SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Golden Enterprises, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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GOLDEN ENTERPRISES, INC.
One Golden Flake Drive
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 the Company, at One Golden Flake Drive, Birmingham,
Alabama on September 22, 2010, 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 July 30, 2010, 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
Mark W. McCutcheon
Chairman
Birmingham, Alabama
September 1, 2010
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 BEFORE THE PROXY IS
EXERCISED.
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PROXY STATEMENT
GENERAL
The annual meeting of the stockholders of Golden Enterprises, Inc. (the
"Company") will be held at the general offices of the Company, at One Golden
Flake Drive, Birmingham, Alabama on September 22, 2010, at 11:00 A.M. All
holders of record of common stock as of July 30, 2010, 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.
Important Notice Regarding Availability of Proxy Materials for Shareholder
Meeting to be Held on September 22, 2010: This Proxy Statement, Proxy Card, the
Annual Report to Stockholders and Form 10-K are available on line at
www.goldenflake.com/financial.html.
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, email, 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 July 30, 2010, 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 July 30, 2010 was
11,734,632 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.
If your shares are held in street name (which means they are held of record
by a broker), you must instruct your broker how to vote the shares, or your
shares will not be voted on any proposal for which the broker does not have
discretionary authority to vote. Due to a recent change in the rules governing
brokers, they no longer have discretionary authority to vote for the election of
Directors without instructions from the beneficial owner. Accordingly, if your
shares are held in street name, it is particularly important that you instruct
your broker how you wish to vote your shares for the election of Directors at
the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At July 30, 2010, SYB, Inc. and the Estate of Sloan Y. Bashinsky, Sr., deceased,
were the only persons known by the Company 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.
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Amount and Nature of
Beneficial Ownership (1)
Name and Address of ------------------------ Percent of
Beneficial Owner Direct Indirect Class
----------------- ------ -------- -----
SYB, Inc.
3432 Briarcliff Road East 5,283,128 -0- 45.0%
Birmingham, Alabama 35223
The Estate of Sloan Y. Bashinsky, Sr. 1,014,500 -0- 8.6%
2117 Second Avenue N.
Birmingham, Alabama 35203 (2)
__________________
(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) On August 9, 2010, pursuant to the terms of the Last Will and Testament of
Sloan Y. Bashinsky, Sr., the Estate distributed 414,221 shares of Company
stock to Joann F. Bashinsky and 600,279 shares of Company stock to the
Marital Testamentary Trust. The Marital Testamentary Trust owns 5.1% of the
Company stock after the transfer
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 July
30, 2010:
Amount and Nature of
Beneficial Ownership (1)
------------------------ Percent of
Name Direct Indirect Class
---- ------ -------- -----
J. Wallace Nall, Jr. -0- 196,000 (2) (5) 1.7%
F. Wayne Pate 141,993 32 (2) (6) 1.2%
Edward R. Pascoe 25,000 -0- *
John P. McKleroy, Jr. (a) (b) (c) 40,000 (3) -0- (2) *
John S. P. Samford 1,666 -0- *
Joann F. Bashinsky (d) (e) 12,704 -0- (2) *
Mark W. McCutcheon 4,455 -0- (2) (4) *
William B. Morton, Jr. -0- -0- *
John S. Stein, III -0- -0- *
Randy Bates 4,634 -0- (2) *
David Jones 996 -0- (2) *
Patty Townsend -0- -0- (2) (4) *
All Directors and
Officers as a group 231,448 196,032 3.64%
__________________
*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.
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(2) Each designated director is a member of the Voting Committee created under
the Will and Marital Testamentary Trust and under the SYB, Inc. Common Stock
Trust of Sloan Y. Bashinsky, Sr. ("Bashinsky"). As a member of the Voting
Committee, each designated director participates in the vote of the shares of
common stock of the Company owned by SYB, Inc. (5,283,128 shares) and by the
Estate/Marital Testamentary Trust of Mr. Bashinsky (1,014,500 shares). Patty
Townsend, an officer of the Company, is also a member of the Voting Committee.
The decision of the majority of the members of the Voting Committee governs how
the stock is voted. The members of the Voting Committee do not possess and
specifically disclaim any beneficial ownership of the shares owned by SYB, Inc.
and the Estate/Marital Testamentary Trust of Bashinsky.
(3) Includes 33,490 shares held by a 401(k) profit sharing plan and personal IRA
account for the benefit of John P. McKleroy, Jr.
(4) Does not include any portion of 571,033 shares of common stock of the
Company which are owned by New York Life Insurance Company, as Trustee of the
Golden Enterprises, Inc. and subsidiaries Employee Stock Ownership Plan. Mark W.
McCutcheon and Patty Townsend are members of the Plan's administrative committee
and exercise the voting power of the shares and each disclaims 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:
McCutcheon 3,441 and Townsend 800.
(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.
(a) Mr. McKleroy is a Director and Secretary of SYB, Inc. which owns 5,283,128
shares of the Company's stock. Mr. McKleroy does not possess and
specifically disclaims any beneficial ownership of these shares.
(b) Mr. McKleroy is a Director and officer of the Bashinsky Foundation, Inc.,
which owns 400,544 shares of the Company's stock. Mr. McKleroy does not
possess and specifically disclaims any beneficial ownership of these
shares.
(c) Mr. McKleroy is designated under the Will of Sloan Y. Bashinsky, Sr.,
deceased, as a Co-Personal Representative/Co-Trustee of his Estate and
Marital Testamentary Trust. The Estate and Marital Testamentary Trust own
1,014,500 shares of the Company stock. Mr. McKleroy does not possess and
specifically disclaims any beneficial ownership of these shares.
(d) Mrs. Bashinsky is a Director, Chairman and CEO of SYB, Inc., which owns
5,283,128 shares of the Company's stock. Mrs. Bashinsky does not possess
and specifically disclaims any beneficial ownership of these shares.
(e) Mrs. Bashinsky is a Director, Chairman and CEO of the Bashinsky
Foundation, Inc., which owns 400,544 shares of the Company's 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/her.
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Voting Control
- ---------------
Sloan Y. Bashinsky, Sr. died on August 2, 2005. At the time of Mr.
Bashinsky's death, he beneficially owned 6,698,172 shares of common stock of the
Company which constituted voting control of the Company. The stock beneficially
owned by Mr. Bashinsky was registered in and held by the following entities:
SYB, Inc. 5,283,128 shares
SYB, Inc. as Trustee 1,000,000 shares
of the Sloan Y. Bashinsky,
Sr. Trust dated February 16, 1982
Bashinsky Foundation, Inc. 400,544 shares
Sloan Y. Bashinsky, Sr. 14,500 shares
As a result of Mr. Bashinsky's death, and the probate of his will on August
12, 2005, the 1,000,000 shares held in SYB, Inc. as Trustee and the 14,500
shares held in his name passed to his Estate/Marital Testamentary Trust created
under his Will. On August 9, 2010, the Personal Representatives of Mr.
Bashinsky's Estate distributed 414,221 shares of Company stock to Joann F.
Bashinsky and 600,279 shares of Company stock to the Marital Testamentary Trust
pursuant to the terms of the Will. SYB, Inc. continues to own the 5,283,128
shares and the Bashinsky Foundation, Inc. continues to own the 400,544 shares.
Joann F. Bashinsky and John P. McKleroy, Jr., Directors of the Company,
each serves as a Director and officer of Bashinsky Foundation, Inc. The stock of
the Company owned by Bashinsky Foundation, Inc. is voted by its board of
directors and is not subject to the Voting Committee, as described below.
Joann F. Bashinsky and John P. McKleroy, Jr., Directors of the Company,
each serves as a director and officer of SYB, Inc. The voting stock of SYB,
Inc. is vested in the SYB, Inc. Common Stock Trust and John P. McKleroy, Jr.
serves as a Co-Trustee of this Trust.
John P. McKleroy, Jr. is designated under Mr. Bashinsky's Will as
Co-Personal Representative of his Estate and as Co-Trustee of his Marital
Testamentary Trust ("Marital Testamentary Trust").(1)
(1) John S. Stein, Jr., previous Chairman of the Board, who resigned/retired
from the Board on July 22, 2010, is also a Co-Personal Representative of the
Estate and Co-Trustee of the Marital Testamentary Trust.
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Mr. Bashinsky's Will and the SYB, Inc. Common Stock Trust provide that
shares of the Company held by SYB, Inc. and his Estate/Marital Testamentary
Trust, along with the voting shares of SYB, Inc. shall be voted by a committee
made up of members of the Board of Directors of Golden Enterprises, Inc. and one
member designated by his Estate Personal Representatives/Trustees ("Voting
Committee"). Consequently, as of the date of this Proxy Statement, the 5,283,128
shares of the Company stock held by SYB, Inc. and the 600,279 shares of the
Company stock held by Mr. Bashinsky's Marital Testamentary Trust, all of which
constitute a majority of the stock of the Company, are voted by the Voting
Committee. The Voting Committee presently consists of J. Wallace Nall Jr., F.
Wayne Pate, John P. McKleroy, Jr., Joann F. Bashinsky, Mark W. McCutcheon, Paul
R. Bates and David A. Jones all directors of the Company, along with Patty
Townsend, an officer of the Company. The decision of a majority of the members
of the Voting Committee governs how the stock is voted.
The Voting Committee will continue to vote the Company stock owned by SYB,
Inc. (5,283,128 shares) and by the Martial Testamentary Trust (600,279 shares),
respectively, until the SYB, Inc. Common Stock Trust and the Testamentary Trust
terminate. The Testamentary Trust will terminate upon the death of Joann F.
Bashinsky and the SYB, Inc. Common Stock Trust will terminate upon the earliest
to occur of the following dates: (i) in the event the Company should be sold,
five (5) years from the date of the sale of the Company, or (ii) December 31,
2020.
Upon termination of the SYB, Inc. Common Stock Trust, the assets of the
Trust will be distributed generally to Sloan Y. Bashinsky, Sr.'s descendants and
control of the Company stock held by SYB, Inc. (5,283,128 shares) will transfer
to these trust beneficiaries and the Voting Committee will cease to vote these
shares. Upon termination of the Testamentary Trust, the Company stock held by
the Testamentary Trust will transfer to various charitable organizations and the
Voting Committee will cease to vote these shares.
Due to the transfer of shares of Golden Enterprises stock held by the
Estate of Sloan Y. Bashinsky, Sr. to the Marital Testamentary Trust created by
the Last Will and Testament of Sloan Y. Bashinsky, Sr. and Joann F. Bashinsky on
August 9, 2010, SYB, Inc., the SYB, Inc. Common Stock Trust, the Voting
Committee and Mrs. Bashinsky have filed an amended Schedule 13D and the Company
remains classified as a "controlled company." SYB, Inc., the Martial
Testamentary Trust and Joann F. Bashinsky as a group own 53.8% of the common
stock of the Company.
ELECTION OF DIRECTORS
At the Annual Meeting, eleven 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. Seven of the nominees were elected to the Board by vote of the
stockholders at the last annual meeting and four nominees were elected by the
Board of Directors on July 22, 2010. At the July 22, 2010 meeting, two of the
nominees John S. Stein, III and William B. Morton, Jr. were elected to fill the
vacancies on the Board created by the resignations/retirements of John S. Stein,
Jr. and James I. Rotenstreich who resigned on that date. Additionally, the
Board expanded the number of Directors from nine to eleven and Paul R. Bates and
David A. Jones were elected to fill these new vacancies. The Board determined
that it was in the best interest of the Company and its shareholders to expand
the Board so that qualified independent and key non-independent Directors would
be added to the Board.
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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 clear direction, otherwise 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 proposed by the Board of
Directors unless the Board reduces the number of directors, but the Board knows
of no reason to anticipate that this will occur. Proxies can not be voted for a
greater number of persons than the number of nominees named.
The Board has established certain attributes that it seeks in identifying
candidates/nominees for Director. In particular, the Board desires individuals
who have very high integrity, business and financial experience and deep,
genuine interests in the Company. In considering candidates for Director, the
Board considers the entirety of each candidate's credentials in the context of
these attributes. In the judgment of the Company's Board as a whole, each of
the following nominees possesses such attributes.
The following table shows the names of the nominees for election as
directors, their respective ages as of July 30, 2010, the principal occupation,
business experience, other directorships held by such nominees, qualifications
and skills considered by the Board and the period during which such nominees
have served as directors of the Company.
Principal Occupation
Business Experiences Director
Name and Age and Other Directorships Since
------------ ----------------------- --------
Mark W. McCutcheon, 55 Mr. McCutcheon is Chairman of the Board, Chief 1999
Executive Officer, and President of the Company
and President of Golden Flake Snack Foods, Inc., a
wholly-owned subsidiary of the Company. He has
served as President and Chief Executive officer of
the Company since April 4, 2001 and as President
of Golden Flake since November 1, 1998. He was
elected Chairman of the Board on July 22, 2010. He
has been employed by Golden Flake since 1980.
The Company benefits from Mr. McCutcheon's
experience with the Company as President and CEO
of the Company, President of Golden Flake Snack
Foods, Inc. and his extensive experience in the
snack foods industry and with the Company, along
with Mr. McCutcheon's positive management style
and operation of the Company.
Edward R. Pascoe, 73 Mr. Pascoe is retired Chairman of the Board of 1971
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.
Mr. Pascoe has significant experience as a
Director of the Company and Golden Flake Snack
Foods, Inc. and the Company benefits from this
experience, his experience as President of former
subsidiaries of the Company and Mr. Pascoe's
service on the Audit Committee for seven years.
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John P. McKleroy, Jr., 66 Mr. McKleroy is an attorney and member with Spain 1976
& Gillon, L.L.C., and general counsel for the
Company. He has practiced law with this firm since
1968.
The Company benefits from Mr. McKleroy's
experience and expertise as an attorney, his
long-term representation and knowledge of the
Company and its subsidiaries and his long service
to the Company as a Director.
John S. P. Samford, 60 Mr. Samford is President and sole owner of Samford 1984
Capital Corporation, an investment holding company
which he formed in 1989.
Mr. Samford's qualifications and skills include
his knowledge and experience with investments, his
knowledge and ability to review financial
information of public companies, his long service
to the Company as a Director and his service on
the Audit Committee since 1989.
J. Wallace Nall, Jr., 70 Mr. Nall is President of Nall Development 1991
Corporation 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.
The Company benefits from Mr. Nall's real estate
investment and financial experience, along with
Mr. Nall's knowledge of the history of the
Company, his long service as a Company Director
and Chairperson of the Compensation Committee.
F. Wayne Pate, 75 Mr. Pate retired as President of the Company on 1992
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 sub- sidiary of the Company from
September 20, 1991, to November 1, 1998.
Mr. Pate's knowledge of the Company which he
acquired as past President of the Company and
Golden Flake Snack Foods, Inc., his over forty
years of service as an employee and/or Director of
Golden Flake Snack Foods, Inc. and his overall
knowledge of the snack food industry are of a
great benefit to the Company.
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Joann F. Bashinsky, 78 Mrs. Bashinsky is Chairman and CEO of SYB, Inc., 1996
an investment holding company, which is a
principal owner of the Company. Mrs. Bashinsky
served as Vice President of SYB, Inc. from 1981
until August 8, 2005, at which time she was
elected Chairman and CEO. Mrs. Bashinsky also
serves as Chairman and CEO of Bashinsky
Foundation, Inc., a private charitable foundation.
The Company benefits from Mrs. Bashinsky's
knowledge of and long service to the Company, her
service as a Director of Golden Flake Snack Foods,
Inc., along with the important knowledge she
possesses of the Company's operations and history.
John S. Stein III, 45 Mr. Stein is currently Chairman and CEO of 2010
National Alabama Corporation, a railcar
manufacturer located in northwest Alabama. From
2001 to 2009, Mr. Stein served as CEO of
IntraMicron, Inc., a technology research,
development and deployment company. He is a
founder and principal (since 2001) of Fidelis
Capital, an SEC registered investment advisor
based in Birmingham, Alabama. From 1996 to 1998,
Mr. Stein co-founded and was Co-Managing Partner
of Petra Capital LLC, a private subordinated debt
fund based in Nashville providing growth capital
to small businesses. Mr. Stein also serves as a
member of the Board of Directors of Wise Metal
Group, LLC, the world's third leading producer of
aluminum can containers for the beverage and food
industries.
Mr. Stein was nominated to serve as a Director due
to his business and financial background,
experience in the investment banking industry, his
expertise and insight as a CEO of other companies,
his current directorship experience and his
knowledge of the Company.
William B. Morton, Jr., 46 Mr. Morton is currently CEO and President (since 2010
2002) of Robins & Morton, a general contracting
company based in Birmingham, Alabama with
significant capabilities in the latest
construction technology and project management
techniques. He has been with Robins & Morton since
1988. Mr. Morton worked as a Field Engineer,
Assistant Superintendent and Project Manager on
projects throughout the country. Mr. Morton also
worked in various management positions in the
company's home office prior to being named
President and assuming day-to-day leadership.
Mr. Morton was nominated to serve as a Director
due to his business background in working in a
number of different management positions, his
financial knowledge and the experience and insight
he brings to the Company as the CEO and President
of a company that operates throughout the United
States.
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Paul R. Bates, 56 Mr. Bates, since 1998, has served as Executive 2010
Vice President of Sales and Marketing for Golden
Flake Snack Foods, Inc. He joined Golden Flake in
1979 as a route salesperson in Birmingham. He has
also been a Divisional Manager in New Orleans,
Region Manager in Nashville, Sales Manager, and
Vice President of Sales for Golden Flake Snack
Foods, Inc.
Mr. Bates' long and extensive history with the
Company from route salesman to Executive Vice
President of Sales and Marketing and Director of
Golden Flake Snack Foods, Inc., along with his
extensive knowledge of sales and marketing in the
snack foods industry is of substantial value and
benefit to the Company.
David A. Jones, 58 Mr. Jones, since 2002, has served as Executive 2010
Vice President of Operations for Golden Flake
Snack Foods, Inc. He joined Golden Flake in 1984
as a Department Manager of Corn and Tortilla
Chips. He was the Manager of the Nashville
manufacturing plant, Plant Manager of the
Birmingham facility, and Vice President of
Manufacturing for Golden Flake Snack Foods, Inc.
Mr. Jones has an extensive history with the
Company and the manufacturing of the Company's
snack foods. Mr. Jones also serves as a Director
of Golden Flake Snack Foods, Inc. His knowledge of
snack food manufacturing requirements/process and
the Company's operations is a great benefit to the
Company.
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CORPORATE GOVERNANCE
Controlled Company
The Company is deemed a "controlled company" because 53.8% of the Company's
stock is owned (directly or indirectly) and/or voted by the control group (as
previously described in "Voting Control" on pages 5 and 6) within the meaning of
Listing Rule 5615 of the Corporate Governance Standards of the NASDAQ Stock
Market, Inc. ("NASDAQ") on which the Company's shares are traded. Controlled
companies are exempt from a number of NASDAQ corporate governance standards,
including the requirement to have a majority of independent directors and the
requirement to have director nominees selected by a nominating committee
comprised of independent directors. Controlled companies are also exempt from
the requirement to have the compensation of the company's officers determined by
a compensation committee comprised of at least a majority of independent
directors.
Director Independence
The Board has determined that Edward R. Pascoe, John S.P. Samford, John S.
Stein, III and William B. Morton, Jr. are qualified as "Independent Directors"
within the meaning of the director independence standards of the NASDAQ and the
Securities and Exchange Commission ("SEC") under the Exchange Act of 1934.
James I. Rotenstreich, who resigned/retired as a Director of the Company on July
22, 2010, had also been classified as an independent director for all of the
fiscal year ended May 28, 2010. All other directors serve on the Voting
Committee described in "Security Ownership of Management" and would not qualify
as Independent Directors.
Meetings of Independent Directors
The Independent Directors meet in executive sessions (with no management
directors or officers present) at least twice each year. The Independent
Directors met two times in the fiscal year ending May 28, 2010.
Committees of the Board of Directors
The Board of Directors has a Compensation Committee, a Stock Option
Committee and an Audit Committee. The Board of Directors has no standing
Nominating Committee.
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. The Compensation Committee consists of John S.P.
Samford, J. Wallace Nall, Jr., Joann F. Bashinsky and F. Wayne Pate. The
Compensation Committee met once during fiscal year 2010. Since the Company
qualifies under NASDAQ Listing/Corporate Governance Rules as a Controlled
Company, the Compensation Committee is not required to meet the independence
requirements of the listing standards of NASDAQ and the non-employee director
definition of Rule 16b-3 promulgated under Section 16 of the Exchange Act.
The Stock Option Committee has from time to time determined the key
employees of the Company and its subsidiary to whom stock options and stock
appreciation rights were granted under the Company's Long Term Incentive Plan.
The Stock Option Committee consists of John S.P. Samford, J. Wallace Nall, Jr.,
Joann F. Bashinsky and F. Wayne Pate. The Stock Option Committee met once
during fiscal year 2010.
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The Audit Committee reviews the results of the annual audit and quarterly
financial statements, selects and engages the independent accountants, assesses
the adequacy of the Company's procedures in connection with financial controls
and receives and considers the independent accountants' comments as to internal
controls. The Audit Committee acts pursuant to a written charter, which is
reviewed annually by the Board of Directors. John S.P. Samford, Chairman,
Edward R. Pascoe, William B. Morton, Jr. and John S. Stein, III currently
constitute the Audit Committee of the Board of Directors. James I.
Rotenstreich, who resigned/retired as a Director of the Company on July 22,
2010, served as Chairman of the Audit Committee until his resignation. The
Board of Directors has determined that all of the members of this committee
qualify as independent directors under the current requirements of NASDAQ and
the SEC. The Board of Directors has further determined that all of the members
of this committee qualify as an "audit committee financial expert" under the
rules and regulations of the SEC. The Audit Committee met four times during
fiscal year 2010. See "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS".
Meetings of the Board of Directors and Committees
During the fiscal year ended May 28, 2010, 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 four times during the fiscal year
2010. All directors attended all of the meetings of the Board and the Committees
on which they served.
Compensation of Directors
During the fiscal year ended May 28, 2010, the Company paid each of its
non-employee Directors a retainer of $300 per month and 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.
Board Member Attendance at Annual Meetings
It is the policy of Golden Enterprises that each member of the Board shall
make a reasonable effort to attend all meetings of the Board, applicable
committee meetings and the Company's annual meeting of shareholders. All
Directors attended the Annual Stockholders Meeting held last year.
Nomination of Directors
During the fiscal year ended May 28, 2010, the Company did not have a
standing nominating committee. The NASDAQ rules do not require the Company to
have a nominating committee since the Company was a "controlled company"
pursuant to NASDAQ Listing Rule 5615, in that more than 50% of the voting common
stock of the Company was held by SYB, Inc. and the Estate of Sloan Y. Bashinsky,
Sr., all of which were affiliated, and such shares are voted by a Voting
Committee created under the Will/Testamentary Trust of Sloan Y. Bashinsky, Sr.
and under the SYB, Inc. Common Stock Trust. The Voting Committee is currently
comprised of J. Wallace Nall, Jr., F. Wayne Pate, John P. McKleroy, Jr., Joann
F. Bashinsky, David A. Jones, Paul R. Bates and Mark W. McCutcheon, all
directors of the Company and Patty Townsend, an officer of the Company.
12
The Board believes that it is not necessary to have a separate nominating
committee in view of the size of the Company, and the fact that the Company was
a "controlled company". Nominees for election as a director are determined by
the entire Board. The Company believes that the Board is able to fully consider
and select appropriate nominees for election to the Board without delegating
that responsibility to a committee or adopting formal procedures. Candidates
have traditionally been recommended to the Board by one or more of the other
Directors, and there is no formal process for identifying or evaluating new
Director nominees. Candidates recommended by shareholders will be evaluated in
the same manner as candidates recommended by Directors. In nominating Directors,
the Board will consider all relevant qualifications, as well as the needs of the
Company and compliance with NASDAQ listing standards and SEC rules.
A shareholder wishing to recommend a candidate for Director should send a
letter to Golden Enterprises, Inc., attention of the Secretary, at One Golden
Flake Drive, Birmingham, Alabama 35205. The mailing envelope must contain a
clear notation indicating that the enclosed letter is a "Director Nominee
Recommendation." The letter must identify the author as a shareholder and
provide a brief summary of the candidate's qualifications, as well as contact
information for both the candidate and the shareholder. Candidates should have
relevant business and financial experience, and they must be able to read and
understand fundamental financial statements. All nominated candidates, if asked
to do so, must evidence their willingness to serve as a Director. The Board will
make all decisions regarding Board nominees based upon the best interest of the
Company and its shareholders.
Communications with the Board
Shareholders interested in communicating directly with the Board of
Directors may do so by writing the Secretary of the Company, at the following
address:
Board of Directors of Golden Enterprises, Inc.
C/O Corporate Secretary
One Golden Flake Drive
Birmingham, Alabama 35205
All such letters must identify the author as a shareholder. The Secretary
of Golden Enterprises, Inc. will review all such communications and forward all
appropriate communications to the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
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, Statement of Changes in
Beneficial Ownership, and 5, Annual Statement of Changes in Beneficial
Ownership. 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 2010.
However, after fiscal year 2010, except for a Form 5 for David A Jones reporting
his purchase of 14.216 shares of stock in May 2010 was untimely filed.
Board of Directors, Duties and Committees
Directors are expected to devote sufficient time to carrying out their
duties and responsibilities effectively. The Board of Directors meets regularly
four times each fiscal year to review matters affecting the Company and to act
on matters requiring the Board's approval. It also holds special meetings
whenever circumstances require and may act by unanimous written consent without
a meeting.
13
The Company's Board of Directors currently consists of eleven directors
(nine during the fiscal year ended May 28, 2010). Mark W. McCutcheon serves as
the Chairman of the Board. The Board of Directors met four times during the
fiscal year ended May 28, 2010, all of which were regularly scheduled meetings.
In the last fiscal year, the Independent Directors met twice in executive
sessions. All directors attended 100% of the meetings of the Board and the
meetings of the committees on which they served during the fiscal year ended May
28, 2010. The Board has a policy expecting director attendance at all Board and
committee meetings and the Company's annual meeting of stockholders.
The Company's Board has established an Audit Committee, Compensation
Committee and Stock Option Committee. The Charter for the Audit Committee is
available from the Company. The Compensation Committee has no Charter, but its
duties and responsibilities are set forth in corporate minutes adopted by the
Board. In addition, the Board may from time to time establish special purpose
committees. There were no special purpose committees existing in the last
fiscal year.
Board Leadership Structure
The Board of Directors is led by the Chairman of the Board. This role is
currently occupied by Mark W. McCutcheon, who also serves as Chief Executive
Officer. The Board of Directors has determined that having Mr. McCutcheon serve
as both the Chief Executive Officer and the Chairman of the Board is in the best
interest of the Company and its stockholders. The Board believes that this
combination is appropriate because, in its opinion, the overseeing of Board
functions is integrally related to the Chief Executive Officer's responsibility
of day-to-day management of a Company this size and, that due to Mr.
McCutcheon's abilities, he is also the best person to handle both duties. The
Board of Directors does not however have a formal policy regarding the
separation of the roles of Chief Executive Officer and Chairman of the Board as
the Board of Directors believes it is in the best interests of the Company to
make the determination regarding how to fulfill these functions based on the
position and direction of the Company and the qualifications of the CEO and
Board members.
Risk Oversight
The Board believes that effective risk management and control processes are
critical to the Company's ability to manage the challenges that the Company
faces. Management is responsible for implementing the Company's risk assessment
and management functions and for reporting to the Board on its processes and
assessments with respect to the management of risk. The Board, in turn, is
responsible for overseeing management's risk functions. The Audit Committee
monitors the processes by which management assesses and manages risk. Management
meets with, or provides reports to, the Company's Audit Committee at least once
per quarter to review the Company's risk profile and other risk topics. In
addition, the Chief Financial Officer meets at least quarterly with the Audit
Committee and the full Board to discuss the Company's financial risk, results
and financial forecasts. The Compensation Committee and the Board as a whole
assess the risks that the Company's overall compensation goals and objectives,
as well as any compensation or other programs that are reasonably likely to
create a material risk to the Company.
14
Corporate Governance Documents
Certain documents relating to corporate governance matters are available on
the Company website at www.goldenflake.com. These corporate governance documents
include, among others, the following:
- Charter for the Audit Committee of the Board (which is also attached
hereto as Schedule 1);
- Code of Business Conduct and Ethics;
- Complaint Procedures for Accounting and Accounting Matters; and
- Disclosure Controls and Procedures.
Stockholders may also obtain a copy of these documents free of charge by
contacting Patty Townsend, Chief Financial Officer, by email at
ptownsend@goldenflake.com or by telephone at (205) 323-6161.
Director Independence
Of the eleven directors currently serving on the Board of Directors, the
Board has determined that Messrs Pascoe, Samford, Morton and Stein are
"Independent Directors" as defined in the rules of the NASDAQ Stock Market, Inc.
(NASDAQ) Listing Rules and the SEC. As a Controlled Company, as previously
discussed, the Company is exempt from certain independence requirements of the
NASDAQ rules, including the requirement to maintain a majority of Independent
Directors on the Board of Directors, an Independent Compensation Committee or a
Standing Nominating/Corporate Governance Committee or committees performing
similar function.
All members of the Audit Committee must be Independent Directors as defined
by NASDAQ Policies and Practices and U.S. Securities and Exchange Commission.
The Company's four Independent Directors serve on the Audit Committee, with Mr.
Samford serving as Chairman.
Policies and Practices
The Company's policies and practices reflect corporate governance
initiatives that comply with the listing requirements of NASDAQ and the
corporate governance requirements of the Sarbanes-Oxley Act of 2002, including
the following:
- All members of the Audit Committee are independent;
- The Charter of the Audit Committee establishes the Committee's duties
and responsibilities;
- The independent members of the Company's Board of Directors meet
regularly ("executive sessions") without the presence of
management;
- The Company has a policy for attendance of Board members at both
regular Board and committee meetings and shareholder meetings;
15
- The Company has adopted a Code of Conduct and Ethics;
- The Company has adopted Disclosure Controls and Procedures which
establishes a committee for regular evaluation of internal company
disclosure control and procedures;
- The Company has procedures in place for the anonymous submission to
the Audit Committee of employee and third party complaints on
accounting, internal accounting controls or auditing matters;
- The Company has policies and procedures for stockholders to
communicate directly with the Board of Directors; and
- The Audit Committee must review, approve and/or ratify all related
party transactions.
EXECUTIVE COMPENSATION
The Objectives of the Executive Compensation Program
The Compensation Committee is responsible for establishing and
administering the Company's policies governing the compensation for the
Executive Officers. All actions of the Compensation Committee must be approved
by the Board of Directors. Because the Company qualifies as a Controlled
Company pursuant to the exception of NASDAQ Listing Rule 5615, the Compensation
Committee is composed of both independent and non-independent directors. See
"Committees of the Board of Directors" above.
The purpose of the Company's executive compensation program is to attract,
retain and motivate qualified executives to manage the business so as to
maximize profits and stockholder value. No outside consultants have been used
to evaluate or determine compensation. Executive compensation in the aggregate
is made up principally of the executive's annual base salary, a bonus based upon
operating earnings and Company perquisites or benefits. The Compensation
Committee annually considers and makes recommendations to the Board as to
executive compensation including changes in base salary and cash incentive
bonuses. Stock options and awards of stock under the Long Term Incentive Plan
have been granted from time to time by the Stock Option Committee, which is
composed of the same members as the Compensation Committee, however, no new
stock options may be granted under the Long Term Incentive Plan. No stock
options have been granted in the last nine years.
Consistent with the above-noted purpose of the executive compensation
program, in recommending the aggregate annual compensation of Executive
Officers, the Compensation Committee considers the individual contribution and
performance of the executive, the Company's overall performance and the total
return to stockholders. The Company's executive compensation program focuses on
strategic plans, corporate performance measures, and specific corporate goals.
The corporate performance measures which the Compensation Committee considers
include sales, earnings, return on equity and comparisons of sales and earnings
with prior years.
The Compensation Committee does not rely on any fixed formulae or specific
numerical criteria in determining an executive's aggregate compensation. It
considers corporate and personal performance criteria and the economic
environment, changes in the cost of living, competitive compensation levels and
the recommendations of management. The Compensation Committee exercises business
judgment based on all of these criteria and the purposes of the executive
compensation program.
16
Base Salary
The Board of Directors, upon recommendation of the Compensation Committee
sets base salaries for the Company's executive officers at levels which the
Company believes are fair and reasonable based on the scope of the executive
officer's responsibilities, taking into account competitive market compensation
paid by other companies for similar positions. With our named executive
officers, we set base salaries based on level of responsibility, span of control
and experience. Base salaries are reviewed annually, as well as at the time of
hire, promotion or changes in responsibility. Base salaries may also be
adjusted from time to time to realign salaries with market levels. Base salary
changes also impact bonus amounts and actual bonus payouts.
Discretionary Performance-Based Bonus
The Board of Directors, upon recommendation of the Compensation Committee,
has the authority to award performance-based bonuses to our executive officers
payable in cash. The Board of Directors, upon recommendation of the
Compensation Committee, has utilized a formula adopted at the beginning of the
year for determining bonuses, which is based on performance of the Company
during the fiscal year. There is no requirement that the Board continue using
this formula for the payment of bonuses.
Performance Measurement
Annual, performance-based awards are intended to compensate executive
officers for achieving Company-wide financial goals and objectives. These
objectives generally relate to general profitability factors.
Generally, performance bonuses are accrued on a quarterly basis and with
seventy-five percent (75%) of the accrued amount paid after the end of the each
of the first three quarters with the remainder of the final accrued amount paid
after the end of the fiscal year when audited annual financial statements are
received.
The formula used for bonuses focuses on net operating profits of the
Company to determine the amount of bonuses. The bonuses provide for a percentage
bonus on net profits up to a set net profit amount (excluding extraordinary
items) and a different, smaller percentage bonus on net profits in excess of the
set net profit amount (excluding extraordinary items).
Perquisites and Benefits
Other than the use of a Company car, the Company generally does not have
programs to provide personal perquisites or executive benefits solely to execute
officers. The exception is that Mr. McCutcheon, as CEO of the Company, is
provided a nonqualified salary continuation plan which is generally payable
beginning at retirement, disability or death, Company-provided life insurance,
healthcare reimbursement and use of a Company vehicle. Our executive officers
are eligible to participate in the same benefit programs as all other employees.
These benefits include the following:
17
- Medical and dental care plans - Flexible Spending Accounts for
healthcare and dependent care spending
- Life accidental death and - 401(k)
dismemberment and plan disability
insurance
- Paid time off
Consistent with our compensation philosophy, we intend to maintain our
current benefits for our executive officers. However, the Board of Directors in
its discretion may revise, amend or add to the executive officers' benefits if
it deems it advisable.
Employment Agreements, Severance Benefits and Change in Control Provisions
The Company has a non-qualified Salary Continuation Plan established for
the benefit of the Company's Chief Executive Officer, Mark W. McCutcheon. The
Company entered into this Salary Continuation Plan, on May 15, 2002, to ensure
the performance of his role in the Company for an extended period of time. In
addition, the Company also considered the critical nature of the position and
the Company's need to retain him when it committed to establish this plan. The
Salary Continuation Plan provides for payments of up to $120,000 per year, as
adjusted for inflation, for 15 years following death or retirement at age 65.
In the event of disability prior to retirement, the yearly benefit of $120,000
is reduced by any payments of social security disability benefits and long term
disability benefits which were funded or provided by the Company. The Salary
Continuation Plan may be amended or terminated by the Company's Board of
Directors, except that in the event of a change of control in the Company, the
Salary Continuation Plan becomes irrevocable. The Plan is funded in part with
life insurance on the life of Mr. McCutcheon.
18
Summary Compensation Table
The following table sets forth certain information with respect to
compensation for the fiscal years 2008, 2009, and 2010 earned by or paid to the
Chief Executive Officer, Chief Financial Officer and the other most highly
compensated Executive Officers whose total compensation exceeded $100,000.
Non-Equity
Stock Option Incentive Plan All Other
Salary Bonus Awards Awards Compensation Compensation Total
Name and Principal Position Year ($) ($) ($) ($) ($) ($) (1) ($)
- ---------------------------- ---- --------- -------- ------- ------- -------------- ------------ ---------
Mark W. McCutcheon (a) 2010 $ 257,000 $ 71,801 --- --- --- $ 79,859 $ 408,660
President and 2009 $ 244,000 $ 40,844 --- --- --- $ 81,727 $ 366,571
Chief Executive Officer 2008 $ 234,000 $ 23,168 --- --- --- $ 68,842 $ 326,010
and President
of Golden Flake
Snack Foods, Inc.
Randy Bates (b) 2010 $ 180,000 $ 53,850 --- --- --- $ 1,756 $ 235,606
Executive Vice President 2009 $ 171,000 $ 30,633 --- --- --- $ 1,534 $ 203,167
of Sales, Marketing 2008 $ 164,000 $ 17,376 --- --- --- $ 1,483 $ 182,859
and Transportation
of Golden Flake Snack
Foods, Inc.
David Jones (c) 2010 $ 180,000 $ 53,850 --- --- --- $ 1,774 $ 235,624
Executive Vice President 2009 $ 171,000 $ 30,633 --- --- --- $ 1,539 $ 203,172
of Operations, Human 2008 $ 164,000 $ 17,376 --- --- --- $ 1,497 $ 182,873
Resources and Quality
Control of Golden Flake
Snack Foods, Inc.
Patty Townsend (d) 2010 $ 133,000 $ 46,670 --- --- --- $ 532 $ 180,202
Chief Financial Officer 2009 $ 125,000 $ 26,548 --- --- --- $ 1,000 $ 152,548
Vice President 2008 $ 117,000 $ 14,426 --- --- --- $ 936 $ 132,362
and Secretary
(1) The compensation represented by the amounts set forth in the All
Other Compensation column is detailed in the following table, except
as noted:
Company Salary
Contributions Continuation Company Total
to 401(k) Plan Accruals Paid Life All Other
Name ($) ($) Perquisites Insurance Compensation
--------------- --------------- ----------- ------------ ---------- ------------
Mark W. McCutcheon $ 1,960 $ 57,761 $ 19,591 $ 547 $ 79,859
Randy Bates $ 1,756 --- (e) --- $ 1,756
David Jones $ 1,774 --- (e) --- $ 1,774
Patty Townsend $ 532 --- (e) --- $ 532
(a) Mark W. McCutcheon has served as President and Chief Executive
Officer of the Company since April 4, 2001. He has served as President
of Golden Flake Snack Foods, Inc. since November 1, 1998.
(b) Randy Bates has served as Executive Vice President of Sales,
Marketing and Transportation of Golden Flake Snack Foods, Inc. since
October 26, 1998.
(c) David Jones has served as Executive Vice President of Operations,
Human Resources and Quality Control of Golden Flake Snack Foods, Inc.
since May 20, 2002. He was Vice President of Manufacturing from 1998
to 2002 and Vice President of Operations from 2000 to 2002.
(d) Patty Townsend has served as Chief Financial Officer, Vice-President
and Secretary of the Company since March 1, 2004.
(e) Total Perquisites for Randy Bates, David Jones and Patty Townsend
were less than $10,000 per individual.
19
Outstanding Equity Awards
The following table sets forth certain information with respect to
outstanding equity awards as of May 28, 2010 with the Executive Officers.
Outstanding Equity Awards at Fiscal Year-End
Option Awards
----------------------------------------------------------
Number of
Securities
Underlying
Unexercised Option
Options Exercise Option
Name Exercisable (1) Price (2) Expiration Date
- ------------------ ----------------- -------- ------------------
Mark W. McCutcheon 40,000 40,000 @ $3.81 10/15/2011
CEO
Randy Bates 29,000 29,000 @ $3.81 10/15/2011
David Jones 30,000 30,000 @ $3.81 10/15/2011
Patty Townsend 20,000 20,000 @ $3.81 10/15/2011
(1) Fully vested
(2) As of May 28, 2010, the value of the Company's Common Stock was $3.10 per
share.
Compensation of Directors
During the fiscal year ended May 28, 2010, the Company paid each of its
non-employee Directors a retainer of $300 per month and 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 $1,000 for each meeting attended.
The following table provides compensation information for the year ended
May 28, 2010 for each of the independent members of the Board.
Total Director Compensation
Name ($)
---- ---------------------------
Edward R. Pascoe $15,600
John S.P. Samford $17,600
James I. Rotenstreich(1) $17,600
(1) Mr. Rotenstreich resigned/retired as a Director of the Company on July 22,
2010.
20
Indemnification Arrangements
The Company's Certificate of Incorporation provides that the Company
indemnify and hold harmless each of its directors and officers to the fullest
extent authorized by the Delaware General Corporation Law, against all expense,
liability and loss (including attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection with services rendered by such
directors or officers to or on behalf of the Company.
The Certificate of Incorporation also provides that a director will not be
personally liable to the Company or its stockholders for monetary damages for
breach of the fiduciary duty of care as a director. This provision does not
eliminate or limit the liability of a director:
- for breach of his or her duty of loyalty to the Company or to the
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law (relating
to unlawful payments of dividends or unlawful stock repurchases or
redemptions); or
- for any improper benefit.
The Company has executed or will execute with each Director a written
Indemnification Agreement which includes the items set forth above.
The Company maintains Officer and Director's Insurance to protect and for
the benefit of Directors.
Notwithstanding the Indemnification arrangements stated above, indemnification
for certain liabilities under the Federal Securities Acts may be deemed by the
SEC as against public policy and unenforceable.
CERTAIN RELATED PARTY TRANSACTIONS
During the fiscal year ended May 28, 2010, 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 for
which it was paid legal fees of $212,131. The firm will continue to perform
legal services for the current fiscal year.
Golden Flake owned a Cessna Citation II Airplane (the "Airplane") for
business use. Joann F. Bashinsky has leased the Airplane for personal use of up
to 100 flight hours per year. The lease required monthly payments of $20,000.
On April 22, 2010, Golden Flake sold the Airplane and the lease with Mrs.
Bashinsky was terminated. During fiscal year 2010, Mrs. Bashinsky paid lease
payments to Golden Flake of $210,000, and also paid all flight crew expenses for
flights used under the lease. The lease was structured so that a substantial
portion of the costs of ownership, maintenance, and operation of the plane to
Golden Flake was offset by the monthly lease payments and payments for the
flight crew expenses on flights used under the lease. The lease with Mrs.
Bashinsky was for a term of one year and automatically renewed annually on each
February 1, unless Golden Flake or Mrs. Bashinsky elected to terminate the same.
Golden Flake and Mrs. Bashinsky mutually agreed to terminate the lease upon sale
of the Airplane. The use of the plane under the lease was coordinated with
Golden Flake so as not to interfere with Golden Flake's business use.
21
The Company believes that these transactions were on terms equal to or
better than those available from unaffiliated third parties.
The Audit Committee Charter requires that the Audit Committee review and
approve or ratify all related party transactions. Accordingly, the Audit
Committee reviewed, approved and ratified the above-described related party
transactions.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee reviews with the independent auditors, the Company's
Chief Financial Officer and the Company's general counsel the results of the
independent auditor's annual report on the Company's financial statements. The
Audit Committee selects and engages the Company's independent auditors and
performs such additional functions as are necessary or prudent to fulfill the
Committee's 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
statements for the year ended May 28, 2010 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 the
independent auditors, such other matters and received such assurances from them
as deemed appropriate by the Audit Committee.
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 23 hereof is compatible with maintaining Dudley, Hopton-Jones, Sims and
Freeman PLLP's independence.
The Audit Committee recognizes the importance of maintaining the independence of
the Company's independent registered public accountants. Consistent with its
Charter, the Audit Committee has evaluated Dudley, Hopton-Jones, Sims & Freeman
PLLP's qualifications, performance, and independence, including that of the lead
audit partner. In addition, Dudley, Hopton-Jones, Sims & Freeman PLLP has
provided the Audit Committee with a letter required by the applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent registered public accountant's communications with the Audit
Committee concerning independence and the Audit Committee has engaged in
dialogue with Dudley, Hopton-Jones, Sims & Freeman PLLP about their
independence.
The Audit Committee reviewed, approved and ratified the related party
transactions set forth and described in "Certain Transactions" on Page 21
hereof.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements
referred to above be included in the Company's Annual Report on form 10-K for
filing with the Securities and Exchange Commission.
22
Members of the Audit Committee: John S. P. Samford, Edward R. Pascoe,
William B. Morton, Jr. and John S. Stein, III.
INDEPENDENT ACCOUNTANTS
Dudley, Hopton-Jones, Sims & Freeman PLLP, Certified Public Accountants
("Dudley, Hopton-Jones") were selected by the Audit Committee and ratified by
the Board of Directors as the independent accountants to audit the Company's
financial statements for the fiscal year ended May 28, 2010. 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 desire to do so and
will be available to respond to appropriate questions from stockholders.
During the fiscal years ended 2010 and 2009, Dudley, Hopton-Jones provided
various audit and non-audit services to the Company and its subsidiary. As part
of their services as the Company's 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 reviewed the Company's Annual Report (Form 10-K) for filing with the
Securities and Exchange Commission.
Fees billed by Dudley, Hopton-Jones:
The following table shows information about fees billed to the Company by
Dudley, Hopton-Jones.
FYE 2010 FYE 2009
-------- --------
Audit Fees (1) $118,240 $135,450
Audit Related Fees (2) -0- -0-
Tax Fees (3) 41,910 32,000
All Other Fees (4) -0- -0-
-------- --------
Total Fees $160,150 $167,450
- -------------
(1) Current FYE 2010 audit fees consist of the aggregate fees billed for
professional services rendered for the audit of the Company's annual financial
statements and for the timely reviews of quarterly financial statements and
assistance with the review of documents filed with the SEC.
(2) Audit related fees consist of the aggregate fees billed for audit of the
Company's and the Company's subsidiary employee benefit plans.
(3) Tax fees consist of the aggregate fees billed for professional services
rendered for tax compliance including tax planning, tax advice, the preparation
of tax returns, audit of tax returns, and claims for refunds.
(4) All other fees: Dudley, Hopton-Jones did not provide any other services to
the Company than those described above nor were there any other fees billed to
the Company than those described above.
23
The Audit Committee is required by its policy to pre-approve all services
to be rendered by the Company's Independent Auditors prior to performance of
such services. Pre-approval of services may be done in one of two ways,
specific pre-approval or general pre-approval. With the use of specific
pre-approval, the Audit Committee must specifically pre-approve the services
that are to be rendered by the Independent Auditors prior to their engagement to
render such services. The Audit Committee has elected to implement the specific
pre-approved policy and procedure. As a result, all services provided by the
Independent Auditors must be specifically pre-approved by the Audit Committee.
The services of the Independent Auditors described above were specifically
pre-approved by the Audit Committee prior to the engagement of the Independent
Auditors to render such services.
The Company has not selected the principal accountants to audit its
financial statements for the current fiscal year. It is the Company's policy to
select its principal accountants after the preceding year's audit has been
completed and the Company has had time to consider the selection.
Carr, Riggs & Ingram, LLC, Certified Public Accountants were selected
by the Audit Committee and ratified by the Board of Directors as the independent
accountants to audit the employee benefit plans of the Company and the Company's
subsidiary ("Employee Benefit Plans"). In addition, Carr, Riggs & Ingram was
also used to handle certain consulting matters for the Company. The Audit
Committee specifically pre-approved the use of Carr, Riggs and Ingram to perform
audit services for the Employee Benefit Plans for the fiscal year ended May 28,
2010 along with the 2011 fiscal year.
Fees billed by Carr, Riggs & Ingram:
The following table shows information about fees billed to the Company by
Carr, Riggs & Ingram.
FYE 2010 FYE 2009
--------- ---------
Audit Related Fees (1) $19,333 $19,333
All Other Fees (2) 6,645 85,970
- -------------
(1) Audit related fees consist of the aggregate fees billed for audit of the
Company's and the Company's subsidiary employee benefit plans
(2) All other fees: Carr, Riggs & Ingram provided consulting services to the
Company other than those described above.
FINANCIAL STATEMENTS
Consolidated Financial Statements of the Company and its subsidiary for the
fiscal year ended May 28, 2010 are contained in the 2010 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.
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STOCKHOLDER PROPOSALS FOR 2011 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 year's Annual Meeting of Stockholders must do so in writing received by the
Company on or before June 4, 2011. Any other stockholder proposals for the
Company's 2011 Annual Meeting of Stockholders must be received no later than
July 23, 2011. The proposals must comply with all applicable statues and
regulations. Any such proposals should be submitted to Golden Enterprises, Inc.,
Attention: Patty Townsend, CFO, Vice President & Secretary, One Golden Flake
Drive, Birmingham, Alabama 35205.
CODE OF CONDUCT AND ETHICS
Golden Enterprises has adopted a Code of Conduct and Ethics that applies to
its directors, officers and employees and to all employees of Golden Flake Snack
Foods, Inc. The Code of Conduct and Ethics and any amendments thereto, are
available on Golden Flake's website at www.goldenflake.com. Any waiver from
the Code of Conduct and Ethics for Directors and Officers also will be made
available on Golden Flake's website at www.goldenflake.com.
HOUSEHOLDING
The SEC's rules permit companies and intermediaries such as brokers to
satisfy delivery requirements for Proxy Statements with respect to two or more
stockholders sharing the same address by delivering a single Proxy Statement
addressed to those stockholders. This process, which is commonly referred to as
"householding," potentially provides extra convenience for stockholders and cost
savings for companies. Some brokers household Proxy Statements, delivering a
single Proxy Statement to multiple stockholders sharing an address. Once you
have received notice from your broker that it will be householding materials to
your address, householding will continue until you are notified otherwise or
until you revoke your consent. If at any time you no longer wish to participate
in householding and would prefer to receive a separate Proxy Statement, please
notify your broker. If you would like to receive a separate copy of this Proxy
Statement from us directly, please contact us by writing or telephone as
follows:
Golden Enterprises, Inc.
One Golden Flake Drive
Birmingham, Alabama 35205
Attention: Patty Townsend, Chief Financial Officer
Telephone: (205) 323-6161
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OTHER BUSINESS
It is not anticipated that there will be presented to the meeting any
business other than the matters set forth herein and 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
Mark W. McCutcheon
Chairman
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SCHEDULE 1
Amended and Restated Audit Committee Charter
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Amended and Restated
Charter of the Audit Committee of the Board of Directors
of Golden Enterprises, Inc.
I. Audit Committee Purpose.
The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities in
the following areas:
1. Monitoring the integrity of the Company's financial
reporting process and systems of internal controls regarding
finance, accounting and legal compliance including the
performance of the Company's internal audit function.
2. Monitoring the independence, qualification and performance
of the Company's independent auditors.
3. Providing an avenue of communication among the independent
auditors, management and the Board of Directors.
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its
responsibilities, and it has direct access to the
independent auditors as well as anyone in the Company. The
Audit Committee has the ability to retain, at the Company's
expense, special legal, accounting or other consultants or
experts it deems necessary in the performance of its duties,
and the Company shall provide appropriate funding, as
determined by the Audit Committee, for the compensation of
such retained persons. The Company shall provide appropriate
funding, as determined by the Audit Committee, for the
ordinary administrative expenses of the Audit Committee that
are necessary or appropriate to carry out its duties.
II. Audit Committee Composition and Meetings.
Audit Committee members shall meet the qualifications,
including the independence and experience requirements, of
the NASDAQ listing standards and the rules and regulations
of the SEC. The Audit Committee shall be comprised of three
or more directors as determined by the Board, each of whom
shall be independent nonexecutive directors, free from any
relationship that would interfere with the exercise of his
or her independent judgment. All members of the Committee
shall have a basic understanding of finance and accounting
and be able to read and understand fundamental financial
statements, and at least one member of the Committee shall
have the necessary accounting or related financial
management expertise to meet the requirements of a
"financial expert" as defined by the SEC.
Audit Committee members shall be appointed by the Board. If
an Audit Committee Chair is not designated by the Board, the
members of the Committee may designate a Chair by majority
vote of the Committee membership.
The Committee shall meet at least four times annually, or
more frequently as circumstances dictate. The Audit
Committee Chair shall prepare and/or approve an agenda in
advance of each meeting. The Committee, at each meeting,
shall meet with management and the independent auditors to
discuss any matters that the Committee or each of these
groups believe should be discussed. The Committee should
communicate with management, the internal auditors and the
independent auditors as, the circumstances dictate, to
review the Company's financial statements and significant
findings based upon the independent auditors quarterly
review procedures. In addition, the Committee, at its
discretion, shall meet, from time to time, with the
independent auditors without the presence of management.
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III. Audit Committee Responsibilities and Duties.
Review Procedures
-----------------
1. Review the adequacy of this Charter at least annually.
Submit its recommendations regarding changes to the Charter
to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC
regulations.
2. Discuss the Company's annual audited financial statements
with management prior to filing or distribution, including
significant issues regarding accounting and auditing
principles, practices and judgments.
3. In consultation with the management, the internal auditors
and the independent auditors, consider the integrity of the
Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps
management has taken to monitor, control and report such
exposures. Review significant findings prepared by the
independent auditors and the internal auditors, together
with management's responses.
4. Discuss with management and the independent auditors
significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial
statements, including any significant changes in the
Company's selection or application of accounting principles,
any major issues as to the adequacy of the Company's
internal controls and any special steps adopted in light of
material control deficiencies.
5. Discuss disclosures made to the Audit Committee by the
Company's CEO and CFO during their certification process for
the Form 10-K and Form 10-Q about any significant
deficiencies in the design or operation of internal controls
or material weaknesses therein and any fraud involving
management or other employees who have a significant role in
the Company's internal controls.
Independent Auditors
--------------------
6. The Audit Committee shall have the sole authority to
appoint or replace the independent auditors. The Committee
shall be directly responsible for the appointment,
compensation, retention and oversight of the work of the
independent auditors (including resolution of disagreements
between management and the independent auditors regarding
financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest
services. The independent auditors shall report directly to
the Committee.
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7. The Company shall provide for appropriate funding, as
determined by the Audit Committee, for payment of
compensation to the independent auditors for the purpose of
rendering or issuing an audit report or performing other
audit, review or attest services.
8. On an annual basis, the Audit Committee should review and
discuss with the independent auditors: (a) all significant
relationships they have with the Company that could impair
the auditors' independence, (b) all critical accounting
policies and practices to be used, (c) all alternative
treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by
the independent auditor, and (d) any material written
communications between the independent auditor and
management, such as any management letter or schedule of
unadjusted differences.
9. The Audit Committee shall ensure its receipt from the
independent auditors of a formal written statement
delineating all relationships between the auditor and the
company, consistent with Independence Standards Board
Standard 1.
10. Review the independent auditors' audit plan - discuss
scope, staffing, locations, reliance upon management and
general audit approach.
11. Prior to releasing the year-end earnings, discuss the
results of the audit with the independent auditors. Discuss
those matters required to be communicated to audit
committees in accordance with AICPA SAS 61 and those matters
required to be communicated to audit committees in
accordance with SEC rules and regulations.
12. Consider the independent auditors' judgments about the
quality and appropriateness of the Company's accounting
principles as applied in its financial reporting.
13. Pre-approve all auditing services and permitted non-audit
services (including the fees and terms thereof) to be
performed by the independent auditor, subject to applicable
de minimis exceptions for non-audit services.
Internal Auditors
-----------------
14. Review the appointment and replacement of the internal
auditor.
15. Review the significant reports to management prepared by
the internal auditor and management's responses.
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16. Discuss with the independent auditor and management the
internal audit department responsibilities, budget and
staffing and any recommended changes in the planned scope of
the internal audit function.
Legal Compliance
----------------
17. On at least an annual basis, review with the Company's
counsel any legal matters that could have a material impact
on the Company's financial statements and with management
any reports or inquiries received from regulators or
governmental agencies.
Other Audit Committee Responsibilities
--------------------------------------
18. Cause to be prepared the report to shareholders that is
required by the Securities and Exchange Commission. The
report should be included in the Company's annual proxy
statement.
19. Establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing
matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or
auditing matters.
20. Review and approval or ratification of transactions with
related persons.
21. Perform any other activities consistent with this Charter,
the Company's by-laws and governing law, as the Committee or
the Board deems necessary or appropriate.
22. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.
IV. Limitation of Audit Committee's Role.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditors.
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