-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hk3xhFk/ctVCUZvYhqCW5My/O6WPLMFLYPML6cEw9xoiph+RcKcnfI4dVFxHIV4S YGQSTbtSQxelKyt+pDhUkw== 0000916641-99-000314.txt : 19990407 0000916641-99-000314.hdr.sgml : 19990407 ACCESSION NUMBER: 0000916641-99-000314 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990512 FILED AS OF DATE: 19990406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESKIMO PIE CORP CENTRAL INDEX KEY: 0000787520 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 540571720 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-19867 FILM NUMBER: 99588042 BUSINESS ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 BUSINESS PHONE: 8045608400 MAIL ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 DEF 14A 1 DEFINITIVE PROXY STATEMENT 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 ( ) Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) (X) Definitive Proxy Statement ( ) Definitive Additional Materials ( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 ESKIMO PIE CORPORATION (Name of Registrant as Specified in its Charter) (Name of Person(s) Filing Proxy Statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): (X) No fee required ( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: ( ) Fee paid previously with preliminary materials. ( ) Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule, or Registration Statement No.: 3) Filing Party: 4) Date Filed: [ESKIMO PIE CORPORATION LOGO] March 31, 1999 Dear Shareholder: You are cordially invited to attend the Annual Meeting of Shareholders to be held on Wednesday, May 12, 1999, at 10:00 a.m. in the Auditorium of the Crestar Center, 919 East Main Street, Richmond, Virginia. A formal notice of the meeting, together with a proxy statement and proxy form, is enclosed with this letter. As you will see from the notice, you will be asked to elect seven directors to serve until the next Annual Meeting and to ratify the designation of auditors for 1999. In addition to the formal agenda, we expect to report on the Company's business activities and to answer any questions you might have. We would appreciate your voting, signing, dating and promptly returning the enclosed proxy in the enclosed postage-paid envelope. By doing so, you will be sure that your shares will be represented and voted at the meeting. If you attend the meeting, you may revoke your proxy and vote in person. We look forward to seeing you if you are able to attend. Whether or not you attend, we hope you will enjoy our products and recommend them to your friends. Sincerely, /s/ Arnold H. Dreyfuss Arnold H. Dreyfuss Chairman of the Board ESKIMO PIE CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD WEDNESDAY, May 12, 1999 The Annual Meeting of Shareholders of Eskimo Pie Corporation (the "Company") will be held on May 12, 1999, at 10:00 a.m. in the Auditorium of the Crestar Center, 919 East Main Street, Richmond, Virginia for the following purposes: 1. To elect seven directors to serve until the 2000 Annual Meeting of Shareholders, 2. To ratify the appointment of Ernst & Young LLP as independent auditors for the current fiscal year, and 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 March 26, 1999 as the record date for determination of shareholders entitled to notice of and to vote at the meeting and any adjournments thereof. By Order of the Board of Directors, /s/ Thomas M. Mishoe, Jr. Thomas M. Mishoe, Jr. Chief Financial Officer, Vice President, Treasurer and Corporate Secretary March 31, 1999 Please complete and return the enclosed proxy. If you attend the meeting in person, you may withdraw your proxy and vote your own shares. 901 Moorefield Park Drive, Richmond, Virginia 23236 ESKIMO PIE CORPORATION 901 Moorefield Park Drive Richmond, Virginia 23236 ---------------------------- PROXY STATEMENT ---------------------------- ANNUAL MEETING OF SHAREHOLDERS May 12, 1999 General The enclosed proxy is solicited by the Board of Directors of Eskimo Pie Corporation (the "Company") for the Annual Meeting of Shareholders ("Annual Meeting") of the Company to be held Wednesday, May 12, 1999, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders or any adjournment or adjournments thereof. Shareholders may revoke proxies at any time prior to their exercise by written notice to the Company, by submitting a proxy bearing a later date, or by attending the Annual Meeting and requesting to vote in person. The Company will pay all costs for this proxy solicitation. Proxies are being solicited by mail and may also be solicited personally by telephone or telegraph, by directors, officers and employees of the Company. The Company may reimburse banks, brokerage firms, and other custodians, nominees, and fiduciaries for their reasonable expenses in sending proxy materials to the beneficial owners of the Company's Common Stock. The approximate mailing date of this Proxy Statement ("Proxy Statement") and the accompanying proxy form is March 31, 1999. Voting Rights Only those shareholders of record at the close of business on March 26, 1999 are entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. The number of shares of the Company's Common Stock outstanding and entitled to vote as of the record date was 3,462,796. A majority of the shares outstanding and entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business. With regard to the election of directors, votes may be cast in favor or withheld. If a quorum is present, the nominees receiving a plurality of the votes cast will be elected directors; therefore, votes withheld will have no effect. Generally, in other matters including the ratification of auditors, an affirmative vote of a majority of the shares present and entitled to vote is required for passage. Abstentions and broker non-votes (shares held by brokers for customers which may not be voted on certain matters because the broker has not received specific instructions from the customer) are counted for purposes of determining the presence or absence of a quorum for the transaction of business. With respect to such other matters, abstentions are counted in the tabulation of the votes cast on such other proposals presented to shareholders, and therefore, abstentions in such other matters have the effect of a vote against such matters; whereas, broker non-votes are not counted for purposes of determining whether a proposal has been approved and therefore have no effect. Security Ownership of Certain Beneficial Owners and Management The following table sets forth, as of February 12, 1999 the number and percentage of shares of the Company's Common Stock held by persons known to the Company to be the owners of more than five percent of the Company's issued and outstanding Common Stock, each of the Company's directors and nominees for director, the executive officers named in the Summary Compensation Table, and all of the Company's directors and executive officers as a group:
Amount and Nature of Percent of Beneficial Ownership Common Stock Name and Address of Beneficial Owner of Common Stock(1) Outstanding - ------------------------------------ ------------------ ----------- Yogen Fruz World-Wide, Inc. (2) 587,700 17.0% Toronto, Canada Peak Management, Inc. (3) 369,600 10.7% Boston, Massachusetts Matrix Asset Advisors, Inc. (4) 278,400 8.0% New York, New York Gabelli Funds, Inc. (5) 254,190 7.3% Rye, New York Arnold H. Dreyfuss 25,741 (6)(7)(8) * Richmond, Virginia Kimberly P. Ferryman 13,347 (7)(8) * Richmond, Virginia Wilson H. Flohr, Jr. 9,043 (6)(9) * Richmond, Virginia Craig L. Hettrich 3,000 (7) * Richmond, Virginia F. Claiborne Johnston, Jr. 3,100 (6)(10) * Richmond, Virginia V. Stephen Kangisser 7,504 (7)(8) * Richmond, Virginia David B. Kewer 53,611 (7)(8) 1.5% Richmond, Virginia Daniel J. Ludeman 6,522 (6) * Richmond, Virginia Amount and Nature of Percent of Beneficial Ownership Common Stock Name and Address of Beneficial Owner of Common Stock(1) Outstanding - ------------------------------------ ------------------ ----------- Judith B. McBee 3,043 (6) * Richmond, Virginia Thomas M. Mishoe, Jr. 13,088 (7)(8) * Richmond, Virginia Robert C. Sledd 1,416 (6) * Richmond, Virginia All Directors and Executive Officers 143,657 (6)(7)(8) 4.0% as a Group (12 persons) - ----------------------------------------
* Beneficial ownership does not exceed one percent of the outstanding shares of Common Stock. (1) Except to the extent that shares may be held in joint tenancy with a spouse or as otherwise indicated, each director or executive officer has sole voting and investment power with respect to the shares shown. The beneficial ownership shown for the four shareholders, other than directors and executive officers of the Company, is based upon the most recent filings received by the Company for such shareholders pursuant to Section 13(d) of the Securities Exchange Act of 1934 (Exchange Act). (2) The Schedule 13D, dated December 10, 1998, filed by Yogen Fruz World-Wide Inc. (Yogen Fruz), as amended by Amendment No. 1 December 16, 1998, states that Yogen Fruz acquired the shares of the Company's Common Stock reflected in the filing with view toward acquiring control of, and ultimately the entire equity interest in, the Company and/or effecting a change in the Board of Directors to facilitate the acquisition of the Company. (3) Peak Management, Inc., Peak Investment Limited Partnership and Peter H. Kamin, have previously reported their holdings of the Company's Common Stock on Schedule 13G, which is permitted for institutional investors that certify passive investment intent with respect to such holdings. The holdings of the collective Peak entities are now reported on a Schedule 13D, dated November 30, 1998, which reflects their intention of engaging in discussions with the Company or other third parties about a possible sale or recapitalization of the Company or other change in control transaction in which they may participate. This filing indicates that Mr. Kamin has shared voting and dispositive power over all the shares of the Company's Common Stock reported as beneficially owned by the Peak entities in the preceding table. (4) Matrix Asset Advisors, which had previously reported its holdings of the Company's Common Stock on Schedule 13G, which is permitted for institutional investors that certify passive investment intent with respect to such holdings. Matrix' holdings are now reported on a Schedule 13D, dated December 4, 1998, which reflects its intention to actively discuss with the Company, in the media and with other shareholders strategic alternatives for the Company, including a sale or other change in control transaction. (5) Amendment No. 11 to the Schedule 13D, dated January 14, 1999, for Gabelli Funds, Inc. reflects beneficial ownership of the reported shares of Company Common Stock by Gabelli Funds, Inc., GAMCO Investors, Inc., Gabelli Associates, Ltd. and Mario J. Gabelli and indicates that Mr. Gabelli directly or indirectly controls, or acts as Chief Investment Officer for, these various entities. (6) Includes shares subject to presently exercisable stock options and shares of restricted and unrestricted stock granted to non-employee directors as compensation for board duties under the 1996 Incentive Stock Plan, as more fully described under "Compensation of Directors." (7) Includes shares subject to presently exercisable stock options and/or shares of restricted stock as more fully described in the "Summary Compensation Table" and table of "Fiscal Year-End Option Values". (8) Includes shares held by executive officers in the Company's 401(k) Savings Plan and/or Employee Stock Purchase Plan. Employees, exclusive of the executive officers, held 24,606 shares of Common Stock in these plans on February 12, 1999. Each participant in the respective plans has the right to instruct the plans' trustee with respect to the voting of shares allocated to his or her account. (9) Includes 1,500 shares held by Mr. Flohr's wife; 2,000 shares held by Mr. Flohr's wife as trustee; and 200 shares held as custodian. (10) Includes 400 shares held by, or for the benefit of, a family member living in Mr. Johnston's household, as to which shares Mr. Johnston disclaims beneficial ownership. Election of Directors The seven persons named below, each of whom currently serves as a director of the Company, will be nominated to serve as directors until the 2000 Annual Meeting or until their successors have been duly elected and have qualified. The persons named in the proxy will vote for the election of the nominees named below unless authority is withheld. If, for any reason, any of the persons named below should become unavailable to serve, an event which management does not anticipate, proxies will be voted for the remaining nominees and such other person or persons as the Board of Directors of the Company may designate.
Director Principal Occupation During Past Five Years; Name (Age) Since Directorship in other Public Companies ---------- ----- -------------------------------------- Arnold H. Dreyfuss (70) 1992 From September 1996 through March 1998, Chief Executive Officer of the Company. Also, President of Jupiter Ocean and Racquet Club of Jupiter, Florida; formerly (1982 until 1991), Chairman of the Board and Chief Executive Officer of Hamilton Beach/Proctor-Silex, Inc., a small appliance manufacturer headquartered in Richmond, Virginia; director of Mentor Growth Trust, Inc. Wilson H. Flohr, Jr. (52) 1992 Retired (in January 1999) Executive Vice President and General Manager of Paramount's Kings Dominion, a regional family theme park in Doswell, Virginia. F. Claiborne Johnston, Jr. (56) 1992 Attorney-at-Law, Partner in the law firm of Mays & Valentine, L.L.P., Richmond, Virginia. David B. Kewer (44) 1997 Effective March 1998, President and Chief Executive Officer of the Company. Previously, beginning March 1997, President and Chief Operating Officer of the Company. Formerly (1993 until 1997), President of Willy Wonka Candy Factory, a subsidiary of Nestle USA, Inc. From 1988 through 1993, various senior level positions at Drumstick Co. which was acquired by Nestle in 1991. Daniel J. Ludeman (41) 1997 Chairman and Chief Executive Officer of Mentor Investment Group, LLC, a Richmond, Virginia based asset management company; director of Mentor Series Trust, Mentor Institutional Trust, Mentor Income Fund, Mentor Cash Resource Trust and American's Utility Fund. Judith B. McBee (51) 1996 Senior Vice President, Marketing of Hamilton Beach/ Proctor-Silex, Inc., a small appliance manufacturer headquartered in Richmond, Virginia, since January 1997; previously Executive Vice President, Marketing (June 1994 to December 1996) and Executive Vice President, Sales/Marketing (January 1990 to June 1994), Hamilton Beach/Proctor-Silex, Inc. Robert C. Sledd (46) 1998 Chairman of the Board (since February 1995) and Chief Executive Officer (since 1987) of Performance Food Group Company, a foodservice distributor headquartered in Richmond, Virginia; director of SCP Pool Corporation.
Board and Committee Meetings and Attendance The Board of Directors held eleven meetings during the fiscal year ended December 31, 1998. All directors attended at least 90% of all meetings of the Board and committees on which they served. The Board has standing Executive, Compensation and Audit Committees. The Executive Committee has a wide range of powers, but its primary duty is to act if necessary between scheduled Board meetings. For such purpose, the Executive Committee possesses all the powers of the Board in management of the business and affairs of the Company except as otherwise limited by Virginia law. The Executive Committee did not meet during the fiscal year ended December 31, 1998. Members of the Executive Committee are Messrs. Dreyfuss (Chairman), Flohr, Johnston and Kewer and Ms. McBee. The Compensation Committee is responsible for setting and administering the policies and programs that govern both annual compensation for the Company's executive officers and employee stock ownership. During the fiscal year ended December 31, 1998, the Compensation Committee met three times. Members of the Compensation Committee are Messrs. Flohr (Chairman) and Sledd and Ms. McBee. The Audit Committee recommends the appointment of a firm of independent public accountants to audit the Company's financial statements, as well as reviews and approves the scope, purpose and type of audit services to be performed by the external auditors. The Audit Committee met two times during the fiscal year ended December 31, 1998. Members of the Audit Committee are Messrs. Ludeman (Chairman), Johnston, and Sledd. Compensation Committee Interlocks and Insider Participation Members of the Compensation Committee are Messrs. Flohr (Chairman) and Sledd and Ms. McBee. No current member of the Compensation Committee is or has been an employee of the Company or has any relationship to the Company that is required to be disclosed pursuant to regulations of the Securities and Exchange Commission. Furthermore, none of the Company's executive officers serves on the board of directors of any company of which a Compensation Committee member is an employee. Compensation of Directors Each director of the Company who is not also an executive officer of the Company receives (a) an annual retainer of $7,000; (b) a $500 fee for attendance at each Board Meeting; and (c) a $250 fee for attendance at each Committee Meeting. The Chairman of the Board, who no longer receives a salary for his duties beginning January 1, 1999, receives director's compensation at two times that paid to other non-employee directors. Beginning in 1998, directors may elect to receive payment of the annual retainer and meeting fees in Common Stock of the Company under the 1996 Incentive Stock Plan, as amended. Under the 1996 Incentive Stock Plan, outside directors also automatically receive a stock option grant for 200 shares and a restricted stock grant for 200 shares of the Company's Common Stock, each year, as part of their compensation for Board service. Each outside director is also reimbursed for usual and ordinary expenses of meeting attendance. A director who is also an executive officer of the Company receives no additional compensation for serving as a director. Certain Relationships Mays & Valentine, L.L.P., a law firm of which F. Claiborne Johnston, Jr., a current director and nominee for director of the Company, is a partner, was retained to perform legal services for the Company and its subsidiaries during the last fiscal year. It is anticipated that the firm will continue to provide such services to the Company and its subsidiaries during the current fiscal year. The amounts paid by the Company were based upon an agreed-upon fee arrangement for services rendered, which the Company believes to be consistent with fees charged for similar services by other comparable firms. Daniel J. Ludeman, a current director and nominee for director of the Company, is the Chairman and Chief Executive Officer of Mentor Investment Group, of which Wheat First Butcher Singer, Inc. (Wheat) is the majority shareholder. First Union Corporation, the parent of Wheat, also wholly owns First Union National Bank (First Union) and Bowles Hollowell Connor & Company (BHC). First Union, Wheat and BHC have provided the Company with investment banking services and First Union provides the Company with long term financing. It is anticipated that First Union, Wheat and BHC will continue to provide such services to the Company based upon agreed-upon fee arrangements and interest rates which are consistent with amounts charged for similar services by other comparable firms. Executive Compensation The following table lists all compensation paid or accrued by the Company for each person who served as the Chief Executive Officer at any time during the past fiscal year and the Company's four most highly paid executive officers, other than the Chief Executive Officer, whose total annual salary and bonus for the year ended December 31, 1998 exceeded $100,000. Messrs. Dreyfuss, Mishoe and Kangisser first became executive officers of the Company in 1996. Mr. Kewer was employed by the Company effective March 1, 1997 and became Chief Executive Officer on March 1, 1998, succeeding Mr. Dreyfuss who had previously served as Chief Executive Officer since September 1996. Mr. Hettrich was employed by the Company in February 1998. Summary Compensation Table
Annual Compensation Long Term Compensation ------------------- ---------------------- Restricted Securities Name, Age and Other Annual Stock Underlying All Other Principal Position Year Salary Bonus Compensation (1) Awards Options(#) Compensation (2) - ------------------ ---- ------ ----- ---------------- ------ ---------- ---------------- Arnold H. Dreyfuss (70) 1998 $70,417 ---- ---- ---- 7,500 $270 Chairman of the Board 1997 131,250 ---- ---- ---- 7,500 315 1996 42,115 ---- ---- $41,125 (3) 200 (4) 11,647 David B. Kewer (44) 1998 213,333 ---- $23,042 ---- 10,000 9,460 President and Chief 1997 166,667 $40,000 (5) 102,182 125,000 (6) 50,000 525 Executive Officer 1996 ---- ---- ---- ---- ---- ---- Kimberly P. Ferryman (42) 1998 99,100 3,000 10,312 ---- 3,000 2,973 Vice President, Quality 1997 93,600 ---- 9,815 ---- 13,485 2,375 Assurance and Product 1996 87,500 ---- ---- ---- 10,000 2,625 Development Craig L. Hettrich (39) 1998 105,417 15,391 87,223 ---- 3,000 ---- General Manager, 1997 ---- ---- ---- ---- ---- ---- Foodservice Division 1996 ---- ---- ---- ---- ---- ---- V. Stephen Kangisser (47) 1998 119,792 5,000 ---- ---- 4,500 3,594 Vice President, Sales 1997 112,002 ---- 52,558 ---- 7,639 2,023 1996 67,286 ---- 18,161 ---- 2,000 ---- Thomas M. Mishoe, Jr. (46) 1998 134,833 ---- 16,217 ---- 4,500 2,680 Chief Financial Officer, 1997 127,500 ---- ---- ---- 7,709 2,495 Vice President, 1996 104,154 ---- 24,444 ---- 12,000 ---- Secretary and Treasurer
1) Of the total amounts reported as "Other Annual Compensation", the following amounts are attributable to relocation expenses incurred in connection with the respective officer's employment by the Company; Mr. Hettrich - $78,398 in 1998, Mr. Kangisser - $43,877 in 1997 and $16,563 in 1996, Mr. Kewer - $10,242 in 1998 and $92,182 in 1997, and Mr. Mishoe - $19,912 in 1996. The remaining amounts relate primarily to automobile allowances. 2) Except for Mr. Dreyfuss whose 1996 amount reflects amounts earned as an outside director prior to his appointment as Chief Executive Officer, all amounts reflect the Company's matching contributions to the Company's 401(k) Savings Plan and Employee Stock Purchase Plan. 3) Reflects an automatic award of 200 shares made to Mr. Dreyfuss on May 2, 1996 as an outside director under the 1996 Incentive Stock Plan and an award of 2,500 shares made as of September 19, 1996, upon Mr. Dreyfuss' appointment as Chief Executive Officer. The May 2, 1996 award vests on May 2, 1999. The September 19, 1996 award vested in four installments, the first 1,000 shares vested six months from the grant date, the next three installments of 500 shares each vested when the market price (average of 20 consecutive trading days) of the Company's Common Stock reached $10.50, $12.00 and $13.00 per share. 4) Reflects options granted to Mr. Dreyfuss on May 2, 1996 as an outside director under the 1996 Incentive Stock Plan. 5) Reflects amounts paid to Mr. Kewer as incentive to join the Company as President and Chief Operating Officer. 6) Reflects an award of 10,000 shares made to Mr. Kewer upon his employment by the Company on March 1, 1997. The award vests in three installments, the first 2,500 shares vested on March 1, 1998; 2,500 additional shares vest on March 1, 1999 and the remaining 5,000 shares vest on March 1, 2000. During the period of restriction, Mr. Kewer has the right to vote the shares and to receive dividends on the shares of restricted stock as and when paid on the Company's Common Stock. At December 31, 1998, Mr. Kewer's restricted stock holdings had a value of $99,375. The following table sets forth information regarding option grants made during the year ended December 31, 1998 for each of the named executive officers. OPTIONS GRANTED IN LAST FISCAL YEAR
Number of Percentage of Potential Realizable Value at Assumed Securities Total Options Exercise Grant Date Annual Rates of Stock Appreciation Underlying Granted to Price Market During Option Term (3) Options Employees in Per Price Expiration ----------------------- Granted 1998 Share Per Share Date 5% 10% ------- ---- ----- --------- ---- -- --- Arnold H. Dreyfuss 7,500 (1) 9% $13.375 $13.375 3/6/08 $63,075 $159,900 David B. Kewer 10,000 (2) 12% 13.375 13.375 3/6/08 84,100 213,200 Kimberly P. Ferryman 13.375 13.375 3/6/08 25,320 63,960 3,000 (2) 4% Craig L. Hettrich 13.375 13.375 3/6/08 25,230 63,960 3,000 (2) 4% V. Stephen Kangisser 4,500 (2) 6% 13.375 13.375 3/6/08 37,845 95,940 Thomas M. Mishoe, Jr. 4,500 (2) 6% 13.375 13.375 3/6/08 37,845 95,940
(1) Grant was made under the 1996 Incentive Stock Plan and was immediately exercisable on the grant date. (2) Grants were made under the Company's 1996 Incentive Stock Plan and become exercisable in increments of one-third of the shares subject to option on each of the first, second and third anniversaries of the March 6, 1998 grant date. (3) The dollar amounts under the 5% and 10% columns are the result of calculations at assumed rates of stock price appreciation set by the Securities and Exchange Commission. The dollar amounts shown are not intended to forecast possible future price appreciation, if any, for the Company's Common Stock. The following table sets forth information regarding year-end option values at December 31, 1998 for each of the named executive officers. Fiscal Year-End Option Values (1)
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options at Year-End Options at Year-End (2) ------------------- ----------------------- Exercisable Unexercisable Exercisable Unexercisable ----------- ------------- ----------- ------------- Arnold H. Dreyfuss 15,200 0 $5,625 $0 David B. Kewer 20,000 40,000 65,000 97,500 Kimberly P. Ferryman 5,000 21,485 0 10,114 Craig L. Hettrich 0 3,000 0 0 V. Stephen Kangisser 0 12,139 0 5,729 Thomas M. Mishoe, Jr. 5,000 17,209 0 5,782
(1) The columns "Number of Shares Acquired on Exercise" and "Value Realized" have been omitted because no options were exercised by the named executive officers during the year ended December 31, 1998. (2) The value included in this column is the difference between the market value of the Company's Common Stock of $13.25 on December 31, 1998 and the exercise price of the respective in-the-money options. Retirement Benefits The following table sets forth information related to the annual benefits payable upon retirement under the Company's defined benefit pension plans to persons with the specified final average earnings and years of service as a salaried employee of the Company, assuming a continuation of service and 1998 compensation to age 65, retirement at age 65, and an annual accrual rate of 1.5% of average annual earnings, and without regard to the compensation limitations under Internal Revenue Code (IRC) 401(a)(17) or the benefit limitation of IRC 415. The benefits set forth in the following table are not subject to any deduction for social security or other offset amount.
Pension Plan Table Years of Service Amount of Annual Retirement Benefit Average ------------------------------------------------------------------------------- Annual Earnings 15 20 25 30 35 - -------------------------------------------------------------------------------------------------------- $125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625 $150,000 33,750 45,000 56,250 67,500 78,750 $175,000 39,375 52,500 65,625 78,750 91,875 $200,000 45,000 60,000 75,000 90,000 105,000 $225,000 50,625 67,500 84,375 101,250 118,125 $250,000 56,250 75,000 93,750 112,500 131,250 $300,000 67,500 90,000 112,500 135,000 157,500 $400,000 90,000 120,000 150,000 180,000 210,000 $450,000 101,250 135,000 168,750 202,500 236,250 $500,000 112,500 150,000 187,500 225,000 262,500
"Average Annual Earnings" is an employee's highest five consecutive year average total cash compensation within the last 10 years (which is salary, incentive awards and the Savings Plan match as such amounts are shown under the respective salary, bonus and other compensation columns in the Summary Compensation Table.) The Company established two substantially identical pension plans in 1992, covering salaried employees age 21 or over with one year of service. Salaried employees who are not officers are covered by the tax-qualified plan and officers are covered by the non-qualified plan. Credited years of service for the named executive officers as of December 31, 1998 are Arnold H. Dreyfuss - 2.2; David B. Kewer - 1.8; Kimberly P. Ferryman - 6.9; Craig L. Hettrich -.9; V. Stephen Kangisser - 2.6 and Thomas M. Mishoe, Jr. - 2.8. Certain Agreements The Company entered into severance agreements with Messrs. Hettrich, Kangisser, Kewer and Mishoe and Ms. Ferryman upon their being named executive officers of the Company. The agreements provide that termination compensation will be paid if the executive's employment is terminated by the Company within three years after a change in control other than for cause (as defined in the agreements) or upon the death, permanent disability, or retirement of the executive if the executive voluntarily terminates his employment for "good reason" (as defined in the agreements). "Change in control" is defined generally to include (i) an acquisition of 20% of the Company's voting stock, (ii) certain changes in the composition of the Company's Board of Directors, (iii) shareholder approval of certain business combinations or asset sales in which the Company's historic shareholders hold less than 60% of the resulting or purchasing company or (iv) shareholder approval of the liquidation or dissolution of the Company. Termination compensation consists of a cash payment equal to approximately three times the average annual compensation paid to the executive for the three most recent taxable years of the Company ending prior to the change in control. In addition, the agreements provide for the continuation of certain medical, life and disability benefits. These agreements renew annually unless terminated by the Company by notice given 60 days prior to expiration of the current term. Compensation Committee Report on 1998 Executive Compensation The Company's executive compensation and benefits program is administered by the Compensation Committee (the "Committee"), which is composed entirely of non-employee directors. The goal of the program is to attract, motivate, reward and retain the management talent required to achieve the Company's business objectives, at compensation levels which are equitable and competitive with those of comparable companies. This goal is furthered by the Committee's policy of linking compensation to individual and corporate performance and by encouraging significant stock ownership by senior management in order to align the financial interests of management with those of the shareholders. The three main components of the Company's executive compensation program are base salary, incentive awards under the Senior Management Incentive Plan as established annually by the Committee and equity participation in the form of stock options, restricted stock grants and eligibility to participate in the Company Stock Fund of the Company's 401(k) Savings Plan and Employee Stock Purchase Plan. Each year, the Committee reviews the total compensation package of each executive officer to ensure it meets the goals of the program. As a part of this review, the Committee considers corporate performance, compensation survey data, the advice of consultants and the recommendations of management. Base Salaries Base salaries for executive officers are reviewed annually to determine whether adjustments may be necessary. Factors considered by the Committee in determining base salaries for executive officers include personal performance considering the respective executive's level of responsibility, the overall performance and profitability of the Company during the preceding year and the competitiveness of the executive's salary with the salaries of executives in comparable positions at companies of comparable size and operational characteristics. Each factor is weighed by the Committee in a subjective analysis of the appropriate level of compensation for that executive. For purposes of assessing the competitiveness of salaries, the Committee reviews compensation data from national surveys and selected groups as provided by William M. Mercer, Incorporated, the Company's compensation consultant. Such compensation data indicates that salary levels for the Company's executive officers approximate the market averages of executive positions of similar scope and responsibility. In March 1998, the Board of Directors appointed Mr. Kewer as the Company's Chief Executive Officer. In consideration of the increased duties to be assumed by Mr. Kewer, his salary was increased from $200,000 to $218,000 annually. Effective December 1998, Mr. Kewer's base salary was temporarily increased by $12,000 per month in view of the significant additional responsibilities undertaken by Mr. Kewer at the Board's request in connection with the Company's announced decision to explore, with the assistance of its financial advisor, strategic alternatives to enhance shareholder value. The annual base salary for Mr. Dreyfuss, who continued as Chairman of the Board, was reduced from $112,500 to $80,000 beginning March 1, 1998, to $60,000 beginning July 1, 1998 and to $40,000 beginning October 1, 1998 as management of the Company transitioned to Mr. Kewer. Mr. Dreyfuss receives no salary from the Company beginning January 1, 1999 but will receive "non-employee" director compensation at two times the amount paid to other non-employee directors, (additional details regarding the Compensation of Directors is provided on page 6 of this proxy). Senior Management Incentive Plan The Company utilizes a Senior Management Incentive Plan under which executives may receive cash and stock incentive awards based upon corporate, divisional and individual performance. Target thresholds and anticipated awards are established annually by the Committee and ratified by the full Board. The plan provides for cash payment of awards under the plan. Mr. Hettrich received an incentive payment of $15,391 as a result of the achievement of divisional (Foodservice) performance. The remaining executive officers as a group, including those listed in the Summary Compensation Table, received incentive payments totaling $11,000 for 1998 based on individual performance. Corporate and other divisional incentive awards were not awarded for 1998 as financial results did not meet the target thresholds required under the 1998 Senior Management Incentive Plan. Equity Participation At the time the Company became a public company in April, 1992, management held abnormally low ownership interests in the Company because of the prior controlling ownership by Reynolds Metals Company. From time to time since the Company's initial public offering, this issue has been raised as a concern by various shareholders. As a result, the Committee and the Board have continued to believe it is important to increase management's equity participation in the Company as a part of the Company's overall compensation policies to provide long-term financial rewards linked directly to the market performance of the Company's stock. The Committee believes that significant ownership of stock by senior management is the best way to align the interests of management and the shareholders, and the Company's stock incentive program is designed to further this objective. Awards with respect to the Chief Executive Officer are made by the Committee and awards for all the other executive officers are made by the Committee in consultation with the Chief Executive Officer. In March 1998, the Committee granted non-qualified stock options on 72,500 shares of Common Stock to executive officers and management employees. These awards were made at an exercise price of $13.375 per share (which equaled the closing price on the date of the grant) and are exercisable in increments of one third each of the shares subject to option on the first, second and third anniversaries of the March 6, 1998 award date. The Committee also granted non-qualified stock options on 7,500 shares to Mr. Dreyfuss. This award, also made on March 6, 1998, has an exercise price of $13.375 per share and became exercisable immediately upon grant. The accelerated rate of exercisability for this grant was made in consideration of the significant contributions made to the Company by Mr. Dreyfuss during his tenure as Chief Executive Officer. In addition to stock option and restricted stock grants, eligible executive officers and many of the Company's employees participate in the Company Stock Fund under the Company's 401(k) Savings Plan and Employee Stock Purchase Plan, thereby increasing, on a voluntary basis, their equity participation in the Company. Section 162(m) Considerations The Committee has not given significant consideration to the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code which was enacted in 1993. Under this provision, beginning in 1994, a publicly held corporation is not permitted to deduct compensation in excess of $1 million per year paid to the chief executive officer or any one of the other named executive officers except to the extent the compensation was paid under compensation plans meeting certain tax code requirements. The Committee has noted that the Company does not currently face the loss of this deduction for compensation. The Committee nevertheless has determined that in reviewing the design of and administering the executive compensation program, the Committee will continue in the future to seek to preserve the Company's tax deductions for executive compensation unless this goal conflicts with the primary objectives of the Company's compensation program. 1998 Compensation Committee Wilson H. Flohr, Jr., Chairman Judith B. McBee Robert C. Sledd Performance Graph Securities and Exchange Commission regulations require the Company to include in its proxy statement the following Performance Graph. As required by the regulations, the Graph shows the percentage change in the total return on the Company's Common Stock during the five-year period ended December 31, 1998. The Company's Common Stock price ranged from a low of $7.125 to a high of $22.00 between January 1, 1994 and December 31, 1998. The closing price for the stock on December 31, 1998 was $13.25. The Performance Graph assumes $100 was invested on January 1, 1994 in the Company, the NASDAQ Stock Market Index, and an industry index for the ice cream and frozen dessert business ("Industry Index") and shows the total return on such investments, assuming reinvestment of dividends, as of December 31, 1998. The Industry Index includes companies in SIC Code 2024 (ice cream and frozen desserts). In addition to the Company, the Industry Index currently includes: Ben & Jerry's Homemade, Inc., Dreyer's Grand Ice Cream, International Yogurt Company, Suiza Foods Corporation, TCBY Enterprises, Inc. and Tofutti Brands, Inc. Comparison of Cumulative Total Return Among Eskimo Pie Corporation Common Stock, an Industry Index and the Nasdaq Market Index
Cumulative Return as of 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 Eskimo Pie Corporation 100.00 106.01 104.32 64.45 67.73 79.43 Ice Cream and Frozen Desserts Industry 100.00 106.10 123.09 105.67 211.62 176.90 NASAQ Market Index 100.00 104.99 136.18 169.23 207.00 201.96
Section 16(a) Beneficial Ownership Reporting Compliance Based on a review of reports of changes in beneficial ownership of the Company's Common Stock and written representations furnished to the Company, the Company believes that its officers and directors complied with all filing requirements under Section 16(a) of the Securities Exchange Act of 1934 during 1998. Ratification of the Selection of Independent Auditors Ernst & Young LLP has been selected as independent auditors for the Company for the fiscal year ending December 31, 1999, subject to ratification by the shareholders. If not otherwise specified, proxies will be voted in favor of ratification of the appointment. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions. Shareholder Proposals for 2000 Annual Meeting The 2000 Annual Meeting of Shareholders is expected to be held on May 3, 2000. Under applicable law, the Board of Directors need not include an otherwise appropriate shareholder proposal in its proxy statement or form of proxy for that meeting unless the proposal is received by the Secretary of the Company at the Company's principal place of business on or before November 26, 1999. In addition, the Company's Bylaws prescribe certain procedures which must be followed, including certain advance notice requirements, in order for a proposal to be properly before a shareholder meeting; such a shareholder notice of intent to bring a proposal before an annual meeting of shareholders must be delivered to the Company generally not later than 30 days prior to the anniversary date of the notice sent by the Company in connection with the previous year's annual meeting. Any shareholder desiring a copy of the Bylaws will be furnished one without charge upon written request to the Secretary. Other Matters As of the date of this Proxy Statement, management of the Company has no knowledge of any matters to be presented for consideration at the Annual Meeting other than those referred to above. If any other matter properly comes before the Annual Meeting, the persons named in the accompanying proxy intend to vote such proxy, to the extent entitled, in accordance with their best judgment. Annual Report on Form 10-K A copy of the Company's annual report on Form 10-K as filed with the Securities and Exchange Commission for the year ended December 31, 1998 can be obtained without charge by writing to the Corporate Secretary at 901 Moorefield Park Drive, Richmond, Virginia 23236. The Form 10-K may also be accessed by viewing the Company's home page on the worldwide web at www.eskimopie.com. By Order of the Board of Directors, /s/ Thomas M. Mishoe, Jr. Thomas M. Mishoe, Jr. Chief Financial Officer, Vice President, Treasurer and Corporate Secretary - FOLD AND DETACH HERE - ESKIMO PIE CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints David B. Kewer, Thomas M. Mishoe, Jr. and F. Clairborne Johnson, Jr. jointly and severally, proxies, with full power to act alone, and with full power of substitution, to represent the undersigned and to vote, as designated below and upon any and all other matters which may properly be brought before such meeting, all shares of Common stock which the undersigned would be entitled to vote at the Annual Meeting of Shareholders of Eskimo Pie Corporation to be held on May 12, 1999, or any adjournment thereof. 1. Election of Directors to serve until 2000 Annual Meeting of Shareholders [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote (except as written on the line below) for all nominees listed below Nominees: Arnold H. Dreyfuss, Wilson H. Flohr, Jr., F. Claiborne Johnson, Jr., David B. Kewer, Daniel J. Ludeman, Judith B. McBee and Robert C. Sledd (INSTRUCTION: To withhold authority to vote for any individual nominee listed above, write that nominees's name on the space provided below.) - -------------------------------------------------------------------------------- 2. Ratification of the designation of Ernst & Young LLP as independent auditors for the Corporation and its subsidiaries for the current fiscal year. [ ] FOR [ ] AGAINST [ ] ABSTAIN - FOLD AND DETACH HERE - Unless otherwise specified in the squares provided, the undersigned's vote will be cast for items 1 and 2. If, at or before the time of the meeting, any of the nominees listed above has become unavailable for any reason, the proxies have the descretion to vote for a substitute nominee or nominees. This proxy may be revoked at any time prior to its exercise. ---------------------------- Signature ---------------------------- Signature Dated: , 1999 (In signing as Attorney, Administrator, Executor, Guardian or Trustee, please add your title as such.) -----END PRIVACY-ENHANCED MESSAGE-----