Lancaster Colony corporation PRE 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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 þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Section 240.14a-12
LANCASTER COLONY CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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. |
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Amount previously paid: |
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Form, Schedule or Registration Statement No.: |
TABLE OF CONTENTS
In accordance with Rule 14a-6(d) under Regulation 14A of the Securities Exchange Act of 1934, as
amended, please be advised that the Corporation intends to release definitive copies of the proxy
statement to security holders on or about October 15, 2008.
PRELIMINARY COPY
37 West Broad Street
Columbus, Ohio 43215
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on November 17, 2008
The Annual Meeting of Shareholders (the Annual Meeting) of Lancaster Colony Corporation (the
Corporation) will be held at 11:00 a.m., Eastern Standard Time, on November 17, 2008, in the
Lilac Room at The Hilton Columbus at Easton, 3900 Chagrin Drive, Columbus, Ohio 43219.
The meeting will be held for the following purposes:
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To elect three directors, each for a term that expires in 2011; |
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To ratify the selection of Deloitte & Touche LLP as the Corporations
independent registered public accounting firm for the year ending June 30, 2009; |
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To approve and adopt amendments to the Corporations Articles of Incorporation
to delete existing control share acquisition provisions and opt back into the
protection of the Ohio Control Share Acquisition Act; |
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To approve and adopt amendments to the Corporations Articles of Incorporation
to eliminate the requirement for supermajority shareholder approval for certain
transactions with owners of 5% or more of the Corporations outstanding voting stock; |
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To approve and adopt amendments to the Corporations Code of Regulations
related to shareholder meetings and notices, including to set forth the express
authority of the meeting chair to conduct shareholder meetings and to revise the
advance notice requirement for shareholder proposals; |
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To approve and adopt amendments to the Corporations Code of Regulations to
allow proxies in any form permitted by Ohio law; |
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To approve and adopt amendments to the Corporations Code of Regulations to add
additional information and covenant requirements regarding nominations by shareholders
of persons for election as directors; |
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To approve and adopt amendments to the Corporations Code of Regulations to
allow the Corporations Board of Directors to amend the Corporations Code of
Regulations without shareholder approval to the extent permitted by Ohio law; and |
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To transact such other business as may properly come before the Annual Meeting
or any
adjournments or postponements of the Annual Meeting. |
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 19, 2008 will be entitled to notice of and to
vote at the Annual Meeting.
If you do not expect to attend the Annual Meeting, please sign, date and return the enclosed
proxy card, which is being solicited by the Corporations Board of Directors. 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 Annual Meeting. If you are the beneficial owner
of shares held in street name by a broker, bank or other nominee, the broker, bank or nominee, as
the record holder of the shares, should have enclosed a voting instruction card for you to use in
directing it on how to vote your shares.
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John B. Gerlach, Jr. |
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Chairman of the Board, |
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Chief Executive Officer |
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and President |
October , 2008
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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 17, 2008, in
the Lilac Room of The Hilton Columbus at Easton, 3900 Chagrin Drive, Columbus, Ohio 43219, at 11:00
a.m., Eastern Standard Time (the Annual Meeting). The enclosed proxy card, if completed and
forwarded to the Corporation prior to the Annual Meeting, will be voted in accordance with the
instructions contained therein. The proposals referred to on the enclosed proxy card are described
in this Proxy Statement. This Proxy Statement and enclosed proxy card are first being mailed to
shareholders on or about October , 2008.
A 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 prior to the Annual Meeting. The presence of a shareholder at the Annual Meeting will
not revoke his or her proxy unless specific notice thereof is given to the Secretary or Assistant
Secretary of the Corporation.
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 the Corporations shares. Proxies may be solicited by personal interview, mail,
telephone and electronic communications through the efforts of officers and regular employees of
the Corporation.
The Board of Directors has fixed the close of business on September 19, 2008 as the record
date for the determination of shareholders entitled to receive notice and to vote at the Annual
Meeting or any adjournments or postponements thereof. At September 19, 2008, the Corporation had
outstanding and entitled to vote 28,186,379 shares of Common Stock, without par value (Common
Stock), with each share of Common Stock entitling its holder to one vote. The Corporation has no
other class of stock outstanding.
The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock
of the Corporation is necessary to constitute a quorum for the transaction of business at the
Annual Meeting. Proxies reflecting abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum. Broker non-votes occur when brokers, who hold
their customers shares in street name, sign and submit proxies for those shares but fail to vote
those shares on some matters.
If you are the beneficial owner of shares held in street name by a broker, bank or other
nominee, the broker, bank or nominee, as the record holder of the shares, should have enclosed a
voting instruction card for you to use in directing it on how to vote your shares.
Voting Requirements
The following are the voting requirements for the items of business listed on the Notice of
Annual Meeting of Shareholders that are expected to be conducted at the Annual Meeting, along with
an explanation of how broker non-votes and abstentions will be treated for purposes of each
proposal:
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Proposal One: The election of the director nominees requires the favorable
vote of a plurality of all votes cast by the holders of the Common Stock at a meeting
at which a quorum is present. Broker non-votes and proxies marked Withhold will not
be counted toward the election of directors or toward the election of individual
nominees specified in the form of proxy and, thus, will have no effect on the outcome
of this proposal. |
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Proposal Two: The ratification of the Corporations independent registered
public accounting firm for the year ending June 30, 2009 also requires the favorable
vote of a plurality of all votes cast by the holders of the Common Stock at a meeting
at which a quorum is present. Broker non-votes and abstentions will have no effect on
the outcome of this proposal. |
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Proposal Three: Approval and adoption of the proposed amendments to the
Corporations Articles of Incorporation to delete existing control share acquisition
provisions and opt back into the protection of the Ohio Control Share Acquisition Act
require the affirmative vote of the holders of at least 80% of the Common Stock
entitled to vote for the election of directors. For purposes of determining the
outcome of this proposal, abstentions and broker non-votes will have the same effect as
votes against the proposed amendments. |
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Proposal Four: Approval and adoption of the proposed amendments to the
Corporations Articles of Incorporation to eliminate the requirement for supermajority
shareholder approval for certain transactions with owners of 5% or more of the
Corporations outstanding voting stock require the affirmative vote of the holders of
at least 80% of the Common Stock entitled to vote for the election of directors. For
purposes of determining the outcome of this proposal, abstentions and broker non-votes
will have the same effect as votes against the proposed amendments. |
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Proposal Five: Approval and adoption of the proposed amendments to the
Corporations Code of Regulations related to shareholder meetings and notices,
including to set forth the express authority of the meeting chair to conduct
shareholder meetings and to revise the advance notice requirements for shareholder
proposals, require the affirmative vote of the holders of at least 80% of the Common
Stock entitled to vote for the election of directors. For purposes of determining the
outcome of this proposal, abstentions and broker non-votes will have the same effect as
votes against the proposed amendments. |
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Proposal Six: Approval and adoption of the proposed amendments to the
Corporations Code of Regulations to allow proxies in any form permitted by Ohio law
require the affirmative vote of a majority of the holders of the Common Stock entitled
to vote for the election of directors. For purposes of determining the outcome of this
proposal, abstentions and broker non-votes will have the same effect as votes against
the proposed amendments. |
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Proposal Seven: Approval and adoption of the proposed amendments to the
Corporations Code of Regulations to add additional information and covenant
requirements regarding nominations by shareholders of persons for election as directors
require the affirmative vote of the holders of at least 80% of the Common Stock
entitled to vote for the election of directors. For purposes of determining the
outcome of this proposal, abstentions and broker non-votes will have the same effect as
votes against the proposed amendments. |
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Proposal Eight: Approval and adoption of the proposed amendments to the
Corporations Code of Regulations to allow the Corporations Board of Directors to
amend the Corporations Code of Regulations to the extent permitted by Ohio law require
the affirmative vote of the holders of at least 80% of the Common Stock entitled to
vote for the election of directors. For |
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purposes of determining the outcome of this proposal, abstentions and broker non-votes
will have the same effect as votes against the proposed amendments. |
PROPOSAL ONE
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.
The names and ages of the Corporations nominees for director and continuing directors, their
principal occupations during the past five years and certain other information are listed below.
Robert S. Hamilton retired from the Board of Directors in May 2008. As a result of Mr. Hamiltons
retirement, there was a vacancy in the 2009 class of Directors. John L. Boylan, a member of the
2010 class of Directors, was reassigned by the remaining Directors to fill this vacancy for Mr.
Hamiltons unexpired term, which created a vacancy in the 2010 class of Directors. Alan F. Harris
was appointed by the remaining Directors to fill this vacancy in the 2010 class of Directors. As a
result of filling these vacancies, Mr. Boylans current term will be reduced by one year so that
his current term as Director will run until the Corporations 2009 Annual Meeting of Shareholders,
and Mr. Harriss initial term as Director will run until the Corporations 2010 Annual Meeting of
Shareholders. Each of the nominees is a director standing for re-election and has consented to
stand for election for a term expiring at the Corporations 2011 Annual Meeting of Shareholders.
In the event that any of the nominees becomes unavailable to serve as a director before the Annual
Meeting, the Board of Directors will designate a new nominee, and the persons named as proxies will
vote for that substitute nominee.
The Board of Directors recommends a vote FOR the election of each of the nominees listed
below by executing and returning the enclosed proxy card.
Nominees for Term to Expire in 2011
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Director Since |
Robert L. Fox
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Financial Adviser for
Wachovia Securities,
LLC, a stock brokerage
firm, since July 2008;
Financial Adviser for
A.G. Edwards & Sons,
Inc., a stock brokerage
firm, from 2005 to July
2008; and Financial
Adviser for Advest,
Inc., a stock brokerage
firm, from 1978 to 2005
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1991 |
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John B. Gerlach, Jr.
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Chairman of the Board,
Chief Executive Officer
and President of the
Corporation since 1997
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1985 |
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Edward H. Jennings
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Retired since 2002;
President Emeritus of
The Ohio State
University since 1990;
Interim President of The
Ohio State University
from July 1, 2002 to
September 30, 2002; and
Professor of Finance at
The Ohio State
University from 1990 to
2002
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1990 |
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Mr. Gerlach is also a director of Huntington Bancshares Incorporated. |
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Continuing Directors
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Director |
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Principal Occupation |
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James B. Bachmann
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Retired since 2003;
and Managing
Partner of the
Columbus, Ohio
office of Ernst &
Young LLP, a
registered
independent public
accounting firm,
from 1992 to 2003
(1)
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2009 |
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2003 |
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Neeli Bendapudi
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Executive Vice
President and Chief
Customer Officer of
Huntington National
Bank since April
2007; and Associate
Professor of
Marketing at The
Ohio State
University from
1996 to 2007
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2009 |
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2005 |
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John L. Boylan
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Chief Financial
Officer and Vice
President of the
Corporation since
1996; and Treasurer
of the Corporation
since 1990
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2009 |
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1998 |
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Alan F. Harris
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Retired since 2007;
Executive Vice
President and Chief
Marketing and
Customer Officer of
Kellogg Company, a
food products
company, from 2003
to 2007; and
Executive Vice
President and
President, Kellogg
Company
International
Division from 2000
to 2003
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2010 |
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2008 |
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Henry M. ONeill, Jr.
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Chairman and Chief
Executive Officer
of IRTH Solutions,
Inc., a voice
response systems
company, since
1988; and Chairman
and Chief Executive
Officer of
Evergreen Food
Services, a food
catering business,
from 1977 to 2005
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2010 |
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1976 |
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Zuheir Sofia
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Chairman of Sofia &
Company, Inc., a
financial advisory
firm, since 1998;
and President,
Chief Operating
Officer and
Treasurer of
Huntington
Bancshares
Incorporated from
1984 to 1998
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2010 |
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1998 |
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Mr. Bachmann is also a director of Abercrombie & Fitch Co. |
CORPORATE GOVERNANCE
The Board of Directors has standing Audit, Compensation, Nominating and Governance and
Executive Committees. In addition, the Board of Directors has adopted a Corporate Governance
Program that includes Corporate Governance Principles, a Code of
Business Ethics and Standards of Conduct. The charters
of each of the committees and the Corporate Governance Principles, Code of Business Ethics and Standards of Conduct are
posted on the corporate governance page of the Corporations web site at
www.lancastercolony.com.
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Director Independence The Board of Directors and the Nominating and Governance Committee
have reviewed and evaluated transactions and relationships with Board members to determine the
independence of each of the members. The Board of Directors does not believe that any of its
nonemployee members have relationships with the Corporation that would interfere with the exercise
of independent judgment in carrying out his or her responsibilities as a director. The Board and
the Nominating and Governance Committee have determined that a majority of the Boards members are
independent directors, as that term is defined in the applicable listing standards of The Nasdaq
Stock Market LLC (Nasdaq). The Board of Directors of the Corporation has identified and
determined that Ms. Bendapudi and Messrs. Bachmann, Fox, Harris, Jennings, ONeill and Sofia are
independent directors. In determining that Ms. Bendapudi is an independent director, the Board
considered that, in 2007, Ms. Bendapudi became an Executive Vice President and Chief Customer
Officer of Huntington National Bank, which is one of the Corporations lenders. Ms. Bendapudi is
primarily responsible for various customer service matters in connection with her employment with
Huntington National Bank. In her work for Huntington, Ms. Bendapudi has no direct or indirect
involvement with the Corporations relationship with Huntington National Bank.
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. All members of the Board of Directors attended the 2007
Annual Meeting of Shareholders (except for Mr. Harris, who was not a member of the Board of
Directors at that time), and each of the current members of the Board of Directors is expected to
attend the 2008 Annual Meeting. The Board of Directors held a total of nine meetings during fiscal
2008. Each director attended at least 75% of the aggregate meetings of the Board of Directors and
the committees on which they served during fiscal 2008.
Corporate Governance Principles The Board of Directors, on the recommendation of the
Nominating and Governance Committee, adopted a set of Corporate Governance Principles in 2005. The
Corporate Governance Principles relate to the role, composition, structure and functions of the
Board of Directors. The Nominating and Governance Committee is responsible for periodically
reviewing these Corporate Governance Principles and recommending any changes to the Board of
Directors.
Code
of Business Ethics and Standards of Conduct The Corporation has adopted a Code of
Business Ethics and Standards of Conduct that informs
the Corporations directors and employees of their legal and ethical obligations to the Corporation
and sets a high standard of business conduct. The Code of Business
Ethics and Standards of Conduct apply to all employees
and, where applicable, to directors of the Corporation. The Corporation intends to satisfy the
disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, any
provision (including the standards listed under Item 406(b) of Regulation S-K) of the Code of
Business Ethics that applies to the Corporations principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions by
posting such information on the Corporations web site.
Shareholder Communication with the Board of Directors Any of the directors may be contacted
by writing to them at: Board of Directors, c/o Corporate Secretarys Office, Lancaster Colony
Corporation, 37 West Broad Street, Columbus, Ohio 43215. The independent directors have requested
that the Assistant Secretary of the Corporation 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 of Directors 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
of Directors will be forwarded to the Chairperson of the appropriate committee. Communications
relating to ordinary business matters are not within the scope of the Board of Directors
responsibility and will be forwarded to the appropriate officer at the Corporation. Solicitations,
advertising materials, and frivolous or inappropriate communications
will not be forwarded.
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BOARD COMMITTEES AND MEETINGS
Audit Committee The Board of Directors has established an audit committee (the Audit
Committee) in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended, that currently consists of Messrs. Bachmann, Jennings and Sofia. Mr. Bachmann serves as
Chairperson of the Audit Committee. It has been determined by the Corporations Board of Directors
that each member of the Audit Committee meets the applicable Nasdaq independence requirements and
that Mr. Bachmann is an Audit Committee financial expert, as defined in Item 407(d)(5) of
Regulation S-K, due to his business experience and background described previously within this
Proxy Statement. The Audit Committee operates pursuant to a charter that was approved by the
Corporations Board of Directors in 2004 and amended in 2007. 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 designed and
implemented throughout the Corporation and is being effectively maintained. Additionally, the
Audit Committee has sole authority and direct responsibility with respect to the appointment,
compensation, retention and oversight of the Corporations independent registered public accounting
firm, or independent auditor. 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 Secretarys Office, Lancaster Colony Corporation, 37 West Broad Street, Columbus,
Ohio 43215. The Audit Committee held seven meetings during fiscal 2008.
Compensation Committee The Board of Directors has established a compensation committee (the
Compensation Committee) that currently consists of Messrs. Fox, Jennings and ONeill. Mr.
Jennings serves as Chairperson of the Compensation Committee. It has been determined by the
Corporations Board of Directors that each member of the Compensation Committee meets Nasdaq
independence requirements. The Compensation Committee operates pursuant to a charter that was
approved by the Board of Directors in 2004 and amended in 2008. The duties of the Compensation
Committee include: annually determining the compensation of the Chief Executive Officer and
reviewing and approving goals and objectives relevant to his activities; reviewing and approving
the Chief Executive Officers recommendations as to the compensation to be paid other executive
officers of the Corporation; reviewing and approving offers to potential executive officers to join
the Corporation; reviewing and approving perquisite policies; reviewing and approving employment
agreements, severance or retention plans or agreements and severance or termination payments;
overseeing regulatory compliance regarding compensation matters; establishing and evaluating
performance goals and the level of achievement of such goals; reviewing and offering advice
regarding director compensation, equity-based compensation and retirement pay; administering
equity-based compensation plans and approving equity awards; reporting activities to the Board of
Directors; reviewing and discussing the Compensation Discussion and Analysis with the Corporations
management; determining whether to recommend to the Board of Directors that the Compensation
Discussion and Analysis be included in the Corporations Annual Report on Form 10-K and proxy
statement; preparing a Compensation Committee Report for inclusion in the Corporations Annual
Report on Form 10-K and proxy statement; reviewing director compensation; annually reviewing the
Compensation Committee charter; and annually evaluating the Compensation Committees performance.
The charter does not provide the Compensation Committee with any delegation authority regarding its
duties, except for the ability to delegate authority to approve equity awards to a subcommittee of
the Compensation Committee. See the discussion below under Compensation Discussion and Analysis
and Compensation of Directors for more information about the Compensation Committees processes
and procedures. The Compensation Committee held four meetings during fiscal 2008.
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Nominating and Governance Committee The Board of Directors has established a nominating and
governance committee (the Nominating and Governance Committee) that currently consists of Messrs.
Fox, ONeill and Sofia and Ms. Bendapudi. Mr. Sofia serves as Chairperson of the Nominating and
Governance Committee. It has been determined by the Corporations Board of Directors that each
member of the Nominating and Governance Committee meets Nasdaq independence requirements. The
Nominating and Governance Committee operates pursuant to a charter that was approved by the Board
of Directors in 2004 and amended in 2005. The duties of the Nominating and Governance Committee
include identification and nominations to the Board of Directors of candidates for election as
directors of the Corporation and the development and review of a set of Corporate Governance
Principles. The Nominating and Governance Committee held eight meetings during fiscal 2008. As
part of its assigned duties, the Nominating and Governance Committee has reviewed the Corporate
Governance Principles and found them to be acceptable in scope and application and has so reported
to the Board of Directors.
The Nominating and Governance Committee uses different sources to identify Board of Directors
candidates, including the Corporations executive officers and current members of the Board of
Directors. The Nominating and Governance Committee also considers the nomination of director
candidates recommended by shareholders in conformance with the tests and standards outlined in the
Nominating and Governance Committees charter. The Nominating and Governance Committee uses the
same manner and process for evaluating every candidate for Board of Directors membership,
regardless of the original source of the candidates nomination. Recommendations to the Nominating
and Governance Committee from shareholders regarding candidates must be delivered to the
Corporations Corporate Secretary 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 Corporations Code
of Regulations authorizes director 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 and Governance Committee currently has not set specific, minimum qualifications or
criteria for nominees that it proposes for Board of Directors membership, but evaluates the
entirety of each candidates credentials. The Nominating and Governance Committee believes,
however, that the Corporation will be best served if its directors bring to the Board a variety of
experience and backgrounds and, among other things, demonstrated integrity, executive leadership
and financial, marketing or business knowledge and experience.
Executive Committee The Board of Directors has established an executive committee (the
Executive Committee) that currently consists of Messrs. Gerlach, Fox, and Bachmann. No
particular director serves as Chairperson of the Executive Committee. The Executive Committee
operates pursuant to resolutions that were adopted by the Board of Directors in February 2008. The
Executive Committee exercises the power and authority of the Board of Directors in managing the
business and affairs of the Corporation (other than any power or authority specifically precluded
by applicable law, the Corporations Articles of Incorporation or Code of Regulations, or by
limiting resolutions of the Board of Directors), but the Executive Committee acts only in the
intervals between meetings of the Board of Directors. Furthermore, all acts of the Executive
Committee must be reported at the next Board of Directors meeting. The Executive Committee did not
meet during fiscal 2008.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To
the Corporations knowledge, based solely on its review of copies of forms filed with the Securities and Exchange Commission (SEC), 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, 2008, except that each of Messrs. Bachmann, Fox, Hamilton, Jennings,
ONeill and Sofia and Ms. Bendapudi filed one late report on Form 4 regarding one acquisition of
restricted stock as compensation under the Lancaster Colony Corporation 2005 Stock Plan (the 2005
Stock Plan), which reports were filed late due to administrative error.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following shareholders have beneficial ownership, directly or indirectly, of more than
five percent of the outstanding Common Stock as of September 19, 2008:
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Nature of |
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Amount of |
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Name and Address of Beneficial Owner |
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Beneficial Ownership |
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Beneficial Ownership |
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of Class(1) |
John B. Gerlach, Jr.(2)(3)(4)(5)(6)(7) |
|
Direct and indirect |
|
|
8,285,036 |
|
|
|
29.39 |
% |
c/o Lancaster Colony Corporation
37 West Broad Street
Columbus, Ohio 43215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dareth A. Gerlach(8) |
|
Direct and indirect |
|
|
5,941,014 |
|
|
|
21.08 |
% |
c/o Lancaster Colony Corporation
37 West Broad Street
Columbus, Ohio 43215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barington Companies Equity
|
|
Direct and indirect |
|
|
1,408,707 |
|
|
|
5.00 |
% |
Partners, L.P. et al.(9) |
|
|
|
|
|
|
|
|
|
|
|
|
888 Seventh Avenue, 17th Floor
New York, NY 10019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Percentages based upon 28,186,379 shares outstanding as of September 19, 2008. |
|
(2) |
|
Holdings include shares owned by spouse and shares held in custodianship or as trustee. Mr.
Gerlach disclaims beneficial ownership in such holdings with respect to 7,522,026 shares. |
|
(3) |
|
Mr. Gerlach, a trustee of Gerlach Foundation, Inc., shares voting and investment power in
this foundation, which is a private charitable foundation. Gerlach Foundation, Inc. holds
346,826 shares. These shares are included in the above table. The FG Foundation, a
supporting foundation (of which Mr. Fox and Mr. Gerlach serve as trustees) of a public
charitable foundation, Fox Foundation, Inc., and Gerlach Foundation, Inc. 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. Mr. Gerlach is also an officer of
Lancaster Lens, Inc. and shares voting and investment power with respect to the 159,499 shares
owned by it. Mr. Gerlach disclaims beneficial ownership of any of these shares, all of which
are also reported in footnote 2. |
|
(4) |
|
Mr. Gerlach, by virtue of his stock ownership and positions with the Corporation, may be
deemed a control person of the Corporation. |
|
(5) |
|
Mr. Gerlach is trustee and his mother, Dareth A. Gerlach, is special trustee of the John B.
Gerlach Marital Deduction Trust A-1. This trust presently holds 5,737,602 shares. Mr.
Gerlach is also trustee of the John B. Gerlach Taxable Irrevocable Trust. This trust
presently holds 137,430 shares. These shares are included in the total number of shares held
by Mr. Gerlach in the above table. Mr. Gerlach disclaims beneficial ownership of these
shares, all of which are also reported in footnote 2. |
|
(6) |
|
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. |
|
(7) |
|
Includes 11,927 shares held through the Lancaster Colony Corporation Employee Stock Ownership
Plan and 555 shares held through the Lancaster Colony Corporation 401(k) Savings Plan. |
|
(8) |
|
Includes 5,737,602 shares that are held by the John B. Gerlach Marital Deduction Trust A-1,
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 5. |
9
|
|
|
|
|
|
|
(9) |
|
Barington Companies Equity Partners, L.P., et al. filed an amended Schedule 13D with the SEC
on June 17, 2008 indicating that, as of June 16, 2008: (A) Barington Companies Equity
Partners, L.P. beneficially owns an aggregate of 440,430 shares; (B) Barington Investments,
L.P. beneficially owns 211,335 shares; (C) Barington Companies Offshore Fund, Ltd.
beneficially owns 750,642 shares; (D) Barington Capital Group, L.P. beneficially owns
1,402,407 shares; and (E) RJG Capital Partners, L.P. beneficially own 6,300 shares.
Furthermore, Barington Companies Equity Partners, L.P., et al. indicated in the amended
Schedule 13D filed with the SEC on June 17, 2008 that: |
|
|
|
As the general partner of Barington Companies Equity Partners, L.P., Barington Companies
Investors, LLC may be deemed to beneficially own the 440,430 shares beneficially owned by
Barington Companies Equity Partners, L.P.; as the general partner of Barington Investments,
L.P., Barington Companies Advisors, LLC may be deemed to beneficially own the 211,335
shares beneficially owned by Barington Investments, L.P.; as the investment advisor to
Barington Companies Offshore Fund, Ltd., Barington Offshore Advisors II, LLC may be deemed
to beneficially own the 750,642 shares beneficially owned by Barington Companies Offshore
Fund, Ltd.; as the majority member of Barington Companies Investors, LLC, Barington
Companies Advisors, LLC, and Barington Offshore Advisors II, LLC, Barington Capital Group,
L.P. may be deemed to beneficially own the 440,430 shares beneficially owned by Barington
Companies Equity Partners, L.P., the 211,335 shares beneficially owned by Barington
Investments, L.P. and the 750,642 shares beneficially owned by Barington Companies Offshore
Fund, Ltd., constituting an aggregate of 1,402,407 shares; as the general partner of
Barington Capital Group, L.P., LNA Capital Corp. may be deemed to beneficially own the
440,430 shares beneficially owned by Barington Companies Equity Partners, L.P., the 211,335
shares beneficially owned by Barington Investments, L.P. and the 750,642 shares
beneficially owned by Barington Companies Offshore Fund, Ltd., constituting an aggregate of
1,402,407 shares; and as the sole stockholder and director of LNA Capital Corp., James A.
Mitarotonda may be deemed to beneficially own the 440,430 shares beneficially owned by
Barington Companies Equity Partners, L.P., the 211,335 shares beneficially owned by
Barington Investments, L.P. and the 750,642 shares beneficially owned by Barington
Companies Offshore Fund, Ltd., constituting an aggregate of 1,402,407 shares. Mr.
Mitarotonda has sole voting and dispositive power with respect to the 440,430 shares
beneficially owned by Barington Companies Equity Partners, L.P., the 211,335 shares
beneficially owned by Barington Investments, L.P. and the 750,642 shares beneficially owned
by Barington Companies Offshore Fund, Ltd. Mr. Mitarotonda disclaims beneficial ownership
of any such shares except to the extent of his pecuniary interest therein. |
|
|
|
|
As the general partner of RJG Capital Partners, L.P., RJG Capital Management, LLC may be
deemed to beneficially own the 6,300 shares beneficially owned by RJG Capital Partners,
L.P.; and as the managing member of RJG Capital Management, LLC, which in turn is the
general partner of RJG Capital Partners, L.P., Ronald J. Gross may be deemed to
beneficially own the 6,300 shares beneficially owned by RJG Capital Partners, L.P. Mr.
Gross has sole voting and dispositive power with respect to the 6,300 shares beneficially
owned by RJG Capital Partners, L.P. by virtue of his authority to vote and dispose of such
shares. Mr. Gross disclaims beneficial ownership of any such shares except to the extent
of his pecuniary interest therein. |
10
The following information indicates the beneficial ownership by all executive officers and
directors of the Corporation as a group, each individual director, and each individual officer
named in the 2008 Summary Compensation Table below, of the outstanding Common Stock as of September
19, 2008:
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of |
|
|
Name of Beneficial Owner |
|
Beneficial Ownership |
|
Percent of Class(1) |
James B. Bachmann |
|
1,500 |
shares(2) |
|
|
|
* |
Neeli Bendapudi |
|
1,000 |
shares(2) |
|
|
|
* |
John L. Boylan |
|
26,194 |
shares(3)(4)(5) |
|
|
|
* |
Robert L. Fox |
|
1,094,794 |
shares(2)(7) |
|
|
3.88 |
% |
John B. Gerlach, Jr. |
|
8,285,036 |
shares(4)(5)(8) |
|
|
29.39 |
% |
Alan F. Harris |
|
0 |
shares |
|
|
|
* |
Edward H. Jennings |
|
1,799 |
shares(2) |
|
|
|
* |
Henry M. ONeill, Jr. |
|
20,651 |
shares(2) |
|
|
|
* |
Bruce L. Rosa |
|
73,870 |
shares(3)(4)(5)(6) |
|
|
|
* |
Zuheir Sofia |
|
6,256 |
shares(2) |
|
|
|
* |
All executive officers
and directors as a
group (10 persons) |
|
8,890,978 |
shares(9) |
|
|
31.51 |
% |
|
|
|
* |
|
Less than 1% |
|
(1) |
|
Percentages based upon 28,186,379 shares outstanding as of September 19, 2008. |
|
(2) |
|
Includes for each nonemployee director 500 shares of restricted stock received pursuant to
the terms of the 2005 Stock Plan. The restricted stock vests one year from the grant date, or
earlier upon a change in control of the Corporation, or the death or disability of the
recipient. |
|
(3) |
|
Includes shares obtainable on exercise of stock options within 60 days following September
19, 2008, which options have not been exercised, as follows: John L. Boylan 15,000; and
Bruce L. Rosa 15,000. |
|
(4) |
|
Includes the following number of shares held through the Lancaster Colony Corporation
Employee Stock Ownership Plan: John L. Boylan 5,992; John B. Gerlach, Jr. 11,927; and
Bruce L. Rosa 10,299. |
|
(5) |
|
Includes the following number of shares held through the Lancaster Colony Corporation
401(k) Savings Plan: John L. Boylan 536; John B. Gerlach, Jr. 555; and Bruce L. Rosa
566. |
|
(6) |
|
Holdings include 47,705 shares held in a trust of which Mr. Rosa has beneficial ownership. |
|
(7) |
|
Holdings include shares owned by spouse and children and shares held in custodianship or as
trustee. Mr. Fox disclaims beneficial ownership in such holdings with respect to 157,005
shares. In addition, Mr. Fox, a trustee of Fox Foundation, Inc., shares voting and investment
power with his foundation, which is a private charitable foundation. Fox Foundation, Inc.
holds 60,269 shares. These shares are included in the above table. The FG Foundation, a
supporting foundation (of which Mr. Fox and Mr. Gerlach serve as trustees) of a public
charitable foundation, Fox Foundation, Inc., and Gerlach Foundation, Inc. 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. Fox. Mr. Fox disclaims beneficial
ownership of any of these shares. |
|
(8) |
|
See also the footnotes for Mr. Gerlach in the beneficial ownership table listed previously
within this Proxy Statement. |
|
(9) |
|
Includes 30,000 shares obtainable on exercise of stock options within 60 days following
September 19, 2008, which options have not been exercised, and includes 1,657 shares held in
the Lancaster Colony 401(k) Savings Plan for the account of the executive officers of the
Corporation, and 28,218 shares held in the Lancaster Colony Corporation Employee Stock
Ownership Plan for the account of the executive officers of the Corporation. For purposes of
this calculation, the 620,122 shares held by Lehrs, Inc. have only been counted once. |
11
COMPENSATION DISCUSSION AND ANALYSIS
In this section, we discuss the principles underlying our executive compensation policies and
decisions and the most important factors relevant to an analysis of these policies and decisions.
We provide qualitative information regarding the manner and context in which compensation is
awarded to, and earned by, our executive officers to give perspective to the data we present in the
compensation tables, as well as the narratives that follow the tables.
Executive Compensation Program Philosophy and Objectives
As we discussed in our 2007 and 2008 annual reports, we are shifting away from our historical
diversity of operations, instead choosing to follow a more food-focused strategy that we believe
will best enhance long-term shareholder value. As we make this shift, we continue to reward our
named executive officers (identified in our 2008 Summary Compensation Table below) for their
efforts in helping us achieve market or above-market results, particularly within our Specialty
Foods operations, and for helping us take important steps to meet our long-term strategic goals.
As a result, our basic executive compensation philosophy remains to pay for performance.
For us, a pay for performance philosophy means providing market compensation packages when
performance meets our expectations, but also realizing that results below our expectations may
result in below-market compensation packages. To further this philosophy, we have designed our
executive compensation program to achieve the following objectives:
|
|
|
attract, motivate and retain key executive talent; |
|
|
|
|
incentivize our named executive officers to help us achieve
superior financial and operational performance; and |
|
|
|
|
continue to align our named executive officers compensation
interests with our goal of creating long-term shareholder value. |
We believe that our executive compensation program should not be overly influenced by the
short-term performance of our stock, but should instead promote long-term shareholder value. Our
named executive officers are already individually focused on promoting long-term shareholder value
because they are each significantly invested in our common stock. Our experience, however, has
been that utilizing salary, annual cash incentive awards, and long-term equity-based awards as the
primary elements of our executive compensation program is the best way to continue to align our
executives compensation interests with our goal of promoting long-term shareholder value. We also
understand that our executive compensation program provides a starting point, or baseline of
comparison, for the compensation that we pay to our other employees. For this reason, we believe
our executive compensation program should strike an appropriate balance among rewards, incentives
and expectations.
While these broad concepts generally govern our executive compensation program, we also take
into account specific factors particular to each executive officer when making individual
compensation decisions, which we describe in detail below. These factors consist of the
executives range of responsibilities and related performance measures, amounts paid to executive
officers with similar responsibilities in similarly situated companies and other individual factors
affecting each executives performance.
12
Compensation Administration and Consultant
The
Compensation Committee of our Board of Directors, which we refer to as our Compensation Committee, reviews and determines the compensation for our named executive officers. The
compensation that we paid our named executive officers for fiscal years 2007 and 2008 is disclosed
in detail in the tables and narratives below under the heading Executive Compensation. Our
Compensation Committee is also responsible for, among other things, structuring and administering
the compensation programs and plans in which our named executive officers participate.
As we reported last year, during fiscal year 2007, our Compensation Committee retained the
services of an independent executive compensation consultant, Pearl Meyer & Partners, which we
refer to as Pearl Meyer, to:
|
|
|
identify a peer group of firms comparable
in size and industry
to us so that we may look to them for the range of market compensation offered
by other companies in our industry; |
|
|
|
|
conduct a competitive assessment of our executive compensation
program; and |
|
|
|
|
reassess our traditional reliance on stock options as our
long-term equity compensation instrument. |
Pearl Meyers recommendations following the competitive assessment of our executive
compensation program were based on our compensation philosophy and information it derived from our
peer groups compensation programs. Our Compensation Committee took these recommendations into
consideration when it established executive compensation for fiscal year 2008. Given our more
food-focused strategy, we asked Pearl Meyer to select entities for our peer group primarily from
the food and beverage industries. The peer group identified by Pearl Meyer (and reviewed in
advance by our Compensation Committee for appropriateness) was comprised of the following
companies:
|
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|
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|
|
The Andersons, Inc.
|
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|
|
Pilgrims Pride Corporation of Georgia, Inc. |
|
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|
|
Church & Dwight Co., Inc.
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|
Premium Standard Farms, Inc. |
|
|
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|
|
|
|
|
Coca-Cola Bottling Co. Consolidated
|
|
|
|
Ralcorp Holdings, Inc. |
|
|
|
|
|
|
|
|
|
Flowers Foods, Inc.
|
|
|
|
Revlon, Inc. |
|
|
|
|
|
|
|
|
|
The Hain Celestial Group, Inc.
|
|
|
|
Sanderson Farms, Inc. |
|
|
|
|
|
|
|
|
|
Imperial Sugar Company
|
|
|
|
Seneca Foods Corporation |
|
|
|
|
|
|
|
|
|
The J. M. Smucker Company
|
|
|
|
TreeHouse Foods, Inc. |
|
|
|
|
|
|
|
|
|
Lance, Inc. |
|
|
|
|
There have been no changes to the peer group since it was first identified in 2007.
Pearl Meyer also provided our Compensation Committee with recommendations regarding changes in
our long-term equity incentive program based on characteristics of our competitive market, our goal
to utilize equity compensation in a way that is more aligned with our compensation program
philosophy and objectives and our overall corporate strategic objectives over the next several
years (including primarily our decision to increase our focus on our food business). These
recommendations were presented to management and our Compensation Committee, and we implemented the
recommended changes to our long-term equity compensation program with new grants of restricted
stock and stock-settled stock appreciation rights in February 2008. Details of these grants with
respect to our named executive officers are set forth below.
13
Compensation Processes, Procedures and Benchmarking
Generally, our Compensation Committee establishes salaries for the current fiscal year and
annual cash incentive award payouts for the prior fiscal year at its regularly scheduled August
meeting. Historically, at this meeting, our Compensation Committee first reviews the elements of
each named executive officers total compensation during the previous fiscal year. Our Chief
Executive Officer then makes compensation recommendations to our Compensation Committee with
respect to the executive officers who report to him, but those executive officers are not present
in the meeting during compensation deliberations. The chairman of our Compensation Committee then
makes compensation recommendations in executive session to our Compensation Committee with respect
to our Chief Executive Officer, who is absent from the meeting at that time. Beginning with its
August 2007 meeting, however, our Compensation Committee has compared our executive officers
compensation with that offered to executive officers employed by companies in our peer group, based
on information supplied by Pearl Meyer, during the first part of the review process. The
Compensation Committee did not seek additional input from Pearl Meyer at its August 2008 meeting,
but intends to consult with Pearl Meyer in connection with its August 2009 meeting.
Our Compensation Committee may accept or make adjustments to the recommendations it receives
in establishing the final compensation for each of the named executive officers. In general, when
setting each component of compensation for our named executive officers, our Compensation Committee
considers the following performance factors:
|
|
|
our previous years operating results and whether we achieved
our performance objectives; |
|
|
|
|
the relative value of the executives unique skills,
competencies and institutional knowledge; |
|
|
|
|
the executives performance of management and officer
responsibilities; and |
|
|
|
|
the executives contribution toward our long-term strategic
objectives and our goal of creating long-term shareholder value. |
Our Chief Executive Officers compensation is also approved by the full Board of Directors.
Our Compensation Committee has historically granted equity incentive awards every other year
at its regularly scheduled February meeting. However, we suspended equity grants from 2005 to 2008
due, in part, to a reevaluation of our equity incentive program that began in fiscal 2007. We
granted new awards in February 2008, and we discuss this in more detail below. Due to his already
significant equity interest in our company, we generally do not award equity compensation to Mr.
Gerlach.
With the exception of our Chief Executive Officer, as discussed in more detail below, we
believe the total cash compensation paid to our named executive officers (the combination of salary
and annual cash incentives) for fiscal 2008 was in line with the median compensation paid for
executives holding similar positions in our peer group.
Primary Elements of Compensation
We have established executive compensation objectives that are primarily focused on helping us
create long-term shareholder value. We believe that we can best achieve all of our executive
compensation program objectives by offering competitive short-term cash compensation combined with
appropriate long-term equity-based compensation tied to our operating results and our achievement
of incremental shareholder value. To this end, the primary elements of our executive compensation
program are salary, annual cash incentive awards, and long-term equity-based incentive awards,
which are each described in
14
detail below. Generally, we look at our named executive officers complete compensation
arrangements when establishing salaries, annual cash and long-term equity incentive awards.
Salaries. We provide our named executive officers with annual salaries both to attract and
retain the executives and to provide them with a steady source of annual cash-based income. For
each named executive officer, salary represents a non-at risk cash component of compensation. We
establish our salaries at levels designed to reward our named executive officers for their overall
level of expertise, responsibilities, experience and other factors unique to each individual
executive officer, as determined by our Compensation Committee. However, our policy is that
salaries for our named executive officer should not exceed median salaries for executive officers
with similar responsibilities within our peer group.
For fiscal year 2008, the amount of each named executive officers salary increase, expressed
as a percentage of such officers fiscal year 2007 salary, was as follows: Mr. Gerlach, 0%; Mr.
Boylan, 3.8% and Mr. Rosa, 2.8%. Salaries earned by our named executive officers for 2007 and 2008
appear below in the Salary column of our 2008 Summary Compensation Table. For fiscal year 2009,
we have increased our named executive officers salaries by an average of 2.8%.
Annual Cash Incentive Awards. We also provide our named executive officers with annual cash
incentive awards designed to motivate them to help us achieve our annual financial goals. For each
named executive officer, his annual cash incentive award represents a performance-based, variable
and at-risk cash component of compensation. Under this program, our two named executive officers
other than our Chief Executive Officer were each granted the opportunity to earn for fiscal year
2008 an annual cash incentive payment based on our achievement of certain financial targets. We
granted this award to Mr. Rosa based on his responsibility for supervising the operations of our
Specialty Foods segment, and to Mr. Boylan based on his responsibilities as Chief Financial
Officer.
For each award, our Chief Executive Officer retains discretionary authority to modify the
financial targets and raise or lower the computed incentive payment by up to 5% based on his
qualitative assessment of the executives overall development during the course of the fiscal year.
Our Compensation Committee also retains authority to make further adjustments to the computed
annual cash incentive payments. An annual cash incentive payment, if earned, is made in the fiscal
year following the year in which it is earned. Annual cash incentive payments earned by our named
executive officers for fiscal years 2007 and 2008 appear below in the Bonus and Non-Equity
Incentive Plan Compensation columns of our 2008 Summary Compensation Table.
For fiscal year 2008, Mr. Rosa received the opportunity to earn a cash incentive payment equal
to 0.35% of our Specialty Foods segments value-added income for fiscal year 2008. Our
Compensation Committee first established 0.35% of Specialty Foods value-added income as the annual
incentive opportunity for Mr. Rosa in 2004, and we have continued to view this as a fair annual
incentive opportunity from year to year since 2004. We define value-added income as the amount by
which the fiscal year operating income of our Specialty Foods segment exceeds a target level of
income. We determine the applicable target level of income by multiplying the segments pre-tax
cost of capital by the segments average net assets (defined as including accounts receivable;
inventory; prepaid expenses; property, plant and equipment; other assets; goodwill; current
liabilities; deferred taxes and other non-current liabilities). We then calculate value-added
income by subtracting target income from operating income. For our Specialty Foods segment in
fiscal year 2008, average net assets equaled approximately $300 million, pre-tax cost of capital
was approximately 12%, target income equaled approximately $56 million, and operating income
exceeded target income by approximately $33 million. We utilized operating income and average net
assets as the performance metrics for Mr. Rosas award because we believe use of these metrics was
the best way to incentivize him to employ the Specialty Foods segments net assets efficiently.
For fiscal year 2008, our Chief Executive Officer and our Compensation Committee exercised
discretion to
15
modify the annual cash incentive payment to Mr. Rosa, by adding 5% on to the calculated bonus.
Both our Chief Executive Officer and the Compensation Committee believe the additional bonus was
in part to recognize Mr. Rosas increased role in the Companys strategic transition that
emphasizes our food business.
Mr. Boylans fiscal year 2008 award represented the opportunity to earn a cash incentive
payment equal to 0.179% of our consolidated value-added income for fiscal year 2008. For purposes
of Mr. Boylans award opportunity, we define value-added income as the amount by which fiscal year
consolidated operating income exceeds a target level of income. We determine the applicable target
level of income by multiplying consolidated pre-tax cost of capital by consolidated average net
assets (defined as including accounts receivable; inventory; prepaid expenses; property, plant and
equipment; other assets; goodwill; current liabilities; deferred taxes and other non-current
liabilities). We then calculate value-added income by subtracting target income from operating
income. For our consolidated operations in fiscal year 2008, average net assets equaled
approximately $409 million, pre-tax cost of capital was approximately 12%, target income equaled
approximately $77 million, and operating income exceeded target income by approximately $8 million.
We utilized consolidated operating income and average net assets as the performance metrics for
Mr. Boylans award because we believe use of these metrics was the best way to incentivize him to
employ our companys consolidated net assets efficiently. We then rounded the annual cash
incentive payment to Mr. Boylan down to the nearest hundred.
For fiscal year 2008, our Compensation Committee exercised substantial discretion under the
plan to increase the annual cash incentive payment to Mr. Boylan from the formula-calculated
$13,700 to a total of $118,700. In making this decision, our Compensation Committee considered the
following three factors:
|
|
|
Mr. Boylans continued successful management of our
restructuring program, including his substantial involvement in managing our
facility closure and dispositions activities during fiscal year 2008; |
|
|
|
|
The cash incentive formula described above resulted in a much
lower calculated incentive payment than was anticipated by or acceptable to the
Compensation Committee when establishing the annual incentive opportunity for
Mr. Boylan; and |
|
|
|
|
Mr. Boylans computed incentive payment would have resulted in
his total compensation falling significantly below the compensation of his
peers at the companies in our peer group. Based on our compensation philosophy
of providing market compensation packages when performance meets our
expectations, our Compensation Committees determination that Mr. Boylans
performance met or exceeded our expectations for fiscal year 2008, and our
desire to retain Mr. Boylan, our Compensation Committee determined that a
substantial increase to Mr. Boylans computed annual incentive payment for
fiscal year 2008 was appropriate. |
The discretionary portion of Mr. Boylans annual cash incentive is reflected in the Bonus column
of our 2008 Summary Compensation Table. The Compensation Committee recognizes that this is the
second consecutive year in which a substantial discretionary amount was added to Mr. Boylans
computed incentive payment. The Compensation Committee determined that Mr. Boylans bonus
calculation requires adjustment to provide a market compensation package. For this reason,
beginning in fiscal 2009, Mr. Boylans calculated incentive payment will be equal to 1% of
consolidated value-added income.
As noted above, our Chief Executive Officer does not receive an annual cash incentive award.
Our Compensation Committee views Mr. Gerlachs salary as sufficient cash compensation for the
performance of his responsibilities and believes that his participation in the annual cash
incentive program is not necessary to align Mr. Gerlachs interest with the long-term interest of
our shareholders, especially given
16
his significant direct ownership interest in our company. Because Mr. Gerlach does not
receive any annual incentive compensation, his total cash compensation falls below the median of
peer company chief executive officers. Our Compensation Committee and Mr. Gerlach consider this
result acceptable given his significant ownership interest and the resulting low probability of his
leaving the company.
Long-Term Equity-Based Incentive Awards. Until 2008, we used stock options as the primary
vehicle for providing long-term incentives to and rewarding our named executive officers for their
efforts in helping to create long-term shareholder value. We have also considered stock options as
a retention tool for executive talent. Both of these factors have helped our Compensation
Committee determine in past years the type of award and the number of underlying shares that it
granted in connection with an equity incentive award.
However, during fiscal year 2008, with the assistance of Pearl Meyer, we have moved away from
our reliance on stock options as our equity incentive compensation instrument. We had historically
believed that granting stock options was the best method for motivating named executive officers to
manage our company in a manner consistent with the long-term interests of our shareholders because
of the direct relationship between the value of a stock option and the market price of our common
stock. The following factors, however, have caused us to reevaluate this approach:
|
|
|
the evolution of regulatory, tax and accounting treatment of
equity incentive programs; |
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|
|
developments in our strategic objectives; and |
|
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|
|
the study of our equity-based incentive program that took place
during fiscal year 2007. |
Based on these factors, in February 2008, we began a new equity incentive program consisting
of grants of stock-settled stock appreciation rights and restricted stock. We did not include any
grants of stock options. At this time, it is our intention to continue these forms of grants on an
annual basis. We believe these types of equity awards offer our employees, including our named
executive officers, incentive that is aligned with the long-term interests of our shareholders.
Other Benefits
Our named executive officers are also eligible to participate in our employee benefit plans
available to all salaried employees, including our 401(k) savings plans, health insurance plan and
group life insurance plan. These other benefits are discussed in detail below. In addition, our
named executive officers participate in our deferred compensation program. We also make some
post-termination payments and benefits available to our named executive officers, as described in
detail below. The value of these benefits are reviewed annually by our Compensation Committee, but
are not generally considered as part of the overall compensation program for purposes of allocating
among cash, equity and other compensation.
Perquisites. We do not believe that providing perquisites to our named executive officers
helps us achieve any of our compensation program objectives, including the promotion of long-term
shareholder value. We limit the perquisites made available to our named executive officers that
are not otherwise available to all salaried employees, and believe that this arrangement is
consistent with our pay for performance philosophy. During fiscal year 2008, we offered our
named executive officers only the following perquisites: corporate automobile allocations and
related insurance premium payments; and life insurance and travel insurance premium payments. More
detailed information about perquisites for fiscal years 2007 and 2008 is presented below in the
All Other Compensation column of our 2008 Summary Compensation Table and related narrative.
17
Executive Deferred Compensation Program. The Lancaster Colony Corporation Executive Employee
2005 Deferred Compensation Plan, which we refer to as our nonqualified deferred compensation plan,
allows our named executive officers to defer up to $50,000 of their annual base compensation for
future payment. Under the nonqualified deferred compensation plan, amounts deferred by our named
executive officers are maintained in separate book-entry accounts. Interest on the deferred
amounts are credited semi-annually on June 30 and December 31 with an annual rate of interest equal
to the prime interest rate reported in the Wall Street Journal on the first business day in January
(for the June 30 credit) and July (for the December 31 credit). We do not match amounts that are
deferred. Distributions from the nonqualified deferred compensation plan are paid upon termination
of employment (including death or disability), and the named executive officer may elect to receive
payments in either a lump sum or a series of installments upon termination. We do not fund the
nonqualified deferred compensation plan, and participants have only an unsecured contractual
commitment from us to pay the amounts due. More detailed information about the nonqualified
deferred compensation plan is presented below in our 2008 Nonqualified Deferred Compensation Table
and related narrative.
Health and Welfare Benefits. We provide healthcare, life and disability insurance and other
employee benefits programs to our employees, including our named executive officers. We believe
that these benefits are competitive within our peer group and, while not separate incentives by
themselves because they do not help us achieve any of our compensation program objectives, are
essential and expected parts of any compensation program. Our benefits and risk management
department is responsible for overseeing the administration of these programs. Our employee
benefits programs are provided on a non-discriminatory basis to all employees. These benefits
include vacation and personal time, paid holidays, medical and long and short-term disability
insurance programs.
Retirement Benefits
Pension Benefits. We do not provide defined benefit pension arrangements or post-retirement
health coverage for our named executive officers, as we do not believe that providing these types
of benefits to our named executive officers helps us achieve any of our compensation program
objectives, including the promotion of long-term shareholder value.
401(k) Savings Plan. All of our named executive officers participate in our Lancaster Colony
Corporation 401(k) Savings Plan, a tax-qualified defined contribution plan that we refer to as our
401(k) Plan. We believe that this benefit is competitive within our peer group and, while not a
separate incentive by itself because it does not help us achieve any of our compensation program
objectives, it is an essential and expected part of any compensation program. Under the 401(k)
Plan, each employee may contribute up to 25% of eligible compensation on a before-tax basis into an
individual account (subject to limits established by the Internal Revenue Service). In any fiscal
year, we will contribute to each participants account a matching contribution equal to 40% of the
first 4% of the participants compensation that has been contributed to the 401(k) Plan. Partial
withdraws from the 401(k) Plan are permitted through a loan or based on financial hardship. Single
lump sum withdrawals are permitted upon an employees termination of employment.
Effective for calendar year 2008, the 401(k) Plan limits the so-called annual additions that
can be made to an employees account to $46,000 per year. Annual additions include matching
contributions and before-tax contributions made by the employee. Of those annual additions, the
current maximum before-tax contribution is $15,500 per year and no more than $230,000 of annual
compensation may be taken into account in computing benefits under the 401(k) Plan.
Participants age 50 and over may also contribute, on a before-tax basis, and without regard to
the $46,000 limitation on annual additions or the $15,500 general limitation on before-tax
contributions, a
18
catch-up contribution of up to $5,000 per year. Matching contributions from us that were paid
to our named executive officers during fiscal years 2007 and 2008 are included in the All Other
Compensation column of our 2008 Summary Compensation Table.
Employee Stock Ownership Plan. The Lancaster Colony Corporation Employee Stock Ownership
Plan, or ESOP, is another of our tax-qualified retirement plans. The ESOP was frozen on December
31, 1997 when it was amended to prevent further participation and contributions and to vest fully
existing account balances. The ESOP was designed to invest primarily in employer securities as
defined in Section 409(l) of the Internal Revenue Code. The ESOP continues to offer a
pre-retirement diversification right, and dividends are distributed (upon election by the
participant) in the form of cash or can be reinvested in our stock and credited to a participants
account. Distributions in the form of a single lump sum or in five annual installments are made
upon a participants termination of employment.
Employment and Severance Agreements
We do not maintain employment agreements with any of our named executive officers. We have
entered into Key Employee Severance Agreements with Mr. Boylan and Mr. Rosa that specify cash
payments in the event the named executive officers employment is terminated other than for cause
or terminated by the executive officer for good reason within one year after a change in control
(the terms cause, good reason and change in control are each defined in the agreement). In
addition, the named executive officer will be entitled to participate in any health, disability and
life insurance plans in which the executive participated at the time of termination, on the same
basis, for a period of one year following termination. The agreements do not require the named
executive officers to mitigate the amount of benefits paid by seeking other employment, and the
benefits payable under the agreements are not subject to reduction for other compensation earned by
the named executive officers after termination. The agreements do not have an expiration date. We
believe that these agreements were necessary for us to attract and retain these two named executive
officers. See further disclosure below under Potential Payments Upon Termination or Change in
Control for more information.
Stock Ownership Guidelines
As discussed above and as disclosed above in our beneficial ownership tables, our named
executive officers already have a substantial equity interest in our company. As a result, we do
not have a formal policy requiring that our named executive officers own any predetermined amount
of our stock. However, as indicated above, a primary objective of our pay for performance
philosophy is to align our named executive officers compensation interests with our goal of
creating long-term shareholder value. We therefore encourage our current named executive officers
to continue to maintain an equity ownership in the company, which ownership further aligns their
compensation interests with the interests of our shareholders.
Recoupment of Incentive Payments
We do not have a formal policy regarding adjusting or recovering annual cash incentive
payments or long-term equity-based incentive awards if the relevant performance metrics upon which
such awards or payments are based are later restated or otherwise adjusted in a manner that reduces
the actual size of the award or payment. Instead, we will consider making adjustments or
recoveries on a case-by-case basis if those situations arise.
19
Accounting and Tax Considerations
Regulations
issued under Section 162(m) of the Internal Revenue Code provide that compensation in excess of $1 million paid to our named executive officers will not be deductible unless it
meets specified criteria required for it to be performance based. In general, our Compensation
Committee considers the potential impact of Section 162(m) in its review and establishment of
compensation programs and payments. However, our Compensation Committee also reserves the right to
provide compensation that does not meet the exemption criteria if, in its sole discretion, it
determines that doing so advances our business objectives. Currently, we have no individuals with
non-performance based compensation paid in excess of the Internal Revenue Code Section 162(m) tax
deduction limit.
EXECUTIVE COMPENSATION
Executive Officers
The following is a list of names and ages of all of the executive officers of the Corporation
indicating all positions and offices held by such person and each persons principal occupation or
employment during the past five years. No person other than those listed below has been chosen to
become an executive officer. The executive officers are elected annually by the Board of
Directors:
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Executive |
Name |
|
Principal Occupation |
|
Age |
|
Officer Since |
John B. Gerlach, Jr.
|
|
Chairman of the Board,
Chief Executive Officer
and President of the
Corporation since 1997
|
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54 |
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1982 |
|
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|
|
John L. Boylan
|
|
Chief Financial Officer
and Vice President of the
Corporation since 1996;
and Treasurer of the
Corporation since 1990
|
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53 |
|
|
|
1990 |
|
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|
Bruce L. Rosa
|
|
President of T. Marzetti
Company, a food
processing subsidiary of
the Corporation, since
2003; and Vice President
Development of the
Corporation since 1998
|
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|
59 |
|
|
|
1998 |
|
The following tables and narratives provide, for the fiscal year ended June 30, 2008,
descriptions of the cash compensation paid by us, as well as certain other compensation, for that
year to Mr. John B. Gerlach, Jr., Chairman of the Board, Chief Executive Officer and President; Mr.
John L. Boylan, Treasurer, Vice President, Assistant Secretary and Chief Financial Officer; and Mr.
Bruce L. Rosa, President of T. Marzetti Company and Vice President Development. We refer to
these three individuals as our named executive officers. The 2008 Summary Compensation Table below
also provides a summary description of the compensation we paid to our named executive officers for
the fiscal year ended June 30, 2007.
20
2008 Summary Compensation Table
The following table summarizes compensation earned during the 2007 and 2008 fiscal years by
our named executive officers:
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Change in |
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Pension Value |
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Non-Equity |
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and |
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Incentive |
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Nonqualified |
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Plan |
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Deferred |
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Name and |
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Stock |
|
Option |
|
Compensa- |
|
Compensation |
|
All Other |
|
|
Principal |
|
Fiscal |
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
tion |
|
Earnings |
|
Compensation |
|
Total |
Position |
|
Year |
|
($) (1) |
|
($) |
|
($) (3) |
|
($) (4) |
|
($) (5) |
|
($) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
John B. Gerlach, Jr., |
|
|
2008 |
|
|
$ |
800,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
7,008 |
(6) |
|
$ |
807,008 |
|
Chairman of the Board, |
|
|
2007 |
|
|
$ |
800,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
12,323 |
|
|
$ |
812,323 |
|
Chief
Executive Officer
and President |
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John L. Boylan, |
|
|
2008 |
|
|
$ |
410,000 |
|
|
$ |
105,000 |
(2) |
|
$ |
1,299 |
|
|
$ |
8,139 |
|
|
$ |
13,700 |
|
|
$ |
0 |
|
|
$ |
14,101 |
(7) |
|
$ |
552,239 |
|
Treasurer, Vice
President, |
|
|
2007 |
|
|
$ |
395,000 |
|
|
$ |
135,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
22,800 |
|
|
$ |
0 |
|
|
$ |
13,480 |
|
|
$ |
566,280 |
|
Assistant Secretary
and Chief Financial
Officer |
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Bruce L. Rosa, |
|
|
2008 |
|
|
$ |
370,000 |
|
|
$ |
5,710 |
(2) |
|
$ |
1,299 |
|
|
$ |
8,139 |
|
|
$ |
114,200 |
|
|
$ |
0 |
|
|
$ |
8,920 |
(8) |
|
$ |
508,268 |
|
President, T.
Marzetti Company and |
|
|
2007 |
|
|
$ |
360,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
185,000 |
|
|
$ |
0 |
|
|
$ |
8,733 |
|
|
$ |
553,733 |
|
Vice
President
Development |
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(1) |
|
The amounts shown in this column for fiscal 2008 include the following amounts deferred by
our named executive officers under our nonqualified deferred compensation plan, which is
further discussed above under Compensation Discussion and Analysis and below in the 2008
Nonqualified Deferred Compensation Table and accompanying narrative: Mr. Gerlach, $20,000;
and Mr. Rosa, $18,750. |
|
(2) |
|
As discussed under Compensation Discussion and Analysis above, the amounts for fiscal 2008
represent discretionary increases under our annual cash incentive award program to the annual
cash incentive payments computed for Mr. Boylan based on his fiscal year 2008 contributions to
our long-term strategic objectives and for Mr. Rosa based on his increased role in our
strategic transition to a more food-focused strategy. |
|
(3) |
|
The amounts shown in this column for fiscal 2008 do not reflect compensation actually
received by the named executive officers, but reflect the dollar amount recognized for
financial statement reporting purposes for the fiscal year ended June 30, 2008 in accordance
with Financial Accounting Standards Board Statement No. 123 (revised 2004), Accounting for
Stock-Based Compensation, or SFAS 123R, excluding the effect of certain forfeiture
assumptions, for awards of restricted stock granted in fiscal 2008. For additional
information, refer to Notes 1 and 11 to our audited consolidated financial statements included
in our Annual Report on Form 10-K for the year ended June 30, 2008. These awards are
discussed in further detail above under Compensation Discussion and Analysis and below under
the 2008 Grants of Plan-Based Awards Table and Outstanding
Equity Awards at 2008 Fiscal Year-End Table. |
21
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(4) |
|
The amounts shown in this column for fiscal 2008 do not reflect compensation actually
received by the named executive officers, but reflect the dollar amount recognized for
financial statement reporting purposes for the fiscal year ended June 30, 2008, in accordance
with SFAS 123R, excluding the effect of certain forfeiture assumptions, for awards of
stock-settled stock appreciation rights granted in fiscal 2008. For additional information,
refer to Notes 1 and 11 to our audited consolidated financial statements included in our
Annual Report on Form 10-K for the year ended June 30, 2008. These awards are discussed in
further detail above under Compensation Discussion and Analysis and below under the 2008
Grants of Plan-Based Awards Table and Outstanding Equity Awards at 2008 Fiscal Year-End
Table. |
|
(5) |
|
The amounts shown in this column for fiscal 2008 represent amounts computed for fiscal year
2008 performance under our annual cash incentive award program. As discussed under
Compensation Discussion and Analysis above, these amounts were based on our achievement of
certain financial targets. See Compensation Discussion and Analysis for more information
about our annual cash incentive award program. |
|
(6) |
|
This amount consists of (A) $2,037 in matching contributions to our 401(k) Savings Plan, (B)
$4,242 allocated for personal use of a corporate automobile, (C) $648 in life insurance
premium payments and (D) $81 in travel insurance premium payments. |
|
(7) |
|
This amount consists of (A) $2,700 in matching contributions to our 401(k) Savings Plan, (B)
$9,842 allocated for personal use of a corporate automobile, (C) $830 in automobile insurance
premium payments, (D) $648 in life insurance premium payments and (E) $81 in travel insurance
premium payments. |
|
(8) |
|
This amount consists of (A) $2,959 in matching contributions to our 401(k) Savings Plan, (B)
$4,402 allocated for personal use of a corporate automobile, (C) $830 in automobile insurance
premium payments, (D) $648 in life insurance premium payments and (E) $81 in travel insurance
premium payments. |
22
2008 Grants of Plan-Based Awards Table
The following table shows all plan-based awards granted to our named executive officers during
fiscal year 2008.
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All Other |
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All Other |
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Option |
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Awards: |
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Awards: |
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Grant Date |
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Estimated Possible Payouts Under |
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Estimated Future Payouts Under |
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Number of |
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Number of |
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Exercise or |
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Fair Value of |
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Non-Equity Incentive Plan Awards |
|
Equity Incentive Plan Awards |
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Shares of |
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Securities |
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Base Price |
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Stock and |
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Maxi- |
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Thres- |
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Maxi- |
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Stock or |
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Underlying |
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of Option |
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Option |
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Grant |
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Threshold |
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Target |
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mum |
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hold |
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Target |
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mum |
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Units |
|
Options |
|
Awards |
|
Awards |
Name |
|
Date |
|
($) |
|
($) (1) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
(#) (2) |
|
(#) (3) |
|
($/Sh) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
(k) |
|
(l) |
John B. Gerlach, Jr. |
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John L. Boylan |
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$ |
76,720 |
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2/27/08 |
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300 |
|
|
|
|
|
|
|
|
|
|
$ |
11,493 |
|
|
|
|
2/27/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
$ |
38.31 |
|
|
$ |
72,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce L. Rosa |
|
|
|
|
|
|
|
|
|
$ |
114,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
$ |
11,493 |
|
|
|
|
2/27/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
$ |
38.31 |
|
|
$ |
72,000 |
|
|
|
|
(1) |
|
As we described in Compensation Discussion and Analysis above, under our annual cash
incentive program, each named executive officer other than Mr. Gerlach receives a fiscal year
bonus payment primarily determined based on the application of a bonus rate percentage to
either the value-added income attributable to the entire company or the value-added income
attributable to our Specialty Foods segment, as applicable. The resulting bonus payment is
subject to discretionary adjustment on recommendation by our Chief Executive Officer and
approval by our Compensation Committee. For fiscal year 2008, our Compensation Committee
exercised discretion in increasing Mr. Boylans annual cash incentive payment by $105,000, and
increasing Mr. Rosas payment by $5,710, as more fully described in Compensation Discussion
and Analysis above. |
|
|
|
Because value-added income changes from year-to-year, we are unable to determine in advance the
target amounts for bonus awards under our annual cash incentive program. The amounts reflected
in column (d) of the above table equal the annual cash incentive payment computed for fiscal
year 2008 for Mr. Rosa and the annual cash incentive payment that would have been computed for
fiscal year 2008 using the new discretionary bonus rate percentage that will be in effect for
fiscal 2009 for Mr. Boylan, which amounts (plus the discretionary increase approved for Mr. Rosa
as described in this footnote) we believe to be a reasonable representation of annual cash
incentive payments that our named executive officers will be eligible to receive for our
performance in fiscal year 2009. The total annual cash incentive payments for our named
executive officers for our performance in fiscal year 2008 were determined by our Compensation
Committee on August 20, 2008, and are reflected in columns (d) and (g) of our 2008 Summary
Compensation Table above. For more information about our annual cash incentive program, see
Compensation Discussion and Analysis above. |
|
(2) |
|
These amounts represent shares of restricted stock that were granted on February 27, 2008
pursuant to our 2005 Stock Plan. The restricted stock is expected to fully vest on February
27, 2011. |
|
(3) |
|
These amounts represent stock-settled stock appreciation rights that were granted on February 27, 2008
pursuant to our 2005 Stock Plan. The stock-settled stock appreciation rights vest ratably over a three-year
period beginning on February 27, 2009, can be exercised for up to five years from the date of
grant, and are expected to fully vest on February 27, 2011. |
None of our named executive officers are parties to employment agreements with us, but Mr.
Boylan and Mr. Rosa are parties to Key Employee Severance Agreements with us. For more information
about these severance agreements, see Compensation Discussion and Analysis Employment and
Severance Agreements above, and the disclosure below under Potential Payments Upon Termination or
Change in Control. For more information about the other compensation arrangements in which our
named executive officers participate and the proportion of our named executive officers total
compensation represented by base salary and annual cash incentive payments or discretionary
bonuses, also see Compensation Discussion and Analysis above.
23
Outstanding Equity Awards at 2008 Fiscal Year End Table
The following table shows all outstanding equity awards held by our named executive officers
at the end of fiscal year 2008.
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Option Awards |
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Stock Awards |
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Equity |
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Incentive |
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Plan |
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Equity |
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Equity |
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Awards: |
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Incentive |
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Incentive |
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Market or |
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Plan |
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Plan |
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Payout |
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Awards: |
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Awards: |
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Value of |
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Number |
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|
Number of |
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Number of |
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Market |
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Number of |
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Unearned |
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|
of |
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Securities |
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|
Securities |
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Value of |
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|
Unearned |
|
|
Shares, |
|
|
|
Securities |
|
|
Underlying |
|
|
Underlying |
|
|
|
|
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|
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|
Number of |
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|
Shares or |
|
|
Shares, |
|
|
Units or |
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|
|
Underlying |
|
|
Unexercised |
|
|
Unexer- |
|
|
Option |
|
|
|
|
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|
Shares or |
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|
Units of |
|
|
Units or |
|
|
Other |
|
|
|
Unexercised |
|
|
Options |
|
|
cised |
|
|
Exer- |
|
|
|
|
|
|
Units of Stock |
|
|
Stock That |
|
|
Other Rights |
|
|
Rights That |
|
|
|
Options |
|
|
(#) |
|
|
Unearned |
|
|
cise |
|
|
Option |
|
|
That Have |
|
|
Have Not |
|
|
That Have |
|
|
Have Not |
|
|
|
(#) |
|
|
Unexercis- |
|
|
Options |
|
|
Price |
|
|
Expiration |
|
|
Not Vested |
|
|
Vested |
|
|
Not Vested |
|
|
Vested |
|
Name |
|
Exercisable |
|
|
able |
|
|
(#) |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
John B. Gerlach, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John L. Boylan |
|
|
15,000 |
(1) |
|
|
|
|
|
|
|
|
|
$ |
41.52 |
|
|
Feb. 28, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
(2) |
|
|
|
|
|
$ |
38.31 |
|
|
Feb. 27, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
(3) |
|
$ |
9,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
|
|
$ |
9,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce L. Rosa |
|
|
15,000 |
(1) |
|
|
|
|
|
|
|
|
|
$ |
41.52 |
|
|
Feb. 28, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
(2) |
|
|
|
|
|
$ |
38.31 |
|
|
Feb. 27, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
(3) |
|
$ |
9,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
|
|
$ |
9,084 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These options were granted on February 23, 2005 pursuant to our 1995 Key Employee Stock
Option Plan and were 100% vested as of the date of grant. |
|
(2) |
|
These stock-settled stock appreciation rights were granted on February 27, 2008 pursuant to our 2005 Stock
Plan. The stock-settled stock appreciation rights vest ratably over a three-year period beginning on
February 27, 2009, can be exercised for up to five years from the date of grant, and are
expected to fully vest on February 27, 2011. |
|
(3) |
|
These shares of restricted stock were granted on February 27, 2008 pursuant to our 2005 Stock
Plan. The restricted stock is expected to fully vest on February 27, 2011. |
2008 Options Exercised and Stock Vested
None of our named executive officers exercised options, and none of our named executive
officers had stock awards that vested, during fiscal year 2008.
2008 Pension Benefits
We do not maintain any defined benefit plans or other plans with specified retirement benefits
in which our named executive officers participate.
24
2008 Nonqualified Deferred Compensation Table
This table shows certain information for fiscal year 2008 for each of our named executive
officers under our nonqualified deferred compensation plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
Registrant |
|
|
|
|
|
Aggregate |
|
Aggregate Balance |
|
|
Contributions in Last |
|
Contributions in |
|
Aggregate Earnings |
|
Withdrawals/ |
|
at Last |
|
|
FY |
|
Last FY |
|
in Last FY |
|
Distributions |
|
FYE |
Name |
|
($) (1) |
|
($) |
|
($) (2) |
|
($) |
|
($) (3) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
John B. Gerlach, Jr.
|
|
$ |
20,000 |
|
|
|
|
$ |
24,012 |
|
|
|
|
$ |
338,259 |
|
|
John L. Boylan
|
|
|
|
|
|
|
|
$ |
9,442 |
|
|
|
|
$ |
128,970 |
|
|
Bruce L. Rosa
|
|
$ |
18,750 |
|
|
|
|
$ |
15,359 |
|
|
|
|
$ |
217,729 |
|
(1) |
|
The amounts reported for our named executive officers in this column are fully reported as
part of the salary for each named executive officer in column (c) of the 2008 Summary
Compensation Table above. |
|
(2) |
|
None of the amounts reported for our named executive officers in this column are reported in
the 2008 Summary Compensation Table above. |
|
(3) |
|
The following amounts reported for our named executive officers in this column have been
previously reported as deferred compensation in our 2007 Summary Compensation Table included
in last years proxy statement: Mr. Gerlach, $20,000; Mr. Boylan, $0; and Mr. Rosa, $25,000. |
For more information about our nonqualified deferred compensation plan, see Compensation
Discussion and Analysis above.
Potential Payments Upon Termination or Change in Control
Our named executive officers may terminate employment with us under a number of different
scenarios, including retirement, voluntary termination for good reason, voluntary termination
without good reason, involuntary termination without cause, involuntary termination for cause,
termination in connection with a change in control, death and disability. Except as discussed
below, we generally limit the payments or other forms of compensation that we will provide our
named executive officers when their employment with us is terminated to compensation elements that
we provide all our employees upon termination, namely payment of any earned but unpaid salary and
accrued but unpaid vacation benefits.
During fiscal year 2008, we were a party to Key Employee Severance Agreements with Mr. Boylan
and Mr. Rosa that provide for them to receive certain cash payments and other benefits if their
employment with us is terminated other than for cause or they resign for good reason, within one
year of a change in control of our company. The terms cause, good reason and change in
control are defined under these agreements. Cause generally means the employees willful engaging
in malfeasance or felonious conduct that in any material respect impairs the reputation, goodwill
or business position of our company or involves misappropriation of our funds or other assets.
Good reason generally means termination triggered by certain reductions in compensation, duties and
responsibility and authority or certain changes in place of employment. Change in control
generally means an event reportable by us on Form 8-K as a change in control and certain
significant changes in the ownership of our common stock or in the makeup of our Board of
Directors.
25
Upon such a termination or resignation within one year of a change in control, we will pay to
the terminated named executive officer in a lump sum cash payment an amount equal to the lesser of
(1) the sum of (A) the executive officers highest annual salary within the immediately preceding
three full fiscal years plus (B) the executive officers highest total annual bonus paid within the
immediately preceding three full fiscal years, or (2) two times the executive officers salary and
bonus paid for the immediately preceding fiscal year. We will also pay to the terminated named
executive officer any accrued but unpaid base salary at the officers then-current salary rate, and
will provide the terminated named executive officer with continued coverage under our health,
disability and life insurance plans in which the named executive officer participated for one year.
The terminated named executive officer has no duty to mitigate the amount of benefits paid by us
while seeking other employment, and the benefits are not subject to reduction for other
compensation earned by the terminated named executive officer after termination.
As stated above, upon termination of employment for any reason regarding Mr. Gerlach, he would
be entitled to his earned unpaid salary as well as his accrued unpaid vacation benefits.
Tabular Disclosure. The tables below reflect the estimated amounts of payments or
compensation our named executive officers may receive under particular termination scenarios. The
amounts shown in the tables below assume that the named executive officer is terminated as of June
30, 2008, and that the price per share of our common shares equals $30.28, which was the closing
price of our common shares on June 30, 2008, as reported on the Nasdaq Global Select Market.
Actual amounts that we may pay to any named executive officer upon termination of employment,
however, can only be determined at the time of such named executive officers actual termination.
John B. Gerlach, Jr. The following table shows the potential payments upon
termination under various circumstances for John B. Gerlach, Jr., our Chairman of the Board, Chief
Executive Officer and President.
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|
Termination |
|
|
|
|
|
|
|
|
|
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|
|
|
|
Without |
|
Termination |
|
Termination |
|
|
|
|
|
|
|
|
|
|
Cause or for |
|
for Cause or |
|
Subsequent to |
|
|
|
|
Benefits and |
|
|
|
|
|
Good |
|
Without |
|
a Change in |
|
Termination |
|
Termination |
Payments Upon |
|
Retirement |
|
Reason on |
|
Good Reason |
|
Control on |
|
by Death on |
|
by Disability |
Termination |
|
on 06/30/08 |
|
06/30/08 |
|
on 06/30/08 |
|
06/30/08 |
|
06/30/08 |
|
on 06/30/08 |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary (1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Annual cash
incentive
compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Long-term
equity-based
incentive
compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Base salary and
average annual
incentive
compensation lump
sum |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Stock options |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Employee Stock
Ownership Plan |
|
$ |
361,185 |
|
|
$ |
361,185 |
|
|
$ |
361,185 |
|
|
$ |
361,185 |
|
|
$ |
361,185 |
|
|
$ |
361,185 |
|
Deferred
Compensation Plan |
|
$ |
338,259 |
|
|
$ |
338,259 |
|
|
$ |
338,259 |
|
|
$ |
338,259 |
|
|
$ |
338,259 |
|
|
$ |
338,259 |
|
|
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health,
disability and
life insurance |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
150,000 |
|
|
$ |
150,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
$ |
699,444 |
|
|
$ |
699,444 |
|
|
$ |
699,444 |
|
|
$ |
699,444 |
|
|
$ |
849,444 |
|
|
$ |
849,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
John L. Boylan. The following table shows the potential payments upon termination
under various circumstances for John L. Boylan, our Treasurer, Vice President, Assistant Secretary
and Chief Financial Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without |
|
Termination |
|
Termination |
|
|
|
|
|
|
|
|
|
|
Cause or for |
|
for Cause or |
|
Subsequent to |
|
|
|
|
Benefits and |
|
|
|
|
|
Good |
|
Without |
|
a Change in |
|
Termination |
|
Termination |
Payments Upon |
|
Retirement |
|
Reason on |
|
Good Reason |
|
Control on |
|
by Death on |
|
by Disability |
Termination |
|
on 06/30/08 |
|
06/30/08 |
|
on 06/30/08 |
|
06/30/08 |
|
06/30/08 |
|
on 06/30/08 |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary (1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Annual cash
incentive
compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Long-term
equity-based
incentive
compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Base salary and
average annual
incentive
compensation lump
sum (2) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
570,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Stock options |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Employee Stock
Ownership Plan |
|
$ |
181,439 |
|
|
$ |
181,439 |
|
|
$ |
181,439 |
|
|
$ |
181,439 |
|
|
$ |
181,439 |
|
|
$ |
181,439 |
|
Deferred
Compensation Plan |
|
$ |
128,970 |
|
|
$ |
128,970 |
|
|
$ |
128,970 |
|
|
$ |
128,970 |
|
|
$ |
128,970 |
|
|
$ |
128,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health,
disability and
life insurance |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
25,313 |
|
|
$ |
150,000 |
|
|
$ |
150,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
$ |
310,409 |
|
|
$ |
310,409 |
|
|
$ |
310,409 |
|
|
$ |
905,722 |
|
|
$ |
460,409 |
|
|
$ |
460,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Bruce L. Rosa. The following table shows the potential payments upon termination
under various circumstances for Bruce L. Rosa, President of our T. Marzetti Company and Vice
President Development.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without |
|
Termination |
|
Termination |
|
|
|
|
|
|
|
|
|
|
Cause or for |
|
for Cause or |
|
Subsequent to |
|
|
|
|
Benefits and |
|
|
|
|
|
Good |
|
Without |
|
a Change in |
|
Termination |
|
Termination |
Payments Upon |
|
Retirement |
|
Reason on |
|
Good Reason |
|
Control on |
|
by Death on |
|
by Disability |
Termination |
|
on 06/30/08 |
|
06/30/08 |
|
on 06/30/08 |
|
06/30/08 |
|
06/30/08 |
|
on 06/30/08 |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary (1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Annual cash
incentive
compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Long-term
equity-based
incentive
compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Base salary and
average annual
incentive
compensation lump
sum (2) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
646,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Stock options |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Employee Stock
Ownership Plan |
|
$ |
311,885 |
|
|
$ |
311,885 |
|
|
$ |
311,885 |
|
|
$ |
311,885 |
|
|
$ |
311,885 |
|
|
$ |
311,885 |
|
Deferred
Compensation Plan |
|
$ |
217,729 |
|
|
$ |
217,729 |
|
|
$ |
217,729 |
|
|
$ |
217,729 |
|
|
$ |
217,729 |
|
|
$ |
217,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health,
disability and
life insurance |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
19,129 |
|
|
$ |
150,000 |
|
|
$ |
150,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
$ |
529,614 |
|
|
$ |
529,614 |
|
|
$ |
529,614 |
|
|
$ |
1,194,743 |
|
|
$ |
679,614 |
|
|
$ |
679,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As of June 30, 2008, the amount of base salary payable to the named executive officers for
services rendered during fiscal year 2008 has been paid. |
|
(2) |
|
For a termination subsequent to a change in control, these amounts represent a lump sum cash
payment in an amount equal to the sum of the executive officers highest annual salary within
the immediately preceding three full fiscal years ($410,000 for Mr. Boylan and $370,000 for
Mr. Rosa) plus the executive officers highest total annual bonus paid within the immediately
preceding three full fiscal years ($160,000 for Mr. Boylan and $276,000 for Mr. Rosa). |
|
(3) |
|
These amounts reflect an assumption that the officer will receive the maximum available
disability payment. |
COMPENSATION OF DIRECTORS
2008 Director Compensation Table
The following table summarizes compensation earned during the 2008 fiscal year by our
nonemployee directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
|
|
|
Paid in |
|
Stock |
|
Option |
|
|
|
|
Cash |
|
Awards |
|
Awards |
|
Total |
Name |
|
($) (1) |
|
($) (2) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(h) |
James B. Bachmann |
|
$ |
89,500 |
|
|
$ |
20,036 |
|
|
$ |
0 |
|
|
$ |
109,536 |
|
Neeli Bendapudi |
|
$ |
52,000 |
|
|
$ |
20,036 |
|
|
$ |
0 |
|
|
$ |
72,036 |
|
Robert L. Fox |
|
$ |
59,500 |
|
|
$ |
20,036 |
|
|
$ |
0 |
|
|
$ |
79,536 |
|
Robert S. Hamilton |
|
$ |
49,500 |
|
|
$ |
8,365 |
(3) |
|
$ |
0 |
|
|
$ |
57,865 |
|
Edward H. Jennings |
|
$ |
62,500 |
|
|
$ |
20,036 |
|
|
$ |
0 |
|
|
$ |
82,536 |
|
Henry M. ONeill, Jr. |
|
$ |
58,000 |
|
|
$ |
20,036 |
|
|
$ |
0 |
|
|
$ |
78,036 |
|
Zuheir Sofia |
|
$ |
70,000 |
|
|
$ |
20,036 |
|
|
$ |
0 |
|
|
$ |
90,036 |
|
Alan F. Harris |
|
$ |
8,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
8,500 |
|
28
(1) |
|
The amounts shown in column (b) represent compensation amounts discussed in the narrative
below. |
|
(2) |
|
The amounts shown in column (c) do not reflect compensation actually received by the
directors. These amounts reflect the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended June 30, 2008 in accordance with SFAS 123R,
excluding the effect of certain forfeiture assumptions, for restricted stock awards granted in
fiscal years 2007 and 2008. For additional information, refer to Notes 1 and 11 to our
audited consolidated financial statements included in our Annual Reports on Form 10-K for the
years ended June 30, 2008 and 2007. The nonemployee directors had restricted stock awards
outstanding as of June 30, 2008 for the following number of shares: Mr. Bachmann, 500; Ms.
Bendapudi, 500; Mr. Fox, 500; Mr. Hamilton, 0; Mr. Jennings, 500; Mr. ONeill, Jr., 500; Mr.
Sofia, 500; and Mr. Harris, 0. Each nonemployee director received a grant of restricted stock
for fiscal 2008 as follows: 500 shares on November 19, 2007 under our 2005 Stock Plan. This
grant of restricted stock will vest on November 19, 2008. Vesting would accelerate upon a
change in control, death or disability. The grant date fair value of the stock awards issued
to each nonemployee director in fiscal year 2008 was $19,070. |
|
(3) |
|
Upon his resignation, Mr. Hamilton forfeited his 500 shares from the November 19, 2007
restricted stock award. |
Our Compensation Committee reviews the level of compensation of our nonemployee directors on
an annual basis. We have historically obtained data from a number of different sources to
determine the appropriateness of the current level of compensation for our nonemployee directors,
including:
|
|
|
Publicly available data describing director compensation at companies in our
peer group; |
|
|
|
|
Data collected by our corporate administration; and |
|
|
|
|
Information obtained directly from other companies. |
We compensate our nonemployee directors through a mix of cash and, beginning in 2006,
equity-based compensation. Except as noted in the footnotes above, our nonemployee directors
received the following compensation for fiscal year 2008:
|
|
|
a quarterly retainer paid at an annual rate of $28,000; |
|
|
|
|
a $1,500 fee for participation in each meeting of the Board of Directors or
Committee of the Board of Directors; |
|
|
|
|
an additional quarterly retainer paid at an annual rate of $7,500 for the
Chair of the Audit Committee for serving in that capacity; |
|
|
|
|
additional quarterly retainers paid at an annual rate of $3,000 for the
Chairs of the Compensation and Nominating and Governance Committees for serving
in those respective capacities; and |
|
|
|
|
an additional quarterly retainer paid at an annual rate of $15,000 for our
Lead Independent Director. |
29
We also reimburse expenses incurred by our nonemployee directors to attend Board and committee
meetings. These compensation amounts are unchanged from the amounts we paid our nonemployee
directors for fiscal years 2006 and 2007, except for the Lead Independent Director, which position
did not exist during those years. Directors who are also our employees do not receive cash or
equity compensation for services on our Board in addition to compensation payable for their
services as employees.
Additionally, on November 19, 2007, each of our nonemployee directors received a grant of 500
shares of restricted stock pursuant to the terms of our 2005 Stock Plan. The restricted stock
vests one year from the grant date, or earlier upon a change in control of the company, or the
death or disability of the recipient. Dividends on the shares of restricted stock are held in
escrow until the shares vest. The Board will consider whether an additional equity grant should be
made to our nonemployee directors at its November 2008 meeting to be held on the same day as our
next annual meeting of shareholders.
In fiscal year 2008, we also requested competitive data from Pearl Meyer. Based upon the
information and recommendations we received, we increased certain components of the compensation
for nonemployee directors effective for fiscal 2009. For fiscal 2009, our nonemployee directors
will receive the following compensation:
|
|
|
a quarterly retainer paid at an annual rate of $35,000; |
|
|
|
|
a $1,500 fee for participation in each official meeting of the Board of
Directors or Committee of the Board of Directors; |
|
|
|
|
an additional quarterly retainer paid at an annual rate of $10,000 for the
Chair of the Audit Committee; |
|
|
|
|
an additional quarterly retainer paid at an annual rate of $6,000 for the
Chair of the Compensation Committee; |
|
|
|
|
an additional quarterly retainer paid at an annual rate of $5,000 for the
Chair of the Nominating and Governance Committee; and |
|
|
|
|
an additional quarterly retainer paid at an annual rate of $15,000 for the
Lead Independent Director. |
Equity Compensation Plan Information Table
The following table contains information as of June 30, 2008 regarding the Corporations 1995
Key Employee Stock Option Plan and the Corporations 2005 Stock Plan:
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
|
|
remaining available for |
|
|
|
|
|
|
Weighted-average |
|
future issuance under |
|
|
Number of securities to |
|
exercise price of |
|
equity compensation |
|
|
be issued upon exercise |
|
outstanding |
|
plans (excluding |
|
|
of outstanding options, |
|
options, warrants |
|
securities |
|
|
warrants and rights |
|
and rights |
|
reflected in column (a)) |
Plan category |
|
(a) |
|
(b) |
|
(c) |
Equity compensation
plans approved by
security holders |
|
|
392,550 |
|
|
|
$40.26 |
|
|
|
1,816,350 |
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
392,550 |
|
|
|
$40.26 |
|
|
|
1,816,350 |
|
30
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Fox, Hamilton, Jennings and ONeill served on the Compensation Committee during fiscal
2008. Except for Mr. Fox, who was an employee of the Corporation more than 10 years ago, none of
the members of the Compensation Committee during fiscal 2008 had at any time been an officer or
employee of the Corporation or of any of its subsidiaries. None of the members of the Compensation
Committee during fiscal 2008 had any related person transaction with the Corporation required to be
disclosed under Item 404 of Regulation S-K. No executive officer of the Corporation served as a
member of the compensation committee or board of directors of any other entity that had an
executive officer serving as a member of the Corporations Board or Compensation Committee during
fiscal 2008 such that the service would constitute an interlock under Item 407(e)(4) of Regulation
S-K.
COMPENSATION COMMITTEE REPORT
The following report has been submitted by the Compensation Committee:
The Compensation Committee has reviewed and discussed the Corporations Compensation
Discussion and Analysis with management. Based on this review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in the Corporations definitive proxy statement on Schedule 14A for the Annual Meeting,
which is incorporated by reference in the Corporations Annual Report on Form 10-K for the fiscal
year ended June 30, 2008, each as filed with the SEC.
The foregoing report was submitted by the Compensation Committee and shall not be deemed to be
soliciting material or to be filed with the SEC or subject to Regulation 14A promulgated by the
SEC or Section 18 of the Securities Exchange Act of 1934, as amended.
Respectfully submitted,
Edward H. Jennings, Chairperson
Robert L. Fox
Henry M. ONeill, Jr.
AUDIT COMMITTEE REPORT
The Audit Committee is comprised solely of nonemployee directors, each of whom has been
determined by the Board of Directors to be independent under the requirements of The Nasdaq Stock
Market LLC and SEC rules. In addition, the Board of Directors has determined that Mr. Bachmann is
a financial expert as defined by SEC rules. The Audit Committee held seven meetings during
fiscal 2008. The Audit Committee operates under a written charter, which is available on the
corporate governance page
31
of the Corporations web site at www.lancastercolony.com. Under the charter, the
Audit Committees responsibilities include:
|
|
|
Appointment and oversight of the independent auditor; |
|
|
|
|
Approval of the fees and other compensation to be paid to the
Corporations independent auditor; |
|
|
|
|
Pre-approval of all auditing services and permitted non-audit
services by the Corporations independent auditor; |
|
|
|
|
Review of the Corporations annual financial statements to be
included in the Corporations Annual Report on Form 10-K; |
|
|
|
|
Oversight of the review and response to complaints made to the
Corporation regarding accounting, internal accounting controls and auditing
matters; |
|
|
|
|
Oversight of the internal audit function; and |
|
|
|
|
Review and approval of related party transactions. |
Management is responsible for the Corporations internal controls and preparing the
Corporations consolidated financial statements and a report on managements assessment of the
effectiveness of internal control over financial reporting. The Corporations independent
registered public accounting firm, Deloitte & Touche LLP, is responsible for performing an
independent audit of the consolidated financial statements and issuing a report thereon, and also
auditing the effectiveness of internal control over financial reporting and issuing a report
thereon. Their audits are performed in accordance with the standards of the Public Company
Accounting Oversight Board. The Audit Committee is responsible for overseeing the conduct of these
activities and appointing the Corporations independent registered public accounting firm. In
performing its oversight function, the Audit Committee relies, without independent verification, on
the information provided to it and on representations made by management and the independent
registered public accounting firm.
In conducting its oversight function, the Audit Committee discusses with the Corporations
internal auditors and the Corporations independent registered public accounting firm, with and
without management present, the overall scope and plans for their respective audits. The Audit
Committee also reviews the Corporations programs and key initiatives to design, implement and
maintain effective internal controls over financial reporting and disclosure controls. The Audit
Committee has sole discretion, in its areas of responsibility and at the Corporations expense, to
engage independent advisors as it deems appropriate and to approve the fees and retention terms of
such advisors.
The Audit Committee meets with the internal auditors and independent registered public
accounting firm, with and without management present, to discuss the results of their examinations,
the evaluations of the Corporations internal controls and the overall quality of the Corporations
financial reporting. The Audit Committee has reviewed and discussed with management and Deloitte &
Touche LLP the audited financial statements for the fiscal year ended June 30, 2008. The Audit
Committee has also reviewed and discussed managements assessment of internal control over
financial reporting with management and Deloitte & Touche LLP. The Audit Committee also reviewed
and discussed with Deloitte & Touche LLP its reports on the Corporations annual financial
statements and that the Corporation maintained, in all material respects, effective internal
control over financial reporting as of June 30, 2008.
The Audit Committee reviewed with Deloitte & Touche LLP the matters required to be discussed
by Statement on Auditing Standards No. 61 (Communications with Audit Committees). In addition, the
Audit Committee discussed with Deloitte & Touche LLP their independence from management, and the
32
Audit Committee has received from Deloitte & Touche LLP the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
Based on its review of the audited consolidated financial statements and discussions with
management and Deloitte & Touche LLP referred to above, the Audit Committee recommended to the
Board of Directors the inclusion of the audited financial statements for the fiscal year ended June
30, 2008 in the Corporations Annual Report on Form 10-K for filing with the SEC.
Respectfully submitted,
James B. Bachmann, Chairperson
Edward H. Jennings
Zuheir Sofia
PROPOSAL TWO
RATIFICATION OF THE SELECTION OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP, an independent registered public accounting firm, has served as the
Corporations independent auditors since 1961 and audited the consolidated financial statements for
the year ended June 30, 2008. The Audit Committee is directly responsible for the appointment of
the Corporations independent registered public accounting firm and has appointed Deloitte & Touche
LLP to audit the Corporations financial statements for the year ending June 30, 2009. Although it
is not required to do so, the Audit Committee has determined to submit its selection of the
independent registered public accounting firm to the Corporations shareholders for ratification of
its action as a matter of good corporate governance. In the event that Deloitte & Touche LLP is
not ratified by the holders of a majority of the shares represented at the Annual Meeting, the
Audit Committee will evaluate such shareholder vote when considering the selection of an
independent registered public accounting firm to serve as the Corporations auditors for the 2010
fiscal year.
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting,
will have the opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of Deloitte & Touche LLP as
the Corporations independent registered public accounting firm for the year ending June 30, 2009
by executing and returning the enclosed proxy card.
AUDIT AND RELATED FEES
The following table recaps Deloitte & Touche LLP fees pertaining to the fiscal years ended
June 30, 2008 and 2007:
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|
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2008 |
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2007 |
Audit Fees |
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$ |
1,555,000 |
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$ |
2,001,000 |
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Audit-Related Fees |
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Tax Fees |
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|
|
|
|
|
|
All Other Fees |
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$ |
25,000 |
|
|
|
|
|
|
Total Fees |
|
$ |
1,580,000 |
|
|
$ |
2,001,000 |
|
33
The fees included under the caption All Other Fees were incurred for services related to a
potential acquisition.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has established a policy regarding review and pre-approval of all audit
and non-audit services expected to be performed by the Companys independent registered public
accounting firm. When considering requests for non-audit services, the Audit Committee evaluates
whether the proposed engagement risks compromising the accounting firms independence by
specifically considering the volume of the proposed non-audit services and whether those non-audit
services are likely to cause the accounting firm 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. Absent strong
countervailing considerations, the Audit Committee will generally not approve non-audit services if
the aggregate fees for non-audit services for the year will exceed the aggregate fees for audit
services, audit-related services and tax compliance services for the year. The policy also
prohibits the Companys accounting firm from providing certain services described in the policy as
prohibited services.
Generally, requests for non-audit services are submitted in writing to the Audit Committee by
the Companys officer or employee requesting such services, along with specific supporting
information described in the policy. Typically, the Audit Committee will approve non-audit
services provided by the accounting firm that are closely related to the audit services,
audit-related services and tax compliance services already being provided by the accounting firm,
including due diligence services, subject to the fee policy described above. Between Audit
Committee meetings, any two Audit Committee members may review and approve requests for non-audit
services in accordance with the policy that are budgeted for $50,000 or less, provided that the
pre-approval is reported not later than the next meeting of the Audit Committee.
The Audit Committees 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 Registered Public Accounting Firm for Non-Audit
Services, which is attached as Appendix A to the Corporations Audit Committee charter. For the
fiscal year ended June 30, 2008, all of the services described above were pre-approved by the Audit
Committee.
PROPOSALS THREE AND FOUR
APPROVAL AND ADOPTION OF AMENDMENTS TO THE ARTICLES OF INCORPORATION
In August 2008, the Board of Directors unanimously recommended that the Corporations
shareholders approve and adopt the amendments to the Corporations Articles of Incorporation
described below. The proposed amendments are separated into two proposals to allow shareholders to
focus and vote on each significant change. Each proposal will be voted upon separately, and the
approval or rejection of one proposal will not affect the approval or rejection of the other
proposal. The proposed amendments are incorporated into a draft Amended and Restated
Articles of Incorporation of the Corporation, a copy of which is
34
attached as Appendix A and marked to show the proposed changes. If approved, Proposal
Three will eliminate existing Article Tenth and existing Article Eleventh of the Articles of
Incorporation. If approved, Proposal Four will eliminate existing Article Twelfth of the Articles
of Incorporation. All other changes are technical, non-substantive changes that will be necessary
if Proposals Three or Four are approved.
Proposal Three Revise Control Share Acquisition Provisions
Proposal Three contains changes to the Articles of Incorporation regarding the applicability
of Section 1701.831 of the Ohio Revised Code, commonly known as the Ohio Control Share Acquisition
Act. In general, the Ohio Control Share Acquisition Act provides that, unless a corporations
articles of incorporation or code of regulations provide otherwise, any control share acquisition
of the corporation may be made only with the prior authorization of the corporations shareholders.
A control share acquisition occurs when any person acquires, either directly or indirectly,
shares of the corporation that, when added to all of the other shares of the corporation as to
which the person may exercise or direct the exercise of voting power in the election of directors,
would entitle the acquiring person, immediately after the acquisition, directly or indirectly, and
alone or with others, to control such voting power in the following ranges:
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one-fifth or more but less than one-third of such voting power; |
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one-third or more but less than a majority of such voting power; or |
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a majority or more of such voting power. |
In 1991, when the Corporation changed its state of incorporation from Delaware to Ohio, its
shareholders adopted original Articles of Incorporation to govern the Corporations affairs. Those
original Articles of Incorporation included Article Tenth, which provided a set of control share
acquisition provisions that, although different from those in the Ohio Control Share Acquisition
Act, also acted as a defense against hostile takeovers. Accordingly, the Corporation and its
shareholders chose to explicitly opt out of the Ohio Control Share Acquisition Act at that time
by providing in Article Eleventh of the Articles of Incorporation that the Ohio Control Share
Acquisition Act only applies to the Corporation with respect to control share acquisitions that are
not covered by Article Tenth. As a result of Article Eleventh, in order to conduct a control share
acquisition, persons need comply with only the provisions of Article Tenth rather than the
provisions of the Ohio Control Share Acquisition Act. In general, both Article Tenth and Article
Eleventh were originally adopted due to general uncertainty at the time regarding the effectiveness
of the Ohio Control Share Acquisition Act and a general perception that the specific control share
acquisition provisions contained in Article Tenth could provide the Corporation with better
protection than the Ohio Control Share Acquisition Act.
The Amended and Restated Articles of Incorporation eliminate both Article Tenth and Article
Eleventh, which effectively causes the Corporation to opt back into the Ohio Control Share
Acquisition Act. This change is being proposed because the Corporation believes that, today, the
preferable approach for an Ohio corporation is to rely on the statutory approach to control share
acquisition situations provided by the Ohio Control Share Acquisition Act rather than on
stand-alone control share acquisition provisions in the corporations organization documents.
Since 1991, the Ohio Control Share Acquisition Act has been revised to account for its
then-perceived weaknesses and to strengthen its protective provisions. Additionally, unlike the
Corporations stand-alone control share acquisition provisions in Article Tenth, the Ohio Control
Share Acquisition Act has been tested in several court actions, and its protective provisions have
been judicially validated. For these reasons, the Corporation does not believe that any additional
protection is needed with respect to control share acquisition situations other than that offered
by the Ohio Control Share Acquisition Act. If this Proposal Three is approved, in order to conduct
a control share
35
acquisition of the Corporations shares under Ohio law, a person will once again have to
comply with the provisions of the Ohio Control Share Acquisition Act rather than the specific
provisions in Article Tenth. If this Proposal Three is approved, other technical, non-substantive
changes will be made to the existing Articles of Incorporation for conformity and consistency
purposes. These additional changes are indicated in Appendix A.
Approval of Proposal Three requires the affirmative vote of the holders of at least 80% of the
Common Stock entitled to vote for the election of directors. Unless otherwise directed, shares
represented by proxy will be voted FOR the approval of Proposal Three.
The Board of Directors recommends a vote FOR Proposal Three and the approval and adoption of
amendments to the Corporations Articles of Incorporation to delete existing control share
acquisition provisions and opt back into the protection of the Ohio Control Share Acquisition Act
by executing and returning the enclosed proxy card.
Proposal Four Eliminate Supermajority Shareholder Approval Requirement
If approved, Proposal Four would delete Article Twelfth of the Articles of Incorporation,
which requires supermajority shareholder approval for certain transactions with owners of 5% or
more of the Corporations outstanding voting stock. Under the existing Article Twelfth of the
Articles of Incorporation, the following transactions with or involving persons or other entities
that own or control 5% or more of the Corporations Common Stock must be approved by the
affirmative vote of the holders of at least 80% of the Common Stock entitled to vote for the
election of directors:
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any merger or consolidation of the Corporation or any of its subsidiaries with or
into such 5% owner or any of its affiliates, subsidiaries or associates; |
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any merger or consolidation of the Corporation with or into any subsidiary of the
Corporation, except a merger with a subsidiary of the Corporation in which the
Corporation is the surviving corporation, or a subsidiary of the Corporation is the
surviving corporation and, following such merger, the certificate or articles of
incorporation of such subsidiary contains provisions substantially the same in
substance as those in Articles Eighth, Tenth, Eleventh, Twelfth and Thirteenth of the
existing Articles of Incorporation; |
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any sale, lease, exchange or other disposition of all or any substantial part of the
assets of the Corporation or any of its subsidiaries to or with such 5% owner or any of
its affiliates, subsidiaries or associates; |
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any issuance or delivery of any voting securities of the Corporation or any of its
subsidiaries to such 5% owner or any of its affiliates, subsidiaries or associates in
exchange for cash, other assets or securities, or a combination thereof; or |
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any dissolution of the Corporation. |
If any of these transactions is approved by the Board of Directors before such person or other
entity acquires 5% or more of the Corporations Common Stock, however, then no supermajority
shareholder approval is needed for the transaction.
The Amended and Restated Articles of Incorporation eliminate Article Twelfth in its entirety,
which effectively eliminates the supermajority shareholder approval requirement for these
transactions. This change is being proposed because the Corporation believes that the provisions
of Chapter 1704 of the
36
Ohio Revised Code (the Interested Shareholder Transactions Act) give the Corporation enough
protection with respect to transactions with shareholders. The Interested Shareholder Transactions
Act generally prohibits any person that beneficially owns 10% or more of the Corporations
outstanding common shares from engaging in mergers, consolidations, majority share acquisitions,
asset sales, loans and certain other transactions for a three-year period after acquiring the 10%
ownership, unless approval for the initial acquisition of 10% or more is first obtained from the
Board of Directors. After the three-year waiting period, the 10% shareholder can complete the
transaction only if, among other things: (1) approval is received from the holders of two-thirds
of all voting shares and from a majority of shares not held by the 10% shareholder; or (2) the
transaction meets certain criteria designed to ensure fairness to the remaining shareholders. As a
result, if this Proposal Four is approved, any of the above-listed transactions may be conducted
without the need for the holders of at least 80% of the Common Stock entitled to vote for the
election of directors to weigh in and approve the transaction; however, such transactions will
still be subject to the Interested Shareholder Transactions Act as well as any other applicable
approval requirements under the Ohio Revised Code. If this Proposal Four is approved, other
technical, non-substantive changes will be made to the existing Articles of Incorporation for
conformity and consistency purposes. These additional changes are indicated in Appendix A.
Approval of Proposal Four requires the affirmative vote of the holders of at least 80% of the
Common Stock entitled to vote for the election of directors. Unless otherwise directed, shares
represented by proxy will be voted FOR the approval of Proposal Four.
The Board of Directors recommends a vote FOR Proposal Four and the approval and adoption of
amendments to the Corporations Articles of Incorporation to eliminate the requirement for a
supermajority shareholder vote for certain transactions with certain owners of the Corporations
securities by executing and returning the enclosed proxy card.
PROPOSALS FIVE, SIX, SEVEN AND EIGHT
APPROVAL AND ADOPTION OF AMENDMENTS TO THE CODE OF REGULATIONS
In August 2008, the Board of Directors also unanimously recommended that the Corporations
shareholders approve and adopt the amendments to the Corporations Code of Regulations described
below. The proposed amendments are separated into four proposals to allow shareholders to focus
and vote on each significant change. Each proposal will be voted upon separately, and the approval
or rejection of one proposal will not affect the approval or rejection of any other proposal. The
proposed amendments are incorporated into a draft Amended and Restated Code of
Regulations of the Corporation, a copy of which is attached as Appendix B and marked to show the proposed
changes. If approved, Proposal Five will change Sections 1.06 and 1.07 of the Code of Regulations.
If approved, Proposal Six will change Section 1.08 of the Code of Regulations. If approved,
Proposal Seven will change Section 2.03. If approved, Proposal Eight will change Section 7.03 of
the Code of Regulations. The remaining changes are technical, non-substantive changes that may be
necessary if Proposals Five, Six, Seven or Eight are approved.
Proposal Five Clarify Shareholder Meeting Authority and Revise Advance Notice Requirement for
Shareholder Proposals
Proposal Five contains changes to the Code of Regulations regarding the conduct of business at
shareholders meetings and the method for shareholders to bring business before such meetings.
Conduct of Meetings. The existing Code of Regulations contains limited provisions in Sections
1.06 and 1.07 regarding the conduct of shareholder meetings. If Proposal Five is approved, Section
1.06
37
will be revised to set forth the express authority of the meeting chairperson to control the
conduct of a shareholder meeting. This change is being proposed to provide greater clarity as to
the authority of the chairperson of a shareholder meeting.
Revised Section 1.06 would continue to identify how the chairperson of the meeting is
designated and specify that the chairperson calls the meeting to order, acts as chairperson of the
meeting, appoints the secretary and an inspector or inspectors of elections and other functionaries
for the meeting, but would also specify that the chairperson determines the order of business for
the meeting, unless the order of business is previously determined by the Board of Directors prior
to the meeting. Revised Section 1.06 would also specify the chairpersons authority to determine
the rules of procedure and regulate the conduct of the meeting, including, without limitation, to:
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impose restrictions on persons other than shareholders or their proxies attending
the meeting; |
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ascertain whether any shareholder or proxy may be excluded from the meeting due to
such persons undue disruption of the meeting; |
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determine the circumstances in which any person may make a statement or ask
questions at the meeting; |
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rule on all procedural questions arising during or in connection with the meeting;
and |
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determine whether any nomination of a director nominee or business proposed to be
brought before the meeting has been properly brought before the meeting. |
Advance Notice of Shareholder Proposals. The most significant aspect of this proposal is
that the amendments set forth revised advance notice provisions relating to shareholder proposals.
The existing Code of Regulations contains a limited provision in Section 1.06 requiring that
shareholders give the Corporation 30 days prior written notice of proposals to be brought before a
shareholder meeting. If Proposal Five is approved, that provision of Section 1.06 will be deleted,
and Section 1.07 will be revised to add detailed advance notice provisions and informational
requirements for shareholder proposals of business to be conducted at shareholder meetings. This
change is also being proposed to provide the Corporation with more customary time and information
about the shareholder proposal to enable the Corporation to best analyze and prepare for conducting
shareholder-proposed business at shareholder meetings.
Under revised Section 1.07, only business that is properly brought before a shareholder
meeting will be conducted or considered at such meeting. For annual shareholder meetings, to
properly request that business be brought before the meeting, a shareholder must (1) be a
shareholder of the Corporation of record at the time the notice of the meeting is given and at the
time of the meeting, (2) be entitled to vote at such meeting, and (3) have given timely notice in
proper written form to the Corporations Secretary.
To be timely submitted, a shareholder notice of a proposal would need to be delivered to or
received by the Corporation not less than 60 nor more than 90 days prior to the meeting. However,
if less than 75 days notice or prior public disclosure of the date of meeting is given, notice
would need to be received not later than the close of business on the 15th day following the
earlier of the day on which such notice is mailed or such announcement of the date of the meeting
is first made. This new timeframe for the submission of notice of a shareholder proposal will
parallel the current timeframe contained in the existing Code of Regulations for the submission of
notice of a shareholder nominee for election to the Board of Directors.
38
To be in proper written form, a shareholder notice of a proposal would need to contain for
each matter the following:
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a reasonable description of the proposed business and the reasons for conducting
such business at the meeting; |
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the name and address appearing on the Corporations books of the proposing
shareholder (and in certain cases other persons associated with the proposing
shareholder or the proposal (Shareholder Related Persons)); |
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a representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at the meeting and intends to hold the Corporations stock
at the time of the meeting and appear in person or by proxy at the meeting to bring
such business before the meeting; |
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the class and number of any securities of the Corporation that are owned
beneficially or of record by the proposing shareholder and any Shareholder Related
Person; |
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a description of any derivative positions in any securities of the Corporation
directly or indirectly held or beneficially owned by the shareholder or any Shareholder
Related Person and any hedging or other transaction or series of transactions,
agreement, arrangement or understanding with respect to any of the Corporations
securities entered into or made by the shareholder or any Shareholder Related Person; |
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a description of any proxy, transaction, agreement, arrangement, understanding or
relationship pursuant to which the shareholder or any Shareholder Related Person has a
right to vote any shares of any of the Corporations securities; |
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a description of all arrangements or understandings between or among any of the
shareholder, any Shareholder Related Person, and any other person relating to the
proposal and any material interest of the shareholder or any Shareholder Related Person
in such business; and |
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whether either the shareholder giving the notice or any Shareholder Related Person
intends to deliver a proxy statement and form of proxy to the holders of at least the
percentage of shares of the Corporation entitled to vote that is required to approve
the proposal. |
Revised Section 1.07 would also specify that, to be properly brought before a special meeting
of shareholders, business must be either specified in the notice of the meeting (or any notice
supplement) or otherwise brought before the meeting by the meeting chairman or by or at the
direction of a majority of the whole Board of Directors. In order to include shareholder proposals
in the Corporations proxy statement, the proposing shareholder will also have to comply with the
applicable requirements of the Securities Act of 1934 and related rules and regulations.
Approval of Proposal Five requires the affirmative vote of the holders of at least 80% of the
Common Stock entitled to vote for the election of directors. Unless otherwise directed, shares
represented by proxy will be voted FOR the approval of Proposal Five.
The Board of Directors recommends a vote FOR Proposal Five and the approval and adoption of
amendments to the Corporations Code of Regulations related to shareholder meetings and notices,
including to set forth the express authority of the meeting chair to conduct such meetings and to
revise the advance notice requirement for shareholder proposals by executing and returning the
enclosed proxy card.
39
Proposal Six Allow Alternative Proxy Formats
Proposal Six seeks to revise Section 1.08 of the Code of Regulations to clarify and modernize
the method by which shareholders may authorize proxies to vote on their behalf in connection with
any shareholder meeting. Prior to 1999, the Ohio Revised Code required that proxies be in writing
and signed by the shareholder. In 1999, the Ohio Revised Code was amended to permit the use of
developing technologies in the area of corporate elections, and specifically to allow the use of
electronically transmitted proxy authorizations to the extent that such electronic proxies can be
verified and validated. The existing Code of Regulations tracks the pre-1999 Ohio statute in
providing that all proxies to be used in connection with a shareholder meeting must be in written
form, which requirement prohibits shareholders from electronically authorizing proxies and may
significantly limit the shareholders abilities to timely transmit their voting instructions for
shareholder meetings. If this proposal is approved, any shareholder would be able to appoint a
proxy for shareholder meetings in any form permitted by Chapter 1701 of the Ohio Revised Code,
including in writing, by electronic mail or by an electronic, telephonic or other transmission,
that is verifiable as having been sent by the shareholder. If this proposal is approved, the Board
of Directors may establish specific rules for verifying non-written proxies to ensure an accurate
count of votes for such shareholder meeting.
Approval of Proposal Six requires the affirmative vote of a majority of the holders of the
Common Stock entitled to vote for the election of directors. Unless otherwise directed, shares
represented by proxy will be voted FOR the approval of Proposal Six.
The Board of Directors recommends a vote FOR Proposal Six and the approval and adoption of
amendments to the Corporations Code of Regulations to allow for proxies in any form permitted by
Ohio law by executing and returning the enclosed proxy card.
Proposal Seven Add Additional Informational and Covenant Requirements Regarding Director
Nominations by Shareholders
Proposal Seven seeks to revise Section 2.03 of the Code of Regulations to modernize and add
certain additional informational and covenant requirements to the process by which shareholders may
nominate candidates for election as Directors. If this proposal is approved, shareholders would be
required to provide certain additional information and agree to certain covenants regarding their
ownership of the Corporations Common Stock in a shareholder nomination notice proposing director
nominees for an annual meeting of shareholders. As revised, these requirements would generally
parallel the requirements listed above under Proposal Five for notices of shareholder proposals
(with information provided regarding the person being nominated rather than any proposed business),
except:
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the shareholder need not provide a reasonable description of the proposed business
and the reasons for conducting such business at the meeting; |
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the description of arrangements or understandings provided must be of those between
or among any of the shareholder, any Shareholder Related Person, and each nominee; |
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the shareholder must provide information regarding each proposed nominee that would
be required to be included in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors in a contested
election pursuant to Section 14 of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, including the signed consent of each nominee to
be named as a nominee and to serve as a director of the Corporation if so elected; and |
40
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the shareholder must provide, with respect to each proposed nominee, a Nominee
Questionnaire and a Nominee Representation and Agreement (each as defined in Section
2.03), each completed and signed by the nominee. |
Under revised Section 2.03, only persons nominated in accordance with Section 2.03 are
eligible for election as directors of the Corporation. For annual shareholder meetings, to
properly nominate a person for election as a director of the Corporation, a shareholder must (1) be
a shareholder of the Corporation of record at the time the shareholder provides its nominee notice
and at the time of the meeting, (2) be entitled to vote for the election of directors at such
meeting, (3) have given timely notice of the nomination in proper written form to the Corporations
Secretary, and (4) comply with the other procedures specified in Section 2.03. Revised Section
2.03 would also specify that, to properly nominate a person for election as a director of the
Corporation at a special meeting of shareholders, the nomination must be either specified in the
notice of the meeting (or any notice supplement) or made by the meeting chairman or by or at the
direction of a majority of the whole Board of Directors. The nominating shareholder will also have
to comply with the applicable requirements of the Securities Act of 1934 and related rules and
regulations.
Approval of Proposal Seven requires the affirmative vote of the holders of at least 80% of the
Common Stock entitled to vote for the election of directors. Unless otherwise directed, shares
represented by proxy will be voted FOR the approval of Proposal Seven.
The Board of Directors recommends a vote FOR Proposal Seven and the approval and adoption of
amendments to the Corporations Code of Regulations to add additional information and covenant
requirements regarding nominations by shareholders of persons for election as directors by
executing and returning the enclosed proxy card.
Proposal Eight Allow the Board of Directors to Adopt Amendments to Code of Regulations
In 2006, the Ohio Revised Code was amended to allow boards of directors of Ohio corporations
to make certain amendments to their codes of regulations without shareholder approval so long as
such amendments do not divest or limit the shareholders power to adopt, amend or repeal the
regulations of the corporation. The existing Code of Regulations requires that all amendments be
approved and adopted by shareholders. Many jurisdictions, such as Delaware, have historically
allowed the board of directors of a corporation to amend the bylaws without shareholder approval.
The Ohio Revised Code now gives Ohio corporations similar flexibility subject to statutory
limitations that prohibit directors from amending the regulations to effect changes in certain
areas deemed by the Ohio legislature to be important substantive rights that are reserved to the
shareholders, such as to:
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specify the percentage of shares a shareholder must hold in order to call a
special meeting; |
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specify the length of time period required for notice of a shareholders
meeting; |
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specify that shares that have not yet been fully paid can have voting
rights; |
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specify requirements for a quorum at a shareholders meeting; |
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prohibit shareholder or director actions from being authorized or taken
without a meeting; |
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define terms of office for directors or provide for classification of
directors; |
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require greater than a majority vote of shareholders to remove directors
without cause; |
41
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establish requirements for a quorum at directors meetings, or specify the
required vote for an action of the directors; |
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delegate authority to committees of the board to adopt, amend or repeal
regulations; and |
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remove the requirement that a control share acquisition of an issuing
public corporation be approved by shareholders of the acquired corporation. |
Section 7.03 of the Amended and Restated Code of Regulations reflects this change by allowing
the Board of Directors to amend the Code of Regulations in the future to the extent permitted by
Ohio law. Accordingly, the Board of Directors would be able to make ministerial and other changes
to the Code of Regulations without the time-consuming and expensive process of seeking shareholder
approval, which would be required if this proposal is not approved. Under Ohio law, the
Corporation will be required to promptly provide shareholders with any amendments that the Board of
Directors makes to the Code of Regulations if this proposal is approved. If this Proposal Eight is
approved, an additional, non-substantive change will be made to Section 7.03 of the Code of
Regulations for conformity and consistency purposes. This additional change is indicated in
Appendix B.
Approval of Proposal Eight requires the affirmative vote of the holders of at least 80% of the
Common Stock entitled to vote for the election of directors. Unless otherwise directed, shares
represented by proxy will be voted FOR the approval of Proposal Eight.
The Board of Directors recommends a vote FOR Proposal Eight and the approval and adoption of
amendments to the Corporations Code of Regulations to allow the Corporations Board of Directors
to amend the Corporations Code of Regulations to the extent now permitted by Ohio law by executing
and returning the enclosed proxy card.
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 Corporations Chief Executive Officer, Mr.
T. J. Conger, is a partner with John Gerlach & Company. The fees paid to John Gerlach & Company
for its services are determined based on the hours of work performed and are reviewed by the Audit
Committee. The fees incurred for services rendered for the fiscal year ended June 30, 2008 were
$325,000.
The Corporations Audit Committee reviews and approves or ratifies any transaction between the
Corporation and a related person (as that term is defined under Item 404 of Regulation S-K) that
is required to be disclosed under the SECs related person transaction rules. In general, the
Audit Committee charter provides that, when reviewing related person transactions, the Audit
Committee will consider the following:
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the nature of the related persons interest in the transaction; |
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the material terms of the transaction; |
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the significance of the transaction to the related person; |
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the significance of the transaction to the Corporation; |
42
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whether the transaction would impair the judgment of a director or executive officer
to act in the best interest of the Corporation; and |
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any other matters the Audit Committee deems appropriate. |
In the event of any conflict between this related persons transaction policy and any similar
policies contained in the Corporations Code of Business Ethics, Standards of Conduct or other
corporate governance documents, the terms of the related persons transaction policy will control.
This related persons transaction policy is contained in the Audit Committee charter, a current copy
of which is posted on the corporate governance page of the Corporations web site at
www.lancastercolony.com.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be included in the Proxy Statement for the 2009 Annual
Meeting of Shareholders must be received by the Corporation at its principal executive offices no
later than June 17, 2009. In addition, under the advance notice provision of the Corporations
current Code of Regulations, shareholder proposals will be considered untimely if received by the
Secretary of the Corporation less than 30 days prior to the date fixed for the 2009 Annual Meeting
of Shareholders. If Proposal Five is approved at the 2008 Annual Meeting, however, then notice of
shareholder proposals for the 2009 Annual Meeting must be received by the Corporation at its
principal executive offices not less than 60 days nor more than 90 days before the 2009 Annual
Meeting (or, if less than 75 days notice or prior public disclosure of the date of the 2009 Annual
Meeting is given, not later than the close of business on the 15th day following the day on which
such announcement of the date of the 2009 Annual Meeting is first made), or such proposals will be
considered untimely under the advance notice provisions of the Corporations Code of Regulations.
The approval of Proposal Five will not change the deadline noted above for inclusion of material in
the Corporations Proxy Statement.
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. For information on how to obtain directions to be able to
attend the Annual Meeting and vote in person, please contact the Companys Assistant Secretary at
37 West Broad Street, Columbus, Ohio 43215 or (614) 224-7141.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON NOVEMBER 17, 2008
This Proxy Statement, along with the Corporations Annual Report on Form 10-K for the fiscal
year ended June 30, 2008 and the Corporations 2008 Annual Report to Shareholders, are available
free of charge at http:// .
By Order of the Board of Directors,
John B. Gerlach, Jr.
Chairman of the Board,
Chief Executive Officer
and President
October , 2008
43
APPENDIX A
Set forth
below is the text of a draft Amended and Restated Articles of Incorporation of the
Corporation marked to show the proposed changes described above under Proposals Three and Four.
The elimination of existing Article Tenth and existing Article Eleventh would be adopted and
approved if Proposal Three is approved. The elimination of existing Article Twelfth would be
adopted and approved if Proposal Four is approved. The remaining changes to existing Article
Thirteenth and the addition of new Article Eleventh are technical, non-substantive changes that
will be necessary if either Proposal Three or Four is approved.
AMENDED
AND RESTATED
ARTICLES OF INCORPORATION
OF
LANCASTER COLONY CORPORATION
FIRST: The name of the Corporation (hereinafter called the Corporation) is LANCASTER COLONY
CORPORATION.
SECOND: The place in Ohio where the principal office of the Corporation is located is Columbus,
Franklin County.
THIRD: The purpose for which the Corporation is formed is to engage in any lawful act or activity
for which corporations may be formed under the Ohio General Corporation Law, as now in effect or
hereafter amended.
FOURTH: The amount of the total authorized capital stock which the Corporation shall have
authority to issue is Seventy-Eight Million Fifty Thousand (78,050,000) shares, consisting of
Seventy-Five Million (75,000,000) shares of Common Stock (the Common Stock) which are common
shares without par value, Seven Hundred Fifty Thousand (750,000) shares of Class A Participating
Preferred Stock (Class A Preferred Stock) which are preferred shares with $1.00 par value, One
Million One Hundred Fifty Thousand (1,150,000) shares of Class B Voting Preferred Stock (Class B
Preferred Stock) which are preferred shares without par value, and One Million One Hundred Fifty
Thousand (1,150,000) shares of Class C Nonvoting Preferred Stock (Class C Preferred Stock) which
are preferred shares without par value.
(A) EXPRESS TERMS OF THE COMMON STOCK.
The shares of Common Stock shall be subject to the terms of the Class A Preferred Stock, the Class
B Preferred Stock and the Class C Preferred Stock (collectively, Preferred Stock) and the express
terms of any series thereof. Each share of Common Stock shall be equal to every other share of
Common Stock and the holders thereof shall be entitled to one vote for each share of Common Stock
on all questions presented to the shareholders. Subject to any rights to receive dividends to
which the holders of the outstanding shares of Preferred Stock may be entitled, the holders of
shares of Common Stock shall be entitled to receive dividends, if and when declared, payable from
time to time by the Board of Directors from funds legally available therefor.
(B) EXPRESS TERMS OF THE CLASS A PREFERRED STOCK.
(1) Dividends.
(i) The holders of record of shares of Class A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally available for that purpose,
44
quarterly dividends payable in cash on the last day of each March, June, September and
December in each year (each such date being referred to herein as a Quarterly Dividend Payment
Date), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Class A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b), subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash dividends and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), paid on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction or a share of Class A Preferred Stock. In
the event the Corporation shall at any time after November 18, 1991 (the Rights Declaration
Date): (x) declare any dividend on Common Stock payable in shares of Common Stock, (y) subdivide
the outstanding Common Stock, or (z) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount of dividends to which holders of shares of Class A
Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such
event.
(ii) On or after the date of the first issuance of any share or fraction of a share of Class A
Preferred Stock, no dividend on Common Stock shall be declared unless concurrently therewith a
dividend or distribution is declared on the Class A Preferred Stock as provided in clause (i) of
paragraph (B)(1) of this Article FOURTH and the declaration of any such dividend on the Common
Stock shall be expressly conditioned upon payment or declaration of and provision for payment of a
dividend on the Class A Preferred Stock. In the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Class A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on outstanding shares of Class A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Class A Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the record date for the first Quarterly Dividend Payment Date following such
date of issue, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Class A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. The Board of Directors may fix a
record date for the determination of holders of shares of Class A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
(2) Voting Rights. The holders of shares of Class A Preferred Stock shall have the
following voting rights:
(i) Each share of Class A Preferred Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the shareholders of the Corporation.
(ii) Except as otherwise provided herein or by law, the holders of shares of Class A Preferred
Stock and the holders of shares of Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
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(iii) (a) If at any time dividends on any Class A Preferred Stock shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark
the beginning of a period (herein called a default period) which shall extend until such time
when all accrued and unpaid dividends for all previous quarterly dividend periods and for the
currently quarterly dividend period on all shares of Class A Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default period, holders of Class
A Preferred Stock, voting as a class, shall have the right to elect two (2) Directors.
(b) During any default period, such voting right of the holders of Class A Preferred Stock may
be exercised initially at a special meeting called pursuant to subparagraph (c) of this paragraph
(2)(iii) or at any annual meeting of shareholders, and thereafter at annual meetings of
shareholders, provided that such voting right shall not be exercised unless the holders of ten
percent (10%) in number of shares of Class A Preferred Stock outstanding shall be present in person
or by proxy. The absence of a quorum of the holders of Common Stock shall not effect the exercise
by the holders of Class A Preferred Stock of such voting right. At any meeting at which the
holders of Class A Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting because of existing vacancies is less than two, the holders of the
Class A Preferred Stock shall have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of two Directors. After the holders of the Class
A Preferred Stock shall have exercised their right to elect Directors in any default period and
during the continuance of such period, the number of Directors shall not be increased or decreased
except by vote of the holders of Class A Preferred Stock as herein provided.
(c) Unless the holders of Class A Preferred Stock shall, during an existing default period,
have previously exercised their right to elect Directors, the Board of Directors may order, or any
shareholder or shareholders owning in the aggregate not less than ten percent of the total number
of shares of Class A Preferred Stock outstanding may request, the calling of a special meeting
which special meeting shall thereupon be called by the President of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Class A Preferred Stock are entitled to
vote pursuant to this paragraph (2)(iii)(c) shall be given to each holder of record of Class A
Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and
not later than 60 days after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on similar notice by any
shareholder or shareholders owning in the aggregate not less than ten percent of the total number
of shares of Class A Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(2)(iii)(c), no such special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(d) In any default period, the holders of Common Stock, and other classes of stock of the
Corporation, if applicable, shall continue to be entitled to elect the whole number of Directors
until the holders of Class A Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (y) the Directors so elected by the
holders of the Class A Preferred Stock shall continue in office until their successors shall have
been elected by such holders or until the expiration of the default period, and (z) any vacancy in
the Board of Directors may (except as provided in this paragraph (2)(iii)(d)) be filled by vote of
a majority of the remaining Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References to this paragraph
(iii) to Directors elected by the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (z) of the immediately preceding
sentence.
46
(e) Immediately upon the expiration of a default period, (x) the right of the holders of Class
A Preferred Stock as a class to elect Directors shall cease, (y) the term of any directors elected
by the holders of Class A Preferred Stock as a class shall terminate, and (z) the ongoing number of
Directors shall be such number as may be provided for in, or pursuant to, the Articles of
Incorporation or Regulations of the Corporation, irrespective of any increase made pursuant to the
provisions of paragraph (2)(iii)(b) (such number being subject, however, to change thereafter in
any manner provided by law or in the Articles of Incorporation or Regulations). Any vacancies in
the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors, even though less than a quorum.
(3) Dissolution, Liquidation and Winding Up.
(i) In the event of a voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Corporation (hereinafter referred to as a Liquidation), the holders of Class A
Preferred Stock shall receive an amount per share equal to the greater of (a) $7,000, or (b) 100
times the amount per share to be distributed to holders of Common Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of
such payment (the Class A Liquidation Preference).
(ii) In the event the Corporation shall at any time after the Rights Declaration Date declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding Common Stock (by reclassification or otherwise
than by payment of a dividend in Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the Class A Liquidation Preference determined pursuant to paragraph
(3)(i)(b) shall be adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such
event.
(4) Redemption. The shares of Class A Preferred Stock shall not be redeemable.
(5) Conversion Rights. The Class A Preferred Stock is not convertible into Common
Stock or any other security of the Corporation.
(6) Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Class A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Class A Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(7) Fractional Shares. Class A Preferred Stock may be issued in fractions of a share
which shall entitle the holder, in proportion to such holders fractional shares, to exercise
voting rights, receive
47
dividends, participate in distributions and to have the benefit of all other rights of
holders of Class A Preferred Stock.
(C) EXPRESS TERMS OF THE CLASS B PREFERRED STOCK
The shares of Class B Preferred Stock may be issued from time to time in one or more series. All
shares of Class B Preferred Stock shall be of equal rank and shall be identical, except in respect
of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share
of each series shall be identical with all other shares of such series, except as to the date from
which dividends are cumulative. Subject to the provisions of this paragraph (C), which provisions
shall apply to all Class B Preferred Stock, the Board of Directors hereby is authorized to cause
such shares to be issued in one or more series and with respect to each such series prior to the
issuance thereof to fix:
(1) the designation of the series, which may be by distinguishing number, letter or title;
(2) the number of shares of the series, which number the Board of Directors may from time to
time (except where otherwise provided in the creation of the series) increase or decrease (but not
below the number of shares thereof then outstanding);
(3) the dividend rate of the series;
(4) the dates of payment of dividends and the dates from which dividends of the series shall
be cumulative;
(5) the redemption rights and price or prices for shares of the series;
(6) sinking fund requirements, if any, for the purchase or redemption of shares of the series;
(7) the liquidation price payable on shares of the series in the event of any liquidation,
dissolution or winding up of affairs of the Corporation;
(8) whether the shares of the series shall be convertible into Common Stock, and, if so, the
conversion price or prices, any adjustments thereof, and all other terms and conditions upon which
such conversion may be made;
(9) restrictions on the issuance of shares of any class or series; and
(10) such other terms as the Board of Directors may by law from time to time be permitted to
fix or change.
The Board of Directors is authorized to adopt from time to time amendments to the Articles of
Incorporation fixing or changing, with respect to each such series, the matters described in the
preceding clauses (1) to (10) of this paragraph (C).
Shares of Class B Preferred Stock shall entitle the holder thereof to one vote per share of Class B
Preferred Stock on all matters submitted to a vote of the shareholders of the Corporation. Except
as otherwise provided herein or by law, the holders of shares of Class B Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation. During any period in which dividends on the Class B
Preferred Stock are cumulatively in arrears in the amount of six or more full quarterly dividends,
the holders of the Class B Preferred Stock, voting together as a class with the holders of any
other class or series of Preferred Stock who are similarly entitled to vote, will have the right to
elect two (2) directors which two (2) directorships shall be in addition
48
to that number of directors then determined as constituting the number of members of the Board of
Directors pursuant to the Regulations of the Corporation. The approval of a majority of the
outstanding shares of Class B Preferred Stock voted together as a class shall be required in order
to amend the Articles of Incorporation of the Corporation to affect adversely the rights of the
holders of the Class B Preferred Stock or to take any action that would result in the creation of
or an increase in the number of authorized shares senior or superior with respect to dividends or
upon liquidation to the Class B Preferred Stock.
(D) EXPRESS TERMS OF CLASS C PREFERRED STOCK.
The shares of Class C Preferred Stock may be issued from time to time in one or more series. All
shares of Class C Preferred Stock shall be of equal rank and shall be identical, except in respect
of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share
of each series shall be identical with all other shares of such series, except as to the date from
which dividends are cumulative. Subject to the provisions of this paragraph (D), which provisions
shall apply to all Class C Preferred Stock, the Board of Directors hereby is authorized to cause
such shares to be issued in one or more series and with respect to each such series prior to the
issuance thereof to fix:
(1) the designation of the series, which may be by distinguishing number, letter or title;
(2) the number of shares of the series, which number the Board of Directors may from time to
time (except where otherwise provided in the creation of the series) increase or decrease (but not
below the number of shares thereof then outstanding);
(3) the dividend rate of the series;
(4) the dates of payment of dividends and the dates from which dividends of the series shall
be cumulative;
(5) the redemption rights and price or prices for shares of the series;
(6) sinking fund requirements, if any, for the purchase or redemption of shares of the series;
(7) the liquidation price payable on shares of the series in the event of any liquidation,
dissolution or winding up of affairs of the Corporation;
(8) whether the shares of the series shall be convertible into Common Stock, and, if so, the
conversion price or prices, any adjustments thereof, and all other terms and conditions upon which
such conversion may be made;
(9) restrictions on the issuance of shares of any class or series; and
(10) such other terms as the Board of Directors may by law from time to time be permitted to
fix or change.
The Board of Directors is authorized to adopt from time to time amendments to the Articles of
Incorporation fixing or changing, with respect to each such series, the matters described in the
preceding clauses (1) to (10) of this paragraph (D).
Shares of Class C Preferred Stock shall not be entitled to voting rights except to the extent
described below. During any period in which dividends on the Class C Preferred Stock are
cumulatively in arrears in the amount of six or more full quarterly dividends, the holders of the
Class C Preferred Stock, voting together as a class with the holders of any other class or series
of Preferred Stock who are similarly entitled to vote,
49
will have the right to elect two (2) directors which two (2) directorships shall be in addition to
that number of directors then determined as constituting the number of members of the Board of
Directors pursuant to the Regulations of the Corporation. The approval of a majority of the
outstanding shares of Class C Preferred Stock voted together as a class shall be required in order
to amend the Articles of Incorporation of the Corporation to affect adversely the rights of the
holders of the Class C Preferred Stock or to take any action that would result in the creation of
or an increase in the number of authorized shares senior or superior with respect to dividends or
upon liquidation to the Class C Preferred Stock.
FIFTH: Except as otherwise provided in these Articles of Incorporation or in the Regulations, the
holders of a majority of the outstanding shares are authorized to take any action which, but for
this provision, would require the vote or other action of the holders of more than a majority of
such shares.
SIXTH: To the extent not prohibited by law, the Board of Directors may authorize the purchase by
the Corporation of shares of any class issued by it.
SEVENTH: No holder of any class of shares of the Corporation shall, as such holder, have any
preemptive or preferential right to purchase or subscribe to any shares of any class of stock of
the Corporation, whether now or hereafter authorized, whether unissued or in treasury, or to
purchase any obligations convertible into shares of any class of stock of the Corporation, which at
any time may be proposed to be issued by the Corporation or subjected to rights or options to
purchase granted by the Corporation.
EIGHTH: No holder of shares of any class of the Corporation shall have the right to cumulate his
voting power in the election of the Board of Directors and the right to cumulate voting described
in Ohio Revised Code § 1701.55 is hereby specifically denied to the holders of shares of any class
of the Corporation.
NINTH: The Corporation may create and issue, whether or not in connection with the issue and sale
of any shares of stock or other securities of the Corporation, rights or options entitling the
holders thereof to purchase from the Corporation any shares of its capital stock of any class or
classes to the extent such shares are authorized by these Articles, such rights or options to be
evidenced by or in such instrument or instruments as shall be approved by the Board of Directors.
The terms upon which any such shares may be purchased upon the exercise of any such right or
option, including without limitation the time or times (which may be limited or unlimited in
duration) at or within which, and the price or prices at which, any such shares may be purchased,
shall be such as shall be determined as set forth or incorporated by reference in a resolution
adopted by the Board of Directors providing for the creation and issue of such rights or options.
TENTH: No Person shall make a Control Share Acquisition without the prior
authorization of the shareholders of the Corporation.
(A) In order to obtain authorization of a Control Share Acquisition by the
shareholders of the Corporation, a Person shall deliver a notice (the Notice) to the Corporation
at its principal place of business that sets forth all of the following information:
(1) The identity of the Person who is giving the Notice;
(2) A statement that the Notice is given pursuant to this Article
TENTH;
(3) The number and class of shares of the Corporation owned, directly or
indirectly, by the Person who gives the Notice;
50
(4) The range of voting power under which the proposed Control Share Acquisition
would, if consummated, fall;
(5) A description in reasonable detail of the terms of the proposed Control
Share Acquisition; and
(6) Representations, supported by reasonable evidence, that the proposed Control
Share Acquisition, if consummated, would not be contrary to law and that the Person who is giving
the Notice has the financial capacity to make the proposed Control Share
Acquisition.
(B) The Board of Directors of the Corporation shall,
within ten (10) days after receipt by the Corporation of a Notice that complies with paragraph (A),
call a special meeting of shareholders to be held not later than fifty (50) days after receipt of
the Notice by the Corporation, unless the Person who delivered the Notice agrees to a later date,
to consider the proposed Control Share Acquisition; provided, that, the Board of Directors shall
have no obligation to call such meeting if they make a determination within ten (10) days after
receipt of the Notice (i) that the Notice was not given in good faith, (ii) that the proposed
Control Share Acquisition would not be in the best interests of the Corporation and its
shareholders or (iii) that the Person who delivered the Notice has failed to adequately demonstrate
that such Person has the financial capacity to make the proposed Control Share Acquisition or that
the proposed Control Share Acquisition would not be contrary to law if consummated. The Board of
Directors may adjourn such meeting if, prior to such meeting, (i) the Corporation has received a
Notice from any other Person or (ii) a merger, consolidation or sale of assets of the Corporation
has been approved by the Board of Directors and the Board of Directors has determined that the
Control Share Acquisition proposed by such other Person or the merger, consolidation or sale of
assets of the Corporation should be presented to shareholders at an adjourned meeting or at a
special meeting held at a later date.
(2) For purposes of making a determination that a special meeting of
shareholders should not be called pursuant to this paragraph (B), no such determination shall be
deemed void or voidable with respect to the Corporation merely because one or more of its directors
or officers who participated in making such determination may be deemed to be other than
disinterested, if in any such case the material facts of the relationship giving rise to a basis
for self-interest are known to the directors and the directors, in good faith reasonably justified
by the facts, make such determination by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a quorum. For purposes of
this paragraph (B), disinterested directors shall mean directors whose material contacts with
the Corporation are limited principally to activities as a director or shareholder. Persons
who have substantial, recurring business or professional contacts with the Corporation shall not be
deemed to be disinterested directors for purposes of this provision. A director shall not be
deemed to be other than a disinterested director merely because he would no longer be a director
if the proposed Control Share Acquisition were approved and consummated.
(C) The Corporation shall give notice of such special meeting to all shareholders of
record as of the record date set for such meeting as promptly as practicable. Such notice shall
include or be accompanied by a copy of the Notice and by a statement of the Corporation, authorized
by the Board of Directors, of its position or recommendation, or that it is taking no position or
making no recommendation, with respect to the proposed Control Share Acquisition.
(D) The Person who delivered the Notice may make the proposed Control Share
Acquisition if both the following occur: (i) the shareholders of the Corporation authorize such
acquisition at the special meeting called by the Board of Directors and held for that purpose, and
at which a quorum is present, by an affirmative vote of a majority of the Voting Shares represented
at such meeting in person or by proxy and by a majority of the portion of such Voting Shares
represented at such meeting in person or by proxy excluding the votes of Interested Shares; and
(ii) such acquisition is consummated, in accordance with the
51
terms so authorized, not later than
360 days following such shareholder authorization of the Control Share Acquisition.
(E) Shares issued or transferred to any Person in violation of this Article TENTH
shall be valid only with respect to such amount of shares as does not result in a violation of this
Article TENTH, and such issuance or transfer shall be null and void with respect to the remainder
of such shares (any such remainder of shares being hereinafter called Excess Shares) unless
within 30 days of the date on which the Board of Directors determines that such Excess Shares have
been issued or transferred, the issuance or transfer of such Excess Shares is approved by the Board
of Directors, which approval makes specific reference to paragraph (E) of this Article TENTH. If
the issuance or transfer of such Excess Shares is approved by the Board of Directors in accordance
with the provisions of this paragraph, then the issuance or transfer of such Excess Shares shall be
deemed, for all purposes, to have been approved prior to the date of such issuance or transfer in
accordance with paragraph F(2)(ii)(e) of this Article TENTH. If the second clause of the first
sentence of this paragraph (E) is determined to be invalid by virtue of any legal decision,
statute, rule or regulation, any Person who holds Excess Shares in violation of this Article TENTH
shall be conclusively deemed to have acted as an agent on behalf of the Corporation, in acquiring
such Excess Shares and to hold such Excess Shares on behalf of the Corporation. While held by any
Person in violation of this Article TENTH, Excess Shares shall not be entitled to any voting
rights, shall not be considered to be outstanding for quorum or voting purposes, and shall not be
entitled to receive dividends or any other distribution with respect to such Excess Shares. Any
such Person who receives dividends or any other distribution with respect to Excess Shares shall
hold the same as agent for the Corporation and, following a permitted transfer, for the transferee
thereof. Notwithstanding the foregoing, any holder of Excess Shares may transfer the same
(together with any distributions thereon) to any Person who, following such transfer, would not own
shares in violation of this Article TENTH. Upon such permitted transfer, the Corporation shall pay
or distribute to the transferee any dividends or other distributions on the Excess Shares not
previously paid or distributed.
(F) As used in this Article TENTH:
(1) Person includes, without limitation, an individual, a corporation (whether
nonprofit or for profit), a partnership, an unincorporated society or association, and two or more
persons having a joint or common interest.
(2) Control Share Acquisition means the
acquisition, directly or indirectly, alone or with others, by any Person of shares of the
Corporation that, when added to all other shares of the Corporation in respect of which such Person
may exercise or direct the exercise of voting power as provided in this paragraph (F)(2)(i), would
entitle such Person, immediately after such acquisition, directly or indirectly to exercise or
direct the exercise of voting power of the Corporation in the election of directors within any of
the following ranges of such voting power.
(a) One-fifth or more but less than one-third of such voting
power,
(b) One-third or more but less than a majority of such voting
power,
(c) A majority or more of such voting power.
A bank, broker, nominee, trustee, or other Person who acquires shares in the ordinary
course of business for the benefit of others in good faith and not for the purpose of circumventing
this Article TENTH shall, however, be deemed to have voting power only of shares in respect of
which such Person would be able to exercise or direct the exercise of votes without further
instruction from others at a meeting of shareholders called under this Article TENTH. For purposes
of this Article TENTH, the acquisition of securities
52
immediately convertible into shares of the
Corporation with voting power in the election of directors shall be treated as an acquisition of
such shares.
(ii) The acquisition of any shares of the Corporation does not constitute a
Control Share Acquisition for the purpose of this Article TENTH if the acquisition is consummated
in any of the following circumstances.
(a) By underwriters, in good faith and not for the purpose of circumventing this
Article TENTH, in connection with an offering of the securities of the Corporation to the
public;
(b) By bequest or inheritance, by operation of law upon the death of any
individual, or by any other transfer without valuable consideration, including a gift, that is made
in good faith and not for the purpose of circumventing this Article TENTH;
(c) Pursuant to the satisfaction of a pledge or other security interest created
in good faith and not for the purpose of circumventing this Article TENTH;
(d) Pursuant to a merger or consolidation adopted, or a combination or majority
share acquisition authorized, by shareholder vote in compliance with the provisions of §1701.78 or
§1701.83 of the Ohio Revised Code if the Corporation is the surviving or new corporation in the
merger or consolidation or is the acquiring corporation in the combination or majority share
acquisition and if the vote of shareholders of the surviving, new, or acquiring corporation is
required by the provisions of §1701.78 or 1701.83 of the Ohio Revised Code;
(e) Pursuant to a transaction which has received the prior authorization of the
Board of Directors of the Corporation which authorization makes specific references to this
paragraph (F)(2)(ii)(e);
(f) Prior
to
* ,1992; or
Pursuant to a contract existing prior to
* , 1992.
The acquisition by any Person of shares of the Corporation in a manner described
under this paragraph (F)(2)(ii) shall be deemed to be a Control Share Acquisition authorized
pursuant to this Article TENTH within the range of voting power under paragraph (F)(2)(i)(a), (b)
or (c) of this Article TENTH that such Person is entitled to exercise after such acquisition,
provided that, in the case of an acquisition in a manner described under paragraph (F)(2)(ii)(b) or
(c), the transferor of such shares to such Person had previously obtained or was deemed to have
obtained any authorization of shareholders required under this Article TENTH in connection with
such transferors acquisition of shares of the Corporation.
(iii) The acquisition of shares of the Corporation in good faith and not for the
purpose of circumventing this Article TENTH, the acquisition of which (a) had previously been
authorized by shareholders in compliance with this Article TENTH or (b) would have constituted a
Control Share Acquisition but for paragraph (F)(2)(ii), does not constitute a Control Share
Acquisition for the purpose of this Article TENTH unless such acquisition entitles any Person,
directly or indirectly, to exercise or direct the exercise of voting power of the Corporation in
the election of directors in excess of the range of such voting power authorized pursuant to this
Article TENTH, or deemed to be so authorized under paragraph (F)(2)(ii).
|
|
|
* |
|
The date which is the Effective Time
of the merger of Lancaster Colony Corporation, a Delaware corporation, with and
into LC of Ohio, Inc., an Ohio corporation. |
53
(3) Interested Shares means Voting Shares with respect to which any of the
following Persons may exercise or direct the exercise of the voting power:
(i) any Person whose Notice prompted the calling of the meeting of
shareholders;
(ii) any officer of the Corporation elected or appointed by the directors of the
Corporation; and
(iii) any employee of the Corporation who is also a director of the
Corporation.
(G) No proxy appointed for or in connection with the shareholder authorization of a
Control Share Acquisition pursuant to this Article TENTH shall be valid unless it provides that it
is revocable. No such proxy is valid unless it is sought, appointed, and received
both:
(1) In accordance with all applicable requirements of law; and
(2) Separate and apart from the sale or purchase, contract or tender for sale or
purchase, or request or invitation for tender for sale or purchase, of shares of the
Corporation.
(H) Proxies appointed for or in connection with the shareholder authorization of a
Control Share Acquisition pursuant to this Article TENTH shall be revocable at all times prior to
the obtaining of such shareholder authorization, whether or not coupled with an
interest.
(I) Notwithstanding any other provisions of these Articles of Incorporation or the
Regulations of the Corporation, as the same may be in effect from time to time, or any provision of
law that might otherwise permit a lesser vote of the directors or shareholders, but in addition to
any affirmative vote of the directors or the holders of any particular class or series of shares
required by law, the Articles of Incorporation or the Regulations of the Corporation, as the same
may be in effect from time to time, the affirmative vote of at least 80% of the Voting Shares shall
be required to alter, amend, supersede or repeal this Article TENTH or adopt any provisions in the
Articles of Incorporation or Regulations of the Corporation, as the same may be in effect from time
to time, that are inconsistent with the provisions of this Article TENTH.
(J) Each certificate representing shares of the Corporations capital stock shall
contain the following legend:
Transfer of the shares represented by this Certificate is subject to the
provisions of Article TENTH of the Corporations Articles of Incorporation as the same may be in
effect from time to time. Upon written request delivered to the Secretary of the Corporation at
its principal place of business, the Corporation will mail to the holder of the Certificate a copy
of such provisions without charge within five (5) days after receipt of written request therefor.
By accepting this Certificate the holder hereof acknowledges that it is accepting same subject to
the provisions of said Article TENTH as the same may be in effect from time to time and covenants
with the Corporation and each shareholder thereof from time to time to comply with the provisions
of said Article TENTH as the same may be in effect from time to time.
ELEVENTH: The provisions of §1701.831 of the Ohio Revised Code, as amended from
time to time, or any successor provision or provisions to said section, shall only apply to this
Corporation with respect to any particular Control Share Acquisition attempt, as such is defined in
§1701.831 of the Ohio Revised Code, in the event that there is a determination by a court of
competent jurisdiction with respect to which no appeal is pending that the provisions of Article
TENTH of these Articles of Incorporation shall not be applicable to a particular Control Share
Acquisition attempt or in the event that Article TENTH of
these Articles of Incorporation, as such Articles of Incorporation may be amended from time to
time, ceases to be
54
an Article of these Articles of Incorporation, disregarding any renumbering of
such Article TENTH resulting from any amendment of these Articles of Incorporation.
TWELFTH: If, as of the record date for the determination of the stockholders entitled
to vote thereon or consent thereto, any Prior Holder (as hereinafter defined) owns or controls,
directly or indirectly, 5% or more of the outstanding shares of the corporation entitled to vote,
then the affirmative vote of the holders of shares representing at least 80% of the shares of stock
of the corporation entitled to vote for the election of directors, voting as a class, will be
required, except as otherwise expressly provided in paragraph (B) of this Article TWELFTH, in order
for any of the following actions or transactions to be effected by the Corporation, or approved by
the Corporation as stockholder of any subsidiary of the corporation.
(1) any merger or consolidation of the Corporation or any of its subsidiaries
with or into such Prior Holder or any of its affiliates, subsidiaries or associates;
(2) any merger or consolidation of the Corporation with or into any subsidiary
of the Corporation, except a merger with a subsidiary of the Corporation in which the Corporation
is the surviving corporation, or a subsidiary of the Corporation is the surviving corporation and,
following such merger, the certificate or articles of incorporation of such subsidiary contains
provisions substantially the same in substance as those in Article EIGHTH, Article TENTH, Article
ELEVENTH, this Article TWELFTH and Article THIRTEENTH of these Articles of
Incorporation.
(3) any sale, lease, exchange or other disposition of all or any substantial
part of the assets of the Corporation or any of its subsidiaries to or with such Prior Holder or
any of its affiliates, subsidiaries or associates;
(4) any issuance or delivery of any voting securities of the Corporation or any
of its subsidiaries to such Prior Holder or any of its affiliates, subsidiaries or associates in
exchange for cash, other assets or securities, or a combination thereof; or
(5) any dissolution of the Corporation.
(B) The vote of shareholders specified in paragraph (A) of this Article TWELFTH will
not apply to any action or transaction described in such paragraph, if the Board of Directors of
the Corporation has approved the action or transaction before direct or indirect ownership or
control of 5% or more of the outstanding shares of stock of the Corporation entitled to vote is
acquired by the Prior Holder.
(C) For the purpose of this Article TWELFTH and for guidance to the Board of
Directors for the purpose of paragraph (D) hereof
(1) Prior Holder means any corporation, person or entity other than the
Corporation or any of its subsidiaries;
(2) a Prior Holder will be deemed to own or control, directly or indirectly,
any outstanding shares of stock of the Corporation (a) which it has the right to acquire pursuant
to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise, or (b) which are owned, directly or indirectly (including shares deemed
owned through application of clause (a) above), by any other corporation, person or other entity
which is its subsidiary, affiliate or associate or with which it or any of its subsidiaries,
affiliates or associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of stock of the Corporation (or, with or without such an
agreement, arrangement or understanding, acts in concert);
55
(3) outstanding shares of the Corporation entitled to vote and voting
securities mean such shares as are entitled to vote in the election of directors, considered as
one class;
(4) subsidiary means any corporation of which another corporation owns,
directly or indirectly, 50% or more of the voting stock;
(5) an associate and an affiliate have the same meanings as set forth in the
General Rules and Regulations under the Securities Exchange Act of 1934; and
(6) substantial part of the assets means assets then having a fair market
value, in the aggregate, of more than $5,000,000.
(D) The Board of Directors of the Corporation will have the power and duty to
determine for the purposes of this Article TWELFTH, on the basis of information then known to the
Board of Directors,
(1) who constitutes a Prior Holder,
(2) whether any Prior Holder owns or controls, directly or indirectly, 5% or
more of the outstanding shares of the Corporation entitled to vote, and what entities are its
subsidiaries, affiliates or associates, and
(3) whether any proposed sale, lease, exchange or other disposition involves a
substantial part of the assets of the Corporation or any of its subsidiaries. Any such
determination by the Board will be conclusive and binding for all purposes.
TENTH: THIRTEENTH: The Corporation reserves the right to
amend or repeal any provision contained in these Articles of Incorporation in the manner prescribed
by the Ohio General Corporation Law. However, the provisions set forth in Article
EIGHTH, Article TENTH, Article ELEVENTH, Article TWELFTH, and this
Article THIRTEENTHTENTH of these Articles of Incorporation may
not be altered, amended, superseded or repealed in any respect, unless such action is approved by
the affirmative vote of the holders of shares representing at least 80% of the shares of the
Corporation entitled to vote for the election of directors, voting as a class. All rights
conferred in these Articles of Incorporation are granted subject to the reservation set forth in
this Article THIRTEENTHTENTH.
ELEVENTH: These Amended and Restated Articles of Incorporation supersede the existing
Articles of Incorporation of the Corporation.
56
APPENDIX B
Set forth
below is the text of a draft Amended and Restated Code of Regulations of the Corporation
marked to show the proposed changes described above under Proposals Five, Six, Seven and Eight.
The changes to Sections 1.06 and 1.07 would be adopted and approved if Proposal Five is approved.
The changes to Section 1.08 would be adopted and approved if Proposal Six is approved. The changes
to Section 2.03 would be adopted and approved if Proposal Seven is adopted. The changes to Section
7.03 would be adopted and approved if Proposal Eight is approved. The remaining changes are
technical, non-substantive changes that will be necessary if any of Proposals Five, Six, Seven or
Eight are approved.
AMENDED AND RESTATED REGULATIONS
OF
LANCASTER COLONY CORPORATION
(the Corporation)
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.01 ANNUAL MEETING. The annual meeting of shareholders of the Corporation
shall be held each year at such time and on such business day as the directors may determine. The
annual meeting shall be held at the principal office of the Corporation or at such other place
within or without the State of Ohio as the directors may determine. The directors shall be elected
thereat and such other business transacted as may properly be brought before the meeting.
SECTION 1.02 SPECIAL MEETING. Special meetings of the shareholders may be called at
any time by the President, by the directors by action at a meeting or a majority of the directors
acting without a meeting, or by shareholders holding 50% or more of the voting power of the then
outstanding shares entitled to vote in an election of directors, taken together as a single class
(Voting Shares). Such meetings may be held within or without the State of Ohio at the time and
place fixed by directors (or the President if the President calls such special meeting) and for any
proper purpose specified in the notice thereof.
SECTION 1.03 NOTICE OF MEETINGS. Written notice of every annual or special meeting of
the shareholders stating the time, place and purposes thereof shall be given to each shareholder
entitled to notice as provided by law, not less than seven nor more than ninety days before the
date of the meeting. Such notice may be given by or at the direction of the Secretary of the
Corporation, or such other officer as is designated by the Board of Directors, by personal delivery
or by mail addressed to the shareholder at his last address as it appears on the records of the
Corporation. Any shareholder may waive in writing notice of any meeting, either before or after
the holding of such meeting, and, by attending any meeting without protesting the lack of proper
notice, shall be deemed to have waived notice thereof.
SECTION 1.04 PERSONS BECOMING ENTITLED TO SHARES BY OPERATION OF LAW OR TRANSFER.
Every person who, by operation of law, transfer or any other means whatsoever, shall become
entitled to any shares, shall be bound by every notice in respect of such share or shares which
prior to the entering of his name and address on the records of the Corporation shall have been
duly given to the person from whom he derives his title to such shares.
SECTION 1.05 QUORUM AND ADJOURNMENTS. Except as may be otherwise required by law or
by the Articles of Incorporation or these Regulations, the holders of a majority of the
57
Voting Shares, present in person or by proxy, shall constitute a quorum; provided, that, any
annual meeting duly called, whether a quorum is present or otherwise, may be adjourned from time to
time by the chairman of the meeting or by the vote of the holders of a majority of the Voting
Shares represented thereat.
Except as otherwise required by law or by the Articles of Incorporation or these Regulations, if
the notice of an adjourned special meeting of shareholders states that it will be held with those
present constituting a quorum, then the holders of the shares of stock who are present in person or
by proxy at the meeting will constitute a quorum for all purposes.
If a meeting is adjourned for more than 30 days or if after an adjournment a new record date is
fixed for an adjourned meeting, then a written notice of the place, date and time of the adjourned
meeting must be given to each shareholder entitled to vote at the adjourned meeting. When a
meeting is otherwise adjourned to another place, date or time, notice of the adjourned meeting does
not need to be given so long as the place, date and time of the adjourned meeting are announced at
the meeting at which the adjournment is taken.
SECTION 1.06 ORGANIZATION OF MEETINGS. The Board of Directors will designate a
chairman for each meeting of shareholders. The chairman will call the meeting to
order and act as chairman of the meeting. In the absence of such a
chairmandesignation, the highest ranking officer of the
Corporation who is present at the meeting will act as chairman of the meeting. The
chairman of the meeting will appoint the secretary of the meeting, an inspector or inspectors of
elections for the meeting and such other functionaries as the chairman deems necessary or
appropriate.
Any proposal to be brought before any meeting of shareholders by any shareholder must
be submitted in writing to the Secretary of the Corporation at least thirty days prior to the date
fixed for the meeting at which it is intended that such proposal is to be presented.
SECTION 1.07 CONDUCT OF BUSINESS.
The chairman of the meeting will determine
the order of business and procedures at the meeting, including without limitation the manner of
voting and the conduct of discussion.
The chairman will call the meeting to order, act as chairman of the meeting, appoint the
secretary of the meeting, an inspector or inspectors of elections for the meeting and such other
functionaries as the chairman deems necessary or appropriate. Unless otherwise determined by the
Board of Directors prior to the meeting, the chairman of the meeting will also determine the order
of business and have the authority in his or her sole discretion to determine the rules of
procedure and regulate the conduct of the meeting including, without limitation, by imposing
restrictions on the persons (other than shareholders of the Corporation or their duly appointed
proxies) who may attend any such shareholders meeting, by ascertaining whether any shareholder or
his proxy may be excluded from any meeting of shareholders based upon any determination by the
chairman of the meeting, in his or her sole discretion, that any such person has unduly disrupted
the proceedings of the meeting, and by determining the circumstances in which any person may make a
statement or ask questions at the meeting, by ruling on all procedural questions that may arise
during or in connection with the meeting, and by determining whether any nomination of a director
nominee or business proposed to be brought before the meeting has been properly brought before the
meeting.
SECTION 1.07 CONDUCT OF BUSINESS. At an annual meeting of shareholders, only such
business will be conducted or considered as is properly brought before the annual meeting. To be
properly brought before an annual meeting, business must be (1) specified in the notice of the
annual meeting (or any supplement thereto) in accordance with Section 1.03, (2) otherwise properly
brought before the annual meeting by the chairman of the meeting or by or at the direction
of the Board of Directors, or (3) otherwise properly requested to be brought before the meeting by
a shareholder of the Corporation in accordance with this Section 1.07.
58
For business to be properly requested by a shareholder to be brought before an annual meeting,
the shareholder must (1) be a shareholder of the Corporation of record at the time of the giving of
the notice for such annual meeting provided for in these Regulations and at the time of such annual
meeting, (2) be entitled to vote at such meeting, and (3) have given timely notice in proper
written form thereof in writing to the Secretary.
To be timely, a shareholders notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than sixty (60) days nor more than ninety
(90) days before the meeting; provided, however, that in the event that less then seventy-five (75)
days notice or prior public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the close of business on
the fifteenth (15th) day following the earlier of the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. In no event shall the public
disclosure of any postponement or adjournment of an annual meeting commence a new time period for
the giving of a stockholders notice.
To be in proper written form, a shareholders notice to the Secretary must set forth as to each
matter the shareholder proposes to bring before the annual meeting (1) a description in reasonable
detail of the business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting; (2) the name and address, as they appear on the
Corporations books, of the shareholder proposing such business and any Shareholder Related Person;
(3) a representation that the shareholder giving the notice is a holder of record of stock of the
Corporation entitled to vote at such annual meeting and intends (a) to be a holder of record of
stock of the Corporation at the time of the annual meeting and (b) to appear in person or by proxy
at the annual meeting to bring such business before the annual meeting; (4) the class and number of
any securities of the Corporation that are owned beneficially or of record by the shareholder
proposing such business and any Shareholder Related Person; (5) a description of (a) any derivative
positions in any securities of the Corporation directly or indirectly held or beneficially owned by
the shareholder or any Shareholder Related Person and (b) any hedging or other transaction or
series of transactions, agreement, arrangement or understanding with respect to any of the
Corporations securities entered into or made by such shareholder or any Shareholder Related
Person; (6) a description of any proxy, transaction, agreement, arrangement, understanding or
relationship pursuant to which such shareholder or any Shareholder Related Person has a right to
vote any shares of any of the Corporations securities; (7) a description of all arrangements or
understandings between or among any of (a) the shareholder giving the notice, (b) any Shareholder
Related Person, and (c) any other person relating to the proposal of such business by such
shareholder and any material interest of such shareholder or any Shareholder Related Person in such
business; and (8) whether either the shareholder giving the notice or any Shareholder Related
Person intends to deliver a proxy statement and form of proxy to the holders of at least the
percentage of shares of the Corporation entitled to vote that is required to approve the proposal.
For purposes of this Section 1.07 and Section 2.03, a Shareholder Related Person of any
shareholder means (1) any person controlling, directly or indirectly, or acting in concert with,
such shareholder, (2) any beneficial owner of shares of stock of the Corporation owned of record or
beneficially by such shareholder, (3) any person controlling, controlled by or under common control
with such Shareholder Related Person, and (4) any Person on whose behalf a notice is given.
Notwithstanding the foregoing provisions of this Section 1.07, in order to include information
regarding a stockholder proposal in the Companys proxy statement for an annual meeting of
shareholders, a shareholder must also comply with all applicable requirements of the Securities
Exchange Act of 1934 (the Exchange Act), and the rules and regulations thereunder with respect to
the matters set forth in this Section 1.07. Nothing in this Section 1.07 will be deemed to affect
any
59
rights of shareholders to request inclusion of proposals in the Corporations proxy statement
pursuant to Rule 14a-8 under the Exchange Act.
At a special meeting of shareholders, only such business may be conducted or considered as is
properly brought before the meeting. To be properly brought before a special meeting, business
must be (i) specified in the notice of the meeting (or any supplement thereto) given by or at the
direction of the Secretary or such other officer as is designated by the Board of Directors
pursuant to Section 1.03 or (ii) otherwise brought before the meeting by the chairman of the
meeting or by or at the direction of a majority of the whole Board.
The determination of whether any business sought to be brought before any annual or special
meeting of the shareholders is properly brought before such meeting in accordance with this Section
1.07 will be made by the chairman of the meeting. If the chairman of the meeting determines that
any business is not properly brought before such meeting, he or she will so declare to the meeting
and any such business will not be conducted or considered.
SECTION 1.08 PROXIES AND VOTING AT MEETINGS. Every shareholder entitled to vote at
any meeting of shareholders may vote in person or by proxy. However, all proxies
mustProxies may be
valid written instruments and must be filed
in accordance withany form permitted by Chapter
1701 of the procedures establishedOhio Revised Code or any
successor provision thereto; provided that the Board of Directors may establish specific rules
for the meetingverification of proxies as may be necessary or
appropriate to ensure an accurate count of votes.
Voting for the election of directors must be by stock vote. Except as otherwise required by law or
by the Articles of Incorporation or these Regulations, all other voting may be by voice vote
without regard to stock. However, a stock vote must be taken if it is demanded by a shareholder
entitled to vote or by his or her proxy.
Except as otherwise required by law, stock votes need not be taken by written ballot. Every stock
vote must be counted by the inspector or inspectors of election for the meeting.
Except as otherwise required or provided for by law or by Articles of Incorporation or these
Regulations, (1) each shareholder will have one vote for each share of stock entitled to vote which
is registered in his name on the record date for the meeting, and (2) all elections or voting will
be determined by a plurality of votes cast.
SECTION 1.09 SHAREHOLDERS LIST. A complete list of shareholders entitled to vote
will be prepared for each meeting of shareholders. The shareholders list will be arranged
alphabetically for each class of stock and will set forth the name and address of each shareholder
and the number of shares registered in his name.
The shareholders list must be available throughout the meeting at the place of the meeting and may
be examined by any shareholder or his proxy present at the meeting for any purpose relevant to the
meeting.
The shareholders list will presumptively determine the identity of shareholders entitled to vote
at the meeting and the number of shares held by each of them.
SECTION 1.10 WRITTEN CONSENT IN LIEU OF MEETING OF SHAREHOLDERS. Actions by
shareholders, including but not limited to any action adopting, amending or repealing these
Regulations or any new Regulations, may be taken only at meetings of shareholders. Actions may not
be taken by a consent in writing setting forth the action to be taken and signed by shareholders.
60
ARTICLE II
DIRECTORS
SECTION 2.01 POWERS. Except as otherwise required or provided for by law or by the
Articles of Incorporation or these Regulations, the Board of Directors may exercise all powers and
do all acts and things that may be exercised or done by the Corporation.
SECTION 2.02 NUMBER. The number of directors may be determined by the vote of the
holders of a majority of the Voting Shares represented at any annual meeting or special meeting
called for the purpose of electing directors or by resolution adopted by affirmative vote of a
majority of the directors then in office; provided that the number of directors shall in no event
be fewer than six (6) nor more than twelve (12). When so fixed, such number shall continue to be
the authorized number of directors until changed by the shareholders or directors.
SECTION
2.03 NOMINATION. Except as may be otherwise provided in the Articles of
Incorporation or any designation of terms of the Corporations preferred stock, only persons who
are nominated in accordance with this Section 2.03 will be eligible for election as Directors of
the Corporation.
Nominations of persons for election as directors of the Corporation may be made at an annual
meeting of shareholders only (1) by or at the direction of the Board of Directors or a committee
thereof or (2) by a shareholder who (a) is a shareholder of record at the time of giving of notice
provided for in this Section 2.03 and at the time of such annual meeting, (b) is entitled to vote
for the election of directors at such meeting, (c) makes the nomination pursuant to timely notice
in proper written form to the Secretary, and (d) otherwise complies with the procedures set forth
in this Section 2.03.
SECTION 2.03 NOMINATION. Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the Corporation. Nominations
of persons for election as directors of the Corporation may be made at a meeting of shareholders
(1) by or at the direction of the directors, by any person or committee appointed by the directors
or (2) by any shareholder of the Corporation entitled to vote for the election of directors who
complies with the notice procedures set forth in this Section 2.03. Such nominations, other than
those made by or at the direction of the directors, shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a shareholders notice
shallmust be delivered to or mailed and received at the
principal executive offices of the Corporation not less than sixty (60) days nor more than ninety
(90) days prior tobefore
the meeting; provided, however, that
in the event that less than seventy-five (75) days notice or prior public disclosure of the date of
the meeting is given or made to shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the fifteenth (15th) day following the
earlier of the day on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such shareholders notice
In no event
shall set forth (1) as to each person who is not an incumbent director whom
the shareholder proposes to nominate for election as a director, (i)
the name, age, business address and residence address
public disclosure of
such person; (ii) the principal occupation or employment of such person; (iii) the
class and number of shares, if any,
postponement or
adjournment of the Corporation which are beneficially owned by such person; and
(iv) any other information relating to such person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended; and (2) as to the shareholder giving the notice, (i) the name and
record address of such shareholder and (ii) the class and number of shares, if any, of the
Corporation which are beneficially owned
by such shareholder. Such notice shall be accompanied by the written consent of each proposed
nominee to serve asan annual meeting commence
a director of
the
61
Corporation, if elected. No person shall be eligible
new time period for
election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.03. The
chairmangiving
of a meetingstockholders
notice of shareholders shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the
provisions of this Section 2.03; and if he or she should so determine, the defective nomination
shall be disregarded.
To be in proper written form, such shareholders notice of a nomination must set forth or
include: (1) the name and address, as they appear on the Corporations books, of the shareholder
giving the notice and any Shareholder Related Person; (2) a representation that the shareholder
giving the notice is a holder of record of stock of the Corporation entitled to vote at such annual
meeting and intends (a) to be a holder of record of stock of the Corporation at the time of the
annual meeting and (b) to appear in person or by proxy at the annual meeting to nominate the person
or persons specified in the notice; (3) the class and number of any securities of the Corporation
owned beneficially or of record by the shareholder giving the notice and by any Shareholder Related
Person; (4) a description of (a) any derivative positions in any securities of the Corporation
directly or indirectly held or beneficially owned by the shareholder or any Shareholder Related
Person and (b) any hedging or other transaction or series of transactions, agreement, arrangement
or understanding with respect to any of the Corporations securities entered into or made by such
shareholder or any Shareholder Related Person; (5) a description of any proxy, transaction,
agreement, arrangement, understanding or relationship pursuant to which such shareholder or any
Shareholder Related Person has a right to vote any shares of any of the Corporations securities;
(6) a description of all arrangements or understandings between or among any of (a) the shareholder
giving the notice, (b) any Shareholder Related Person, and (c) each nominee; (7) all information
regarding each nominee proposed by the shareholder giving the notice that would be required to be
included in a proxy statement or other filings required to be made in connection with solicitations
of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange
Act and the rules and regulations promulgated thereunder, including the signed consent of each
nominee to be named as a nominee and to serve as a director of the Corporation if so elected; (8)
with respect to each nominee proposed by the shareholder giving the notice, a Nominee Questionnaire
and a Nominee Representation and Agreement, each completed and signed by the nominee; and (9)
whether either such shareholder or, beneficial owner or Shareholder Related Person intends to
deliver a proxy statement and form of proxy to the holders of at least the percentage of shares of
the Corporation entitled to vote that is required to elect such nominee or nominees.
For purposes of this Section 2.03, (1) a Nominee Questionnaire means a written
questionnaire with respect to the background and qualification of such person and the background of
any other person or entity on whose behalf the nomination is being made (in the form provided by
the Secretary upon written request) and (2) a Nominee Representation and Agreement means a
written representation and agreement (in the form provided by the Secretary upon written request)
that such person (a) is not and will not become a party to (i) any agreement, arrangement or
understanding with, and has not given any commitment or assurance to, any person or entity as to
how such person, if elected as a director of the Corporation, will act or vote on any issue or
question (a Voting Commitment) that has not been disclosed to the Corporation or (ii) any Voting
Commitment that could limit or interfere with such persons ability to comply, if elected as a
director of the Corporation, with such persons fiduciary duties under applicable law, (b) is not
and will not become a party to any agreement, arrangement or understanding with any person or
entity other than the Corporation with respect to any direct or indirect compensation,
reimbursement or indemnification in connection with service or action as a director that has not
been disclosed therein, and (c) in such persons individual capacity and on behalf of any person or
entity on whose behalf the nomination is being made, would be in compliance, if elected as a director
of the Corporation,
and will comply with the provisions of these Regulations and all applicable publicly disclosed
corporate
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governance, conflict of interest, confidentiality and stock ownership and trading
policies and guidelines of the Corporation.
Nominations of persons for election as directors of the Corporation may be made at a special
meeting of shareholders only if properly brought before the meeting. To be properly brought before
a special meeting, the nomination must be (i) specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Secretary or such other officer as is
designated by the Board of Directors pursuant to Section 1.03 or (ii) made by the chairman of the
meeting or by or at the direction of a majority of the whole Board.
Notwithstanding the foregoing provisions of this Section 2.03, a shareholder must also comply
with all applicable requirements of the Exchange Act and the rules and regulations promulgated
thereunder with respect to the matters set forth in this Section 2.03.
The chairman of any annual meeting may, if the facts warrant, determine that a nomination was
not made in accordance with this Section 2.03, and if he or she should so determine, he or she will
so declare to the meeting, and the defective nomination will be disregarded.
SECTION 2.04 CLASSIFICATION, TERM OF OFFICE AND ELECTION OF DIRECTORS. If the number
of director determined in accordance with the provisions of Section 2.02 of these Regulations is
nine (9) or more, then the director will be classified into three classes, Class 1, Class 2 and
Class 3, respectively. If the number of directors determined in accordance with the provisions
of Section 2.02 of these Regulations is six (6) or more but less than nine (9), then the directors
will be classified into two classes, designated Class 1 and Class 2, respectively. The number
of directors constituting each class will, as nearly as possible, be equal. However, if the number
of directors constituting the whole Board of Directors is not evenly divisible by the number of
classes of directors, then the number of directors constituting each class will be such that (1)
the difference between the number of directors constituting each class is not greater than one, (2)
the number of Class 3 directors, if any, is greater than or equal to the number of Class 2
directors and the number of Class 1 directors, and (3) the number of Class 2 directors is greater
than or equal to the number of Class 1 directors. Initially, (1) the term of office of each Class
1 director will expire at the annual meeting in 1992, (2) the term of office of each Class 2
director will expire at the annual meeting in 1993, and (3) the term of office of each Class 3
director will expire at the annual meeting in 1994. Thereafter, the successors to the directors of
each class will hold office for terms of three years so that the term of office of one class of
directors will expire at each annual meeting. Each director will hold office for the term for
which he or she is elected or appointed and until his or her successor is elected and qualified or
until his or her earlier death, resignation, disqualification or removal. Election of directors
shall be by ballot whenever requested by any person entitled to vote at the meeting but unless so
requested such election may be conducted in any way approved at such meeting.
SECTION 2.05 INCREASE OR DECREASE IN THE NUMBER OF DIRECTORS. Whenever the number of
directors constituting the whole Board of Directors is increased between annual meetings, a
majority of the directors then in office may appoint the new director or directors. The term of
office of such new director or directors will be for the balance of the terms of the directors of
the class to which such new director is appointed and until his or her successor is elected and
qualified or until his or her earlier death, resignation, disqualification or removal.
Any decrease in the number of directors constituting the whole Board of Directors will not become
effective until the expiration of the term or terms of the directors of each class affected by the
decrease. However, a decrease in the number of directors constituting the whole Board of Directors
may become effective at any time to the extent that there are vacancies on the Board of Directors
which are being eliminated by the decrease.
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SECTION 2.06 VACANCY. Whenever any vacancy shall occur among the directors, the
remaining directors shall constitute the directors of the Corporation until such vacancy is filled
or until the number of directors is changed pursuant to Section 2.02 hereof. Except in cases where
a director is removed as provided by law and these Regulations, and his successor is elected by the
shareholders, the remaining directors may, by a vote of a majority of their number, fill any
vacancy for the unexpired term.
If any directors resign effective as of a future date, then a majority of the remaining directors,
including the resigning directors may appoint a successor. The term of office of the successor
will be the unexpired term of the director he or she succeeds and until his or her successor is
elected or qualified.
SECTION 2.07 REMOVAL OF A DIRECTOR. A director may be removed by holders of a
majority of the shares then entitled to vote for the election of directors, but only for cause.
Except as otherwise required or provided for by law, cause to remove a director will be construed
to exist only if the director whose removal is proposed (1) has been convicted of a felony by a
court of competent jurisdiction and such conviction is no longer subject to direct appeal, or (2)
has been adjudged by a court of competent jurisdiction to be liable for negligence or misconduct in
the performance of his duty to the corporation in a matter of substantial importance to the
corporation and such adjudication is no longer subject to direct appeal.
SECTION 2.08 QUORUM AND ADJUSTMENTS. One third of the directors constituting the
whole Board of Directors, but not less than two directors, shall constitute a quorum; provided,
that, any meeting duly called, whether a quorum is present or otherwise, may, by vote of a majority
of the directors present, adjourn from time to time and place to place within or without the State
of Ohio, in which case no further notice of the adjourned meeting need be given. At any meeting at
which a quorum is present, all questions and business shall be determined by the affirmative vote
of not less than a majority of the directors present, except as otherwise provided in the Articles
of Incorporation or these Regulations or as otherwise authorized by law.
SECTION 2.09 ORGANIZATION MEETING. Immediately after each annual meeting of the
shareholders at which directors are elected, or each special meeting held in lieu thereof, the
directors, including those newly elected, if a quorum of all such directors is present, shall hold
an organization meeting for the purpose of electing officers and transacting any other business.
Notice of such meeting need not be given. If for any reason such organization meeting is not held
at such time, a special meeting for such purpose shall be held as soon thereafter as practicable.
SECTION 2.10 REGULAR MEETINGS. Regular meetings of the directors may be held at such
times and places within or without the State of Ohio as may be provided for in by-laws or
resolutions adopted by the directors and upon such notice, if any, as shall be so provided for.
SECTION 2.11 SPECIAL MEETINGS. Special meetings of the directors may be held at any
time within or without the State of Ohio upon call by the President, or by one-third of the
directors then in office. Written notice of each such meeting shall be given to each director by
personal delivery or by mail, cablegram or telegram not less than one day prior to such meeting or
such shorter notice as the directors shall deem necessary and warranted under the circumstances.
Any directors may waive in writing notice of any meeting, and, by attending any meeting without
protesting the lack of proper notice, shall be deemed to have waived notice thereof. Unless
otherwise limited in the notice thereof, any business may be transacted at any organization,
regular or special meeting.
SECTION 2.12 PARTICIPATION IN MEETINGS BY TELEPHONE. Members of the Board of
Directors or of any committee of the Board of Directors may participate in a meeting of the Board
of Directors or committee of the Board of Directors by means of telephone or similar communications
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equipment that enables all persons participating in the meeting to hear each other. Such
participation constitutes presence in person at such meeting.
SECTION 2.13 COMPENSATION. Directors shall receive such compensation and expense
reimbursement for attendance at each meeting of the Board of Directors or of any Committee thereof
and/or such salary as may be determined from time to time by the Board of Directors. Nothing
herein contained shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE III
COMMITTEES
SECTION 3.01 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may
establish one or more committees of the Board of Directors to consist of not less than three
directors. The committees of the Board of Directors will have the powers and duties properly
delegated to them by the Board of Directors. Without limiting the foregoing, the Board of
Directors may empower a committee of the Board of Directors to declare a dividend or authorize an
issuance of stock. However, all powers and duties delegated to each committee of the Board of
Directors must be specified in a resolution of the Board of Directors.
The Board of Directors will appoint the directors who will be members of each committee. The Board
of Directors may also appoint alternative members to replace any absent or disqualified member of
any committee. All committee members may be removed or replaced by the Board of Directors at any
time.
SECTION 3.02 CONDUCT OF BUSINESS. Except as otherwise required by law or by the
Articles of Incorporation or these Regulations, each committee may determine the procedural rules
for meeting and conducting its business. However, (1) adequate provision will be made for notice
to members of all meetings; (2) one-third of the members will constitute a quorum; (3) all matters
will be determined by a majority vote of the members present; and (4) action may be taken by any
committee without a meeting if all members of the committee consent in writing and the writing or
writings are filed with the minutes of the proceedings of such committee.
ARTICLE IV
OFFICERS
SECTION 4.01 ELECTION. The elected officers of the Corporation shall consist of a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers including
a Chairman of the Board as may from time to time be appointed by the Board of Directors. All
officers of the Corporation whose authority is derived directly from the provisions of this Article
IV shall be elected and the compensation of all such officers may be fixed by the Board of
Directors or by the President (except for the compensation of the President) or by a committee duly
empowered pursuant to Section 3.01 of these Regulations to fix compensation. Any officer may, but
no officer except the President and the Chairman of the Board, if any, must, be chosen from among
the Board of Directors. The officers of the Corporation shall have the authority, perform the
duties and exercise the powers in the management of the Corporation usually incident to the offices
held by them respectively, and/or such other authority, duties and powers as may be assigned to
them from time to time by the Board of Directors.
SECTION 4.02 TERM. The officers of the Corporation shall be elected annually at the
organization meeting of the Board of Directors and shall hold office until the next organization
meeting of
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the Board of Directors or for such shorter periods as may be designated by the Board of
Directors. Any officer may be removed at any time, with or without cause, by the Board of
Directors. A vacancy in any office, however created, may be filled by the Board of Directors at
any regular or special meeting.
SECTION 4.03 PRESIDENT. The President shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the Board of Directors
are carried into effect. The President shall have the authority, perform the duties and exercise
the powers usually incident to the office of President and/or assigned to him or her by the Board
of Directors.
SECTION 4.04 CHAIRMAN OF THE BOARD. The Chairman of the Board, if any, shall have the
authority, perform the duties and exercise the power usually incident to the office of Chairman of
the Board and/or assigned to him or her by the Board of Directors or the President.
SECTION 4.05 VICE PRESIDENT. Each Vice President of the Corporation shall have the
authority, perform the duties and exercise the powers usually incident to the office of Vice
President and/or assigned to him or her from time to time by the Board of Directors or the
President.
SECTION 4.06 SECRETARY. The Secretary of the Corporation shall have the authority,
perform the duties, and exercise the powers usually incident to the office of the Secretary of the
Corporation and/or assigned to him or her from time to time by the Board of Directors or the
President. The Secretary of the Corporation shall record the proceedings of the meetings of the
shareholders and of the directors in a minute book maintained for such purpose.
SECTION 4.07 TREASURER. The Treasurer of the Corporation shall have the authority,
perform the duties and exercise the powers usually incident to the office of Treasurer of the
Corporation and/or assigned to him or her from time to time by the Board of Directors or the
President.
SECTION 4.08 DELEGATION OF AUTHORITY. The Board of Directors may from time to time
delegate the powers or duties of any officer to any other officers or agents, notwithstanding any
provision of these Regulations.
SECTION 4.09 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless
otherwise directed by the Board of Directors, the President will have power to vote and otherwise
act on behalf of the Corporation, in person or by proxy, at any meeting of shareholders of or with
respect to any action of shareholders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other Corporation.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 5.01 INDEMNIFICATION. The Corporation shall indemnify any director or
officer, any former director or officer of the Corporation and any person who is or has served at
the request of the Corporation as a director, officer or trustee of another corporation,
partnership, joint venture, trust or other enterprise (and his or her heirs, executors and
administrators) against expenses, including attorneys fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him or her by reason of the fact that he or she is
or was such director, officer or trustee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full
extent and according to the procedures and requirements set forth in
the Ohio General Corporation Law as the same may be in effect from time to time. The
indemnification provided for
herein shall not be
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deemed to restrict the right of the Corporation to (i) indemnify
employees, agents and others as permitted by law, (ii) purchase and maintain insurance or provide
similar protection on behalf of directors, officers or such other persons against liabilities
assessed against them or expenses incurred by them arising out of their service to the Corporation
as contemplated herein, and (iii) enter into agreements with such directors, officers, employees,
agents or others indemnifying them against any and all liabilities (or such lesser indemnification
as may be provided in such agreements) assessed against them or incurred by them arising out of
their service to the Corporation as contemplated herein.
ARTICLE VI
CAPITAL STOCK
SECTION 6.01 STOCK CERTIFICATES. Shares of stock in the Corporation may be
certificated or uncertificated as provided by the Ohio general corporation law, provided that every
holder of stock in the Corporation shall be entitled to certificates signed by the President or a
Vice President and by a second officer who may be the Treasurer, an Assistant Treasurer, the
Secretary, or an Assistant Secretary of the Corporation, certifying the number of shares evidenced
thereby. The signatures of the officers of the Corporation upon a certificate may be facsimiles if
the certificate is countersigned by a transfer agent or by a registrar other than the Corporation
itself or its employee. In case any officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer before such certificate is issued,
it may be issued by the Corporation with the same effect as if he were such officer at the date of
issue. Each certificate shall set forth additional material as is required by law.
SECTION 6.02 TRANSFERS. The shares of stock of the Corporation shall be transferable
in the manner prescribed by laws of the State of Ohio. Transfers of stock shall be made on the
share transfer books of the Corporation only by the person named in the certificate or by an
attorney lawfully constituted in writing and upon the surrender of the certificate therefore, which
shall be canceled when the new certificate shall be issued.
SECTION 6.03 REGISTERED HOLDERS. The Corporation shall be entitled to treat and shall
be protected in treating the persons in whose names shares or any warrants, rights or options are
registered on the record of shareholders, warrant holders, right holders or options holders, as the
case may be, as the owners thereof for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, any such share, warrant, right or option on the part
of any other person, whether or not the Corporation shall have notice thereof.
SECTION 6.04 NEW CERTIFICATES. The Corporation may issue a new certificate of stock
in the place of any certificate theretofore issued by it alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate,
or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation
and any transfer agent and/or registrar against any claim that may be made against it or them on
account of the alleged loss, theft or destruction of any such certificate or the issuance of such
new certificate. A new certificate may be issued without requiring any bond when it is proper to
do so.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 PROVISION ARTICLES OF INCORPORATION. These Regulations are at all times
subject to the provisions of the Articles of Incorporation of the Corporation as the same may be in
effect from time to time.
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SECTION 7.02 RECORD DATES. For any lawful purpose, including, without limitation, the
determination of the shareholders who are entitled to: (i) receive notice of or to vote at a
meeting of shareholders; (ii) receive payment of any dividend or distribution; (iii) receive or
exercise rights of purchase of or subscription for, or exchange or conversion of, shares or other
securities, subject to contract rights with respect thereto; or (iv) participate in the execution
of written consents, waivers, or releases, the directors may fix a record date, which shall not be
a date earlier than the date on which the record date is fixed and, in the cases provided for in
clauses (i), (ii) and (iii) above, shall not be more than sixty (60) nor fewer than ten (10) days
preceding the date of the meeting of he shareholders, or the date fixed for the payment of any
dividend or distribution, or the date fixed for the receipt or the exercise of rights, as the case
may be, unless the Articles of Incorporation specify a shorter or a longer period for such purpose.
SECTION 7.03 AMENDMENTS. These Regulations may be altered, changed or amended in any
respect or superseded by new Regulations in whole or in part,
either (i) by the affirmative
vote of a majority of the holders of the stock entitled to vote for the election of directors
voting as a single class, or (ii) to the extent permitted by Chapter 1701 of the Ohio Revised
Code or any successor provision thereto, by the Board of Directors, except that the provisions
of Sections 1.02, 1.06, 2.02, 2.03, 2.04, 2.07 and this Section 7.03 may not be altered, changed or
amended in any respect, or superseded by new Regulations in whole or in part except by the
affirmative vote of the holders of 80% of such stock
entitled to
vote for the election of directors, voting as a single class.
SECTION 7.04 FISCAL YEAR. The fiscal year of the Corporation shall be as fixed by the
Board of Directors.
These Amended and Restated Regulations supersede the existing Regulations of the Company.
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LANCASTER
COLONY CORPORATION
37 West Broad Street, Columbus, Ohio 43215
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF LANCASTER COLONY
CORPORATION
Notice of the 2008 Annual Meeting of Shareholders to be held on November 17, 2008
The
undersigned hereby appoints Matthew R. Shurte, John L. Boylan and David M. Segal, or
any of them separately, as proxies of the undersigned, each with the power of substitution, and
hereby authorizes them to represent and to vote, as designated herein, all the shares of common
stock of Lancaster Colony Corporation held of record by the undersigned at the close of business on
September 19, 2008 that the undersigned would be entitled to vote, and to exercise all of the
powers that the undersigned would be entitled to exercise as a shareholder, if personally present,
at the Annual Meeting of Shareholders to be held in the Lilac Room at The Hilton Columbus at
Easton, 3900 Chagrin Drive, Columbus, Ohio 43219 at 11:00 a.m., Eastern Standard Time, on November
17, 2008, or at any and all adjournments or postponements of the Annual Meeting of Shareholders.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
LANCASTER COLONY CORPORATION
November 17, 2008
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSALS 1 THROUGH 8.
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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NOMINEES: |
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FOR ALL NOMINEES
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O Robert L. Fox |
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O John B. Gerlach, Jr. |
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WITHHOLD
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O Edward H. Jennings |
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AUTHORITY FOR ALL |
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NOMINEES |
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FOR ALL EXCEPT |
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INSTRUCTIONS: 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:
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To ratify the selection of Deloitte & Touche LLP as the Corporations independent
registered public accounting firm for the year ending June 30, 2009;
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To approve and adopt amendments to the Corporations Articles of Incorporation to delete
existing control share acquisition provisions and opt back into the protection of the Ohio
Control Share Acquisition Act;
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To approve and adopt amendments to the Corporations Articles of Incorporation to
eliminate the requirement for supermajority shareholder approval for certain transactions
with owners of 5% or more of the Corporations outstanding voting stock;
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To approve and adopt amendments to the Corporations Code of Regulations related to
shareholder meetings and notices, including to set forth the express authority of the meeting
chair to conduct shareholder meetings and to revise the advance notice requirement for
shareholder proposals;
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To approve and adopt amendments to the Corporations Code of Regulations to allow
proxies in any form permitted by Ohio law;
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To approve and adopt amendments to the Corporations Code of Regulations to add
additional information and covenant requirements regarding nominations by shareholders
of persons for election as directors;
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To approve and adopt amendments to the Corporations Code of Regulations to allow the
Corporations Board of Directors to amend the Corporations Code of Regulations without
shareholder approval to the extent permitted by Ohio law; and
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To transact such other business as may properly come before the Annual Meeting or any
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER(S). IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR EACH OF THE DIRECTOR
NOMINEES NAMED HEREIN AND FOR PROPOSALS 2 THROUGH 8. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO TAKE ACTION AND VOTE IN ACCORDANCE WITH THEIR JUDGMENT UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING, OR AT ANY AND ALL ADJOURNMENTS OR POSTPONEMENTS OF THE
ANNUAL MEETING.
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING, DATING AND RETURNING
THE ENCLOSED PROXY CARD USING THE ENCLOSED ENVELOPE.
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.
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.
October , 2008
Dear Lancaster Colony Corporation Employee Stock Ownership Plan Participant:
Pursuant to Section 5.9 of the Lancaster Colony Corporation Employee Stock Ownership Plan and Trust
Agreement (the Plan), you are entitled to instruct Huntington Trust Company, N.A., as trustee
under the Plan (the Trustee), as to the manner in which the Lancaster Colony Corporation shares
of stock allocated to your individual account under the Plan are to be voted as well as a pro-rata
portion (in the proportion that the number of shares allocated to your account under the Plan bears
to the total number of shares in the Plan) of the shares allocated to other participants accounts
under the Plan who do not provide instructions to the Trustee (uninstructed shares). The Annual
Meeting of Shareholders of Lancaster Colony Corporation will be held on November 17, 2008 (see
enclosed Notice of Annual Meeting of Shareholders). The matters which are anticipated to come
before the shareholders and require shareholder action are set forth in the enclosed Proxy
Statement. The Board of Directors of Lancaster Colony Corporation recommends that you vote in
favor of proposals 1, 2, 3, 4, 5, 6, 7 and 8. Consequently, please indicate your confidential
voting instructions to the Trustee for the:
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Election of Directors |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR all Nominees listed under the
section titled Proposal One Nomination and Election of Directors
Nominees for Term to Expire in 2011 of the Proxy Statement,
enclosed. |
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OR: |
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WITHHOLD VOTE OF ALL SHARES of Lancaster Colony Corporation stock
allocated to your individual account under the Plan together with a
pro-rata portion of uninstructed shares FROM all Nominees listed under
the section titled Proposal One Nomination and Election of
Directors Nominees for Term to Expire in 2011 of the Proxy
Statement, enclosed. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR all Nominees listed under the
section titled Proposal One Nomination and Election of Directors
Nominees for Term to Expire in 2011 of the Proxy Statement,
enclosed, EXCEPT WITHHOLD VOTE from the following nominee(s): |
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2. |
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Ratification of Selection of Independent Registered Public Accounting Firm |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR the ratification of Deloitte &
Touche LLP as the Companys independent registered public accounting
firm for the year ending June 30, 2009. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the ratification of Deloitte &
Touche LLP as the Companys independent registered public accounting
firm for the year ending June 30, 2009. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
ratification of Deloitte & Touche LLP as the Companys independent
registered public accounting firm for the year ending June 30, 2009. |
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3. |
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Amendment to Articles of Incorporation to Delete Control Share Acquisition Provisions and
Opt Back Into Ohio Control Share Acquisition Act |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to your individual account
under the Plan together with a pro-rata portion of uninstructed shares FOR the approval and
adoption of amendments to the |
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Corporations Articles of Incorporation to delete existing control share acquisition
provisions and opt back into the protection of the Ohio Control Share Acquisition Act. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the approval and adoption of
amendments to the Corporations Articles of Incorporation to delete
existing control share acquisition provisions and opt back into the
protection of the Ohio Control Share Acquisition Act. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
approval and adoption of amendments to the Corporations Articles of
Incorporation to delete existing control share acquisition provisions
and opt back into the protection of the Ohio Control Share Acquisition
Act. |
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4. |
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Amendment to Articles of Incorporation to Eliminate Requirement for Supermajority
Shareholder Approval for Certain Transactions With Owners of 5% or More of the Corporations
Outstanding Voting Stock |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR the approval and adoption of
amendments to the Corporations Articles of Incorporation to eliminate
the requirement for supermajority shareholder approval for certain
transactions with owners of 5% or more of the Corporations
outstanding voting stock. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the approval and adoption of
amendments to the Corporations Articles of Incorporation to eliminate
the requirement for supermajority shareholder approval for certain
transactions with owners of 5% or more of the Corporations
outstanding voting stock. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
approval and adoption of amendments to the Corporations Articles of
Incorporation to eliminate the requirement for supermajority
shareholder approval for certain transactions with owners of 5% or
more of the Corporations outstanding voting stock. |
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5. |
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Amendment to Code of Regulations Related to Shareholder Meetings and Notices |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR the approval and adoption of
amendments to the Corporations Code of Regulations related to
shareholder meetings and notices, including to set forth the express
authority of the meeting chair to conduct shareholder meetings and to
revise the advance notice requirement for shareholder proposals. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the approval and adoption of
amendments to the Corporations Code of Regulations related to
shareholder meetings and notices, including to set forth the express
authority of the meeting chair to conduct shareholder meetings and to
revise the advance notice requirement for shareholder proposals. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
approval and adoption of amendments to the Corporations Code of
Regulations related to shareholder meetings and notices, including to
set forth |
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the express authority of the meeting chair to conduct shareholder meetings and to revise the
advance notice requirement for shareholder proposals. |
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6. |
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Amendment to Code of Regulations to Allow Proxies in any Form Permitted by Ohio Law |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR the approval and adoption of
amendments to the Corporations Code of Regulations to allow proxies
in any form permitted by Ohio law. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the approval and adoption of
amendments to the Corporations Code of Regulations to allow proxies
in any form permitted by Ohio law. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
approval and adoption of amendments to the Corporations Code of
Regulations to allow proxies in any form permitted by Ohio law. |
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7. |
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Amendment to Code of Regulations to Add Additional Information and Covenant Requirements
Regarding Nominations by Shareholders of Persons for Election as Directors |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR the approval and adoption of
amendments to the Corporations Code of Regulations to add additional
information and covenant requirements regarding nominations by
shareholders of persons for election as directors. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the approval and adoption of
amendments to the Corporations Code of Regulations to add additional
information and covenant requirements regarding nominations by
shareholders of persons for election as directors. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
approval and adoption of amendments to the Corporations Code of
Regulations to add additional information and covenant requirements
regarding nominations by shareholders of persons for election as
directors. |
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8. |
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Amendment to Code of Regulations to Allow the Board of Directors to amend the Code of
Regulations Without Shareholder Approval to the Extent Permitted by Ohio Law |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares FOR the approval and adoption of
amendments to the Corporations Code of Regulations to allow the
Corporations Board of Directors to amend the Corporations Code of
Regulations without shareholder approval to the extent permitted by
Ohio law. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares AGAINST the approval and adoption of
amendments to the Corporations Code of Regulations to allow the
Corporations Board of Directors to amend the Corporations Code of
Regulations without shareholder approval to the extent permitted by
Ohio law. |
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OR: |
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VOTE ALL SHARES of Lancaster Colony Corporation stock allocated to
your individual account under the Plan together with a pro-rata
portion of uninstructed shares to ABSTAIN in connection with the
approval and adoption of amendments to the Corporations Code of
Regulations to allow the Corporations Board of Directors to amend the
Corporations Code of Regulations without shareholder approval to the
extent permitted by Ohio law. |
Please check only one of the above for each matter to be voted upon, and then sign and return this
form to the Trustee in the enclosed postage prepaid envelope.
NOTE: If no instructions are received from you by the Trustee by November 11, 2008, all such
Lancaster Colony Corporation shares shall be voted by the Trustee as described in the first
paragraph of this form.
Very truly yours,
Lancaster Colony Corporation
Employee Stock Ownership Plan Committee
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Date
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Participants Signature |
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Enclosures |
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Print Name |