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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(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 Rule 14a-11(c) or Rule 14a-12.
LANCASTER COLONY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE 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)(1) 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: ...........................................................
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[LANCASTER COLONY LOGO] LANCASTER COLONY
37 WEST BROAD STREET
COLUMBUS, OHIO 43215
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 15, 2004
The annual meeting of shareholders of Lancaster Colony Corporation (the
"Corporation") will be held at 11:00 a.m., Eastern Standard Time, November 15,
2004, in the Congressional Room of the Hyatt on Capitol Square, 75 East State
Street, Columbus, Ohio 43215.
The meeting will be held for the following purposes:
1. To elect three directors, each for a term which expires in 2007.
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
By action of the Board of Directors, only persons who are holders of
record of shares of the Corporation at the close of business on September 17,
2004 will be entitled to notice of and to vote at the meeting.
If you do not expect to attend the meeting, please sign, date and return
the enclosed proxy. A self-addressed envelope which requires no postage is
enclosed for your convenience in returning the proxy. Its prompt return would be
appreciated. The giving of the proxy will not affect your right to vote in
person should you find it convenient to attend the meeting.
JOHN B. GERLACH, JR.
Chairman of the Board,
Chief Executive Officer
and President
October 13, 2004
LANCASTER COLONY CORPORATION
37 WEST BROAD STREET
COLUMBUS, OHIO 43215
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Lancaster Colony
Corporation (the "Corporation") in connection with the solicitation by the Board
of Directors of the Corporation of proxies to be used in voting at the annual
meeting of shareholders to be held November 15, 2004, in the Congressional Room
of the Hyatt on Capitol Square, 75 East State Street, Columbus, Ohio 43215, at
11:00 a.m., Eastern Standard Time (the "Annual Meeting"). The enclosed proxy, if
completed and forwarded to the Corporation, will be voted in accordance with the
instructions contained therein. The proposals referred to therein are described
in this Proxy Statement.
The proxy may be revoked by the person giving it any time before it is
exercised. Such revocation, to be effective, must be communicated to the
Secretary or Assistant Secretary of the Corporation. The presence of a
shareholder at the Annual Meeting will not revoke the proxy unless specific
notice thereof is given.
The Corporation will bear the cost of solicitation of proxies, including
any charges and expenses of brokerage firms and others for forwarding
solicitation material to the beneficial owners of stock. In addition to the use
of the mails, proxies may be solicited by personal interview, by telephone or
through the efforts of officers and regular employees of the Corporation.
The Board of Directors has fixed the close of business on September 17,
2004 as the record date for the determination of shareholders entitled to
receive notice and to vote at the Annual Meeting or any adjournment or
adjournments thereof. At that date the Corporation had outstanding and entitled
to vote 35,290,187 shares of Common Stock, each share entitling the holder to
one vote. The Corporation has no other class of stock outstanding. Under Ohio
law, except for the election of directors, abstentions and broker non-votes will
have the same effect as votes against any proposal. Abstentions and broker
non-votes will have no effect on the election of directors since, under Ohio
law, the nominees for election as directors at the Annual Meeting who receive
the greatest number of votes shall be elected. This Proxy Statement is first
being mailed to shareholders on or about October 13, 2004.
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors of the Corporation currently consists of nine
members and is divided into three classes of three members each. The members of
the three classes are elected to serve for staggered terms of three years.
Pursuant to Section 2.04 of the Code of Regulations, the number of directors
constituting each class will, as nearly as practicable, be equal.
The majority of the members of the Corporation's Board of Directors
qualify as "independent directors" as determined in accordance with the current
listing standards of The Nasdaq Stock Market, Inc. ("Nasdaq"). The Board of
Directors of the Corporation has identified and affirmatively determined that
Ms. Anderson and Messrs. Bachmann, Fox, Hamilton, Jennings, O'Neill and Sofia
are independent directors.
The names and ages of the "Nominees" and the "Continuing Directors," their
principal occupations during the past five years and certain other information
together with their beneficial ownership of the Corporation's Common Stock as of
August 27, 2004, are listed below. As of August 27, 2004, the Corporation had
outstanding and entitled to vote 35,351,313 shares of Common Stock.
2
NOMINEES FOR TERM TO EXPIRE IN 2007
DIRECTOR SHARES OWNED AT PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE SINCE AUGUST 27, 2004 CLASS
------------------------------------------------------------------ --- -------- --------------- ---------
John L. Boylan.................................................... 49 1998 49,523 *
Treasurer, Vice President and
Chief Financial Officer of the Corporation(1)
Henry M. O'Neill, Jr. ............................................ 69 1976 19,651 *
Chairman and Chief Executive Officer of AGT
International, Inc. (voice response systems) since 1988
Zuheir Sofia...................................................... 60 1998 4,499 *
Chairman of Sofia & Company, Inc. (financial
advisory firm); Managing Director of Cleary Gull Inc.
and MBO Cleary Advisors Inc. (registered investment
advisor/investment banking firms); President,
Chief Operating Officer, Treasurer and
Director of Huntington Bancshares Incorporated
from 1984 to 1998(2)
----------------
* Less than 1%
(1) See footnote 1 and 3 under "Continuing Directors" which explanations apply
to Mr. Boylan.
(2) Mr. Sofia is also a director of Dominion Homes, Inc.
All the nominees have indicated a willingness to stand for election and to
serve if elected. It is intended that the shares represented by the enclosed
proxy will be voted for the election of the above named nominees. Although it is
anticipated that each nominee will be available to serve as a director, should
any nominee be unable to serve, the proxies will be voted by the proxy holders
in their discretion for another person.
CONTINUING DIRECTORS
DIRECTOR TERM SHARES OWNED AT PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE SINCE EXPIRES AUGUST 27, 2004 CLASS
---------------------------------------------------------- --- -------- ------- --------------- ----------
Kerrii B. Anderson........................................ 47 1997 2006 2,750 *
Executive Vice President, Chief Financial Officer
and Director of Wendy's International, Inc.;
Senior Vice President and Chief Financial Officer
of M/I Schottenstein Homes, Inc. (homebuilders)
from 1993 to 2000
James B. Bachmann; Retired................................ 61 2003 2006 - *
Managing Partner of the Columbus, Ohio office of
Ernst & Young LLP from 1992 to June 30, 2003(10)
Robert L. Fox............................................. 55 1991 2005 1,062,159 3.00%
Financial Adviser for Advest, Inc.
(stock brokerage firm) since 1978(2)(4)(9)
John B. Gerlach, Jr. ..................................... 50 1985 2005 8,152,524 23.05%
Chairman of the Board, Chief Executive Officer
and President of the Corporation(1)(2)(3)(4)(5)(6)(7)(8)
Robert S. Hamilton; Retired............................... 76 1985 2006 13,223 *
Vice Chairman Emeritus of Liqui-Box Corporation
(plastic packaging manufacturer) from April 2000 to
October 2000; Vice Chairman of Liqui-Box
Corporation from 1989 to April 2000(2)
3
CONTINUING DIRECTORS (CONTINUED)
DIRECTOR TERM SHARES OWNED AT PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE SINCE EXPIRES AUGUST 27, 2004 CLASS
---------------------------------------------------------- --- -------- ------- --------------- ----------
Edward H. Jennings........................................ 67 1990 2005 799 *
President Emeritus at The Ohio State University;
formerly Interim President of The Ohio State
University from July 1, 2002 to September 30, 2002;
Professor of Finance at The Ohio State University
from 1990 to April 2002 and President of The Ohio
State University from 1981 to 1990
All directors and executive officers
as a group (9 Persons)(1)(3)........................... 8,760,972 24.72%
--------------------
* Less than 1%
(1) Holdings include shares held by the Employee Stock Ownership Plan (the
"ESOP") allocated to the accounts of Lancaster Colony Corporation
employees. Employees have the right to direct the voting of the shares
held by the ESOP.
(2) Holdings include shares owned by spouses, minor children and shares held
in custodianship or as trustee. The following persons disclaim beneficial
ownership in such holdings with respect to the number of shares indicated:
Mr. Fox - 813,627 shares; Mr. Gerlach - 7,385,177 shares; and Mr. Hamilton
- 4,024 shares.
(3) Holdings include shares which could be acquired within 60 days upon the
exercise of stock options as follows: Mr. Gerlach - 25,000 shares, Mr.
Boylan - 42,486 shares, and all directors and executive officers as a
group - 89,858 shares.
(4) Mr. Gerlach, a trustee of Gerlach Foundation, Inc., and Mr. Fox, a trustee
of Fox Foundation, Inc., share voting and investment power with their
respective foundations, both of which are private charitable foundations.
Gerlach Foundation, Inc. holds 371,826 shares and Fox Foundation, Inc.
holds 60,269 shares. These shares are included in the above table. Gerlach
Foundation, Inc., Fox Foundation, Inc. and The FG Foundation, a supporting
foundation (of which Mr. Fox and Mr. Gerlach are the trustees) of a public
charitable foundation, together control an additional 620,122 shares held
by Lehrs, Inc. The shares held by Lehrs, Inc. are also included in the
total number of shares held by Mr. Gerlach and Mr. Fox. The trustees each
has disclaimed beneficial ownership of any of these shares in footnote 2.
(5) Mr. Gerlach, by virtue of his stock ownership and positions with the
Corporation, may be deemed a "control person" of the Corporation.
(6) Mr. Gerlach is trustee and his mother, Dareth A. Gerlach, is special
trustee of the John B. Gerlach Trust. This trust presently holds 5,875,032
shares of Common Stock of the Corporation. These shares are included in
the total number of shares held by Mr. Gerlach in the above table. Mr.
Gerlach has disclaimed beneficial ownership of these shares in footnote 2.
(7) Includes 348,000 shares held by a family limited partnership and 12,500
shares held by a corporation which is the general partner of the family
limited partnership. Mr. Gerlach shares indirect beneficial ownership of
these shares.
(8) Mr. Gerlach is also a director of Huntington Bancshares Incorporated.
(9) Includes 16,825 shares of the Common Stock of the Corporation which are
held by a trust of which Mr. Fox is the trustee. Mr. Fox has sole voting
and dispositive power with respect to these shares.
(10) Mr. Bachmann is also a director of Abercrombie & Fitch Co. and Nationwide
Mutual Insurance Company.
4
BOARD COMMITTEES AND MEETINGS
AUDIT COMMITTEE - The Board of Directors has established an audit
committee (the "Audit Committee") currently consisting of Messrs. Hamilton,
Jennings and Sofia and Ms. Anderson. Ms. Anderson serves as Chairperson of the
Audit Committee. It has been determined by the Corporation's Board of Directors
that each member of the Audit Committee meets the applicable Nasdaq independence
requirements and that Ms. Anderson is an Audit Committee "financial expert", as
defined in Item 401(h) of Regulation S-K. The Audit Committee operates pursuant
to a charter, which is attached hereto as Exhibit A, as approved by the
Corporation's Board of Directors in May 2004. The duties of the Audit Committee
include the responsibility of reviewing financial information (both external and
internal) about the Corporation and its subsidiaries so as to assure (i) that
the overall audit coverage of the Corporation and its subsidiaries is
satisfactory and appropriate to protect the shareholders from undue risks and
(ii) that an adequate system of internal financial control has been implemented
throughout the Corporation and is being effectively followed. Additionally, the
Audit Committee has sole authority and direct responsibility with respect to the
appointment, compensation, retention and oversight of the Corporation's
independent registered public accounting firm. Also, as part of its duties, the
Audit Committee has adopted procedures for receiving and acting on complaints
received by the Corporation regarding accounting, internal accounting controls
and auditing issues. Such complaints should be sent to the attention of the
Corporate Secretary's Office, Lancaster Colony Corporation, 37 West Broad
Street, Columbus, Ohio 43215. During the fiscal year ended June 30, 2004
("fiscal 2004"), the Audit Committee held three meetings. In addition to these
meetings, the Audit Committee also held teleconferences before each public
release of the Corporation's earnings during fiscal 2004.
COMPENSATION COMMITTEE - The Board of Directors has established a
compensation committee (the "Compensation Committee") currently consisting of
Messrs. Fox, Hamilton, Jennings and O'Neill. Mr. Jennings serves as Chairperson
of the Compensation Committee. It has been determined by the Corporation's Board
of Directors that each member of the Compensation Committee meets Nasdaq
independence requirements. The Committee operates pursuant to a charter, which
is attached hereto as Exhibit B, as approved by the Board of Directors in May
2004. The duties of the Compensation Committee include annual determination of
the compensation of the Chief Executive Officer and review and approval of goals
and objectives relevant to his activities, review and approval of the Chief
Executive Officer's recommendations as to the compensation to be paid other
executive officers of the Corporation, establishing that all compensation for
executive officers is in compliance with securities law provisions, and review
and approval of the Corporation's equity-based incentive programs. The
Compensation Committee held two meetings during fiscal 2004.
NOMINATING COMMITTEE - The Board of Directors has established a nominating
committee (the "Nominating Committee") consisting of Messrs. Fox, O'Neill and
Sofia. Mr. Sofia serves as Chairperson of the Nominating Committee. It has been
determined by the Corporation's Board of Directors that each member of the
Nominating Committee meets Nasdaq independence requirements. The Committee
operates pursuant to a charter, which is attached hereto as Exhibit C, as
approved by the Board of Directors in May 2004. The duties of the Nominating
Committee include identification and nominations to the Board of Directors of
candidates for election as directors of the Corporation. The Nominating
Committee is also to consider the nomination of Director candidates recommended
by shareholders in conformance with the tests and standards outlined in the
Nominating Committee's charter. Recommendations to the Nominating Committee from
shareholders regarding candidates must be delivered to the Corporation's
Corporate Counsel no later than June 30 of the year in which such shareholder
proposes that the recommended candidate stand for election. Section 2.03 of the
Corporation's Code of Regulations authorizes direct nominations to be made by
shareholders if the conditions specified therein are met, including the giving
of advance notice and the furnishing of certain personal background information
and a written statement from the proposed candidate agreeing to be identified in
the proxy statement as a nominee and, if elected, to serve as a director. The
Nominating Committee held two meetings in fiscal 2004.
BOARD ATTENDANCE - Each member of the Board of Directors is expected to
make a reasonable effort to attend all meetings of the Board of Directors, all
applicable committee meetings, and each annual meeting of shareholders. While no
formal policy with respect to attendance has been adopted, attendance at these
meetings is encouraged and expected. All members of the Board of Directors
attended the 2003 Annual Meeting of Shareholders and each of the current members
of the Board of Directors is expected to attend the 2004 Annual Meeting of
Shareholders. In addition to the committee meetings previously mentioned, the
Board of Directors held a total of four meetings during fiscal 2004. A meeting
of the independent directors, separate from management, has been an agenda item
at each meeting of the Board of Directors held in calendar 2004. Each director
attended at least 75% of the aggregate
5
of all meetings of the Board of Directors and the committees on which they
served during fiscal 2004, except Mr. Bachmann, who, as a result of a commitment
originating prior to his November 2003 election to the Board of Directors, was
absent from one of the three Board meetings he was eligible to attend.
SHAREHOLDER COMMUNICATION WITH THE BOARD OF DIRECTORS - Any of the
directors may be contacted by writing them: Board of Directors, c/o Corporate
Secretary's Office, Lancaster Colony Corporation, 37 West Broad Street,
Columbus, Ohio 43215. The independent directors have requested that the
corporate secretary act as their agent in processing any communications
received. All communications that relate to matters that are within the scope of
responsibilities of the Board and its committees will be forwarded to the
independent directors. Communications relating to matters within the
responsibility of one of the committees of the Board will be forwarded to the
Chairperson of the appropriate committee. Communications relating to ordinary
business matters are not within the scope of the Board's responsibility and will
be forwarded to the appropriate officer at the Corporation. Solicitations,
advertising materials, and frivolous or inappropriate communications will not be
forwarded.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Corporation's knowledge, based solely on its review of copies of
forms filed with the Securities and Exchange Commission, all filing requirements
applicable to the officers, directors and beneficial owners of more than 10% of
the outstanding Common Stock under Section 16 (a) of the Securities Exchange Act
of 1934, as amended, were complied with during the fiscal year ended June 30,
2004.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Corporation or any of its
subsidiaries receive an annual retainer fee of $28,000 plus $1,500 for each
meeting of the Board or committee of the Board attended. Directors who serve as
chairpersons of the Audit Committee, Compensation Committee and Nominating
Committee receive an additional annual retainer fee of $7,500, $3,000 and
$3,000, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following individuals have beneficial ownership, directly or
indirectly, of more than five percent of the outstanding Common Stock of the
Corporation:
NATURE OF
BENEFICIAL AMOUNT PERCENT OF
NAME AND ADDRESS OWNERSHIP OWNED OWNERSHIP
---------------- ---------- --------- ----------
John B. Gerlach, Jr. .............................................. Direct and 8,152,524(1)(2) 23.05%
c/o Lancaster Colony Corporation Indirect
37 West Broad Street
Columbus, Ohio 43215
Dareth A. Gerlach.................................................. Direct and 5,933,644(1) 16.78%
c/o Lancaster Colony Corporation Indirect
37 West Broad Street
Columbus, Ohio 43215
-------------
(1) Includes 5,875,032 shares of Common Stock of the Corporation which are
held by the John B. Gerlach Trust, of which Mr. Gerlach is trustee and of
which Dareth A. Gerlach is special trustee with sole voting power with
respect to the shares. See footnote 6 under "Continuing Directors."
(2) See footnotes 1, 2, 3, 4, 5 and 7 under "Continuing Directors" which
explanations apply to Mr. Gerlach.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned during the periods
indicated by those persons who were the Chief Executive Officer and the two
other most highly compensated executive officers of the Corporation whose
compensation during fiscal 2004 is required to be reported:
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
FISCAL ---------------------- ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(2)
------------------------------------------- ------ -------- --------- ------------ --------------
John B. Gerlach, Jr. ...................... 2004 $750,000 $3,360
Chairman of the Board, 2003 710,000 2,840
Chief Executive Officer and President 2002 710,000 2,840
Bruce L. Rosa.............................. 2004 $325,000 $264,100 $4,583
Vice President of Development(3) 2003 265,000 125,000 15,000 3,440
2002 250,000 115,000 1,644
John L. Boylan............................. 2004 $325,000 $125,000 $2,760
Treasurer, Vice President 2003 265,000 125,000 15,000 2,490
and Chief Financial Officer(3) 2002 250,000 115,000 2,466
---------------
(1) The named executive officers received certain perquisites in 2004, 2003
and 2002, the amount of which did not exceed the reportable threshold of
the lesser of $50,000 or 10% of any such officer's salary and bonus.
(2) Approximate amounts contributed or to be contributed on behalf of such
executive officer to the 401(k) Profit Sharing Plan and Trust.
(3) The bonus amounts for Mr. Boylan in 2004, 2003 and 2002 and for Mr. Rosa
in 2003 and 2002 were determined based upon an evaluation of the merit of
their performances and the application of a formula incorporating the
Corporation's consolidated operating results. Effective July 1, 2003, Mr.
Rosa also assumed primary oversight responsibility of the Corporation's
Specialty Foods segment and, accordingly, his bonus for 2004 was
determined based upon an evaluation of his performance and the application
of a formula incorporating the operating results of the Specialty Foods
segment. The bonuses are paid in the succeeding fiscal year.
GRANTS OF STOCK OPTIONS
There were no stock options granted during the 2004 fiscal year to the
executive officers named in the Summary Compensation Table. The Corporation has
never granted stock appreciation rights.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to stock
options exercised during fiscal 2004 by each of the executive officers named in
the Summary Compensation Table and unexercised stock options held as of June 30,
2004 by such executive officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
VALUES OF UNEXERCISED IN-
SHARES UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT FISCAL
ACQUIRED FISCAL YEAR-END (#) YEAR-END(1)(2)
UPON VALUE -------------------------- ---------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------- ----------- ----------- ----------- ------------- ----------- -------------
John B. Gerlach, Jr. ..... 25,000 $303,500 $ 0
John L. Boylan............ 42,486 14 $429,484 $ 203
Bruce L. Rosa............. 22,372 1,870 $173,155 $ 27,143
----------------
(1) All values are shown pretax and are rounded to the nearest whole dollar.
(2) Based on the 2004 fiscal year-end closing price of $41.64 per share.
7
SEVERANCE AGREEMENT
Messrs. Boylan and Rosa are each parties to agreements entitling each of
them, in the event that within a period of one year after a "change of control"
(as defined in the agreements) his employment is terminated by the Corporation
(other than for cause) or is terminated at the initiative of the affected party
if there has been a material adverse change in the terms of his employment, to
severance benefits equal to (i) full salary paid through the date of termination
plus (ii) an amount equal to the lesser of (a) 100% of the highest annual rate
of salary and highest annual bonus paid during the three-year period prior to
the date of termination or (b) twice the annual compensation (salary plus bonus)
paid for the full fiscal year immediately preceding the date of termination.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors ("the Committee")
consists of four independent non-employee directors. It is the obligation of the
Committee under its present charter to establish the compensation to be paid to
the Chief Executive Officer of the Corporation and to approve, after
consultation with the Chief Executive Officer with respect to the establishment
thereof, the compensation of other executive officers. The Committee also
reviews matters relating to the employee benefit plans and stock options and
presents its recommendations respecting these matters to the Board of Directors.
The compensation of the Chief Executive Officer for services rendered
through June 30, 2004 was established by the Committee and adopted by the Board
of Directors upon the Committee's recommendation. The Committee's recommendation
was based upon an evaluation of the scope of his management responsibilities,
his execution of them, his accomplishment of significant changes in management
structure and the financial results attained under his direction. In determining
his compensation, the amounts paid to chief executive officers of companies of
like size in like markets were also considered. The determination of such
compensation was subjective, with no specific weight being given to any
particular factor.
The Committee was advised by the Chief Executive Officer of the base fixed
compensation levels and proposed bonus formulae to be applied in setting the
compensation of senior management. It concurred that the levels of compensation
established were reasonable and appropriate and provided incentives which, if
realized, would produce operating results of value to the Corporation's
shareholders.
Edward H. Jennings, Chairperson
Robert L. Fox
Robert S. Hamilton
Henry M. O'Neill, Jr.
8
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
OF LANCASTER COLONY CORPORATION, THE S&P MIDCAP 400 INDEX
AND THE DOW JONES U.S. FOOD INDEX
The graph set forth below compares the five-year cumulative total return
from investing $100 on June 30, 1999 in each of the Corporation's Common Stock,
the S&P Midcap 400 Index and the Dow Jones U.S. Food Index. It is assumed that
all dividends are reinvested.
[LINE GRAPH]
CUMULATIVE TOTAL RETURN
6/99 6/00 6/01 6/02 6/03 6/04
Lancaster Colony Corporation 100.00 57.78 100.10 110.46 122.25 134.42
S&P Midcap 400 100.00 116.98 127.36 121.35 120.48 154.20
Dow Jones U.S. Food 100.00 91.66 89.64 106.55 104.24 125.78
9
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Corporation's financial reporting process
on behalf of the Board of Directors and operates under a written charter
included as Exhibit A to this Proxy Statement. The Audit Committee held three
meetings during fiscal 2004. In addition to these meetings, the Audit Committee
also held teleconferences before each public release of the Corporation's
earnings during fiscal 2004. The Audit Committee has reviewed and discussed the
audited consolidated financial statements for fiscal 2004 with both management
and the Corporation's independent auditors, Deloitte & Touche LLP. The
discussions with Deloitte & Touche LLP included matters required to be discussed
by the Statement on Auditing Standards No. 61 as amended. In addition, the Audit
Committee received from Deloitte & Touche LLP written independence disclosures
and the letter required by the Independence Standards Board Standard No. 1 and
discussed with Deloitte & Touche LLP its independence. Based on the review of
the audited consolidated financial statements and the discussions described
above, the Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in the Corporation's
Annual Report on Form 10-K for the year ended June 30, 2004 for filing with the
Securities and Exchange Commission.
Kerrii B. Anderson, Chairperson
Robert S. Hamilton
Edward H. Jennings
Zuheir Sofia
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP has acted as the independent registered public
accounting firm of the Corporation during the fiscal year ended June 30, 2004.
Deloitte & Touche LLP is expected to have a representative present at the Annual
Meeting who may make a statement, if desired, and will be available to answer
appropriate questions.
AUDIT AND RELATED FEES
The following table recaps Deloitte & Touche LLP fees pertaining to the
fiscal years ended June 30, 2004 and 2003:
2004 2003
---------- ----------
Audit Fees.......................................... $ 591,200 $ 427,200
Audit-Related Fees(1)............................... 9,300 23,200
Tax Fees(2)......................................... - 33,700
---------- ----------
Total Fees..................................... $ 600,500 $ 484,100
========== ==========
------------------
(1) Audit-related fees were for employee benefit plan audits, due diligence
services and performance of agreed-upon procedures.
(2) Tax fees were for services related to tax compliance, tax planning and tax
advice.
The Audit Committee has considered whether the provisions for non-audit
services are compatible with maintaining the independence of Deloitte & Touche
LLP. The Audit Committee's pre-approval policies and procedures for non-audit
services are described in the "Statement of Policy of the Audit Committee of
Lancaster Colony Corporation Pre-Approval of Engagements with the Independent
Auditor for Non-Audit Services" attached to this Proxy Statement as Appendix I
to Exhibit A. For the fiscal year ended June 30, 2004, all of the services
described above were pre-approved by the Audit Committee.
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation contracts with John Gerlach & Company, an accounting
partnership, to provide certain internal auditing, general accounting and tax
services of a type generally available from an independent accounting firm. A
brother-in-law of the Company's chief executive officer is a minority partner in
the firm. The fee paid to John Gerlach & Company for its services is determined
based on the hours of work performed and is reviewed by the Audit Committee. The
fees incurred for services rendered for the fiscal year ended June 30, 2004 were
$441,750.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be in the Proxy Statement for the 2005
Annual Meeting of Shareholders must be received by the Corporation at its
principal executive offices no later than June 15, 2005. In addition, if a
shareholder fails to provide the Corporation notice of any shareholder proposal
on or before August 29, 2005, then the Corporation may vote in its discretion as
to the proposal all of the shares for which it has received proxies for the 2005
Annual Meeting of Shareholders.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business that will come before the Annual Meeting. Should any other matter
requiring the vote of the shareholders arise, the enclosed proxy confers upon
the proxy holders discretionary authority to vote the same in respect to the
resolution of such other matters as they, in their best judgment, believe to be
in the interest of the Corporation.
By Order of the Board of Directors
JOHN B. GERLACH, JR.
Chairman of the Board,
Chief Executive Officer
and President
October 13, 2004
11
EXHIBIT A
LANCASTER COLONY CORPORATION
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. STRUCTURE OF COMMITTEE
This charter governs the operation of the Audit Committee (the
"Committee"). The Committee shall review and reassess the adequacy of this
charter at least annually and obtain the approval of the Board of Directors for
any proposed changes to the charter. The charter shall be included as an
appendix to the Company's proxy statement at least once every three years. The
Committee and its Chair shall be appointed by the Board of Directors, to serve
at the discretion of the Board, and shall be comprised of at least three
Directors, each of whom meets the independence requirements set forth in
applicable rules of the Securities and Exchange Commission ("SEC") and The
Nasdaq Stock Market, Inc. ("Nasdaq"). All Committee members shall be financially
literate (as more fully defined in Nasdaq rules) and at least one member shall
be an "audit committee financial expert" as that term is defined by applicable
rules of the SEC.
The Committee and its members shall have unrestricted access to
management. The Committee shall have sole discretion, in its areas of
responsibility, to retain at Company expense and to terminate independent
advisors and shall have sole authority to approve the fees and retention terms
for such advisors, if it shall determine the services of such advisors to be
necessary or appropriate.
The Committee may, in its discretion, delegate authority with respect to
specific matters to one or more members, provided that all decisions made in
accordance with such delegated authority shall be presented to the full
Committee at its next scheduled meeting.
II. MEETINGS
The Committee shall meet as often as deemed necessary and may have in
attendance at its meetings such members of management (including internal
auditors), the independent auditors and such other advisors, accountants or
consultants as it deems necessary or desirable to carry out its oversight duties
and responsibilities. Electronic participation in meetings is acceptable if
effected in compliance with the Company's Code of Regulations.
The Committee shall meet at least annually with senior and financial
management and the independent auditor in separate executive sessions to discuss
any matters that the Committee or any of these groups believes should be
discussed privately.
III. AUDIT COMMITTEE PURPOSES
The function of the Committee is to assist the Board of Directors of the
Company in fulfilling its oversight responsibilities relating to:
- the quality and integrity of the Company's financial statements and
related disclosure matters;
- the Company's system of internal controls regarding financial and
accounting compliance;
- the qualifications, independence and performance of the Company's
independent auditors;
- the review of and response to complaints made to the Company or to
the Committee regarding accounting, internal accounting controls and
auditing matters and the establishment of procedures to permit
delivery to the Committee of confidential and anonymous complaints
from employees and others regarding such matters; and
- the Company's compliance with other requirements imposed by the SEC
or Nasdaq relating to auditing and internal financial and accounting
matters and other matters for which it is assigned responsibility.
The Committee's role in carrying out its function is one of oversight. It
is the responsibility of the Company's management to implement the matters
described above, including the duty to plan and conduct audits and to prepare
A-1
consolidated financial statements in accordance with generally accepted
accounting principles and it is the responsibility of the Company's independent
auditor to audit those financial statements. Each member of the Committee, in
exercising his or her business judgment, shall be entitled to rely on the
integrity of those persons and organizations within and outside the Company from
whom he or she receives information and on the accuracy of the financial and
other information provided to the Committee by such persons or organizations
unless he or she has reason to inquire further. The Committee shall not
undertake to provide any expert or other special assurance as to the content of
the Company's financial statements or any expert or professional certification
as to the work of the Company's independent auditor.
IV. COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Committee shall perform the following functions and may carry out
additional functions and adopt additional policies and procedures in furtherance
of the purposes of the Committee outlined in Section III of this charter as may
be appropriate in light of changing conditions or regulations or as may be
delegated to the Committee by the Board of Directors from time to time.
Appointment and Oversight of Independent Auditors, Counsel and Other
Advisors
- Have the sole authority to appoint, oversee, evaluate and, where
appropriate, replace the independent auditor, who shall report
directly to and be accountable to the Committee.
- Be directly responsible for approving annually the fees and other
compensation to be paid to the independent auditor for the purpose
of preparing or issuing an audit report or related work and for
oversight of their work.
- Pre-approve all auditing services and permitted non-audit services
(including the fees and terms thereof) to be performed for the
Company by the independent auditor. The Committee may delegate to
one or more Committee members the authority to pre-approve non-audit
services to be performed by the independent auditor provided that
such pre-approvals shall be reported to the full Committee at its
next meeting. Attached hereto as Appendix A are the Committee's
policies for pre-approval of non-audit services.
- Review reports from the independent auditor regarding:
- all critical accounting policies and practices to be
used;
- alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management, ramifications of their use
and the treatment preferred by the independent auditor;
and
- other material written communications between the
independent auditor and management, such as any
management letter or schedule of unadjusted differences.
- On an annual basis review and discuss with the independent auditor
all significant relationships the independent auditor has had with
the Company during the preceding 12 months in order to determine the
firm's continued independence. Also on an annual basis the Committee
shall ensure the receipt from the independent auditor of a formal
written statement delineating all relationships between the
independent auditor and the Company consistent with Independent
Standards Board Standard No. 1.
- Monitor the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner
responsible for reviewing the audit, in each case at least once
every five years (or more frequently, if required by law or
regulation).
- Direct the Company to pay the amounts determined by the Committee to
be paid as compensation to the independent auditor for the purpose
of preparing or issuing an audit report and to any advisers employed
by the Committee.
A-2
Review of Financial Documents and Reports
- Review the Company's annual financial statements and any reports or
other financial information prepared by management and the
independent auditor. If deemed appropriate after such review, the
Committee shall recommend to the Board of Directors that the
financial statements be included in the Company's Form 10-K filing.
- Review and discuss with the independent auditor and management the
Company's interim quarterly financial results prior to the release
of earnings and prior to the filing of the Company's Form 10-Q. The
Chair of the Committee may represent the entire Audit Committee for
purposes of these reviews and such reviews may be conducted
telephonically or in person.
- Review with financial management and the independent auditor those
communications required to be communicated by the independent
auditor by Statement of Accounting Standards (SAS) 61 as amended by
SAS 90 relating to the conduct of the audit.
- Prepare the following:
- the Audit Committee Report required by the rules of the
SEC to be included in the Company's annual proxy
statement; and
- any disclosure required to be included in the Company's
public filings if the Committee approves the performance
of any non-audit services by the independent auditor.
Oversight of Internal Audit Function
- Review and discuss the annual internal audit plan, and the budget
and staffing of the internal audit function.
- Review significant reports prepared by the internal auditors
together with management's response and follow-up to these reports.
- Review management's assessment of the Company's internal controls,
its evaluation of the adequacy of the Company's internal controls
and discuss the results of such evaluation with the independent
auditors and the internal auditors.
- Review with management the Company's major financial risk exposures
and the steps taken by management to monitor, mitigate and control
such exposures.
Other Committee Responsibilities
- Monitor the Company's compliance processes, including compliance
with the Company's Code of Business Ethics and any related corporate
policies and review with the appropriate officers and/or staff of
the Company and the Company's counsel, as necessary, the adequacy
and effectiveness of the Company's procedures to ensure compliance
with legal and regulatory requirements.
- Review and approve all "related party transactions" as defined under
Item 404 of Regulation S-K.
- Maintain minutes of meetings and periodically report to the Board of
Directors on significant matters relating to the discharge by the
Committee of its responsibilities.
- Perform any other activities consistent with this charter, the
Company's by-laws, and governing law, as the Committee or the Board
of Directors deems necessary or appropriate.
A-3
APPENDIX I
STATEMENT OF POLICY
OF THE
AUDIT COMMITTEE OF
LANCASTER COLONY CORPORATION
PRE-APPROVAL OF ENGAGEMENTS WITH THE INDEPENDENT AUDITOR FOR NON-AUDIT SERVICES
The Sarbanes-Oxley Act of 2002 (the "Act") vests the Committee with the
responsibility to appoint and to oversee the work of the independent auditor of
the Company. Under the Act and SEC Rules that the SEC has issued pursuant to the
Act, that responsibility includes in particular the requirement that the
Committee review and pre-approve all audit and non-audit services performed by
the independent auditor. In exercising that responsibility with respect to
proposed engagements for non-audit services, it is the policy of the Committee
to give paramount consideration to the question of whether the engagement of the
independent auditor to perform those services is likely to create a risk that
the independent auditor's independence may be compromised. To that end, the
Committee will endeavor to exercise its discretion in a manner that will
minimize the risk of compromising the independence of the independent auditor.
In making this determination, the Committee is mindful of the guidance
provided by the SEC: "The Commission's principles of independence with respect
to services provided by auditors are largely predicated on three basic
principles, violations of which would impair the auditor's independence: (1) an
auditor cannot function in the role of management, (2) an auditor cannot audit
his or her own work, and (3) an auditor cannot serve in an advocacy role for his
or her client." Thus, in evaluating whether a proposed engagement presents a
risk of compromising the independence of the independent auditor, the factors
that the Committee will typically consider will include whether the service in
question is likely to cause the independent auditor to function in a management
role, to be put in the position of auditing its own work, or to serve in an
advocacy role for the Company. In addition, the Committee believes that the risk
of such compromise may increase in direct proportion to the volume of non-audit
services performed by the independent auditor. Accordingly, it is the policy of
the Committee that, in the absence of very strong countervailing considerations,
the total amount of fees payable to the independent auditor on account of
non-audit services with respect to any fiscal year should not exceed the total
amount of audit fees plus audit-related fees (as both such terms are used in the
SEC Rules) plus tax-compliance/return-preparation services payable to the
independent auditor with respect to such year. Solely for purposes of the
preceding sentence, amounts payable with respect to audit-related services and
tax-compliance/return-preparation services will not be considered fees payable
on account of non-audit services. This policy is adopted with the intent to
maintain Committee flexibility in circumstances under which the proposed
engagement is likely to provide the Company with benefits that substantially
outweigh the risk to independence.
In order to assist the Committee in applying this policy, any officer or
other employee of the Company who proposes to engage the independent auditor to
perform non-audit services will be expected to submit such a proposal in writing
to the Committee accompanied by the following supporting materials:
1. A detailed description of each service proposed to be provided by
the independent auditor.
2. A description of the extent, if any, to which the non-audit services
in question are likely to cause the independent auditor to function
in the role of management, to recommend actions by the Company that
the independent auditor may be called upon to review in its role as
the Company's independent auditor, or to serve as an advocate for
the Company.
3. A description of the qualifications of the independent auditor that
demonstrate its capability to perform each of the non-audit services
in question.
A-4
4. The name or names of service-providers who were considered as
alternatives to the independent auditor to perform the services in
question, and a description of the qualifications of each such
alternative service-provider relating to its capability to perform
the services in question.
5. A detailed explanation of the benefits that the Company is expected
to enjoy as a result of engaging the independent auditor, rather
than an alternative service-provider, to perform the non-audit
service in question.
6. An estimate of the amount of fees that the independent auditor is
likely to be paid for performance of the non-audit services in
question.
The Committee will typically be inclined to approve requests to engage the
independent auditor to provide those types of non-audit services that are
closely related to the audit services performed by the independent auditor, such
as audit-related services, tax-compliance/return preparation services, and "due
diligence" services relating to transactions that the Company may be considering
from time to time. Because such non-audit services bear a close relationship to
the audit services provided by the independent auditor, the Committee believes
that they will not ordinarily present a material risk of compromising the
independent auditor's independence, subject to the Committee's policy concerning
the total amount payable to the independent auditor for non-audit services with
respect to any fiscal year.
Between meetings of the Committee, any two Committee members are
authorized to concurrently and jointly review and, where consistent with this
policy, to pre-approve non-audit services proposed to be performed by the
independent auditor that are budgeted for fees of Fifty Thousand Dollars
($50,000) or less. Any such pre-approval decisions shall be reported to the
Committee as soon as practicable and in any event at its next meeting.
Under no circumstances will the Audit Committee approve the engagement of
the independent auditor for the performance of services that are prohibited by
section 201(a) of the Act (15 U.S.C. Section 78j-1(g)), or by Section
210.2-01(4) of the SEC Rules (17 CFR Part 210.2-01(c)(4)). Such prohibited
services include the following:
1. Bookkeeping or other services related to the accounting records or
financial statements of the Company, unless the results of those
services will not be subject to audit procedures during an audit of
the Company's financial statements;
2. Services relating to the design or implementation of financial
information systems, unless the results of such services will not be
subject to audit procedures during an audit of the Company's
financial statements;
3. Services relating to appraisals or valuations, fairness opinions, or
contribution-in-kind reports, unless the results of such services
will not be subject to audit procedures during an audit of the
Company's financial statements;
4. Any actuarially-oriented services (other than assisting the Company
in understanding the methods, models, assumptions, and inputs used
in computing an amount), unless the results of those services will
not be subject to audit procedures during an audit of the Company's
financial statements;
5. Internal audit outsourcing services relating to the Company's
internal accounting controls, financial systems, or financial
statements, unless the results of such services will not be subject
to audit procedures during an audit of the Company's financial
statements;
6. Any management functions, whether or not temporary, including any
decision-making, supervisory, or ongoing monitoring function for the
Company;
7. Any services relating to human resources of the Company, including
searching for, testing, investigating, negotiating, or providing
recommendations or advice with respect to human resources or
prospective human resources;
A-5
8. Any services relating to acting as a broker-dealer, promoter, or
underwriter for the Company, including providing advice, exercising
discretionary authority, or assuming custodial responsibility with
respect to investment decisions or assets of the Company;
9. Any service that can be provided only by a person licensed,
admitted, or otherwise qualified to practice law in the jurisdiction
in which the service is to be rendered;
10. Providing an expert opinion or other expert service for the Company,
or for the Company's legal representative, for the purpose of
advocating the Company's interests in litigation or in a regulatory
or administrative proceeding or investigation, except for factual
accounts or testimony explaining work that the independent auditor
has performed, positions that the independent auditor has taken, or
conclusions that the independent auditor has reached during the
performance of any permitted service for the Company; and
11. Any other service that the Public Company Accounting Oversight
Board may from time to time determine by regulation to be
impermissible.
A-6
EXHIBIT B
LANCASTER COLONY CORPORATION
CHARTER OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
I. STRUCTURE OF COMMITTEE
This Charter governs the structure and operation of the Compensation
Committee (the "Committee"). The Committee's role, as more specifically
described below, is to determine the annual compensation of the Chief Executive
Officer and other executive officers of the Company, including both direct and
indirect payments, and to review and approve the Company's equity compensation
programs relating to all of its employees. In the performance of its duties, it
shall assume and carry out all obligations imposed upon a compensation committee
pursuant to then existing rules and regulations of the Securities and Exchange
Commission ("SEC") and of The Nasdaq Stock Market, Inc. ("Nasdaq").
The Committee shall be comprised of at least three Directors, each of whom
shall meet the definition of "independent" as set forth in applicable standards
set forth in rules and regulations of the SEC and of Nasdaq. Each Committee
Member ("Member") shall also qualify as a "non-employee director" as defined in
Section 16 of the Securities Exchange Act and as an "outside director" as
defined in Section 162(m) of the Internal Revenue Code. The Members and the
Chairperson of the Committee shall be appointed by the Board of Directors (the
"Board"). Each Member shall serve for a term expiring at the next annual meeting
of Directors and may be removed by the Board at any time in its discretion.
II. MEETINGS
The Committee shall meet as often as is deemed necessary by its
Chairperson or by any two of its Members. Electronic participation in meetings
is acceptable if effected in compliance with the Company's Code of Regulations.
The Committee shall have authority, in its areas of responsibility, to retain at
Company expense independent advisors and to approve and require payment of fees
of such advisors. In the performance of its duties, the Committee and its
Members shall have unrestricted access to management.
The Committee shall cause appropriate minutes to be prepared and preserved
with respect to its proceedings and shall report its actions to the next
following meeting of the Board.
III. DUTIES AND RESPONSIBILITIES
In discharging its duties, the Committee shall perform the following
activities as well as such additional activities as it deems appropriate in
light of its general purpose and the then applicable rules and regulations of
the SEC and Nasdaq:
A. To annually review and approve corporate goals and objectives
relevant to the Company's Chief Executive Officer's compensation, to
evaluate the Chief Executive Officer's performance in light of such
goals and objectives and to provide a report thereon to the Board.
B. To annually review and determine base salary, incentive compensation
and equity based compensation for the Chief Executive Officer and to
report the Committee's determination to the Board which
determination shall be considered by the Board in establishing such
compensation. In determining the incentive compensation and the
equity-based compensation of the Chief Executive Officer, the
Committee shall consider, among other factors, the Company's current
performance, the return to shareholders, the value of similar
incentive and equity based awards to chief executive officers at
comparable companies and the value of incentives and equity based
compensation granted to the Chief Executive Officer in past years.
C. To annually review and approve the recommendations of the Chief
Executive Officer as to base salary, incentive compensation and
equity based compensation for other executive officers of the
Company and the compensation structure applicable to other members
of senior management.
B-1
D. To review executive officer compensation for compliance with Section
16 of the Securities Exchange Act and Section 162(m) of the Internal
Revenue Code, as each is from time to time amended, and any other
applicable laws, rules and regulations.
E. To annually review and consider and advise respecting the Company's
programs and strategies respecting direct compensation, equity-based
compensation and retirement pay programs.
F. To review and approve any proposed grants of stock options or
restricted stock.
G. To review the Committee Charter from time to time for adequacy in
light of current conditions and to recommend any appropriate changes
to the Board.
H. To regularly report to the Board on the Committee's activities and
to deliver to its members copies of the Committee's minutes.
I. To annually produce a Committee report on executive compensation as
required by the SEC for inclusion in the Company's annual proxy
statement or annual report on Form 10-K.
J. To perform any other duties or responsibilities expressly delegated
to the Committee by the Board from time to time.
B-2
EXHIBIT C
LANCASTER COLONY CORPORATION
CHARTER OF THE NOMINATING COMMITTEE OF
THE BOARD OF DIRECTORS
I. STRUCTURE OF COMMITTEE
This Charter governs the structure and operation of the Nominating
Committee (the "Committee"). The Committee's role, as more specifically
described below, is to identify and evaluate persons qualified for presentation
as Director nominees, to present to the Board of Directors (the "Board")
qualified slates of nominees for election to the Board by the Company's
shareholders, to recommend candidates to fill vacancies occurring between annual
shareholder meetings and to carry out all obligations imposed upon a nominating
committee pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and of The Nasdaq Stock Market, Inc. ("Nasdaq") as the same
may be applicable from time to time.
The Committee shall be comprised of at least three Directors each of whom
meets the definition of independence as set forth in applicable rules of the SEC
and Nasdaq. The Members and the Committee Chairperson shall be appointed by the
Board. Each Member shall serve for a term expiring at the next annual meeting of
Directors and may be removed by the Board at any time.
II. MEETINGS
The Committee shall meet as often as deemed necessary by its Chairperson
or by any two of its Members. Electronic participation in meetings is acceptable
if effected in compliance with the Company's Code of Regulations. The Committee
shall have authority, in its areas of responsibility, to retain at Company
expense independent advisors and to approve and require payment of fees charged
by such advisors. In the performance of its duties, the Committee and its
Members shall have unrestricted access to management.
The Committee shall cause appropriate minutes to be prepared and preserved
with respect to its proceedings and shall report its actions to the next
following meeting of the Board.
III. DUTIES AND RESPONSIBILITIES
In discharging its duties, the Committee shall perform the following
activities as well as such additional activities as it deems appropriate in
light of then applicable rules and regulations of the SEC and Nasdaq:
A. To identify and review, in consultation with the Company's Chief
Executive Officer, candidates for the Board of Directors and to
recommend to the Board candidates for election to the Board. Such
recommendation shall disclose the source from which the
recommendation of such candidate came.
B. To evaluate and measure those skills and accomplishments which
should be possessed by a prospective member of the Board given the
then membership of the Board, including such factors as the ethical
values, personal integrity and business reputation of the candidate,
his or her financial acumen, reputation for effective exercise of
sound business judgment, strategic planning capability, indicated
interest in providing attention to the duties of a member of the
Board, contribution of a diverse frame of reference, personal skills
in marketing, manufacturing processes, technology or in other areas
where such person's talents may contribute to the effective
performance by the Board of its responsibilities.
C. To review the Committee Charter from time to time for adequacy in
light of current conditions and to recommend any appropriate changes
to the Board, including, without limitation, those changes which may
be required by the SEC with respect to the process of receipt and
review of recommendations from shareholders regarding possible Board
candidates.
D. To consider and review the qualifications of those Director
candidates recommended by shareholders in a fair and unbiased manner
and by application of the same tests and standards which are
considered in connection with candidates independently identified by
the Committee or otherwise brought to its attention including,
without limitation, those factors described in III. B., above.
Recommendations from shareholders
C-1
regarding candidates must be delivered to the Company's Corporate
Counsel no later than June 30 of the year in which such shareholder
proposes that the recommended candidate stand for election. Such
recommendations must be in writing and must include a resume of the
prior relevant activities of the proposed candidate and the views of
the recommending shareholder regarding his or her qualifications.
Such recommendations must be accompanied by a written statement from
the proposed candidate agreeing to be identified in the proxy
statement as a nominee and, if elected, to serve as a Director.
E. To report to the Board regarding the number and identity of
Directors who were present and who were absent at the most recent
annual shareholders meeting and to encourage attendance by Board
Members at all shareholder annual meetings.
F. To develop and, following approval thereof by the Board, to
implement a process for the receipt of communications from
shareholders to Directors.
C-2
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Proof # 1
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0
LANCASTER COLONY CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 15, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert L. Fox, Robert S. Hamilton and
Edward H. Jennings, or any of them, proxies of the undersigned, with power of
substitution, to vote all shares of stock of the Corporation which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held November 15, 2004, or at any and all
adjournments thereof, and to exercise all of the powers which the undersigned
would be entitled to exercise as a shareholder if personally present upon the
following matters:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
14475
ANNUAL MEETING OF SHAREHOLDERS OF
LANCASTER COLONY CORPORATION
NOVEMBER 15, 2004
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Proof # 1
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PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
- Please detach along perforated line and mail in the envelope provided. -
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
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1. Election of Directors: For term expiring 2007 2. The transaction of all other matters as may
properly come before the meeting.
NOMINEES:
[ ] FOR ALL NOMINEES O John L. Boylan
O Henry M. O'Neill, Jr.
[ ] WITHHOLD AUTHORITY O Zuheir Sofia
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: 0
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that [ ]
changes to the registered name(s) on the account may not be submitted
via this method.
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------------------------ ----------- ------------------------ -----------
Signature of Shareholder Date: Signature of Shareholder Date:
------------------------ ----------- ------------------------ -----------
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If
signer is a partnership, please sign in partnership name by authorized person.