SCHEDULE 14A INFORMATION
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Golden Enterprises, Inc.
2140 11th Avenue South
Suite 208
Birmingham, Alabama 35205
Notice of Annual
Meeting
Notice Is Hereby Given that the Annual Meeting of the
Stockholders of Golden
Enterprises, Inc., (the Company) a Delaware Corporation, will
be held at the
general offices of Golden Flake Snack Foods, Inc., a subsidiary
of the Company,
at One Golden Flake Drive, Birmingham, Alabama, on October 8,
2002, at
11:00 A.M., Birmingham time, for the following purposes:
1. To elect a Board of Directors.
2. To transact such other business as may properly come
before the meeting.
Stockholders of record at the close of business on August 12,
2002, are entitled to
notice of and to vote at the meeting. All Stockholders are
cordially invited to attend
the meeting.
By Order of the
Board of Directors
John S. Stein
Chairman
Birmingham, Alabama
September 10, 2002
Holders of a majority of the outstanding shares must be present
either in person or
by proxy in order to hold the meeting. To insure your
representation at the meeting,
you are requested to sign the enclosed proxy and return it in
the accompanying
envelope. If you are able to attend the meeting, you may revoke
the proxy and
vote your shares personally at any time be-fore the proxy is
exercised
Proxy Statement
General
The annual meeting of the stockholders of Golden Enterprises,
Inc. (the Company)
will be held at the general offices of Golden Flake Snack Foods,
Inc., a subsidiary
of the Company, at One Golden Flake Drive, Birmingham, Alabama,
on
October 8, 2002, at 11:00 A.M. All holders of record of common
stock as
of August 12, 2002, will be entitled to vote at the meeting and
any
adjournment thereof.
The purpose of this proxy solicitation is to enable those
stockholders who will be
unable to personally attend the meeting to vote their stock.
Persons making the solicitation
This proxy is solicited on behalf of the Board of Directors of
Golden Enterprises, Inc.
The cost of solicitation will be paid by the Company and will
include reimbursement
paid to brokerage firms and others for their expenses in
forwarding
solicitation material regarding the meeting to beneficial
owners.
In addition to solicitation by mail, officers and regular
employees
of the Company may solicit proxies by telephone, telegram, or
personal interview at no additional compensation.
Security Holders Entitled to Vote
Holders of shares of common stock of the Company of record at
the
close of business on August 12, 2002, will be entitled to vote
at
the Annual Meeting and at any and all adjournments thereof. Each
share of common stock entitles its owner to one vote. The
number of shares of common stock of the Company (exclusive of
treasury shares) outstanding at the close of business on
August 12, 2002 was 11,883,305 shares.
Stockholders who execute proxies retain the right to revoke
them at any time before they are voted. If the enclosed proxy
is properly signed and returned to the Company
and not so revoked, the shares represented thereby will be voted
in accordance with its terms.
Security ownership of certain beneficial owners and Management
At August 12, 2002, Sloan Y. Bashinsky, Sr., Chairman Emeritus
of the Board,
and Compass Bank, as Trustee of the Golden Enterprises, Inc. and
subsidiaries Employee Stock Ownership Plan, were the only
persons who beneficially owned more than 5% of the outstanding
voting securities of the Company. The following table sets forth
the number of shares of common stock of the Company beneficially
owned by these persons.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1)
Percent
Sloan Y. Bashinsky, Sr. Direct Indirect
Class
2140 11th Ave. So. 8,500 6,683,672 (2)(3)(4)
56.3%
Suite 208
Birmingham, Alabama 35205
Amount and Nature of
Percent
Name and Address of Beneficial Ownership (1)
Class
Beneficial Owner
Compass Bank, as Trustee Direct Indirect
9.2%
of the Golden Enterprises, -0- 1,089,123(5)
Inc. and subsidiaries
Employee Stock Ownership Plan
701 South 32nd Street
Birmingham, Alabama 35233 (a)
(1) An indirect beneficial owner as this term is interpreted by
the Securities and Exchange Commission (SEC) includes any person
who has or shares the (1) voting power which includes the power
to vote or to direct the voting of such security; and/or (2)
investment power which includes the power to dispose, or to
direct the disposition of such security.
(2) Includes 5,283,128 shares owned by SYB, Inc., a corporation
of which Sloan Y. Bashinsky, Sr. is Chairman of the Board and
the majority stockholder.
For SEC reporting purposes, Mr Bashinsky is deemed the
beneficial owner of such shares. Except for SEC reporting
purposes, Mr. Bashinsky disclaims beneficial ownership of such
shares.
(3) Includes 1,000,000 shares owned by SYB, Inc. as Trustee of a
Trust created by Sloan Y. Bashinsky, Sr. SYB, Inc. exercises the
right to vote the shares and the investment power relative to
the shares. For SEC reporting purposes, Mr. Bashinsky is deemed
the beneficial owner of such shares. Except for SEC reporting
purposes, Mr Bashinsky disclaims beneficial ownership of such
shares.
(4) Includes 400,544 shares owned by the Bashinsky Foundation,
Inc. of which Sloan Y. Bashinsky, Sr. is the founder and
Chairman of the Board. For SEC reporting purposes, Mr. Bashinsky
is deemed the beneficial owner of such shares. Except for SEC
reporting purposes, Mr Bashinsky disclaims beneficial ownership
of such shares.
(5) The Employee Stock Ownership Plan provides that the shares
held by theTrustee are voted by an administrative committee made
up of 3 members. The Board of Directors of the Company
determines the members of the committee. Present members
of the administrative committee are: John S. Stein, Chairman of
the Board, Mark W. McCutcheon, Chief Executive Officer and
President of the Company and President of Golden Flake Snack
Foods, Inc., and John H. Shannon, Vice President and Secretary
of the Company.
(a) The Employee Stock Ownership Plan is an employee benefit
plan qualified under 401(a) of the Internal Revenue Code and
subject to the Employee Retirement Income Security Act of 1974.
Security Ownership Of Management
The following table shows the shares of common stock of
Golden Enterprises, Inc. beneficially owned, directly or
indirectly, by each Director and Nominee for
Director and all Directors and Officers of the Company as a
group at August 12, 2002:
Amount and Nature of
Beneficial Ownership (1)
Name Direct Indirect
Percent
John S. Stein (a) (b) 288,854 -0-
(4) Class
J. Wallace Nall, Jr. -0- 196,000
(5) 2.4%
Edward R. Pascoe 125,000 -0-
1.6%
F. Wayne Pate 136,994 32
(6) 1.1%
John P. McKelory, Jr. (c) (d) 26,000 (2) -0-
1.2%
D. Paul Jones, Jr. 23,044 (3) 2,000
(7) *
James I. Rotenstreich 9,533 -0-
*
John S. P. Samford 1,666 -0-
*
Joann F. Bashinsky (e) (f) 10,571 -0-
*
Mark W. McCutcheon 4,455 -0-
(4) *
650,367 198,032
7.1%
All Directors and
Officers as a group
*Less than one percent of class.
(1) An indirect beneficial owner as this term is interpreted by
the Securities and Exchange Commission (SEC) includes any person
who has or shares the (1) voting power which includes the power
to vote or to direct the voting of such security, and/or (2)
investment power which includes the power to dispose of,
or to direct the disposition of, such security.
(2) Includes 21,490 shares held by a self-employed pension plan
and personal IRA account for the benefit of John P. McKleroy,
Jr.
(3) Does not include a .2287 fractional share held pursuant to
the Companys Dividend Reinvestment Plan.
(4) Does not include any portion of the 1,089,123 shares of
common stock of the Company which are owned by Compass Bank, as
Trustee of Golden Enterprises, Inc. and subsidiaries Employee
Stock Ownership Plan. Messrs. Stein and McCutcheon
are members of the plans administrative committee and exercise
the voting power of the shares. Messrs. Stein and McCutcheon
disclaim any beneficial ownership of such shares with the
exception of the following shares which are vested in their
respective accounts as an employee-participant under the Plan:
Stein 44,701, McCutcheon 2,745.
(5) Shares owned by Nall Development Corporation, a corporation
of which J. Wallace Nall, Jr. is a Director and President. For
SEC reporting purposes,
Mr. Nall is deemed the beneficial owner of such shares. Except
for SEC reporting purposes, Mr. Nall disclaims beneficial
ownership of such shares.
(6) Includes 32 shares owned by the wife of F. Wayne Pate.
(7) Shares owned by Mr. Jones wife and mother-in-law.
(a) Mr. Stein is a Director and President of SYB, Inc. which
beneficially owns 6,283,128 shares of the Companys stock. Mr.
Stein does not possess and specifically disclaims any beneficial
ownership of these shares.
(b) Mr. Stein is a Director and officer of the Bashinsky
Foundation, Inc., which owns 400,544 shares of the Companys
stock. Mr. Stein does not possess and specifically disclaims any
beneficial ownership of these shares.
(c) Mr. McKleroy is a Director and Secretary of SYB, Inc. which
beneficially owns 6,283,128 shares of the Companys stock. Mr.
McKleroy does not possess and specifically disclaims any
beneficial ownership of these shares.
(d) Mr. McKleroy is a Director and officer of the Bashinsky
Foundation, Inc., which owns 400,544 shares of the Companys
stock. Mr. McKleroy does not possess and specifically disclaims
any beneficial ownership of these shares.
(e) Mrs. Bashinsky is a Director and Vice President of SYB,
Inc., which beneficially owns 6,283,128 shares of the Companys
stock. Mrs. Bashinsky does not possess and specifically
disclaims any beneficial ownership of these shares.
(f) Mrs. Bashinsky is a Director and Vice President of the
Bashinsky Foundation, Inc., which beneficially owns 400,544
shares of the Companys stock. Mrs. Bashinsky does not possess
and specifically disclaims any beneficial ownership of these
shares.
Each Director has the sole voting and investment
power of the shares directly owned by him.
SYB, Inc., beneficially owns 6,283,128 shares of common
stock of the Company. John S. Stein, Joann F. Bashinsky and John
P. McKleroy, Jr., Directors of the Company, each serves as a
Director and Officer of SYB, Inc. Joann F. Bashinsky is the wife
of Sloan Y. Bashinsky, Sr. Mr. Bashinsky is Director
Emeritus of the Company and owns 80% of the voting stock of SYB,
Inc. and the other 20 % is vested in a trust for the use and
benefit of his children and grandchildren of which John P.
McKleroy, Jr., serves as a Co-Trustee.
In Mr. Bashinskys will and in the trust document, he has
provided that in the event SYB, Inc. or his estate owns any
shares of Golden Enterprises stock at his death, the shares of
Golden Enterprises held by SYB, Inc. and the estate and the
voting shares of SYB, Inc. shall be voted by a committee
made up of each member of the Board of Directors of Golden
Enterprises and one member designated by his executors/trustees.
Proposal One
Election of Directors
At the Annual Meeting, ten Directors (constituting the
entire Board of Directors) are to be elected, each to hold
office until the next Annual Meeting of Stockholders, or until a
successor has been elected and qualified. All nominees
are presently members of the Board of Directors and were elected
to the Board by vote of the stockholders at the last annual
meeting.
Shares represented by your proxy will be voted in
accordance with your direction as to the election as directors
of the persons hereinafter listed as nominees. In the absence of
direction, the shares represented by your proxy
will be voted FOR such election. Should any of the persons
listed as nominees become unavailable as a nominee for election,
it is intended that the shares represented by your proxy will be
voted for the balance of those named and for a substitute
nominee or nominees unless the Board of Directors reduces
the number of directors, but the Board knows of no reason to
anticipate that this will occur.
The following table shows the names of the nominees for
election as directors, their respective ages as of August 12,
2002, the principal occupation, business experience and other
directorships held by such nominees, and the period
during which such nominees have served as directors of the
Company.
Name and Age Principal Occupation,
Director
Business Experiences
Since
and Other Directorships
John S. Stein, 65 Mr. Stein is Chairman of the Board. 1971
He was elected Chairman on June 1, 1996.
He served as Chief Executive Officer
from 1991 to April 4, 2001, and as
President from 1985 to 1998 and from
June 1, 2000 to April 4, 2001. Mr.
Stein also served as President of Golden
Flake Snack Foods, Inc. from 1976 to
1991. Mr. Stein Retired an asn employee
with the Company on May 31, 2002. Mrs.
Stein is a Directory of Compass
Bancshares, Inc.
Edward R. Pascoe, 65 Mr. Pascoe is retired Chairman of 1971
the Board of Steel City Bolt & Screw,
Inc. (formerly Coosa Acquisition, Inc.)
which, in 1995, acquired the bolt
and special fastener business owned by
the Company. He served as President of
Steel City Bolt & Screw, Inc. and Nall &
Associates, Inc., which were wholly
-owned subsidiaries of the Company,
from 1972 and 1973, respectively, until
1995.
John P. McKleroy,
Jr. 58 Mr. McKleroy is an attorney and 1976
member with Spain & Gillon, L.L.C.,
general counsel for the
Company. He has practiced law with this
firm since 1968.
James I. Mr. Rotenstreich is Chairman and 1984
Rotenstreich, 65 Chief Executive Officer of JHF Holdings,
Inc. (JHF), a company formerly doing
business under the name of
Jefferson Home Furniture Company, Inc.
He has served as Chief Executive Officer
since 1967 and as Chairman since
1992. In May of 1994, JHF sold its
retail home furniture interest and
presently engaged in real estate and
investment holdings.
John S. P. Samford, 52 Mr. Samford is President and sole 1984
owner of Samford Capital Corporation, an
investment holding company which he
formed in 1989.
D. Paul Jones, Jr., 59 Mr. Jones is Chairman of the Board 1991
and Chief Executive Officer of Compass
Bancshares, Inc.
(a bank holding company), and of its
subsidiary, Compass Bank. He assumed
these positions on April 1, 1991. Mr.
Jones has been employed with
Compass Bancshares, Inc. (formerly
Central Bancshares of the South, Inc.)
and Compass Bank (formerly
Central Bank of the South) since 1978.
J. Wallace Nall, Mr. Nall is President of Nall 1991
Jr. 62 DevelopmentCorporation and a General
Partner of Nall Partnership,Ltd.
He has held these positions
since 1981. Nall Development
Corporation is an
investment holding company and Nall
Partnership,Ltd. is a real estate
investment and development company.
F. Wayne Pate, 67 Mr. Pate retired as President of 1992
The Company on May 31, 2000. He served
as President from November 1, 1998
until retirement. He also served as
President of Golden Flake Snack Foods,
Inc., a wholly-owned subsidiary of the
Company from September 20, 1991, to
November 1, 1998.
Joann F. Bashinsky, 70 Mrs. Bashinsky is Vice President of 1996
SYB, Inc., which position she has held
since 1981. SYB, Inc. is an investment
holding company, which is the principal
owner of the Company. Mrs. Bashinsky
also serves as Vice President of
Bashinsky Foundation, Inc., a private
charitable foundation.
Mrs. Bashinsky is the wife of Sloan Y.
Bashinsky, Sr., who is Director Emeritus
Of The Company.
Mark W. McCutcheon, 47 Mr. McCutcheon is Chief Executive 1999
Officer and President of the Company
and President of Golden Flake Snack
Foods, Inc., a wholly-owned subsidiary
of the Company. He was elected President
and Chief Executive Officer of the
Company on April 4, 2001 and President
of Golden Flake on November 1, 1998. He
has been employed by Golden Flake
since 1980.
Sloan Y. Bashinsky, Sr., the husband of Joann F. Bashinsky is
a control person by reason by his beneficial ownership of
voting securities.
Committees Of The Board Of Directors
The Company has a Compensation Committee, a Stock Option
Committee and an Audit Committee. The Board of Directors has no
standing Nominating Committee.
During the fiscal year ended May 31, 2002, the
Compensation Committee was made up of John S. Stein, John S.P.
Samford, James I. Rotenstreich, and J. Wallace Nall, Jr. The
Compensation Committee met once during fiscal year 2002.
The Compensation Committee reviews the performance of the
Executive Officers of the Company and the top executive officer
of Golden Flake Snack Foods, Inc., a wholly-owned subsidiary,
and recommends to the Board of Directors of the
Company the appropriate compensation level and compensation and
benefit programs of such officers.
During the fiscal year ended May 31, 2002, the Stock
Option Committee was made up of James I. Rotenstreich, John S.
P. Samford, and J. Wallace Nall, Jr. The Stock Option Committee
met once during fiscal year 2002. The Stock Option
Committee determines the key employees of the Company and its
subsidiary to whom stock options and stock appreciation rights
will be granted under the 1996 Long Term Incentive Plan.
During the fiscal year ended May 31, 2002, the Audit
Committee was made up of James I. Rotenstreich, John S.P.
Samford and D. Paul Jones, Jr., all of whom are independent
members, as defined by the National Association of Security
Dealers, Inc. The Audit Committee met twice during fiscal year
2002. See Report of the Audit Committee of the Board of
Directors. Edward R. Rascoe became a member of the
Audit Committee on June 1, 2002.
Meetings Of The Board Of Directors and Committees
During the fiscal year ended May 31, 2002, there were four
regular meetings of the Board of Directors. The Compensation
Committee and the Stock Option Committee met once and the Audit
Committee met twice during the year. All incumbent directors
attended all of the meetings of the Board and the Committees
on which they served, except Joann F. Bashinsky who attended 75%
of the Board meetings.
Compensation of Directors
During the fiscal year ended May 31, 2002, the Company
paid each of its non-employee Directors a retainer of $300 per
month and all Directors, including Directors who were employees
of the Company, were paid a fee of $2,000 for each regular Board
meeting attended. The members of the Compensation Committee were
each paid $2,000 for attending the Compensation Committee
meeting and the members of the Audit Committee were paid $1,000
for each meeting attended.
Stock Ownership Reporting By Directors And Officers
Section 16(a) of the Securities Exchange Act of 1934
requires that Directors, certain Executive Officers and
beneficial owners of more than ten percent of the stock
of the Company file reports of stock ownership and changes in
ownership with the Securities and Exchange Commission. These
reports consist of Forms 3, Initial Statement of Ownership, 4,
Monthly Reports, and 5, Annual Reports. Based upon
a review of copies of such reports, or representations that no
reports were due to be filed by Directors, Executive Officers
or beneficial owners of more than ten percent of the stock of
the Company, the Company believes that Section 16(a) filing
requirements applicable to its Directors, Executive Officers and
beneficial owners of more than ten percent of the
stock of the Company were complied with during the fiscal year
2002, except that John S. Stein, Mark W. McCutcheon and John H.
Shannon, as members of the Administrative Committee of the
Companys Employee Stock Ownership Plan, due to inadvertence,
failed to timely report the receipt of 14,841 shares acquired
by the Plan, on August 10, 2001. Messrs. Stein, McCutcheon and
Shannon subsequently reported this transaction to the
Securities and Exchange Commission on Form 4 Reports filed in
November 2001.
Executive Compensation and other Information
The following table summarizes the compensation paid or
accrued by the and its subsidiary during the fiscal years 2000,
2001 and 2002 to the Companys Chairman of the Board, Chief
Executive Officer and to the three most highly compensated
executive officers, other than the Chairman of the Board and
Chief Executive Officer, whose compensation exceed $100,000.
Summary Compensation Table
Annual Compensation Long-Term
Compensation Secur-
Awards ities
Other Annual Underlying
Name and Salary Bonus Compensation Options/SARs
Principal Position Year ($) ($) ($) (#) (1)
John S. Stein (a) 2002 $250,000 $18.493 -- 40,000
Chairman, President 2001 $246,375 $16,810 -- --
Chief and Executive 2000 $246,375 $18,728 -- --
Officer Mark W. 2002 $175,500 $18,493 -- 40,000
McCutcheon (b) 2001 $137,500 $16,810 -- --
President and
Chief Executive 2000 $125,000 $18,728 -- --
Officer and President
of Golden Flake
Snack Foods, Inc.
F. Wayne Pate (c) 2002 -- -- -- 10,000
President and 2001 -- -- -- --
President of 2000 $179,763 $18,728 -- --
Golden Flake Snack
Foods, Inc
John H. Shannon 2002 $105,850 -- -- 10,000
Vice President 2001 $105,850 -- -- --
Secretary & 2000 $105,850 -- -- --
Controller
(1) During the 2002 fiscal year, incentive stock options were
granted under the 1996 Long Term Incentive Plan for the
indicated number of underlying securities.
(2) Includes directors fees paid by the Company and its
subsidiary as follows: Mr. Stein ($16,000), Mr. McCutcheon
($14,000).
(3) Includes contributions to the Companys and subsidiary
Profit Sharing Plan and Employee Stock Ownership Plan as
follows: Mr. Shannon ($1,525) and Mr. McCutcheon ($2,380).
(4) Includes amounts accrued, but not paid, to provide for
future payments under a salary continuation plan covering Mr.
Stein. The plan provides for payments of up to $120,000 per year
for fifteen years following death, disability or retirement at
age 65. During the 2002 Fiscal Year, the amount accrued for Mr.
Stein was $127,341. The plan is funded in part with life
insurance on the life of Mr. Stein.
(a) John S. Stein served as Chairman of the Board for fiscal
years 2000, 2001 and 2002. He served as Chief Executive Officer
for fiscal year 2000 and during fiscal 2001 until April 4, 2001.
He also served as President during fiscal year 2001 from June,
1 2000 until April 4, 2001. Mr. Stein retired as an employee of
the Company on May 31, 2002, but continues to serve the Company
in a consulting capacity and as Chairman of the Board.
(b) Mark W. McCutcheon has served as President of Golden Flake
Snack Foods, Inc. since November 1, 1998. He has served as
President and Chief Executive Officer of the Company since April
4, 2001.
(c) F. Wayne Pate served as President of the Company for
fiscal year 2000.
Salary Continuation Plan
On April 9, 2002, the Board of Directors of the Company
approved a Salary Continuation Plan (the Plan) for Mark W.
McCutcheon, Chief Executive Officer.
Under the Plan, if Mr. McCutcheon remains employed with the
Company until retirement at age 65 or until his death, the
Company will pay to Mr. McCutcheon or his designated
beneficiary, a monthly retirement benefit of $10,000 for 15
years. In the event of Mr. McCutcheons disability while he is
employed with the Company prior to age 65, a partial salary
continuation will be paid to his designated beneficiary. The
monthly benefits paid pursuant to the Plan shall be adjusted
annually for inflation based upon the change in the U.S.
Consumer Price Index
The Company currently plans to fund the benefits to be paid
under the Plan wholly or partially through the use of a Rabbi
Trust to which the Company will make annual contributions. The
Plan may also be funded by the use of life and/or disability
insurance, the premiums of which will be paid
by the Company.
The Plan is subject to termination by the Company by
resolution of the Board of Directors at any time prior to death,
disability or retirement of Mr. McCutcheon. However, in the
event a majority of the Companys stock ceases to be owned,
directly or indirectly, by Sloan Y. Bashinsky, Sr.,
his estate, testamentary trust or SYB, Inc. (a Change of
Control), upon the date of such Change of Control, the Plan
shall not be terminable by the
Company.
401(k) Profit Sharing Plan And Employee Stock Ownership Plan
The Company and its subsidiary each maintain a 401(k)
Profit Sharing Plan and Employee Stock Ownership Plan for the
benefit of their employees. Annual contributions are made to the
plans in amounts as determined by the Board of Directors of each
company. Contributions to the Employee Stock Ownership Plan are
invested in stock of the Company which is held for the account
of the participating employees and is distributed to the
employees upon their retirement or termination of employment.
All contributions to the Profit Sharing Plan and Employee
Stock Ownership Plan are allocated to the accounts of the
participating employees based upon their annual compensation and
each employee account vests 100% in the employee after five
years of service. The contribution to the plans for the fiscal
year ended May 31, 2002 was $177,405, with the following amounts
being credited to the accounts of the following persons named in
the Cash Compensation Table: John S. Stein, $-0-; John H.
Shannon, $1,525; and Mark W. McCutcheon $2,380.
(See Summary Compensation Table on page 8 (These amounts are
included within compensation shown in table.)
The Employee Stock Ownership Plan provides that the shares
held by the Trustee are voted by an administrative committee
made up of 3 members. The Board of Directors of the Company
determines the members of the committee. Present members of the
administrative committee are: John S. Stein, Chairman of the
Board, Mark W. McCutcheon, Chief Executive Officer and President
of the Company and President of Golden Flake Snack Foods, Inc.;
and John H. Shannon, Vice President, Secretary and Controller of
the Company.
1996 Long Term Incentive Plan
On September 27, 1996, the Companys shareholders approved
the Golden Enterprises, Inc. 1996 Long Term Incentive Plan (the
1996 Plan). The purpose of the 1996 Plan is to
further the growth in earnings and market appreciation of the
Company by providing long term incentives to those officers
and key employees of the Company or its subsidiaries who make
substantial contributions to the Company through their ability,
loyalty, industry and invention.
The 1996 Plan is administered by the Stock Option
Committee of the Board of Directors.
The 1996 Plan authorizes the Stock Option Committee to
grant to officers and key employees in the 1996 Plan (i) stock
options (which may be non-qualified options or incentive
stock options for tax purposes), (ii) stock appreciation rights
(SARs) (which may be issued in tandem with stock
options), (iii) restricted stock awards, (iv) performance units
(which may be in stock, cash or a combination thereof), and (v)
supplemental cash payments. Persons eligible to
participate in the 1996 Plan shall be those officers and key
employees of the Company and its subsidiaries who are in
positions in which their decisions, actions and counsel
significantly impact the performance of the Company or
its subsid-iaries. Participants are chosen from this group by
the Stock Option Committee.
Shares Reserved for Issuance. The aggregate number of
shares of the Companys common stock which may be issued under
the 1996 Plan may not exceed 500,000. Shares
subject to options granted under the 1996 Plan which expire
unexercised, or shares subject to awards which are otherwise
forfeited or canceled, will not count against this limit. The
maximum number of shares with respect to which awards may be
granted to any individual in any one year under the 1996
Plan is 100,000.
Stock Options. The Stock Option Committee is authorized to
determine the terms and conditions of all option grants, subject
to certain specific limitations as set forth in the
1996 Plan. In general, no option may be granted with an exercise
price of less than the fair market value of a share of the
Companys common stock on the date of grant (110% if the
grantee beneficially owns more than 10% of such stock), the term
of an option may not be longer than ten (10) years, and any
option shall be subject to certain restrictions on
transferability. Payment of the option price may be in cash,
check or other instrument acceptable to the Stock Option
Committee, or, in the discretion of the Stock Option Committee,
in the form of unrestricted common stock of the Company owned by
the optionee.
Stock Appreciation Rights. The Stock Option Committee is
authorized to grant SARs either independent of or in connection
with stock options granted under the 1996 Plan. The exercise of
SARs will entitle the holder thereof to an amount (the
appreciation) equal to the difference between the fair market
value of the common stock on the date the SAR was issued (or, in
the
case of SARs issued in connection with options, the exercise
price under the related option agreement) and the fair
market value of a share of common stock of the Company on the
date the SAR is exercised. The appreciation will be payable in
cash or common stock of the Company at the discretion of the
Stock Option Committee. The exercise of SARs granted in
connection with options will terminate those options.
The exercise of SARs which are paid in common stock will
be treated as the issuance of the shares of common stock to
which the SARs relate for purposes of calculating the maximum
number of shares which have been issued under the 1996 Plan.
Restricted Stock. The Stock Option Committee is authorized
to award restricted stock under the 1996 Plan subject to such
terms and conditions as the Stock Option Committee may
determine. The Stock Option Committee will have authority to
determine the number of shares of restricted stock to be
awarded, the price, if any, to be paid by the recipient of the
restricted stock, and the date on which the restricted stock
will vest. The vesting of restricted stock may be
conditioned upon the completion of a specified period of service
with the Company, upon the attainment of specified performance
goals, or upon such other criteria as the Stock Option
Committee may determine. The Stock Option Committee has the
discretion to make loans to the recipients for the purchase
price of the restricted stock and to accelerate the vesting of
the restricted stock on a case by case basis at any time.
Performance Units. The Stock Option Committee may grant
performance units under which payment may be made to the
participant upon the attainment of specific performance
goals. Such performance goals will be established by the Stock
Option Committee and will relate to the performance of the
Company (or any segment thereof) over a specified performance
period, as judged under any business criteria deemed appropriate
by the Stock Option Committee, including, without limitation,
growth in earnings, the ratio of earnings to shareholders
equity or the ratio of earnings to total capital.
The Stock Option Committee shall determine the extent to
which the performance targets have been attained, and what, if
any, payment is due the participant on the performance unit.
Such payment may be made, at the Stock Option Committees
discretion, in cash or common stock of the Company (based on the
then current fair market value of such stock).
Supplemental Cash Payments. A stock option, SAR,
restricted stock or performance unit award may provide for the
Company to make a supplemental cash payment to a participant.
Payments may be made for the purpose of, but not limited to,
assisting the employee in paying income taxes resulting from an
award under the 1996 Plan. In no event shall the amount of cash
payment exceed the value of the award to which it relates.
During the fiscal year ended May 31, 2002, a total of
330,000 incentive stock options were granted under the 1996 Plan
to officers and key employees of the Company and its
subsidiary. Of the total options granted, 40,000 were granted to
John S. Stein, Chairman, 40,000 to Mark W. McCutcheon, President
and CEO, and 10,000 to John H. Shannnon, Vice President,
Secretary and Controller. None of these executive officers
exercised options during fiscal year 2002. More detailed
information concerning these stock options and other outstanding
options is set forth in the following tables.
Compensation Committee Interlocks and Insider Paticipation
During fiscal year 2002, the Compensation Committee of the
Board of Directors (the Compensation Committee) was comprised
of John S. Stein, John S.P. Samford, James I. Rotenstreich and
J. Wallace Nall, Jr. None of the members, with the exception
of John S. Stein who is Chairman of the Board, are officers or
employees of the Company or its subsidiary.
Compensation Committee Report On Executive Compensation for the
Fiscal Year Ended May 31, 2002.
The Compensation Committee reviews the compensation
structure of the Executive Officers of the Company and the top
executive officer of Golden Flake Snack Foods, Inc.
(Golden Flake), a wholly-owned subsidiary, and recommends to
the Board the appropriate base and incentive bonus compensation
of such officers.
The Stock Option Committee during fiscal 2002 was made up
of James I. Rotenstreich, John S. P. Samford and J. Wallace
Nall, Jr. The Stock Option Committee determines the key
employees of the Company and Golden Flake to
whom stock options and stock appreciation rights are granted
under the 1996 Long Term Incentive Plan.
The Companys executive compensation program consists of
three primary components: base salary, annual incentive bonus,
and grants of stock options and stock appreciation rights.
Base salary is the foundation of executive compensation.
Base salaries are reviewed annually and adjusted, if deemed
appropriate, based upon recommendations of the Compensation
Committee after its review of recommendations received
from the Chairman of the Board (Chairman).
Annual incentive bonus formulas are established for the
Chairman, Chief Executive officer (CEO), President and the top
executive officer of Golden Flake. The Chairman, CEO, President
and the top executive officer of Golden Flake are
paid a percentage of the companys pre-tax operating earnings
that exceed a targeted return on equity.
The base salaries and incentive bonus formulas for fiscal
2002 reported in this Proxy Statement were recommended by the
Compensation Committee in April, 2001 to the Board. The
Compensation Committee received and reviewed recommendations
from the Chairman, which recommendations were based upon
a number of factors, including overall earnings of the Company
and Golden Flake, pre-tax earnings from operations, return on
equity, the financial performance of the Company and its
subsidiary, the complexities of the job, and individual
performance and achievements of each of the executive officers.
In reviewing the recommendations of the Chairman and in
making its recommendations to the Board, the Compensation
Committee undertook a subjective consideration of the executive
officers base salaries and incentive bonus formulas that was
not related to any specific qualitative or quantitative
criteria.
The Boards approval of such recommendations of the
Compensation Committee have generally been based on its
subjective analysis of what it considers to be a reasonable and
appropriate base salary and incentive bonus formula for the
Chairman, CEO and other executive officers taking into
consideration their individual job responsibilities and the
financial performance of the Company during the prior fiscal
year.
The Company has used stock options and stock appreciation
rights to reward the performance of executives. These are
granted under the 1996 Long Term Incentive Plan. Grant of stock
options and stock appreciation rights are made by the Stock
Option Committee to key employees after considering the
recommendations of the Chairman.
The Compensation Committee believes that the incentive
bonus formulas and stock options/stock appreciation rights
assure that a significant portion of the Chairmans and CEOs
compensation relate to the Companys performance.
The base salary and incentive bonus formula for Mark W.
McCutcheon, the Companys CEO, during fiscal year 2002 were
determined based upon his responsibilities and contributions to
the Company and the performance of the Company. During fiscal
2002, Mr. McCutcheon received an increase in base salary of 27%
from $137,500 to $175,000. Mr. McCutcheons incentive bonus
formula which was based upon a pre-determined percentage of the
Companys pre-tax operating earnings that exceeded a target of
return on equity, produced a bonus of $18,493 for fiscal 2002.
Mr. McCutcheon received stock options during fiscal 2002 to
purchase 40,000 shares of Company stock.
In April of 2002, the Compensation Committee held its
regular meeting to consider and recommend compensation for the
fiscal year beginning June 1, 2002. At that meeting, the
Compensation Committee, upon recommendation of John S.
Stein, Chairman, and employing the factors and criteria set out
above, recommended a base salary for Mark W. McCutcheon as
President and CEO of $210,000 and John H. Shannon as Vice
President, Secretary and Controller of $90,000. The
recommendations of the of the Compensation Committee were
approved by the Board of Directors.
Compensation Committee: J. Wallace Nall, Jr., John S. P.
Samford, James I. Rotenstreich, John S. Stein.
Shareholder Return Performance Graph
The following graph illustrates, for the period commencing May
31, 1997, and ending May 31, 2002, the yearly percentage change
in the cumulative total shareholder return on the Companys
common stock as compared with the cumulative total returns of
other companies included withint he NASDAQ Stock Market (U.S.
Companies) Index and the Company Peer Group.
The Company has selected a Peer Group consisting of the four
publicly-traded companies named below, which are in the snack
food industry. Virtually all of the Companys direct
competitors and peers are privately-held companies or
subsidiaries or divisions of larger publicly-held companies so
that the available members of the Peer Group are limited.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE
COMPANY, NASDAQ
STOCK MARKET INDEX AND PEER GROUP.
05/1997 05/1998 05/1999 05/2000 05/2001 05/2002
100.0 138.2 178.9 245.1 152.1 117.1
100.0 126.3 114.6 62.2 108.4 167.0
100.0 87.1 62.4 50.4 70.0 86.1
Fiscal Year Ended May 31
This graph assumes that $100 was invested in the Companys
common stock on May 31, 1997, in the NASDAQ Stock Market (U.S.
Companies) Index and in the Peer Group, which
consisted of Lance, Inc., J & J Snack Foods Corp., Tasty Baking
Co. and Ralcorp Holdings, Inc. and that dividends were
reinvested.
CERTAIN TRANSACTIONS
During the fiscal year ended May 31, 2002, the law firm of
Spain & Gillon, L.L.C., of which John P. McKleroy, Jr. is a
member, served as General Counsel and performed various
legal services for the Company and its subsidiary. The firm will
continue to perform legal services for the current fiscal year.
During the fiscal year ended May 31, 2002, Golden Flake
Snack Foods, Inc. (Golden Flake), a wholly-owned subsidiary of
the Company, leased 6 tractors and 20 delivery vans from
SYB, Inc., a corporation primarily owned and controlled by Sloan
Y. Bashinsky, Sr. These leases were executed in prior years.
Golden Flake used the tractors and delivery vans in its ordinary
course of business of distributing snack food products. During
the term of the tractor lease, Golden Flake paid an average
monthly lease payment of $1,668 per tractor. The tractor lease
terminated on October 31, 2001, and Golden Flake purchased the
tractors at their salvage value of $10,000 per tractor. During
the fiscal year, Golden Flake paid an average monthly lease
payment of $777.00 per month for each delivery van. Upon
expiration of the delivery van lease, Golden Flake has the
option to purchase the vans at their salvage value of $8,000 per
van.
Golden Flake owns a Cessna Citation II Airplane for
business use. Sloan Y. Bashinsky, Sr. has leased the plane for
personal use of up to 100 flight hours per year. The lease
requires monthly payments of $20,000. During fiscal year 2002,
Mr. Bashinsky paid lease payments to Golden Flake of $240,000,
and also paid all flight crew expenses for flights used by him.
The lease is structured so that the costs of ownership,
maintenance and operation of the plane to Golden Flake are
offset by the lease payments and payment of the flight crew
expenses on flights used by Mr. Bashinsky. The lease is for a
term of one year and automatically renews annually on
each February 1, unless Golden Flake or Mr. Bashinsky elects to
terminate the same. The current lease term will expire on
January 31, 2003. Mr. Bashinskys personal use of the plane is
coordinated with Golden Flake so as not to interfere with Golden
Flakes business use.
The Company believes that these transactions were on terms
equal to or better than those available from unaffiliated third
parties.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee reviews with the independent auditors,
the corporate controller and the Companys general counsel the
results of the independent auditors annual report on the
Companys financial statements. The Audit Committee also reviews
and confers with management and the Board of Directors with
respect to the selection of the Companys independent auditors
and performs such additional functions as are necessary or
prudent to fulfill the Committees duties and responsibilities
and reports its recommendations and findings to the
full Board of Directors.
The Board of Directors has adopted a written charter for
the Audit Committee, which is reviewed and reassessed for
adequacy on an annual basis.
The Audit Committee has reviewed and discussed the audited
financial statments for the year ended May 31, 2002 with
management. The Audit Committee has also discussed with the
independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (SAS 61). The Audit
Committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards
Board Standard No. 1 and has discussed with the independent
auditors their independence. The Audit Committee has also
discussed with the management of the Company and Dudley, Hopton-
Jones, Sims and Freeman, PLLP, such other matters and received
such assurances from them as deemed appropriate by the
Audit Committee.
Based on the review and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
audited financial statments referred to above be
included in the Companys Annual Report on form 10-K for filing
with the Securities and Exchange Commission.
The Audit Committee has considered whether the provision
of the non-audit services performed by Dudley, Hopton-Jones,
Sims and Freeman PLLP, as described on Page 17 hereof
is compatible with maintaining Dudley, Hopton-Jones, Sims and
Freeman PLLPs independence.
Members of the Audit Committee: James I. Rotenstreich, John S.
P. Samford, D. Paul Jones, Jr. and Edward R. Rascoe.
INDEPENDENT ACCOUNTANTS
Dudley, Hopton-Jones, Sims & Freeman, PLLP, Certified
Public Accountants (Dudley, Hopton-Jones) were selected by the
Board of Directors, upon recommendation of its Audit
Committee, as the independent accountants to audit the Companys
financial statements for the fiscal year ended May 31, 2002.
Dudley, Hopton-Jones has served as independent auditors to the
Company since 1977. Representatives of Dudley, Hopton-Jones will
be present at the annual meeting and will have the opportunity
to make a statement if they wish to do so, and will be
available to respond to appropriate questions from stockholders.
During the fiscal year ended May 31, 2002, Dudley, Hopton-
Jones, Sims & Freeman PLLP provided various audit and non-audit
services to the Company and its subsidiary. As a part
of their services as the Companys auditors, they audited the
consolidated financial statements of the Company and its
subsidiary, the individual financial statements of the Company
and Golden Flake Snack Foods, Inc. and its subsidiary and also
assisted in the preparation of the Companys Annual Report (Form
10-K) for filing with the Securities and Exchange Commission.
During fiscal year 2002, Dudley, Hopton-Jones billed the
company for services provided in the following categories and
amounts:
Audit Fees. Dudley, Hopton-Jones billed the Company
$66,000 for professional services rendered for the audit of the
Companys annual financial statments for fiscal year 2002
and the reviews of the financial statements included in the
Companys Quarterly Reports on Form 10-Q filed for the first
three quarters of fiscal 2002.
Financial Information Systems Design and
Implementation Fees. Dudley, Hopton-Jones did not provide any
professional services during fiscal 2002 to the Company for
the design and implementation of financial information systems.
All Other Fees. Dudley, Hopton-Jones billed the
Company $25,535 for all services rendered during fiscal 2002
other than audits and reviews of the Companys financial
statements and financial information systems design and
implementation.
The Company has not selected the principal accountants to
audit its financial statements for the current fiscal year. It
is the Companys policy to select its principal accountants
after the preceding years audit has been completed and the
Company has had time to consider the
selection.
FINANCIAL STATEMENTS
Consolidated Financial Statements of the Company and its
subsidiary for the fiscal year ended May 31, 2002, are contained
in the 2002 Annual Report to Stockholders which accompanies this
Proxy Statement. However, such Report and Financial Statements
contained therein are not to be considered a part of this
solicitation material since they are not deemed
material to the matters to be acted upon at the meeting.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Any stockholder desiring to submit a proposal to be
considered by the Board of Directors for inclusion in the proxy
statement and form of proxy relating to next years Annual
Meeting of Stockholders must do so in writing received by the
Company on or before May 31, 2003. Any other stockholder
proposals for the Companys 2003 Annual Meeting of Stockholders
must be received no later than July 27, 2003. The proposals must
comply with all applicable statues and regulations. Any such
proposals should be submitted to Golden Enterprises, Inc.,
Attention: John H. Shannon, Vice President & Secretary, 2140
11th Avenue South, Suite 208, Birmingham, Alabama 35205.
OTHER BUSINESS
It is not anticipated that there will be presented to the
meeting any business other than the matters set forth herein and
the management was not aware, a reasonable time before this
solicitation of proxies, of any other matter which may properly
be presented for action at the meeting. If any other business
should come before the meeting, the persons named on the
enclosed proxy will have discretionary authority to vote all
proxies in accordance with their best judgment.
By Order of the Board
of Directors
John S. Stein
Chairman