-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, orPxR2kEP2yuDdbmG/af2A6W3OBYCry+ZRcwlbAN+1/QmegqrKqiqWPZtJJih+6e 9LBLA1l70mRA5g+1Rkz6Ww== 0000950131-94-001908.txt : 19941216 0000950131-94-001908.hdr.sgml : 19941216 ACCESSION NUMBER: 0000950131-94-001908 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950126 FILED AS OF DATE: 19941215 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL FOODS CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07626 FILM NUMBER: 94564926 BUSINESS ADDRESS: STREET 1: 433 EAST MICHIGAN ST CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 DEF 14A 1 NOTICE & PROXY SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12 UNIVERSAL FOODS CORPORATION (Name of Registrant as Specified In Its Charter) UNIVERSAL FOODS CORPORATION (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:* (4) Proposed maximum aggregate value of transaction: - -------- *Set forth the amount on which the filing fee is calculated and state how it was determined. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: LOGO UNIVERSAL FOODS CORPORATION 433 EAST MICHIGAN STREET MILWAUKEE, WISCONSIN 53202 NOTICE OF ANNUAL MEETING TO BE HELD JANUARY 26, 1995 To the Shareholders of Universal Foods Corporation: NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders ("Meeting") of Universal Foods Corporation, a Wisconsin corporation ("Company"), will be held at the Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, on Thursday, January 26, 1995, at 2:00 p.m., Central Standard Time, for the following purposes: 1. To elect four directors of the Company as described in the Proxy Statement. 2. To ratify the appointment of Deloitte & Touche LLP, certified public accountants, as the independent auditor of the Company for fiscal 1995. 3. To transact such other business as may properly come before the Meeting or any adjournments thereof. The Board of Directors has fixed the close of business on December 2, 1994 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Meeting and any adjournments thereof. We encourage you to attend the Meeting and vote your shares in person. However, if you are unable to attend the Meeting, please complete the enclosed proxy card and return it promptly using the envelope provided so that your shares will be represented at the Meeting. You may revoke your proxy at any time before it is actually voted by notice in writing to the undersigned. Your attention is directed to the attached proxy statement and accompanying proxy. On Behalf of the Board of Directors, Terrence M. O'Reilly Secretary Milwaukee, Wisconsin December 16, 1994 UNIVERSAL FOODS CORPORATION 433 EAST MICHIGAN STREET MILWAUKEE, WISCONSIN 53202 (414) 271-6755 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 26, 1995 ---------------- GENERAL This proxy statement and accompanying proxy are first being furnished to the shareholders of Universal Foods Corporation, a Wisconsin corporation ("Company"), beginning on or about December 16, 1994 in connection with the solicitation by the Board of Directors of the Company ("Board") of proxies for use at the Company's 1995 Annual Meeting of Shareholders to be held at the Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, on Thursday, January 26, 1995, at 2:00 p.m., Central Standard Time, and at any adjournments thereof ("Meeting"), for the purposes set forth in the attached Notice of Annual Meeting of Shareholders and in this proxy statement. Accompanying this proxy statement are a Notice of Annual Meeting of Shareholders and a form of proxy for the Meeting solicited by the Board. The Annual Report to Shareholders, which also accompanies this proxy statement, contains financial statements for the three years ended September 30, 1994, and certain other information concerning the Company. The Annual Report and such financial statements are neither a part of this proxy statement nor incorporated herein by reference. Only holders of record of the Company's Common Stock ("Common Stock") as of the close of business on December 2, 1994 are entitled to notice of, and to vote at, the Meeting. On that date, the Company had 26,078,875 shares of Common Stock outstanding, each of which is entitled to one vote per share for each proposal submitted for shareholder consideration at the Meeting. A proxy, in the enclosed form, which is properly executed, duly returned to the Company or its authorized representatives or agents and not revoked will be voted in accordance with the instructions contained therein. If no specification is indicated on the proxy, the shares represented thereby will be voted FOR the Board's four nominees for director, FOR ratification of the Board's selection of the Company's 1995 independent auditor and on such other matters that may properly come before the Meeting in accordance with the best judgment of the individual proxies named in the proxy. The proxy may be revoked at any time before it is exercised, and any Shareholder attending the Meeting may vote in person whether or not the Shareholder has previously filed a proxy. Presence at the Meeting by a Shareholder who has signed a proxy does not in itself revoke the proxy. Any Shareholder giving a proxy may revoke it at any time before it is exercised by delivering notice thereof to the Secretary in writing. The shares represented by all properly executed proxies received prior to the Meeting will be voted as directed by the Shareholders. The cost of soliciting proxies will be borne by the Company. Proxies may be solicited by directors, officers or employees of the Company in person, by telephone or by telegram. The Company will use the services of D. F. King & Co., Inc., New York, to aid in the solicitation of proxies. Their charges will be $7000 plus reasonable expenses. The Company will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses in sending proxy materials to the beneficial owners. ELECTION OF DIRECTORS The Board of Directors consists of thirteen members divided into three classes. One class is elected each year to serve for a term of three years. Four directors are to be elected at the Meeting, all of whom are currently directors of the Company. The remaining nine directors will continue to serve in accordance with their previous elections. It is intended that the persons named as proxies in the accompanying proxy will vote FOR the election of the Board's four nominees. If any nominee should become unable to serve as a director prior to the Meeting, the shares represented by proxies otherwise voted in favor of the Board's four nominees or which do not contain any instructions will be voted FOR the election of such other person as the Board may recommend. Under Wisconsin law, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election, assuming a quorum is present. For this purpose, "plurality" means that the individuals receiving the largest number of votes are elected as directors, up to the maximum number of directors to be chosen at the election. Therefore, any shares of Common Stock which are not voted on this matter at the Meeting, whether by abstention, broker nonvote or otherwise, will have no effect on the election of directors at the Meeting. Pursuant to the Company's By-laws, written notice of other qualifying nominations by Shareholders for election to the Board must have been received by the Secretary no later than December 7, 1994. As no notice of any such other nominations was received, no other nominations for election to the Board of Directors may be made by Shareholders at the Meeting. Set forth below is certain information about the Board's nominees for director and the nine continuing members. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES. 2 NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS TERM EXPIRING JANUARY, 1998
YEAR FIRST POSITION WITH COMPANY ELECTED NAME AND AGE OR OTHER OCCUPATION DIRECTOR ------------ --------------------- ---------- MICHAEL E. BATTEN Chairman of the Board and Chief Execu- 1980 C, F..................54 tive Officer, Twin Disc, Inc., a manu- facturer of transmission components; Director of Briggs & Stratton Corpora- tion, Firstar Corporation and Walker Forge, Inc. GUY A. OSBORN Chairman and Chief Executive Officer 1983 E.....................58 of the Company; Director of WICOR, Inc., Wisconsin Gas Company, Firstar Corporation, Firstar Bank Milwaukee, N.A., Fleming Companies, Inc. and Northwestern Mutual Life Insurance Company WILLIAM U. PARFET President and Chief Executive Officer 1993 C, F..................48 of Richard-Allan Medical Industries, a manufacturer of surgical equipment and medical supplies; Director of The Upjohn Company, Old Kent Financial Corporation, CMS Energy Corporation, Stryker Corporation and Flint Ink, Corp(1) ESSIE WHITELAW President and Chief Operating Officer 1993 A.....................46 of Blue Cross & Blue Shield United of Wisconsin, a comprehensive health in- surer, since 1992; Director of WICOR, Inc.(2)
3 MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE TERM EXPIRING JANUARY, 1997
YEAR FIRST POSITION WITH COMPANY ELECTED NAME AND AGE OR OTHER OCCUPATION DIRECTOR ------------ --------------------- ---------- JOHN F. BERGSTROM President and Chief Executive Officer 1994 N.....................48 of Bergstrom Corporation, which owns automotive dealerships and commercial real estate; Director of Wisconsin En- ergy Corporation, Kimberly-Clark Cor- poration, Midwest Express Airlines and First National Bank-Fox Valley LEON T. KENDALL Retired Chairman of the Board, MGIC, a 1985 A, E..................66 mortgage insurer; Professor of Finance and Real Estate, Kellogg Graduate School of Management, Northwestern University; Director of Avatar Hold- ings Corp., Asset Management Funds, Inc., Chicago Board Options Exchange and Resolution Trust Corp. CHARLES S. MCNEER Retired Chairman of the Board and 1987 E, N..................68 Chief Executive Officer, Wisconsin En- ergy Corporation, a supplier of elec- tric, gas and real estate development services KENNETH P. MANNING President and Chief Operating Officer 1989 S, E..................52 of the Company; Director of Firstar Trust Company
4 MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE TERM EXPIRING JANUARY, 1996
YEAR FIRST POSITION WITH COMPANY ELECTED NAME AND AGE OR OTHER OCCUPATION DIRECTOR ------------ --------------------- ---------- JAMES L. FORBES President, Chief Executive Officer and 1989 E, C, F...............62 Director of Badger Meter, Inc., a man- ufacturer and marketer of flow mea- surement products; Director of WICOR, Inc., Wisconsin Gas Company, Blue Cross & Blue Shield United of Wiscon- sin, United Wisconsin Services, Inc., Firstar Trust Company, Firstar Corpo- ration and The Columbia Health Sys- tems, Inc. DR. OLAN D. FORKER Professor, Department of Agricultural, 1974 N, A..................66 Resource and Managerial Economics, New York State College of Agriculture & Life Sciences, Cornell University DR. CAROL I. WASLIEN GHAZAII Professor and Department Chair--Public 1981 S, N..................54 Health Science, School of Public Health, University of Hawaii(3) JAMES H. KEYES Chairman of the Board and Chief Execu- 1990 C, A..................54 tive Officer of Johnson Controls, Inc., a supplier of automated building controls, automotive seating, batter- ies and plastic packaging; Director of LSI Logic Corporation, Firstar Corpo- ration, Firstar Trust Company and Firstar Bank Milwaukee, N.A. JOHN L. MURRAY Retired Chairman of the Company; Di- 1971 F.....................67 rector of Twin Disc, Inc., Wisconsin Electric Power Company, Wisconsin En- ergy Corporation, The Marcus Corpora- tion and Briggs & Stratton Corporation
5 - -------- A--Audit Committee F--Finance Committee C--Compensation and Development N--Nominating Committee Committee S--Scientific Advisory Committee E--Executive Committee (1) Mr. William U. Parfet served as Corporate Vice President and Treasurer of The Upjohn Company from July, 1984 until January, 1988, and was Corporate Vice President for Consumer Products, HealthCare Services & Pharmaceutical Strategic Planning until January, 1989. He served as Executive Vice President from January, 1989 until January, 1991, when he was elected President. In April, 1993, he was also elected Vice Chairman. He resigned as President and Vice Chairman, effective September 30, 1993. (2) Prior to 1992, Ms. Whitelaw served as Vice President, Southeastern Region of Blue Cross & Blue Shield United of Wisconsin. (3) Prior to 1990, Dr. Carol I. Waslien Ghazaii was Professor, Nutrition and Food Science Program, School of Health Science, Hunter College, City University of New York. All other nominees and directors continuing in office have been employed in their current executive positions or otherwise have served in executive officer positions with the listed organizations for more than five years. No director, nominee for director or executive officer had any material interest, direct or indirect, in any business transaction of the Company or any subsidiary during the 1994 fiscal year nor in any such proposed transaction. The Board of Directors met 5 times during fiscal 1994, and each director attended at least 75% of the meetings of the Board and the Board Committees on which he or she served that were held during the period in which he or she was a director. COMMITTEES OF THE BOARD OF DIRECTORS The Executive Committee of the Board of Directors, which consists of Messrs. Forbes, Kendall, McNeer, Osborn and Manning, did not meet during fiscal 1994. This Committee has the power and authority of the Board of Directors in directing the management of the business and affairs of the Company in the intervals between Board of Directors meetings, except to the extent limited by law. The Audit Committee of the Board of Directors met 2 times during fiscal 1994. Messrs. Forker, Kendall and Keyes and Ms. Whitelaw are members of the Audit Committee. This Committee, among other things: (a) recommends the engagement of the independent accountants of the Company, approves their fee and the scope and timing of their audit services; (b) reviews with the independent accountants the internal control structure; (c) reviews with the independent accountants their report on financial and accounting personnel of the Company, and their recommendations for improvements in the internal controls of the Company and the implementation of such recommendations; (d) reviews the Company's internal audit program; and (e) reviews the adequacy and appropriateness of the various policies of the Company dealing with the principles governing performance of corporate activities. These policies include antitrust compliance, conflict of interest and business ethics. Members of the Compensation and Development Committee of the Board of Directors, which held 3 meetings during fiscal 1994, include Messrs. Batten, Forbes, Keyes and Parfet. This Committee reviews and approves all compensation programs for senior management of the Company including salary structure, base salary, and short- and long-term incentive compensation plans including stock options and nonqualified fringe benefit programs. The Committee also reviews and approves annual changes in each elected officer's compensation including base salary and short- and long-term incentive awards and approves all executive employment contracts. The Committee annually recommends to the Board of Directors the election of Company officers. In addition, the Committee annually reviews the performance of the Chief Executive Officer and reviews and approves the Chief Executive Officer's management development and succession plans for the Company. 6 The Nominating Committee of the Board of Directors, which consists of Messrs. Bergstrom, Forker and McNeer and Dr. Waslien Ghazaii, met once during fiscal 1994. This Committee studies and makes recommendations concerning the composition of the Board of Directors and its committee structure and reviews the compensation of Board and Committee members. The Committee also recommends persons to be nominated by the Board of Directors for election as directors of the Company at the Annual Meeting of Shareholders. The Committee will consider nominees recommended by Shareholders. Recommendations by Shareholders should be forwarded to the Secretary of the Company and should identify the nominee by name and provide detailed information concerning his or her qualifications. The Company's By-laws require that Shareholders give advance notice and furnish certain information to the Company in order to nominate a person for election as a director. See the discussion under "Future Shareholder Proposals and Nominations" on page 16. The Scientific Advisory Committee of the Board of Directors, which met twice during fiscal 1994, annually reviews the Company's research and development programs in respect to the quality and scope of work undertaken. It advises the Company on maintaining product leadership through technological innovation, reports on new technological trends that would significantly affect the Company and suggests possible new emphasis in respect to its research programs. Members of the Scientific Advisory Committee include Dr. Waslien Ghazaii and Mr. Manning. The Finance Committee of the Board of Directors, which met twice during fiscal 1994, reviews and monitors the Company's financial planning and structure to ensure conformance with the Company's requirements for growth and fiscally sound operation. The Committee reviews and approves (a) the Company's annual capital budget, long-term financing plans, existing credit facilities and investments, and commercial and investment banking relationships; (b) existing insurance programs, foreign currency management and the stock repurchase program; (c) the Company's dividend policy including payout levels and timing; and (d) the financial management and administrative operation of the Company's qualified and nonqualified benefit plans. Messrs. Batten, Forbes, Murray and Parfet are members of the Finance Committee. DIRECTOR COMPENSATION AND BENEFITS Directors who are not officers of the Company received during fiscal 1994 an annual retainer of $20,000 and fees of $1,000 for each Board and Committee meeting attended in addition to reimbursable expenses for such attendance. Each Committee chairperson receives an additional $1,000 annually for serving in that capacity. A portion of the annual retainer is paid in Common Stock pursuant to the Universal Foods Corporation Director Stock Grant Plan (the "Director Plan") as approved by the Shareholders on January 23, 1992. Under the Director Plan each nonemployee director will receive an award of Common Stock on October 1 of each year. The value of the award was $5,000 for fiscal 1994. The award consists of a number of shares of Common Stock determined by dividing the value of the award by the per share closing price of Common Stock on the New York Stock Exchange on October 1. The shares may not be sold or otherwise transferred for a period of six months after the grant date, except in the event of death or disability. On October 1, 1993, 145 shares of Common Stock were awarded to each nonemployee director (Messrs. Forbes, Forker, Keyes, Batten, Kendall, McNeer, Murray and Parfet, Ms. Whitelaw and Dr. Waslien Ghazaii). Such shares were transferred from the Company's treasury stock. The Company has an unfunded retirement plan for nonemployee directors who have at least three years of service with the Company as a director. The plan provides a benefit equal to the annual retainer fee for directors in effect at the time of the director's departure from the Board. This benefit, payable only during the lifetime of the participant, continues for a period equal to the amount of time the individual was an active director. During the benefit period, the participant must be available to the Chairman of the Board for consultation. 7 The Company has a Deferred Compensation Plan available to any director who is entitled to compensation as a Board member. Under this plan, the maximum amount that is eligible to be deferred is the total of all fees paid to the director by reason of his or her membership on the Board or any Committee thereof other than the portion of the annual retainer paid in Common Stock. The fees deferred are credited to individual deferred compensation accounts which bear interest at the rate of 8%. The amounts deferred pursuant to this plan will be paid in either (i) a lump sum on January 31st of the calendar year following the year in which the director ceases to be a director or (ii) five equal consecutive annual installments commencing on January 31st of the first calendar year after the director ceases to serve as a director. In the event of death, the balance in a director's account will be paid in a lump sum to a designated beneficiary or to the director's estate. PRINCIPAL SHAREHOLDERS MANAGEMENT The following table sets forth certain information as of December 2, 1994 regarding the beneficial ownership of Common Stock by each of the executive officers of the Company who is named in the Summary Compensation Table set forth below, each director and nominee and all of the directors and executive officers of the Company as a group. Except as otherwise indicated, all shares listed are owned with sole voting and investment power.
AMOUNT AND NATURE NAME OF BENEFICIAL OWNER OF OWNERSHIP(1) * ------------------------ ----------------- Michael E. Batten....................................... 1,328 John F. Bergstrom....................................... 1,169 James L. Forbes......................................... 1,103 Dr. Olan D. Forker(2)................................... 1,923 Dr. Carol I. Waslien Ghazaii............................ 944 John E. Heinrich........................................ 108,372 Geoffrey J. Hibner...................................... 70,656 Leon T. Kendall......................................... 2,078 James H. Keyes(3)....................................... 1,954 Charles S. McNeer....................................... 2,342 Kenneth P. Manning(4)................................... 103,194 John L. Murray(5)....................................... 130,336 Guy A. Osborn(6)........................................ 361,963 James F. Palo........................................... 91,088 William U. Parfet....................................... 1,314 Essie Whitelaw.......................................... 314 All directors and executive officers as a group (24 persons)(7).................... 1,224,035
- -------- *No director or named executive officer owns 1% or more of the Company's Common Stock, except Mr. Osborn, whose beneficial ownership represents 1.3% of the Common Stock. (1) Includes the following shares subject to stock options which are currently exercisable or exercisable within 60 days of December 2, 1994: Mr. Osborn, 113,917 shares; Mr. Manning, 69,800 shares; Mr. Heinrich, 61,275 shares; Mr. Hibner, 56,280 shares; Mr. Palo, 55,000 shares; and all directors and executive officers as a group, 564,121 shares. Also includes the following shares held under Company employee benefit plans that are attributable to the following persons, but over which such persons have no current voting or investment power: Mr. Osborn, 54,504 shares; Mr. Manning, 5,249 shares; Mr. Heinrich, 15,151 shares; Mr. Hibner, 3,801 shares; Mr. Palo, 3,601 shares; and all directors and executive officers as a group, 104,719 shares. 8 (2) Includes 369 shares held by Mr. Forker's spouse. (3) Includes 801 shares held by Mr. Keyes' spouse. (4) Includes 750 shares held by Mr. Manning's children. (5) Includes 31,625 shares held by Mr. Murray's spouse. (6) Includes 22,230 shares held by Mr. Osborn's spouse and a trust of which he is trustee. (7) All directors and executive officers as a group own 4.5% of the Company's Common Stock. OTHER BENEFICIAL OWNERS The following table sets forth information regarding beneficial ownership by those persons whom the Company believes to be beneficial owners of more than 5% of the Common Stock of the Company. The following information is based on reports on Schedules 13D and 13G and amendments thereto filed by those persons with the Securities and Exchange Commission.
AMOUNT AND PERCENT OF CLASS NAME AND ADDRESS NATURE AS OF OF BENEFICIAL OWNERS OF OWNERSHIP DECEMBER 2, 1994 -------------------- ------------- ---------------- Marshall & Ilsley Corporation 770 North Water Street Milwaukee, Wisconsin 53202............ 2,104,679.962(1) 7.8%
- -------- (1) Marshall & Ilsley Corporation reported that, as of February 9, 1994, it had sole voting power as to 1,130,836.557 shares of Common Stock and shared voting power as to 16,799 shares, and it had sole dispositive power as to 2,087,695.962 shares of Common Stock and shared dispositive power as to 16,985 shares. Marshall & Ilsley Corporation is the trustee of the Universal Foods Retirement Employee Stock Ownership Plan and Universal Foods Corporation Savings Plan. COMPENSATION AND DEVELOPMENT COMMITTEE REPORT Introduction This report describes the Company's executive compensation programs and the basis on which fiscal year 1994 compensation was determined with respect to the executive officers of the Company. The Committee is composed entirely of independent nonemployee directors and met 3 times during fiscal 1994. A more complete description of the Committee functions is set forth under the heading "Committees of the Board of Directors." Compensation Policy and Objectives The Company has developed an overall compensation policy and specific compensation plans that tie a significant portion of executive compensation to the Company's success in meeting specified performance goals (the "Program"). The overall objectives of this policy are to attract and retain the best possible executive talent, to motivate these executives to achieve the Company's business strategy goals, to link executive and shareholder interests through equity-based plans and to provide a Program that recognizes individual contributions. Each year the Committee conducts a review of the Company's Program. This review includes a report from independent compensation consultants assessing the effectiveness of the Program and comparing it to a group of public corporations that represent the Company's competition for executive talent. The Committee approves the selection of comparator companies used for this analysis. The comparator group used for compensation analysis includes companies in the S&P Food Index in the Proxy Performance Graph. However, the Committee believes that the Company's most direct competitors for executive talent are not necessarily all of the companies included in the S&P Food Index. The Committee determines the compensation for the 12 elected officers including the 5 most highly compensated Company executives. In reviewing individual performance, the Committee takes into account the recommendations of Mr. Osborn. Key elements of the Company's Program are base salary, short- term (annual) incentive and long-term incentives. 9 Base Salaries Base salaries are initially determined by evaluating the responsibilities of the position, the experience of the individual and by reference to the competitive marketplace for executive talent, including a comparison with base salaries for comparable positions at other comparator companies. The base salary levels of the Company's executives are targeted at the 50th percentile of the predicted base pay levels of similarly positioned executives in comparator companies. Predicted values are determined using regression analysis because of the difference in size between the comparator companies and the Company. The Committee annually reviews each executive's base salary. Adjustments are determined by evaluating the financial performance of the Company, the performance of each executive officer against job specifications, any new responsibilities and average percentage pay increases provided by the comparator companies for similar positions. In the case of executive officers with responsibility for a particular business unit, such unit's financial results are also considered. As reflected in the Summary Compensation Table on page 11, Mr. Osborn's base salary was increased in fiscal 1994 by $25,000 (5.4%). In determining Mr. Osborn's base salary, the Committee weighed the aforementioned criteria equally, and also compared Mr. Osborn's base salary to the predicted value using the base salaries of CEOs at the comparator companies. Annual Bonuses The Management Incentive Plan for Major Corporate Executives (the "Annual Plan") promotes the Company's pay-for-performance policy by providing annual cash payments to executives based upon achieving Company and individual performance goals. The Annual Plan has both a Formula and Discretionary portion subject to a maximum of 45% to 75% of fiscal base salary depending on a participant's position in the Company. The Formula award is based on the level of achievement of a targeted Earnings Per Share level for the fiscal year, with 65% of the maximum Formula award being paid upon achieving the target level. The Discretionary portion is fully awarded based on each executive achieving specific non-financial personal objectives agreed upon with his/her immediate supervisor at the beginning of each fiscal year. Mr. Osborn's non-financial objectives under the Discretionary portion are established by the Committee and typically deal in such areas as acquisitions, divestitures, capital allocation and organizational development. Bonus awards are targeted at levels approximating the 50th percentile of comparator companies' practices for each executive position. For performance exceeding the targeted levels, the bonus opportunities are tied to 75th percentile practices among comparator companies. In fiscal 1994, Mr. Osborn's bonus opportunity was 75% of his base salary. As reflected in the Summary Compensation Table, his bonus award under the Annual Plan was $267,525. Stock Awards Under the Company's 1990 Employee Stock Plan and 1994 Employee Stock Plan, which were approved by Shareholders, restricted stock or stock options may be granted to the Company's executive officers and other key employees. The Committee makes annual decisions regarding appropriate stock-based grants for each executive based on the following equally weighted factors. The Committee considers the Company's financial performance, executives' levels of responsibilities and predicted values at the 50-75th percentile of long-term incentive compensation practices for similar positions at the comparator companies. If restricted stock is awarded, the issuance price is equal to the market price of the Common Stock on the date of grant and vests over five years. This approach is designed to provide incentive to create shareholder value over the long term since the full benefit of the compensation cannot be realized unless stock price appreciation occurs over a number of years. In fiscal 1994, Mr. Osborn received 6,000 restricted stock shares and options to purchase 42,000 shares at their fair market value on the date of grant. 10 Code Section 162(m) Section 162(m) of the Internal Revenue Code limits the Company's income tax deduction for compensation paid in any taxable year to certain executive officers to $1,000,000, subject to several exceptions. The Committee intends to grant awards under the 1994 Employee Stock Plan that are designed, in most cases, to qualify for the performance-based compensation exception. Compensation and Development Committee Michael E. Batten James L. Forbes James H. Keyes, Chairperson William U. Parfet EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth information on the compensation of the Chief Executive Officer and each of the other four most highly compensated executive officers ("named executive officers") of the Company as of September 30, 1994. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION ----------------- ----------------------- SECURITIES RESTRICTED UNDERLYING ALL OTHER NAME AND BASE BONUS STOCK AWARDS OPTIONS COMPENSATION PRINCIPAL POSITION YEAR SALARY ($)(4) ($)(5) (#) ($)(6) ------------------ ---- -------- -------- ------------ ---------- ------------ Guy A. Osborn 1994 $492,000 $267,525 $185,250 42,000 $128,652 Chairman and CEO(1) 1993 467,000 350,250 219,375 44,000 123,780 1992 445,000 166,878 0 30,000 115,753 Kenneth P. Manning 1994 $316,000 $171,825 $ 92,625 29,000 $ 52,767 President and COO(1) 1993 291,000 218,250 108,000 27,900 48,130 1992 272,000 95,200 0 20,000 40,607 John E. Heinrich 1994 $221,250 $ 96,244 $ 61,750 20,000 $ 38,337 Vice President and Chief Financial 1993 201,500 120,900 74,250 19,200 35,285 Officer(2) 1992 190,000 57,000 0 14,000 32,053 Geoffrey J. Hibner 1994 $215,000 $ 93,525 $ 0 0 $ 31,706 Vice President-- Finance(3) 1993 201,500 114,855 57,375 19,200 29,321 1992 190,000 57,000 0 14,000 26,452 James F. Palo 1994 $177,000 $ 88,500 $ 43,225 12,000 $ 38,957 President--Rogers Foods, Inc. 1993 167,000 83,500 54,000 12,000 36,638 1992 157,000 58,000 0 10,000 34,628
- -------- (1) Mr. Manning was elected President and Chief Operating Officer effective January 23, 1992. Prior thereto, he served as Executive Vice President and Mr. Osborn also held the titles of President and Chief Operating Officer. (2) Mr. Heinrich was elected Vice President and Chief Financial Officer effective July 1, 1994. Prior thereto he served as Vice President-- Administration. Mr. Heinrich passed away on December 6, 1994. (3) Mr. Hibner will resign as Vice President--Finance effective January 2, 1995. (4) Consists of awards under the Company's management incentive plans. 11 (5) The amounts in the table reflect the market value on the date of award of restricted shares of Common Stock. Total number and value of restricted shares held as of September 30, 1994, for each named individual are: Guy Osborn, 20,175 shares--$597,684; Kenneth Manning, 9,800 shares--$290,325; John Heinrich, 6,575 shares--$194,784; Geoffrey Hibner, 4,075 shares-- $120,722; James Palo, 4,675 shares--$138,497. Dividends are paid on restricted shares when paid on Common Stock. (6) Consists of contributions in fiscal 1994 under Company benefit plans for the five named individuals as follows:
ESOP SAVINGS TRANSITION ------- ------- ---------- Guy A. Osborn.................................. $45,572 $33,690 $49,390 Kenneth P. Manning............................. 29,270 21,370 2,127 John E. Heinrich............................... 19,050 13,686 5,601 Geoffrey J. Hibner............................. 18,512 13,194 0 James F. Palo.................................. 15,930 10,420 12,607
STOCK OPTIONS The following table sets forth information concerning the grant of stock options under the Company's 1990 or 1994 Employee Stock Plan during fiscal 1994 to the named executive officers. OPTION GRANTS IN 1994 FISCAL YEAR
PERCENTAGE OF TOTAL POTENTIAL REALIZABLE OPTIONS VALUE AT ASSUMED NUMBER OF GRANTED TO EXERCISE ANNUAL RATES OF STOCK SECURITIES EMPLOYEES OR PRICE APPRECIATION UNDERLYING IN BASE FOR TEN YEAR OPTION OPTIONS 1994 PRICE TERM(3) GRANTED FISCAL ($/SHARE) EXPIRATION ------------------------- NAME (#)(1) YEAR (2) DATE 5% 10% ---- ---------- ---------- --------- ---------- ----------- ------------- Guy A. Osborn..... 42,000 12.4% 30.875 9/12/04 $ 815,519 $ 2,066,686 Kenneth P. Manning.... 29,000 8.5% 30.875 9/12/04 563,097 1,426,997 John E. Heinrich... 20,000 5.9% 30.875 9/12/04 388,342 984,136 Geoffrey H. Hibner..... 0 0 0 0 0 James F. Pa- lo......... 12,000 3.5% 30.875 9/12/04 233,005 590,482 All Share- holders(4). -- -- -- -- 506,026,150 1,282,369,616
- -------- (1) The options reflected in the table are nonqualified stock options under the Internal Revenue Code and were granted on September 12, 1994. The exercise price of each option granted was equal to 100% of the fair market value of the Common Stock on the date of grant. The options granted vest in increments of one-third on each of the three anniversaries of the grant date. The options are subject to early vesting in the event of the optionee's death, disability or retirement. Upon a "change in control" of the Company (as defined in the 1990 and 1994 Employee Stock Plans), all options then outstanding will become immediately exercisable in full. (2) The exercise price of options may be paid in cash, by delivering previously issued shares of Common Stock or any combination thereof. (3) The option values presented were calculated based on a share price of $30.875 as of grant at assumed 5% and 10% annualized rates for the term of the grant. The actual value, if any, that an optionee may realize upon exercise will depend on the excess of the market price of the Common Stock over the option exercise price on the date the option is exercised. There is no assurance that the actual value realized by an optionee upon the exercise of an option will be at or near the value estimated under the model described above. 12 (4) The potential realizable value for "All Shareholders" and for the options actually granted are determined on the assumption that the price of the Company's Common Stock appreciated over the term of the options from the $30.875 per share market price as of the date of grant at an annualized rate (1) of 5% (which would result in a value on September 12, 2004 of $50.29 per share); and (2) 10% (which would result in a value on September 12, 2004, of $80.08 per share). The "All Shareholders" information is calculated based on 26,060,822 shares of the Company's Common Stock outstanding as of September 30, 1994. Thus, for comparative purposes, the total value of such Common Stock as of the date on which the options were granted would be $804,627,879. The following table sets forth information regarding the exercise of stock options by each of the named executive officers during the 1994 fiscal year and the fiscal year-end value of unexercised stock options held by such officers. AGGREGATED OPTION EXERCISES IN 1994 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS OPTIONS/SARS AT AT END OF FISCAL 1994 SHARES END OF FISCAL 1994 (#)(1) ($)(1)(2) ACQUIRED ON VALUE ------------------------- ------------------------- NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ------------ ------------ ----------- ------------- ----------- ------------- Guy A. Osborn 10,000 67,917 113,917 101,333 135,938 0 Kenneth P. Man- ning 3,500 55,479 69,800 67,600 135,938 0 John E. Heinrich 1,000 20,792 61,275 46,800 299,704 0 Geoffrey J. Hibner 225 3,475 56,280 26,800 213,425 0 James F. Palo 0 0 55,030 30,000 347,003 0
- -------- (1) SARs are rights, granted in tandem with an option, to receive cash payments equal to any appreciation in value of the shares subject to option from the date of the option grant to the date of exercise, in lieu of exercise of the option. (2) The dollar values were calculated by determining the difference between the fair market value of the underlying shares of Common Stock and the various applicable exercise prices of the named executive officers' outstanding options at the end of fiscal 1994. The last reported sale price of the Company's Common Stock on the New York Stock Exchange on September 30, 1994 was $29.625 per share. EMPLOYMENT AGREEMENTS The Company has employment contracts with Messrs. Osborn, Manning, Heinrich and Hibner. The initial term of each of these agreements is for three years which is automatically extended for an additional one-year period except that in no event will the term of employment extend beyond the calendar month in which the employee's 65th birthday occurs or the employee becomes disabled or dies. In the event of a "change of control" as defined in these agreements, the executives will be automatically employed for a period of three years. During this employment period, these agreements provide for the payment of base salary subject to annual adjustment, bonus plus customary fringe benefits. The agreements can be terminated upon 30 days' notice by the Board of Directors with or without cause. If terminated without cause, certain termination benefits are payable to the executive in an amount equal to the executive's base salary then in effect plus the bonus for the most recently completed fiscal year, and the executive continues to receive fringe benefits for not more than one year. If an executive's employment is terminated after a "change of control," the Company will pay the executive a lump sum equal to three times the sum of the executive's annual base salary then in effect and the amount of the largest bonus paid to the executive during the three years preceding termination and continue coverage under existing benefit plans for two years. Further, if the executive's employment terminates before he or she becomes 100% vested in his or her entire account balance under the Universal Foods Corporation Savings Plan or ESOP, the executive will be fully vested under both plans. In fiscal 1995, in accordance with the provisions of his terminated employment contract, Mr. Hibner will receive cash compensation of $253,650. The Company also has entered into Executive Employment and Severance Agreements with 8 other current executive officers who are part of the executive officer group. Each of these agreements provides that 13 in the event of a "change of control," as defined in the respective agreement, the Company will continue to employ the executive for a period of three years following the date of such change of control; however, in no event shall the term of the employment extend beyond the end of the calendar month in which the executive's 65th birthday occurs. During this employment period, the executive shall receive as compensation the base salary then in effect, subject to yearly adjustment, bonus awards in accordance with past practice, and all other customary fringe benefits in effect as of the date of the change of control. The Company and the executive each retain the right to terminate employment at any time prior to a change of control. After a change of control, the agreement may be terminated by the Board upon 30 days' prior written notice in which event, unless terminated for cause, the Company shall pay the executive a lump sum equal to three times the sum of the executive's annual base salary then in effect and the amount of the largest bonus paid to the executive during the three years preceding termination and continue coverage under existing benefit plans for two years. Further, if the executive's employment terminates before he or she becomes 100% vested in his or her entire account balance under the Universal Foods Corporation Savings Plan or ESOP, the executive will be fully vested under both plans. The Company provides a nonqualified supplemental executive retirement benefit for selected officers and key employees. Participants contribute to the plan, in each year until death or retirement, an amount equal to the term insurance premium applicable to a life insurance benefit of two or three times the participant's base salary in effect on the date of acceptance into the plan. A pre-retirement survivor income benefit equal to 20%, 25% or 30% of base salary payable for 15 or 20 years is available to designated beneficiaries if the participant dies prior to retirement. At the time of retirement, the participant may continue the survivor income benefit or elect to receive a supplemental retirement income benefit equal to 20%, 25% or 30% of base salary for 15 or 20 years or an actuarially equivalent survivor benefit. See the "Summary Compensation Table" for the possible benefit payable to the named executive officers. The benefit obligations under this plan are funded through Company-owned life insurance policies. The executive officers named in the compensation table on page 11 participate in this plan. The program is designed so that if the assumptions made as to mortality experience, policy dividends and other factors are realized, the Company will recover all its payments plus an interest factor for the use of Company money. The Company has a supplemental retirement arrangement with Mr. Osborn. Under this arrangement, he will receive an annual payment commencing at retirement of $14,500 for 15 years. The Company has established two so-called "Rabbi Trusts" by entering into trust agreements with Marshall & Ilsley Trust Company (the "Trustee"). These trusts are vehicles to assure the satisfaction of the obligations of the Company under various plans and agreements to make deferred and other payments to certain of its past, present and future executives, including the current executive officers named in the executive compensation table on Page 11, without causing such payments to be taxable to the executives until they are paid ("Rabbi Trusts I and II"). Pursuant to Rabbi Trusts I and II, which are irrevocable, the Company has deposited, and is obligated to maintain on deposit, with the Trustee, either amounts of cash, marketable securities and/or insurance policies sufficient to fund such payments. Rabbi Trusts I and II will terminate upon the earlier of the exhaustion of the trust corpus or the final payment to the executives pursuant to all of such plans and agreements, and any remaining assets will be paid to the Company. The Company has also entered into another trust agreement ("Rabbi Trust III") with the Trustee to assure that payments to nonemployee directors will not be improperly withheld. Rabbi Trust III was established on substantially the same terms as Rabbi Trusts I and II, except that Rabbi Trust III is revocable under certain circumstances and is currently funded with a nominal amount but is required to be fully funded by the Company in the event of a potential change in control or a change in control (as defined in Rabbi Trust III) or at such other time as the Board of Directors may determine. 14 COMPANY STOCK PERFORMANCE The following graph compares on a cumulative basis the yearly percentage change since September 30, 1989 in (a) the total shareholder return on the Common Stock with (b) the total return on the Standard & Poor's 500 Composite Index (the "S&P 500 Index") and (c) the total return on the Standard & Poor's Food Index (the "S&P Food Index"). Such yearly percentage change has been measured by dividing (a) the sum of (i) the amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the price per share at the end of and the beginning of the measurement period, by (b) the price per share at the beginning of the measurement period. LOGO
RETURN RETURN RETURN RETURN RETURN RETURN COMPANY NAME SEP 89 SEP 90 SEP 91 SEP 92 SEP 93 SEP 94 ------------ ------ ------ ------ ------ ------ ------ Universal Foods Corporation 100 126.30 165.24 139.10 154.16 138.58 S&P Food Index 100 100.29 140.74 159.75 144.35 159.96 S&P 500 Index 100 90.76 119.04 132.20 149.39 154.89
APPOINTMENT OF INDEPENDENT AUDITOR Upon the recommendation of the Audit Committee of the Board of Directors, the Board, subject to shareholder ratification, has selected Deloitte & Touche LLP, certified public accountants, to audit the financial statements of the Company for the year ending September 30, 1995. Deloitte & Touche LLP has been the independent auditor of the Company for many years and has advised the Company that neither the firm nor any of its partners have any direct or indirect material financial interest in the Company. The Board recommends a shareholder vote FOR ratification of such selection. The affirmative vote of more shares than those voted against such ratification at the Meeting is required for ratification. Under Wisconsin law, any shares of Common Stock which are not voted on this matter at the Meeting, whether by abstention, broker nonvote or otherwise, will have no effect on the ratification of auditors. Representatives of Deloitte & Touche LLP are expected to be present at the Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate shareholder questions. 15 OTHER MATTERS Company management knows of no business which will be presented for action at the Meeting other than those items identified in the Notice of Annual Meeting. Pursuant to the Company's By-laws, written notice of any Shareholder proposals to be presented at the Meeting must have been received by the Secretary no later than December 7, 1994. As no notice of any Shareholder proposals was received, no business may be brought before the Meeting by any Shareholders. If other matters are brought before the Meeting by the Board of Directors, it is intended that proxies will be voted at the Meeting in accordance with the judgment of the person or persons exercising the authority conferred by such proxies. Section 16(a) of the Exchange Act requires the Company's officers and directors to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the New York Stock Exchange. SEC regulations require officers and directors to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such forms furnished to the Company, the Company believes that during the fiscal year ended September 30, 1994 all its officers and directors complied with Section 16(a) filing requirements. FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS The Company welcomes comments or suggestions from its Shareholders. In the event a Shareholder desires to have a proposal formally considered at the 1996 Annual Shareholders' Meeting and included in the proxy statement for that meeting, the proposal must be in writing and received by the Secretary of the Company on or before August 16, 1995. In addition, the Company's By-laws establish procedures for Shareholder nominations for elections of directors of the Company and bringing business before any annual meeting of Shareholders of the Company. Among other things, to bring business before an annual meeting or to nominate a person for election as a director at an annual meeting, a Shareholder must give written notice to the Secretary of the Company not more than 90 nor less than 50 days prior to the fourth Thursday in the month of January next following the last annual meeting held. The notice must contain certain information about the proposed business or the nominee and the Shareholder making the proposal. Any Shareholder interested in making a nomination or proposal should request a copy of the applicable By-law provisions from the Secretary of the Company. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE REQUESTED TO DATE, SIGN AND RETURN THE PROXY CARD AS SOON AS POSSIBLE. IF YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY YOUR BROKER OR BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE PROXY CARD ON YOUR BEHALF. UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF THE COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S 1994 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. By Order of the Board of Directors, Terrence M. O'Reilly Secretary December 16, 1994 16 FORM OF PROXY CARD [front] UNIVERSAL FOODS CORPORATION ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 26, 1995 The undersigned constitutes and appoints GUY A. OSBORN and TERRENCE M. O'REILLY, and each of them, with full power of substitution, the true and lawful proxies of the undersigned, to represent and vote, as designated below, all shares of Common Stock of Universal Foods Corporation which the undersigned is entitled to vote at the Annual Meeting of Shareholders of such corporation to be held at the Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, on Thursday, January 26, 1995, 2:00 p.m. Central Time, and at any adjournment thereof: 1. Election of Directors [_] FOR all nominees listed [_] WITHHOLD authority below (except as marked to vote for all to the contrary below). nominees listed below. MICHAEL E. BATTEN, GUY A. OSBORN, WILLIAM U. PARFET, ESSIE WHITELAW (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) - -------------------------------------------------------------------------------- 2. Proposal to ratify the appointment of Deloitte & Touche as the independent auditors of the corporation. [_] For [_] Against [_] Abstain 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. The Board of Directors recommends a vote FOR Items 1 and 2. [reverse] THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED "FOR" ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2. The undersigned acknowledges receipt of the Notice of said Annual Meeting and the accompanying Proxy Statement and Annual Report. Dated: ___________________, 19__ Signed --------------------------------------- --------------------------------------- (Please print name) NOTE: Please sign exactly as your name appears on your stock certificate. Joint owners should each sign personally. A corporation should sign full corporate name by duly authorized officers and affix corporate seal. When signing as attorney, executor, administrator, trustee or guardian, give full title as such. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNIVERSAL FOODS CORPORATION -----END PRIVACY-ENHANCED MESSAGE-----