from his service to the
Company as Trustee of certain employment benefit plans, namely The Chalone Wine
Group, Ltd. Qualified Retirement Plan and the Edna Valley Vineyard Profit
Sharing 401(k) Plan.
In the judgment of the Company, all material transactions between the
Company and its directors, officers and principal shareholders, and their
affiliates, have been made on terms no less favorable to the Company than could
have been obtained from unaffiliated third parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors and
greater-than-ten-percent beneficial owners are required under Section 16(a) of
the Exchange Act to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Copies of those reports must also be
furnished to the Company. Based on Company records, copies of filings received
by it and upon written representations from certain reporting persons and their
agents, the Company believes that all SEC filing requirements applicable to its
officers and directors under Section 16(a) of the Exchange Act were complied
with during the applicable year.
RATIFICATION OF APPOINTMENT OF THE COMPANY'S
INDEPENDENT AUDITORS
(PROXY ITEM NO. 2)
The Board has reappointed Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending March 31, 2001 subject to
ratification by the shareholders at the Meeting. Deloitte & Touche and its
predecessor, Touche Ross & Co., have been the
16
Company's independent auditors since 1986. Representatives of Deloitte & Touche
are expected to be in attendance at the Meeting, with the opportunity to make a
statement, and to be available to answer shareholders' questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION
AND APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
OTHER MATTERS
The Company does not know of any matter other than those discussed in
the foregoing materials contemplated for action at the Meeting. Should any other
matter be properly brought before the Meeting, it is the intention of the
persons designated by the Board to receive and vote the proxies to vote in
accordance with the recommendation of the Board. Discretionary authority for
them to do so is contained in the proxy.
FINANCIAL STATEMENTS
Shareholders should refer to the Consolidated Financial Statements and
Supplemental Data, Management's Discussion and Analysis, and Selected Financial
Data set forth in the Company's Annual Report on Form 10-K, which was previously
filed with the Securities and Exchange Commission and is being furnished to
shareholders concurrently with this proxy statement.
SUBMISSION OF SHAREHOLDER
PROPOSALS FOR 2001 ANNUAL MEETING
Any proposal which a shareholder wishes to have presented at the 2001
Annual Meeting and included in the Company's proxy statement for that meeting
must be received by the Company, at its principal executive office, 621 Airpark
Road, Napa, California 94558-6272, no later than May 31, 2001. Proposals should
be addressed to the attention of the Chief Financial Officer of the Company. In
order to avoid controversy as to the date on which a proposal was received by
the Company, it is suggested that any shareholder who wishes to submit a
proposal submit such proposal by certified mail, return receipt requested.
The Bylaws of the Company provide that in order for a shareholder to
bring business before or propose director nominations at an annual meeting of
shareholders, the shareholder must provide advance notice of such proposal or
nomination. Specifically, the shareholder must give written notice to the
Corporate Secretary not less than sixty (60) days nor more than ninety (90) days
prior to the date of the annual meeting. The notice must contain specified
information about the proposed business or each nominee and about the
shareholder making the proposal or nomination. In the event that less than
seventy (70) days' prior notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, notice by the shareholder in
17
order to be timely must be received no later than the close of business on the
tenth day following the date on which such notice of the annual meeting date was
mailed or public disclosure of the date of the annual meeting was made,
whichever occurs first.
By Order of the Board of Directors,
/s/ W. PHILIP WOODWARD
-------------------------
W. Philip Woodward
Chairman of the Board
Napa, California
18
APPENDIX A
VOTE VIA TELEPHONE OR THE INTERNET -- IT'S QUICK, EASY AND
IMMEDIATE
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card. PLEASE
NOTE THAT ALL VOTES CAST VIA THE TELEPHONE OR THE INTERNET MUST BE CAST PRIOR TO
5 P.M., AUGUST 23, 2000. If you wish to change your address or notify the
Company that you plan to attend the meeting, please mark the boxes below and
return your proxy by mail.
TELEPHONE VOTING
o There is NO CHARGE for this call.
o On a Touch Tone Telephone call TOLL FREE 1-888-807-7699 twenty-four hours
per day - 7 days a week.
o You will be asked to enter the Control Number which is located above your
name and address below.
- - - --------------------------------------------------------------------------------
OPTION #1: If you wish to vote as the Board of Directors RECOMMENDS, PRESS 1
- - - --------------------------------------------------------------------------------
Your vote will be confirmed and cast as you directed.
END OF CALL
- - - --------------------------------------------------------------------------------
OPTION # 2: If you choose to vote on each proposal separately, PRESS 2
- - - --------------------------------------------------------------------------------
You will hear these instructions:
Proposal 1: To vote as the Board of Directors RECOMMENDS, PRESS 1; to vote
AGAINST, PRESS 2; to ABSTAIN, PRESS 3
Proposal 2: To vote as the Board of Directors RECOMMENDS, PRESS 1; to vote
AGAINST, PRESS 2; to ABSTAIN, PRESS 3
Your vote will be confirmed and cast as you directed.
END OF CALL
INTERNET VOTING
Log on to the Company's transfer agent's Internet voting site at
http://www.equiserve.com/proxy/ and follow the instructions on your screen.
19
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If you vote via telephone or the Internet, it is not necessary to
return your proxy by mail. THANK YOU FOR VOTING.
-------------------------------------------------------------------------------
DETACH HERE
20
======================================
CHALONE
Wine Group
======================================
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT
Dear Shareholder:
Regardless of whether you plan to attend the 2000 Annual Meeting of
Shareholders, you can be sure your shares are represented at the meeting by
promptly returning your proxy card in the enclosed envelope or by voting via
telephone or the Internet. Instructions are on the reverse side of this card.
Thank you,
Investor Relations Department
PROXY
THE CHALONE WINE GROUP, LTD.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
for the Annual Meeting of Shareholders, August 24, 2000.
The undersigned, shareholders(s) of The Chalone Wine Group, Ltd. do(es) hereby
appoint the Corporation's Secretary and Chairman, and each of them, proxies,
each with full power of substitution, for and in the name and stead of the
undersigned at the Annual Meeting of Shareholders of The Chalone Wine Group,
Ltd., to be held on August 24, 2000, and at any and all postponements or
adjournments thereof, to vote all shares of capital stock held by the
undersigned, with all powers that the undersigned would possess if personally
present, on each of the matters referred to herein.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED "FOR" ELECTION OF MANAGEMENT'S DIRECTOR-NOMINEES AND "FOR"
RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S INDEPENDENT AUDITORS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING AND ANY POSTPONEMENT(S) OR ADJOURNMENT(S) THEREOF.
FOR WITHHELD FOR ALL
21
1. ELECTION OF DIRECTORS / / / / / /
NOMINEES:
--------
Cristina Banks
Mark A. Hojel
Yves-Andre Istel
C. Richard Kramlich
William G. Myers
James H. Niven
Phillip M. Plant
Eric de Rothschild
Christophe Salin
Thomas B. Selfridge
W. Philip Woodward
__________________
If you wish to withhold authority to vote for any individual nominee(s),
write such nominee(s) name on the lines above.
2. Proposal to ratify the appointment of / / / / / /
Deloitte & Touche LLP as the Company's
independent certified public accountants
for the fiscal year ending March 31, 2001.
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his or her name appears hereon and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both shareholders should sign.)
___________________ __________ , 2000 ___________________ __________ , 2000
Signature Date Signature Date
22
APPENDIX B
THE CHALONE WINE GROUP, LTD.
AUDIT COMMITTEE CHARTER
(as adopted May 18, 2000)
The Audit Committee is appointed by the Board of Directors of the Company to
assist the Board in monitoring (1) the integrity of the financial statements of
the Company, (2) the Company's compliance with legal and regulatory requirements
and (3) the independence and performance of the Company's external auditors.
The Audit Committee shall consist of at least three directors. On or before the
first anniversary of the adoption of this Audit Committee Charter, the members
of the Audit Committee shall meet the independence and experience requirements
of The NASDAQ Stock Market, Inc., except to the extent that the Board, under
exceptional and limited circumstances, determines that membership on the Audit
Committee by one director who is not independent is required by the best
interests of the Company and its shareholders and the Board discloses, in the
next annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination. The members of the Audit
Committee shall be appointed by the Board.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting principles and practices as
well as the adequacy of internal controls that could significantly
affect the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor
of significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's finan-
cial position prior to the filing of its Form 10-Q and Form 10-K.
5. Meet periodically with management to review the Company's major
financial risk exposures, if any, and the steps management has taken to
monitor and control such exposures.
6. Review major changes in the Company's accounting principles and prac-
tices as suggested by the independent auditor management.
7. Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Audit Committee and the
Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board
Standard 1, discuss such reports with the auditor, and if so determined
by the Audit Committee, take or recommend that the full Board take,
appropriate action to oversee the independence of the auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend that
the Board replace the independent auditor.
11. Review the appointment and any replacement of the chief financial
officer.
12. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
13. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
14. Obtain reports from management, the Company's senior financial
executive and the independent auditor that the Company's
subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Company's policies regarding
ethics and standards of conduct.
15. Discuss with the independent auditor the matters required to be dis-
cussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
16. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and any response of the Company to that letter.
17. Prepare the report of the Audit Committee required by the rules of the
Securities and Exchange Commission to be included in the Company's
annual proxy statement.
18. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's policies regarding ethics and standards of conduct.
19. Review with the Company's legal advisors' legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports
or inquiries received from regulators or governmental agencies.
20. Meet at least annually with the chief financial officer and the inde-
pendent auditor in separate executive sessions.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's policies regarding ethics and standards of
conduct.