SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
FLOWERS FOODS, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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FLOWERS FOODS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 31, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Flowers
Foods, Inc. will be held on May 31, 2002 at 11:00 A.M. Eastern Time at the
Thomasville Cultural Center, 600 East Washington Street, Thomasville, Georgia,
for the following purposes:
(1) to elect three members of the board of directors to serve for a
term of three years;
(2) to consider and take action upon the ratification and approval of
the Flowers Foods, Inc. 2001 Equity and Performance Incentive Plan;
(3) to consider and take action upon the ratification and approval of
the Flowers Foods, Inc. Annual Executive Bonus Plan;
(4) to consider and take action upon the ratification of the selection
of PricewaterhouseCoopers LLP to serve as the independent public
accountants for Flowers Foods for the fiscal year ending December 28, 2002;
and
(5) to transact any other business as may properly come before the
meeting;
all as set forth in the proxy statement accompanying this notice.
Only record holders of issued and outstanding shares of our common stock at
the close of business on April 8, 2002, the record date, are entitled to notice
of and to vote at the meeting, or any adjournment thereof. A list of such
shareholders will be open for examination by any shareholder at the time and
place of the meeting.
By order of the Board of Directors,
/s/ Stephen R. Avera
Stephen R. Avera
Secretary and General Counsel
1919 Flowers Circle
Thomasville, Georgia 31757
April 22, 2002
A PROXY CARD IS CONTAINED IN THE ENVELOPE IN WHICH THIS PROXY STATEMENT WAS
MAILED. SHAREHOLDERS ARE ENCOURAGED TO VOTE ON THE MATTERS TO BE CONSIDERED AT
THE MEETING AND TO SIGN AND DATE THE PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR INTERNET. YOUR ATTENDANCE
AT THE MEETING IS URGED; IF YOU ATTEND THE MEETING AND DECIDE YOU WANT TO VOTE
IN PERSON, YOU MAY WITHDRAW YOUR PROXY.
FLOWERS FOODS, INC.
1919 FLOWERS CIRCLE
THOMASVILLE, GEORGIA 31757
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 31, 2002
GENERAL
This proxy statement and the accompanying form of proxy are being furnished
to the shareholders of Flowers Foods, Inc. on or about April 22, 2002 in
connection with the solicitation of proxies by our board of directors for use at
the annual meeting of shareholders to be held on May 31, 2002 at 11:00 A.M.
Eastern Time at the Thomasville Cultural Center, 600 East Washington Street,
Thomasville, Georgia, and any adjournment of the meeting. Any shareholder who
executes and delivers a proxy may revoke it at any time before its use by (i)
giving written notice of revocation to the Secretary of Flowers Foods, (ii)
executing a proxy bearing a later date, or (iii) appearing at the meeting and
voting in person.
Unless otherwise specified, all shares represented by effective proxies
will be voted in favor of:
- election of the three nominees as directors;
- ratification and approval of the Flowers Foods, Inc. 2001 Equity and
Performance Incentive Plan;
- ratification and approval of the Flowers Foods, Inc. Annual Executive
Bonus Plan; and
- ratification of the selection of PricewaterhouseCoopers LLP to serve as
our independent public accountants for the fiscal year ending December
28, 2002.
Our board of directors does not know of any other business to be brought before
the meeting, but if any other business is properly brought before the meeting,
proxies will be voted upon those matters in accordance with the judgment of the
person or persons acting under the proxies.
We will pay the cost of soliciting proxies. In addition to use of the
mails, proxies may be solicited in person or by telephone or telegram by our
directors and officers, who will not receive additional compensation for these
services. Brokerage houses, nominees, custodians and fiduciaries will be
requested to forward soliciting material to beneficial owners of stock held of
record by them, and we will reimburse those persons for their reasonable
expenses in doing so.
Only holders of record of outstanding shares of our common stock at the
close of business on the record date, April 8, 2002, are entitled to notice of,
and to vote at the meeting. Each shareholder is entitled to one vote for each
share of common stock held on the record date. There were 29,797,513 shares of
our common stock outstanding and entitled to vote on the record date. The share
information reflected throughout this proxy statement gives effect to a 3-for-2
stock split that occurred on January 2, 2002.
The holders of at least a majority of the shares of our common stock
entitled to vote at the meeting are required to be present at the meeting in
person or by proxy to constitute a quorum for the transaction of business. Once
a quorum has been established, the vote of the holders of a majority of the
shares of our common stock present at the meeting in person or by proxy will
decide the action proposed on each matter identified in this proxy statement,
except the election of directors. Directors will be elected at the meeting by a
plurality of the votes cast by shares of our common stock entitled to vote in
the election. Abstentions and broker "non-votes" will be counted as present in
determining whether the quorum requirement is satisfied. A "non-vote" occurs
when a nominee holding shares for a beneficial owner votes on one proposal
pursuant to discretionary authority or instructions from the beneficial owner,
but does not vote on another proposal because the nominee has not received
instruction from the beneficial owner and does not have discretionary power. The
aggregate number of votes cast by all shareholders present in person or
represented by proxy at the
meeting, whether those shareholders vote for or against the proposals, will be
counted for purposes of determining the minimum number of affirmative votes
required for approval of the proposals, and the total number of votes cast for
each of these proposals will be counted for purposes of determining whether
sufficient affirmative votes have been cast. Abstentions and "non-votes" will
have no effect on the voting with respect to any of the proposals.
A copy of the 2001 Annual Report to Shareholders, which includes the
financial statements of Flowers Foods for the fiscal year ended December 29,
2001, is being mailed with this proxy statement to all shareholders entitled to
vote at the meeting.
By executing and returning your proxy (either by returning the proxy card
or by submitting your proxy electronically via the Internet or by telephone),
you appoint Amos R. McMullian, our Chairman and Chief Executive Officer, and
Jimmy M. Woodward, our Vice President and Chief Financial Officer, to represent
you at the meeting and direct them to vote your shares at the meeting. Shares of
our common stock represented by proxy will be voted by the proxy holders at the
meeting in accordance with the instructions indicated in the proxy appointment.
Shareholders of record may vote by proxy in one of three ways:
- by telephone: call 1-800-690-6903 and use the control number listed on
your proxy card;
- via the Internet: visit the www.proxyvote.com web site and use the
control number listed on your proxy card; or
- by mail: mark, sign, date and mail your proxy card in the enclosed
postage-paid envelope.
The Internet and telephone voting procedures are designed to authenticate
shareholder identities, to allow shareholders to give voting instructions and to
confirm that shareholders' instructions have been recorded properly. Any
shareholder voting by Internet should understand that there may be costs
associated with electronic access, like usage charges from Internet access and
telephone or cable service providers, that must be borne by the shareholder.
If your shares are held in "street name" through a broker, bank or other
holder of record, you will receive instructions from the registered holder that
you must follow in order for your shares to be voted for you by that record
holder. Telephone and Internet voting is also offered to shareholders who own
their Flowers Foods shares through certain banks and brokers.
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PRINCIPAL SHAREHOLDERS
The following table lists information, based upon the number of shares of
our common stock outstanding as of February 1, 2002, regarding the ownership of
our common stock by the only non-affiliated individuals, entities or groups
known to us to be the beneficial owner of more than 5% of our common stock:
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS
------------------- ----------------- -------
Gabelli Asset Management Inc............................... 3,279,187(1) 11.00%
One Corporate Center
Rye, New York 10580-1435
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(1) According to the Schedule 13D/A filed on July 3, 2001 by Gabelli Asset
Management, Inc., Gabelli Funds, LLC has sole voting power with respect to
879,060 shares and sole dispositive power with respect to 879,060 shares;
GAMCO Investors, Inc. has sole voting power with respect to 2,338,027 shares
and sole dispositive power with respect to 2,396,527 shares; and Gabelli
Performance Partnership L.P. has sole voting power with respect to 3,600
shares and sole dispositive power with respect to 3,600 shares.
PROPOSAL I
ELECTION OF DIRECTORS
Our restated articles of incorporation provide that our board of directors
be divided into three classes, each consisting, as nearly as possible, of
one-third of the total number of directors constituting the board of directors,
with each class to serve for a term of three years. The following nominees are
proposed for election in class I, to serve until 2005:
-- Joseph L. Lanier, Jr.
-- Jackie M. Ward
-- C. Martin Wood III
Ms. Ward and Mr. Wood are incumbent directors in class I. Mr. Lanier
currently serves as a class III director. In order to have each class consist,
as nearly as possible, of an equal number of directors, Mr. Lanier has agreed to
resign his position as a class III director effective immediately prior to the
meeting and stand for re-election as a class I director this year.
Unless instructed otherwise, the proxies will be voted for the election of
the three nominees named above to serve for three years or until their
successors shall be elected and shall have been duly qualified. If any nominee
is unable to serve, proxies may be voted for a substitute nominee selected by
the board of directors. However, our board of directors has no reason to believe
that any nominee will not be able to serve if elected.
Background information concerning each of our director-nominees and current
directors is provided below.
CLASS I DIRECTOR-NOMINEES
Joseph L. Lanier, Jr., age 70, has been Chairman of the board of directors
and Chief Executive Officer of Dan River Inc. (NYSE), a Danville, Virginia
textile company, since 1989. He is also Chairman of the board of directors of
Dimon, Inc. (NYSE) and a director of SunTrust Banks, Inc. (NYSE) and Torchmark
Corp. (NYSE). Mr. Lanier has served as a director of Flowers Foods since March
2001, and he previously served as a director of Flowers Industries, Inc. from
1977 until March 2001.
Jackie M. Ward, age 63, has been an outside managing director of Intec
Telecom Systems since December 2000. Prior to that time, she was Chairman of the
board of directors of Computer Generation Incorporated, a telecommunications
company based in Atlanta, Georgia that she founded, from 1968 until it was
acquired by Intec in December 2000. She is also a director of Bank of America
Corporation (NYSE), Equifax, Inc. (NYSE), Matria Healthcare, Inc. (Nasdaq), PTEK
Holdings, Inc. (Nasdaq), Profit Recovery
3
Group International, Inc. (Nasdaq), SCI Systems, Inc. (NYSE), Trigon Healthcare,
Inc. (NYSE), and Sysco Corp. (NYSE). Ms. Ward served as a director of Flowers
Industries, Inc. from March 1999 until March 2001, and she has served as a
director of Flowers Foods since March 2001.
C. Martin Wood III, age 58, has been a partner in Wood Associates, a
private investment firm, since January 2000. He retired as Senior Vice President
and Chief Financial Officer of Flowers Industries, Inc. on January 1, 2000, a
position that he had held since 1978. Mr. Wood served on the Flowers Industries,
Inc. board of directors, from 1975 until March 2001. Mr. Wood also served as a
director of Keebler Foods Company from 1996 until March 2001, and he has served
as a director of Flowers Foods since March 2001.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL OF THE ABOVE
DIRECTOR-NOMINEES
OTHER DIRECTORS
CLASS II DIRECTORS SERVING UNTIL 2003
Joe E. Beverly, age 60, has been Chairman of the board of directors of
Commercial Bank in Thomasville, Georgia, a wholly-owned subsidiary of Synovus
Financial Corp. (NYSE), a financial services company, since 1989. He is also the
former Vice Chairman of the board of directors of Synovus Financial Corp, and is
a director of Synovus Financial Corp. He was President of Commercial Bank from
1973 to 1989. Mr. Beverly has served as a director of Flowers Foods since March
2001, and he previously served as a director of Flowers Industries, Inc. from
August 1996 until March 2001. Mr. Beverly serves as a director of Plum Creek
Timber Co., Inc (NYSE).
Amos R. McMullian, age 64, has been Chairman of the board of directors and
Chief Executive Officer of Flowers Foods since November 2000. Mr. McMullian
previously served as Chairman of the board of directors of Flowers Industries,
Inc. from 1985 until March 2001, and as its Chief Executive Officer from 1981
until March 2001. Mr. McMullian previously served as a director of Keebler Foods
Company from 1996 to March 2001. Mr. McMullian is a director of Hughes Supply,
Inc. (NYSE).
J.V. Shields, Jr., age 63, has been Chairman of the board of directors and
Chief Executive Officer of Shields & Company, a New York diversified financial
services company and member of the New York Stock Exchange, Inc., since 1982.
Mr. Shields also is the Chairman of the board of directors and Chief Executive
Officer of Capital Management Associates, Inc., a registered investment advisor,
and the Chairman of the board of trustees of The BBH Funds, the Brown Brothers
Harriman mutual funds group. He has served as a director of Flowers Foods since
March 2001, and he previously served as a director of Flowers Industries, Inc.
from March 1989 until March 2001.
CLASS III DIRECTORS SERVING UNTIL 2004
Franklin L. Burke, age 60, has been a private investor since 1991. He is
the former Senior Executive Vice President and Chief Operating Officer of Bank
South Corp., an Atlanta, Georgia banking company, and the former Chairman and
Chief Executive Officer of Bank South, N.A., the principal subsidiary of Bank
South Corp. He has served as a director of Flowers Foods since March 2001. Mr.
Burke previously served as a director of Flowers Industries, Inc. from 1994
until March 2001 and as a director of Keebler Foods Company from 1998 until
March 2001.
Robert P. Crozer, age 54, has been the Chairman of Wahyam Capital, LLC, a
private investment firm, since March 2001. Previously, Mr. Crozer was the Vice
Chairman of the board of directors of Flowers Foods from November 2000 until
March 2001. He has served as a director of Flowers Foods since November 2000. He
previously served as Vice Chairman of the board of directors of Flowers
Industries, Inc. from 1989 until March 2001. Mr. Crozer also served as a
director of Keebler Foods Company from 1996 until March 2001 and as Chairman of
the board of directors of Keebler from 1998 until March 2001.
Langdon S. Flowers, age 79, retired as Chairman of the board of directors
of Flowers Industries, Inc. in 1985. He has served as a director of Flowers
Foods since March 2001, and he previously served as a director of Flowers
Industries, Inc. from 1968 until March 2001.
4
Directors are elected annually to serve until the expiration of the term of
their class or until their successors are elected and qualified. The board of
directors held six meetings in fiscal 2001. During the last completed fiscal
year, no incumbent director attended fewer than 75% of the total number of
meetings of the board of directors and any committee on which he served. Robert
P. Crozer, J.V. Shields, Jr. and C. Martin Wood III are married to sisters, each
of which is a niece of Langdon S. Flowers.
RESIGNATIONS
Edward L. Baker, who served as a director of Flowers Foods since March 2001
and as a director of our predecessor company, Flowers Industries, Inc., since
1992, resigned as a director effective June 1, 2001. G. Anthony Campbell, our
former General Counsel and Secretary, who served as a director since March 2001
and as an officer and director of our predecessor company, Flowers Industries,
Inc., since 1991, resigned as an officer and director effective December 31,
2001. Mr. Campbell will continue to serve Flowers Foods as a consultant focusing
on governmental affairs. Gary L. Harrison, who served as President and Chief
Operating Officer of the Mrs. Smith's Bakeries division since 1997, has resigned
from that capacity effective January 16, 2002.
COMMITTEES OF THE BOARD OF DIRECTORS
Our board of directors has established several standing committees, which
include an audit committee, a nominating committee and a compensation committee.
Unless otherwise noted, the first member of each committee listed below serves
as chairman of that committee.
The members of the audit committee are Franklin L. Burke, Joe E. Beverly
and Jackie M. Ward. All committee members are currently independent as defined
by sections 303.01 and 303.02 of the Listed Company Manual of the New York Stock
Exchange. The primary functions of the audit committee are to: (i) recommend to
the board of directors the engagement or discharge of independent accountants;
(ii) review investigations into matters relating to audit functions; (iii)
review with independent accountants the plan for and results of the audit
engagement; (iv) review the independence of the auditors; (v) consider the range
of audit and non-audit fees; (vi) review the adequacy of Flowers Foods' system
of internal accounting controls; and (vii) review related party transactions.
This committee held five meetings in 2001. The board of directors has adopted a
written charter for the audit committee, which is reprinted as Annex A to this
proxy statement.
The members of the nominating committee are Jackie M. Ward, Amos R.
McMullian and Joseph L. Lanier, Jr. The functions of the nominating committee
are to: (i) select or recommend to our board of directors nominees for election
as directors; and (ii) consider the performance of incumbent directors in
determining whether to nominate them for reelection. This committee held no
meetings in 2001. The nominating committee will consider nominations for our
next annual meeting that are submitted by shareholders in writing to our
corporate secretary at our principal executive office between March 2, 2003 and
April 1, 2003.
The members of the compensation committee are Joseph L. Lanier, Jr.,
Franklin L. Burke and Jackie M. Ward. This committee's primary functions are to:
(i) approve, or recommend to our board of directors approval of, compensation
plans for officers and directors; (ii) approve, or recommend to the board of
directors approval of, remuneration arrangements for directors and senior
management; and (iii) grant benefits under compensation plans. This committee
held two meetings in 2001.
DIRECTORS' FEES
Each non-employee director receives an option to purchase 15,000 shares of
our common stock upon that director's initial election to our board of
directors. Additionally, each non-employee director receives payments pursuant
to a standard arrangement. For fiscal year 2001, these directors received: (i) a
retainer of $2,500 per month; (ii) $1,000 for each meeting of the board of
directors or committee of the board of directors attended, with each chairman of
a committee receiving an annual retainer of $5,000; and (iii) reimbursement for
travel expenses. Non-employee directors are eligible to participate in our 2001
Equity and Performance Incentive
5
Plan, our Stock Appreciation Rights Plan and our Executive Deferred Compensation
Plan. Non-employee directors may elect to receive stock appreciation rights
under our Stock Appreciation Rights Plan in lieu of cash payments for the
retainers described above.
During our last fiscal year, Langdon. S. Flowers, one of our directors,
received payments totaling $61,802 for consulting services provided to Flowers
Foods pursuant to a written contract. The contract provides that during its
term, Mr. Flowers will not compete, directly or indirectly, with Flowers Foods.
Unless earlier terminated, his contract will terminate upon his death.
6
SECURITY OWNERSHIP OF MANAGEMENT
The following table lists information as of February 1, 2002 about the
number of shares owned by each director, each director-nominee, each executive
officer listed on the summary compensation table included later in this proxy
statement, and by all of our directors and executive officers as a group:
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(1)
------------------------ ----------------- --------
Joe E. Beverly.............................................. 25,869(2) *
Franklin L. Burke........................................... 4,336(3) *
G. Anthony Campbell......................................... 111,472 *
Robert P. Crozer............................................ 1,142,896(4) 3.69%
George E. Deese............................................. 159,488(5) *
L. S. Flowers............................................... 196,198(6) *
Gary L. Harrison............................................ 156,246(7) *
Joseph L. Lanier, Jr. ...................................... 24,151(8) *
Amos R. McMullian........................................... 304,417 1.01%
J. V. Shields, Jr. ......................................... 2,057,150(9) 6.46%
Marta J. Turner............................................. 3,164 *
Jackie M. Ward.............................................. 1,875 *
C. Martin Wood III.......................................... 1,030,417(10) 3.34%
Jimmy M. Woodward........................................... 4,141 *
All Directors and Officers as a group (14 persons).......... 5,221,820 14.91%
---------------
* Represents beneficial ownership of less than 1% of Flowers Foods common
stock
(1) Unless otherwise indicated, each person has sole voting and dispositive
power with respect to all shares listed opposite his name.
(2) Includes 13,974 shares owned by the spouse of Mr. Beverly, as to which
shares Mr. Beverly disclaims any beneficial ownership.
(3) Includes 2,625 shares owned by the spouse of Mr. Burke, over which shares
Mr. Burke has investment authority.
(4) Includes 1,064,092 shares held by a limited liability company, whose
members are Mr. Crozer, his spouse, the Robert Page Crozer, Jr. 1984
Irrevocable Trust, the William Flowers Crozer 1985 Irrevocable Trust,
Netherleigh Associates LP, Netherleigh II LP, and the Crozer Irrevocable
Life Insurance Trust; 24,409 shares held by a charitable remainder trust of
which Mr. Crozer and his spouse are the trustees and Mr. Crozer and his
spouse are the income beneficiaries and The Crozer Family Foundation, Inc.
is the remainder beneficiary; 6,834 shares held by a limited partnership in
which Mr. Crozer and his spouse are the general partners; and 71,970 shares
held by a charitable lead trust of which Mr. Crozer and his spouse are the
trustees and their children are beneficiaries. Mr. Crozer disclaims any
beneficial ownership of all of these shares.
(5) Includes 6,624 shares owned by the spouse of Mr. Deese, as to which Mr.
Deese disclaims any beneficial ownership.
(6) Includes 92,052 shares owned by the spouse of Mr. Flowers, as to which Mr.
Flowers disclaims any beneficial ownership.
(7) Includes 9,000 shares held by a limited partnership in which Mr. Harrison
is a general partner. Also includes 12,000 shares owned by the spouse of
Mr. Harrison, as to which Mr. Harrison disclaims any beneficial ownership.
7
(8) Includes 7,167 shares owned by the spouse of Mr. Lanier, as to which Mr.
Lanier disclaims any beneficial ownership.
(9) Includes: (i) 974,000 shares held by investment advisory clients of Capital
Management Associates, Inc., of which Mr. Shields is Chairman of the board
of directors and Chief Executive Officer, and (ii) 1,060,650 shares owned
by the spouse of Mr. Shields, as to which Mr. Shields disclaims any
beneficial ownership. Mr. Shields' business address is Shields & Company,
140 Broadway, New York, NY 10005.
(10) Includes 17,750 shares held by a trust of which Mr. Wood is co-trustee and
the following shares, as to which Mr. Wood disclaims any beneficial
ownership: (i) 863,308 shares owned by the spouse of Mr. Wood; and (ii)
7,695 shares held by Mr. Wood as custodian for his nephew.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe all stock transaction reports required to be filed by Section
16(a) of the Securities Exchange Act of 1934 with the Securities and Exchange
Commission were timely filed by directors and officers, except for Mr. Crozer,
one of our directors, who filed one Form 4 late. This was an inadvertent
omission and the Form 4 was promptly filed upon discovery of the oversight.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information for the period
March 26, 2001, the date of our spin-off from Flowers Industries, Inc., to
December 29, 2001 concerning compensation of the Chief Executive Officer and
each of the four other most highly compensated executive officers of Flowers
Foods.
COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ---------------------------------------------
SECURITIES
RESTRICTED UNDERLYING LONG TERM ALL
OTHER STOCK OPTION INCENTIVE OTHER
FISCAL SALARY BONUS COMP. AWARDS AWARDS PAYOUTS COMP.
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) ($) (#) ($) ($)
--------------------------- ------ ------- ------- ----- ---------- ---------- --------- -------
Amos R. McMullian.............. 2001 480,288 522,891 -- -- 397,200 -- --
Chairman of the Board and
Chief Executive Officer
George E. Deese................ 2001 272,000 152,048 -- -- 115,500 -- --
President and Chief Operating
Officer, Flowers Bakeries
Gary L. Harrison............... 2001 272,000 -- -- -- 75,000 -- --
Former President and Chief
Operating Officer, Mrs
Smith's Bakeries
Jimmy M. Woodward.............. 2001 213,462 134,849 -- -- 115,500 -- --
Vice President and Chief
Financial Officer
G. Anthony Campbell............ 2001 188,700 102,898 -- -- 69,000 -- --
Former General Counsel and
Secretary
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
--------------------------------------------------------------- STOCK PRICE
NUMBER OF PERCENTAGE OF APPRECIATION FOR
SECURITIES TOTAL OPTIONS EXERCISE THE OPTION TERM($)(3)
UNDERLYING GRANTED TO PRICE ---------------------
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH)(1) DATE(2) 5% 10%
---- ----------- ------------- -------------------- ---------- --------- ---------
Amos R. McMullian..... 397,200 25.94% $14.21 04/06/11 3,549,615 8,995,420
George E. Deese....... 115,500 7.54% $14.21 04/06/11 1,032,176 2,615,738
Gary L. Harrison...... 75,000 4.90% $14.21 04/06/11 670,244 1,698,531
Jimmy M. Woodward..... 115,500 7.54% $14.21 04/06/11 1,032,176 2,615,738
G. Anthony Campbell... 69,000 4.51% $14.21 04/06/11 616,625 1,562,649
---------------
(1) The exercise price per share is equal to the fair market value of a share of
our common stock on April 6, 2001, the date of the grant.
(2) All stock options have a ten year term and become exercisable on the fourth
anniversary of the grant date.
(3) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming that Flowers Foods common
stock appreciates at the specified compounded rates. The assumed annual
rates of stock price appreciation are specified by the rules of the
Securities and Exchange Commission for illustrative purposes only and are
not intended to project the future performance of Flowers Foods common
stock.
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AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
None of our executive officers named in the summary compensation table
exercised options during the period from March 26, 2001 through December 29,
2001. The table below provides information on the value of options held by such
executive officers, based on the value of such options on December 29, 2001.
This value is calculated as the difference between the exercise price of the
option and $26.61 per share, which was the closing price of our common stock on
that date as reported in the Record of Composite Transactions for New York Stock
Exchange listed securities and printed in The Wall Street Journal.
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
EXERCISE REALIZED ------------------------------ ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
Amos R. McMullian.. -- -- -- 397,200 -- 4,925,280
George E. Deese.... -- -- -- 115,500 -- 1,432,200
Gary L. Harrison... -- -- -- 75,000 -- 930,000
Jimmy M. Woodward.. -- -- -- 115,500 -- 1,432,200
G. Anthony
Campbell......... -- -- -- 69,000 -- 855,600
OTHER ARRANGEMENTS
In connection with his resignation as General Counsel and Secretary and as
a director of Flowers Foods effective December 31, 2001, G. Anthony Campbell
entered into an employment agreement with Flowers Foods providing for his
continued employment until April 2005. Mr. Campbell will serve as our
consultant, with a particular focus on governmental affairs, and he will receive
a salary through October 5, 2002 at a rate equal to his salary in effect at the
time of his resignation. Thereafter, Mr. Campbell will receive no further cash
compensation, but he will retain any outstanding options to purchase our common
stock in accordance with the terms of his stock option agreement.
SEPARATION AGREEMENTS
We entered into separation agreements with specified "executive officers"
(as such term is defined under the Securities Exchange Act of 1934, as amended).
These agreements serve as memoranda of the change in control benefits under
certain of our benefit plans, and provide additional benefits, including
relocation benefits and certain welfare benefits, in the event of a termination
of employment following a change in control. These agreements also provide for
tax gross-up payments to neutralize any excise taxes that are imposed on
payments subject to Section 4999 of the Internal Revenue Code of 1986, as
amended, referred to as the Code, and any additional income taxes that are
attributable to those payments. Our compensation committee may select, in its
sole discretion, any additional executives to be offered such separation
agreements.
RETIREMENT PLAN
We adopted the Flowers Foods, Inc. Retirement Plan No. 1, referred to as
the retirement plan, which provides a defined benefit pension upon retirement to
eligible employees of participating subsidiaries (but not to employees of
Flowers Foods) that is based upon each year of service with the participating
subsidiary. Additionally, the retirement plan provides a defined benefit pension
upon retirement to eligible employees (including employees of non-participating
subsidiaries and of Flowers Foods) who were participants under the Flowers
Industries, Inc. Retirement Plan No. 1 prior to the spin-off that is based upon
each year of service with Flowers Industries, Inc. and/or certain of its
subsidiaries. The pension benefit is the sum of annual credits earned during
eligible employment. The basic annual credit is 1.35% of the first $10,000 of
W-2 earnings (subject to certain exclusions) for each year of service and 2% of
W-2 earnings (subject to certain exclusions) in excess of $10,000 for each year
of service. Certain additional annual credits are provided for a limited group
of participants in the retirement plan. The table below includes the estimated
amounts that are payable to the individuals indicated upon their retirement at
age 65 under the provisions of the retirement plan, assuming that payment is
made in the form of a life annuity. Effective as of the date of our spin-off
from Flowers
10
Industries, Inc., the individuals listed in the table below had accrued a fixed
benefit under the retirement plan, and will not earn additional benefits under
the retirement plan for years of service with Flowers Foods and/or
non-participating subsidiaries.
DISCLOSURE FOR CERTAIN INDIVIDUALS
CREDITED
YEARS OF PROJECTED ANNUAL
SERVICE BENEFIT
-------- ----------------
Amos R. McMullian........................................ 38 $137,950
George E. Deese.......................................... 37 $ 98,051
Gary L. Harrison......................................... 45 $ 94,362
Jimmy M. Woodward........................................ 16 $ 36,383
G. Anthony Campbell...................................... 17 $ 71,393
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Our supplemental executive retirement plan, referred to as the SERP,
provides a supplemental retirement income benefit for any executive who is a
participant in the retirement plan, if his retirement plan benefit is subject to
restrictions that apply to tax-qualified plans. The supplemental benefit is
equal to (i) the benefit he would have received according to the retirement plan
formula if he had not been subject to limitations on maximum benefits or
pensionable compensation received from tax-qualified plans and if certain
amounts of compensation that he elected to defer under non-qualified deferred
compensation programs were taken into account as pensionable compensation, minus
(ii) the amount he will receive from the retirement plan, as adjusted for these
limits, and minus (iii) the amount of the monthly accrued benefit under the
Flowers Industries, Inc. Supplemental Executive Retirement Plan as of March 26,
2001, which was paid out in the form of a lump sum in connection with the
termination of that plan. The SERP is not tax-qualified. The purpose of the plan
is to ensure that each participating executive's total retirement income
benefits will equal the amounts that would have been payable to him under the
retirement plan absent the limitations described above. Payments pursuant to
this plan will be calculated in the form of a life only annuity, and the
actuarial equivalent thereof will be paid in the form which the participating
executive has elected for purposes of the retirement plan. Payments will be made
from Flowers Foods' general assets. Payments generally will be made at the same
time as the participant's distributions from the retirement plan, except in the
event of a change in control of Flowers Foods, in which event the actuarial
equivalent of anticipated payments will be paid immediately in a lump sum.
Accruals under this plan during fiscal year 2001 amounted to $74,459, and there
were no distributions from the plan during fiscal 2001.
REPORT ON EXECUTIVE COMPENSATION
Our executive compensation program is administered by the compensation
committee of our board of directors, which is comprised of three non-employee
directors. Our compensation committee met twice during 2001 to evaluate the
executive compensation program to assure that it is reasonable, equitable and
competitive. The compensation committee considers the recommendations of
independent compensation specialists in evaluating compensation levels, plan
design and administration.
COMPENSATION PHILOSOPHY
Our compensation committee administers each aspect of our executive
compensation program in a manner that emphasizes our primary long-term goals,
which are the creation of consistent earnings growth and the enhancement of
shareholder value in our common stock. The compensation committee considers
these goals to be attainable by maintaining continuity within an experienced,
professional and technically proficient executive group. Accordingly, our
compensation program is designed (a) to be competitive with other similarly
situated companies, (b) to be equitable by offering a reasonable level of base
compensation and (c) to align the interests of the executives with those of the
shareholders. The primary compensation
11
arrangements, tailored to fulfill this philosophy and utilized by the
compensation committee in various combinations, are as follows:
BASE SALARY
Each year, the compensation committee reviews the contribution made to
Flowers Foods' performance by each senior executive and approves the executive's
base salary. The base salary represents Flowers Foods' ongoing compensation
commitment and forms the foundation for the executive compensation program. The
compensation committee ensures that a competitive base salary is maintained for
each executive by periodically reviewing the results of independent national
survey data for comparable positions in companies with a dollar sales volume
similar to Flowers Foods.
BONUS PLAN
Flowers Foods' Annual Executive Bonus Plan provides for an annual incentive
bonus, which is expressed as a percentage of base salary, varying by position
with Flowers Foods. A bonus is awarded upon Flowers Foods' attainment of a
specified earnings goal. In addition, the bonus plan is designed to provide the
executive with an increased bonus, limited to the lesser of $1,500,000 or an
amount equal to twice the bonus percentage established for the executive's
position multiplied by the executive's base salary, if actual earnings
significantly exceed the goal. Correspondingly, the bonus plan is designed to
provide the executive a lesser bonus if actual earnings fall below the goal, and
no bonus at all if actual earnings fall below eighty percent of the goal. This
mechanism provides motivation for the executive to continue to strive for
improved earnings in any given year, regardless of the fact that the goal may,
or may not, be obtained.
STOCK INCENTIVE PLAN
In keeping with the compensation committee's philosophy that the element of
shareholder risk is an essential compensation tool, stock based incentives
comprise a significant portion of the compensation program for the individuals
listed above in the Summary Compensation Table. The compensation committee
believes that continuation of stock based incentives is fundamental to the
enhancement of shareholder value.
The 2001 Equity and Performance Incentive Plan (referred to as the "EPIP")
is Flowers Foods' ongoing intermediate and long-term incentive plan. The EPIP
provides the compensation committee with an opportunity to make a variety of
stock based awards, while selecting the form that is most appropriate for
Flowers Foods and the executive group. The awards described below contain
elements that focus the executive's attention on one of Flowers Foods' primary
goals, the enhancement of shareholder value.
During 2001, the compensation committee granted non-qualified stock options
under the EPIP. These options are exercisable at any time, commencing on the
fourth anniversary of the grant date, until the year 2011. Upon exercise, the
executives are required to pay the fair market value of the shares, determined
as of the grant date, which was $14.21 (referred to below as the "option
price"). The executives have no rights as shareholders with respect to the
common shares subject to the options until payment of the option price. The
options are subject to forfeiture in the event of termination of employment,
other than for retirement, disability, death, termination without cause or
termination for any reason that the compensation committee determines should not
result in forfeiture.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
For the period from March 26, 2001 to December 29, 2001, Mr. McMullian
received a base salary of $480,288, which amount was determined by the
compensation committee to be appropriate in consideration of Flowers Foods'
performance, Mr. McMullian's leadership and contribution to that performance and
market conditions. In accordance with the terms of our bonus plan, Mr. McMullian
received a bonus of $522,891 for 2001.
During 2001, Mr. McMullian was granted the right to purchase 397,200 shares
of our common stock under the terms of a non-qualified stock option award.
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DEDUCTIBILITY OF COMPENSATION EXPENSES
Flowers Foods is not allowed a federal income tax deduction for
compensation paid to certain executive officers in excess of $1 million, except
to the extent that such compensation constitutes "performance based
compensation" (as defined in Section 162(m) of the Code). Subject to shareholder
approval of these compensation programs at the meeting, the compensation
committee believes that any awards under the Annual Executive Bonus Plan and the
EPIP will result in performance based compensation, and that Flowers Foods will
not lose any federal income tax deduction for compensation paid under these
compensation programs. The compensation committee will consider this deduction
limitation during future deliberations and will continue to act in the best
interests of Flowers Foods.
SUMMARY
The compensation committee believes that the base salary and the Annual
Executive Bonus Plan provide an efficient and effective mechanism to reward the
executive group for the daily leadership required to maximize Flowers Foods'
current performance. Additionally, the stock based awards granted under the EPIP
serve to align the long-term interests of the executives with those of the
shareholders so that executive decisions are made as owners of Flowers Foods.
The Compensation Committee
of the Board of Directors:
Joseph L. Lanier, Jr., Chairman
Franklin L. Burke
Jackie M. Ward
13
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Under the terms of an agreement between Flowers Foods and Merrily
Plantation, Inc., Flowers Foods is granted the use of approximately 6,000 acres
of land owned by Merrily, together with the use of lodging, dining, and
conference room facilities located on the property. The facilities are used
primarily for the entertainment of customers. During the last fiscal year,
Flowers Foods paid Merrily $93,410. Flowers Foods has surveyed facilities
comparable to Merrily to assess the relative quality and cost of such facilities
and has determined that the amount paid to Merrily for the use of its facilities
is competitive with that charged for the use of comparable facilities. Flowers
Foods has further determined that the use of the Merrily facilities in the past
has been beneficial to the business of Flowers Foods and that its continued use
for the entertainment of customers is in Flowers Foods' best interest. A
majority of the outstanding capital stock of Merrily is owned by the spouse of
J. V. Shields, Jr.; the spouse of Robert P. Crozer, each of whom are directors
of Flowers Foods, and the spouse of C. Martin Wood III, who is a director and a
director-nominee.
Since the beginning of 2001 through March 18, 2002, our Mrs. Smith's
Bakeries subsidiary has purchased approximately $354,775 of ingredients from a
distribution company, R&S Bakery Services, LLC, that is owned by the daughter
and son-in-law of Gary L. Harrison, president and chief operating officer of
Mrs. Smith's Bakeries until his retirement in early 2002. Of the amount
purchased, $105,525 had not been paid for by Mrs. Smith's Bakeries as of March
18, 2002. Mr. Harrison is a minority shareholder in, and has provided a
guarantee of a bank loan for, the ingredient manufacturer represented by R&S
Bakery Services. Flowers Foods believes that these purchases have been made on
terms that are no less favorable to it than would be the case for purchases from
an unaffiliated third party. Neither Flowers Foods nor Mrs. Smith's Bakeries has
an ongoing obligation to purchase any additional such ingredients.
14
AUDIT COMMITTEE REPORT
Three directors make up the audit committee of our board of directors: Joe
E. Beverly, Franklin L. Burke and Jackie M. Ward. The board of directors has
adopted a written charter for the audit committee, which is included as Annex A
to this proxy statement.
Management is responsible for our internal controls, financial reporting
process and compliance with laws, regulations and ethical business standards.
Our independent accountants are responsible for performing an independent audit
of our consolidated financial statements and expressing an opinion on the
conformity of these financial statements with accounting principles generally
accepted in the United States. The audit committee's responsibility is to
monitor and oversee these processes. In this context and in the performance of
its duties, the audit committee met five times during 2001 and has:
- reviewed with PricewaterhouseCoopers LLP the overall scope of and plans
for its audit of our financial statements as of and for the fiscal year
ended December 29, 2001;
- received management representations that our consolidated financial
statements were prepared in accordance with accounting principles
generally accepted in the United States and reviewed and discussed with
management and PricewaterhouseCoopers LLP our audited financial
statements as of and for the fiscal year ended December 29, 2001;
- discussed with PricewaterhouseCoopers LLP, our independent accountants,
their judgment as to the quality, and not just the acceptability, of our
accounting principles and financial controls and such other matters as
are required to be discussed with the audit committee under auditing
standards generally accepted in the United States, including the items
regarding accounting principles set out in Statement on Auditing
Standards No. 61, Communication with Audit Committees, as amended,
promulgated by the Auditing Standards Board of the American Institute of
Certified Public Accounts;
- met with PricewaterhouseCoopers LLP, with and without management present,
to discuss the results of their examinations and their evaluations of our
internal controls; and
- received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees, as
amended, discussed PricewaterhouseCoopers LLP's independence with
representatives of PricewaterhouseCoopers LLP, and considered whether the
provision of non-audit services to us by PricewaterhouseCoopers LLP is
compatible with maintaining its independence.
Based on these reviews and discussions, and in reliance on management and
PricewaterhouseCoopers LLP, the audit committee recommended to the board of
directors that our 2001 audited financial statements be included in our Annual
Report on Form 10-K for the fiscal year ended December 29, 2001.
Additionally, the audit committee has implemented procedures to ensure that
during the course of each fiscal year it devotes the attention that it deems
necessary or appropriate to each of the matters assigned to it under the audit
committee charter.
The Audit Committee
of the Board of Directors:
Franklin L. Burke, Chairman
Joe E. Beverly
Jackie M. Ward
15
STOCK PERFORMANCE GRAPH
The chart below is a comparison of the cumulative total return among
Flowers Foods, Standard & Poor's Foods 500 Index and Standard & Poor's 500 Index
since our common stock began regular-way trading on the New York Stock Exchange
on March 28, 2001. Stock performances were calculated using the assumption that
all dividends, including distributions of cash, were reinvested in common stock.
TOTAL SHAREHOLDER RETURNS
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------
MARCH 28 DECEMBER 29
--------------------------------------------------------------------------
FLOWERS FOODS 100.00 131.75
S&P 500 INDEX 100.00 100.58
S&P FOODS 500 100.00 112.74
Companies in the S&P Foods 500 Index and the S&P 500 Index are weighted by
market capitalization and indexed to $100 at March 28, 2001. The Flowers Foods
share price is also indexed to $100 at March 28, 2001.
PROPOSAL II
RATIFICATION AND APPROVAL OF THE
FLOWERS FOODS, INC. 2001 EQUITY AND PERFORMANCE INCENTIVE PLAN
GENERAL
Prior to Flowers Foods' spin-off from Flowers Industries, Inc. on March 26,
2001, our board of directors adopted and approved the 2001 Equity and
Performance Incentive Plan, and Flowers Industries, Inc., as our sole
shareholder, also approved the plan. To obtain the federal income tax deduction
benefits under Section 162(m) of the Code, we are required to resubmit this plan
for your ratification and approval at this annual meeting. Generally, the plan
encourages ownership of our common stock by our executives and more closely
aligns the interests of our executives with those of our shareholders. A summary
of the plan is set forth below, and a complete copy of the plan is reprinted as
Annex B to this proxy statement. All grants made under the plan to date and all
share information specified in the plan and plan summary have been adjusted to
reflect
16
the 3-for-2 stock split that occurred on January 2, 2002. The only awards that
have been made under the plan up to the date of this proxy statement are the
non-qualified stock options discussed above.
Specified key employees and officers of Flowers Foods and any of its
subsidiaries who are selected by our board of directors and the non-employee
directors of Flowers Foods are eligible to receive awards under the plan.
PRINCIPAL FEATURES OF THE PLAN
General. Under the plan, our board of directors is authorized to make
awards of (1) options to purchase shares of Flowers Foods common stock, par
value $0.01 per share, (2) performance stock and performance units, (3)
restricted stock and (4) deferred stock. Our compensation committee is
authorized to oversee the plan and to make awards and grants under the plan.
Shares Available Under the Plan. The number of shares of our common stock
that may be issued or transferred (1) upon the exercise of options, (2) as
restricted stock and released from all substantial risks of forfeiture, (3) as
deferred stock, (4) in payment of performance stock or performance units that
have been earned or (5) in payment of dividend equivalents paid with respect to
awards made under the plan, may not exceed a total of 3,000,000, subject to
adjustment under the terms of the plan. These shares of common stock may be
original issue or treasury shares, or a combination of both.
Eligibility. Our officers, key employees and non-employee directors, as
well as any person who has agreed to begin serving in such capacity within 30
days of a date of grant, are eligible to be selected by our board of directors
to receive awards under the plan. Our compensation committee selects those
eligible individuals who will receive grants on the basis of management
objectives. As of February 1, 2002, approximately six officers, 36 key employees
and eight non-employee directors were eligible to participate in the plan.
Options. Options entitle the optionee to purchase shares of our common
stock at a predetermined price per share (which may not be less than the fair
market value at the date of grant). Each grant specifies whether the option
price will be payable (1) in cash at the time of exercise, (2) by the actual or
constructive transfer to Flowers Foods of shares of our common stock owned by
the optionee for at least six months and having a value at the time of exercise
equal to the option price, (3) if authorized by our board of directors or our
compensation committee, the delivery of shares of restricted stock or other
forfeitable shares, deferred stock, performance stock, other vested options or
performance units or (4) a combination of these payment methods. Grants may
provide for deferred payment of the option price from the proceeds of a sale
through a broker on the date of exercise of some or all of the shares of our
common stock to which the exercise relates. No options are exercisable more than
ten years from the date of grant. Each grant must specify the period of
continuous employment with Flowers Foods that is required before the options
become exercisable. Grants may provide for earlier exercise of an option in the
event of retirement, disability, death or a change in control of Flowers Foods,
or other similar transactions or events. Grants may also specify management
objectives that must be achieved as a condition to the exercise of the option.
Successive grants may be made to the same optionee whether or not previously
granted options remain unexercised.
Our board of directors may modify, suspend or terminate the plan, provided
that some material modifications affecting the plan must be approved by
shareholders, and any change in the plan that may adversely affect an optionee's
rights under an option previously granted under the plan requires the consent of
the optionee.
Restricted Stock. An award of restricted stock involves the immediate
transfer of ownership of a specific number of shares of our common stock to a
participant in consideration of the performance of services. The participant
will be entitled immediately to voting, dividend and other ownership rights in
such shares. The transfer or later elimination of restrictions may be made
without additional consideration or in consideration of a payment by the
participant that is less than current fair market value, as our board of
directors may determine. Our board of directors may condition the award on the
achievement of specified management objectives. Restricted stock must be subject
to a "substantial risk of forfeiture" (within the meaning of
17
Section 83 of the Code) for a period to be determined by our board of directors
in order for the participant to avoid immediate taxation. An example would be a
provision that the restricted stock would be forfeited if the participant ceased
to serve as an officer or key employee of Flowers Foods during a specified
period of years. If service alone is the criterion for non-forfeiture, the
period of service must be at least three years; if other management objectives
are included, non-forfeiture may occur after one year from the date of grant. In
order to enforce these forfeiture provisions, the transferability of restricted
stock is prohibited or restricted in a manner and to the extent prescribed by
our board of directors for the period during which the forfeiture provisions are
to continue. Our board of directors may provide for a shorter period during
which the forfeiture provisions are to apply in the event of retirement,
disability, death or a change in control of Flowers Foods, or other similar
transaction or event.
Deferred Stock. An award of deferred stock constitutes an agreement by
Flowers Foods to deliver shares of its common stock to the participant in the
future in consideration of the performance of services. However, the deferred
stock award may be subject to the fulfillment of certain conditions, such as
management objectives, during the deferral period specified by our board of
directors. During the deferral period, the participant cannot transfer any
rights in the award and has no right to vote the shares of deferred stock, but
our board of directors may, on or after the date of the award, authorize the
payment of dividend equivalents on such shares on a current, deferred or
contingent basis, either in cash or in additional shares of our common stock.
Awards of deferred stock may be made without additional consideration or in
consideration of a payment by the participant that is less than the fair market
value per share on the date of award. Deferred stock must be subject to the
performance of services for at least three years, provided that if management
objectives are included, the performance of services must be for at least one
year. Our board of directors determines the deferral period at the date of the
award, and may provide for a deferral period of less than three years in the
event of retirement, disability, death or a change in control of Flowers Foods,
or other similar transaction or event.
Performance Stock and Performance Units. Performance stock and performance
units involve awards that become payable upon the achievement of specified
management objectives during a designated performance period. This performance
period may be subject to early termination in the event of retirement,
disability or death or a change in control of Flowers Foods, or other similar
transaction or event. A minimum level of acceptable achievement may also be
established by our board of directors. If, by the end of the performance period,
the participant has achieved the specified management objectives, the
participant will be deemed to have fully earned the performance stock and/or
performance units. If the participant has not achieved the management
objectives, but has attained or exceeded the predetermined minimum, the
participant will be deemed to have partly earned the performance stock and/or
performance units (such part to be determined in accordance with a formula). To
the extent earned, the performance stock and/or performance units will be paid
to the participant at the time and in the manner determined by our board of
directors in cash, shares of our common stock or in any combination of those
methods. Each award of performance stock or performance units may be subject to
adjustment to reflect changes in compensation or other factors, so long as no
adjustment would result in the loss of an available exemption for the award
under Section 162(m) of the Code. Our board of directors or its compensation
committee may provide for the payment of dividend equivalents to the holder on a
current, deferred or contingent basis, either in cash or in additional shares of
our common stock.
Management Objectives. Under the plan, our board of directors is required
to establish performance goals for purposes of performance stock and performance
units. In addition, if our board of directors so chooses, options, restricted
stock and deferred stock may also specify management objectives. Management
objectives may be described either in terms of company-wide objectives,
individual participant objectives or objectives related to the performance of
the division, subsidiary, department or function within Flowers Foods in which
the participant is employed. Management objectives applicable to any award may
include specified levels of and/or growth in (1) cash flow, (2) earnings per
share, (3) earnings before interest and taxes, (4) net income, (5) return on
assets, (6) return on assets employed, (7) return on equity, (8) return on
invested capital, (9) return on total capital, (10) revenue, (11) stock price,
(12) total return to shareholders, (13) economic value added, (14) operating
profit, or any combination of these objectives. If our board of
18
directors determines that a change in the business, operations, corporate
structure or capital structure of Flowers Foods, or the manner in which it
conducts its business, or other events or circumstances render the management
objectives unsuitable, our board of directors may modify the performance goals
or the related minimum acceptable level of achievement, in whole or in part, as
our board of directors deems appropriate and equitable, unless the result would
be to make an award otherwise eligible for an exemption under Section 162(m) of
the Code ineligible for such an exemption.
Transferability. Except as otherwise determined by our board of directors,
no option or other award under the plan is transferable by a participant, other
than by will or the laws of descent and distribution, provided that options
(except for incentive stock options) may be transferred without payment of
consideration by the transferee to the participant's immediate family or to
trusts established solely for the benefit of one or more members of the
participant's immediate family. Except as otherwise determined by our board of
directors, options are exercisable during the optionee's lifetime only by him or
her or by his or her guardian or legal representative. Our board of directors
may specify at the date of grant that part or all of the shares of our common
stock that are (1) to be issued or transferred by Flowers Foods upon the
exercise of options, upon the termination of a deferral period applicable to
deferred stock or upon the payment under any grant of performance stock or
performance units or (2) no longer subject to a substantial risk of forfeiture
and restrictions on transfer referred to in the plan, shall be subject to
further restrictions on transfer.
Adjustments. The plan provides that the number of shares available for
awards will be adjusted to account for (a) shares relating to awards that expire
or are forfeited under the plan, or (b) shares that are transferred, surrendered
or relinquished in payment of the option exercise price for satisfaction of
withholding rules for the exercise or receipt of awards under the plan. This
permits the grant of additional awards equal to the number of shares turned in
by award recipients. The maximum number of shares of our common stock covered by
outstanding options, deferred stock, performance stock and restricted stock
granted under the plan, and the prices per share applicable to those shares, are
subject to adjustment in the event of stock dividends, stock splits,
combinations of shares, recapitalizations, mergers, consolidations, spin-offs,
reorganizations, liquidations, issuances of rights or warrants and similar
events. In the event of any such transaction, our board of directors is given
discretion to provide a substitution of alternative consideration for any or all
outstanding awards under the plan, as it in good faith determines to be
equitable under the circumstances, and may require the surrender of all awards
so replaced. Our board of directors may also make or provide for adjustments in
the numerical limitations under the plan as our board of directors may determine
appropriate to reflect any of the foregoing transactions or events. Our board of
directors is authorized to interpret the plan and related agreements and other
documents. Our board of directors may make awards to employees under any or a
combination of all of the various categories of awards that are authorized under
the plan, or, in its discretion, make no awards. The plan may be amended from
time to time by our board of directors. However, any amendment that must be
approved by the shareholders of Flowers Foods in order to comply with applicable
laws or the rules of the principal national securities exchange or quotation
system upon which our common stock is traded or quoted will not be effective
unless and until such approval has been obtained in compliance with those
applicable laws or rules. These amendments would include any increase in the
number of shares issued or certain other increases in awards available under the
plan (except for increases caused by adjustments made pursuant to the plan).
Presentation of the plan or any amendment of the plan for shareholder approval
is not to be construed to limit Flowers Foods' authority to offer similar or
dissimilar benefits through plans that are not subject to shareholder approval.
The plan provides that awards representing no more than 3% of the shares
available under the plan may not be required to meet certain restrictions
otherwise applicable to restricted stock, deferred stock and performance stock
awards under the plans. Our board of directors may not, without further approval
of Flowers Foods' shareholders, authorize the amendment of any outstanding
option to reduce the option price. Furthermore, the exercise price of an
outstanding option may not be reduced to a lower option price without further
approval of the shareholders of Flowers Foods. The plan does not confer on any
participant a right to continued employment with Flowers Foods.
19
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the federal income tax consequences of
specified transactions under the plan based on federal income tax laws in effect
on January 1, 2002. This summary is not intended to be complete and does not
describe state or local tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
Non-Qualified Stock Options. In general, (i) no income will be recognized
by an optionee at the time a non-qualified stock option is granted; (ii) at the
time of exercise of a non-qualified stock option, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise; and (iii) at the time of sale of shares
acquired pursuant to the exercise of a non-qualified stock option, appreciation
(or depreciation) in value of the shares after the date of exercise will be
treated as a capital gain (or loss).
Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an option that qualifies as an incentive
stock option under Sections 421 and 422 of the Code. If shares are issued to the
optionee pursuant to the exercise of an incentive stock option, and if no
disqualifying disposition of such shares is made by such optionee within two
years after the date of grant or within one year after the transfer of such
shares to the optionee, then upon sale of such shares, any amount realized in
excess of the option price will be taxed to the optionee as a capital gain and
any loss sustained will be a capital loss.
If shares acquired upon the exercise of an incentive stock option are
disposed of prior to the expiration of either holding period described above,
the optionee generally will recognize ordinary income in the year of disposition
in an amount equal to the excess (if any) of the fair market value of such
shares at the time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the option price paid for
such shares. Any further gain (or loss) realized by the participant generally
will be taxed as a capital gain (or loss).
Restricted Stock. The recipient of restricted stock generally will be
subject to tax at ordinary income rates on the fair market value of the
restricted stock (reduced by any amount paid by the participant for such
restricted stock) at such time as the shares are no longer subject to forfeiture
or restrictions on transfer for purposes of Section 83 of the Code, referred to
as Restrictions. However, a recipient who so elects under Section 83(b) of the
Code within 30 days of the date of transfer of the shares will have taxable
ordinary income on the date of transfer of the shares equal to the excess of the
fair market value of such shares (determined without regard to the Restrictions)
over the purchase price, if any, of such restricted stock. If a Section 83(b)
election has not been made, any dividends received with respect to restricted
stock that are subject to the Restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant.
Deferred Stock. No income generally will be recognized upon the award of
deferred stock. The recipient of a deferred stock award generally will be
subject to tax at ordinary income rates on the fair market value of unrestricted
shares on the date that such shares are transferred to the participant under the
award (reduced by any amount paid by the participant for such deferred stock).
Performance Stock and Performance Units. No income generally will be
recognized upon the grant of performance stock or performance units. Upon
payment in respect of the earn-out of performance stock or performance units,
the recipient generally will be required to include as taxable ordinary income
in the year of receipt an amount equal to the amount of cash received and the
fair market value of any unrestricted shares received.
TAX CONSEQUENCES TO FLOWERS FOODS OR ITS SUBSIDIARIES
To the extent that a participant recognizes ordinary income in the
circumstances described above, Flowers Foods or the corporate subsidiary for
which the participant performs services will be entitled to a corresponding
deduction provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an "excess
parachute payment" within the meaning of
20
Section 280G of the Code and is not disallowed by the $1 million limitation on
certain executive compensation under Section 162(m) of the Code.
NEW PLAN BENEFITS
Following adoption of the plan by our board of directors, the board of
directors approved grants of stock options under the 2001 Equity and Performance
Incentive Plan to our named executive officers as follows:
NUMBER OF
SHARES
UNDERLYING
NAME AND POSITION OPTIONS
----------------- ----------
Amos R. McMullian........................................... 397,200
Chairman of the Board and Chief
Executive Officer
George E. Deese............................................. 115,500
President and Chief Operating
Officer, Flowers Bakeries
Gary L. Harrison............................................ 75,000
Former President and Chief
Operating Officer, Mrs. Smith's
Bakeries
Jimmy M. Woodward........................................... 115,500
Vice President and Chief Financial
Officer
G. Anthony Campbell......................................... 69,000
Former General Counsel and
Secretary
All Current Executive Officers as a
Group..................................................... 780,600
All Current Non-Executive
Directors as a Group...................................... 135,000
All Employees, including all Non-Executive
Officers as a Group....................................... 1,666,200
Included in the above table are grants of options to purchase 15,000 shares
of our common stock during fiscal 2001 to each of Jackie M. Ward, C. Martin Wood
III and Joseph L. Lanier, Jr., our director-nominees. Except as set forth above,
no other awards have been granted under the plan. Additional grants and benefits
accruing pursuant to the above grants are not presently determinable.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION AND
APPROVAL OF THE FLOWERS FOODS, INC. 2001 EQUITY AND PERFORMANCE INCENTIVE PLAN.
21
PROPOSAL III
RATIFICATION AND APPROVAL OF THE
FLOWERS FOODS, INC. ANNUAL EXECUTIVE BONUS PLAN
GENERAL
To obtain the federal income tax deduction benefits under Section 162(m) of
the Code, we are required to submit this plan for your ratification and approval
at this annual meeting. Generally, the plan rewards performance by executives
based upon criteria specified in the plan. Specified employees and officers of
Flowers Foods and any of its subsidiaries who are selected by the compensation
committee of our board of directors are eligible to receive bonuses under the
plan. A summary of the plan is set forth below, and a complete copy of the plan
is reprinted as Annex C to this proxy statement.
PRINCIPAL FEATURES OF THE PLAN
The plan provides for an annual incentive bonus, which is expressed as a
percentage of an executive's base salary. The amount of a bonus for a plan year
depends on the following three factors: (1) the executive's base salary for the
plan year; (2) a bonus percentage of between forty and seventy-five percent,
depending upon the executive's salary grade; and (3) a percentage determined by
the relationship of Flowers Foods' actual earnings before interest, taxes,
depreciation and amortization, referred to as EBITDA, for the plan year,
compared with the EBITDA goal for the plan year that is established by the
compensation committee no later than ninety days following the beginning of the
plan year.
The plan provides for an increased bonus for a plan year, limited to the
lesser of (1) $1,500,000 or (2) an amount equal to twice the amount determined
by multiplying the executive's base salary for the plan year by the bonus
percentage applicable to his or her salary grade, if the actual EBITDA for the
plan year exceeds the EBITDA goal for the plan year. Correspondingly, the plan
provides for a decreased bonus for a plan year or no bonus at all if the actual
EBITDA for the plan year is less than the EBITDA goal for the plan year.
In the event that an executive's employment is terminated before the
completion of an entire plan year due to death, disability or retirement for
purposes of Flowers Foods' tax-qualified retirement plans, or in the event of a
change in control of Flowers Foods, the executive will receive a prorated bonus
for the partial plan year. If an executive's employment is terminated before the
completion of an entire plan year for any reason other than those described
above, he or she will not receive a bonus for the partial plan year.
It is intended that any bonus paid to an executive under the plan will
constitute "performance based compensation" as that term is defined in Section
162(m) of the Code. Section 162(m) generally disallows a federal income tax
deduction for compensation paid to specified executive officers in excess of $1
million, except to the extent that such compensation constitutes "performance
based compensation."
If the shareholders approve the plan, it will continue indefinitely,
subject to the compensation committee's right to terminate the plan on a
prospective basis at any time.
22
NEW PLAN BENEFITS
No plan benefits will be paid under the plan for any non-executive employee
or any non-employee director of Flowers Foods. The following is information
concerning the benefits or amounts that are expected to be received by or
allocated to each of our named executive officers individually and to our
executive group as a whole under the Annual Executive Bonus Plan.
NAME AND POSITION DOLLAR VALUE($)
----------------- ---------------
AMOS R. MCMULLIAN.............................. 522,891
Chairman of the Board and
Chief Executive Officer
GEORGE E. DEESE................................ 152,048
President and Chief
Operating Officer, Flowers
Bakeries
GARY L. HARRISON............................... 0
Former President and Chief
Operating Officer, Mrs. Smith's
Bakeries
JIMMY M. WOODWARD.............................. 134,849
Vice President and Chief
Financial Officer
G. ANTHONY CAMPBELL............................ 102,898
Former General Counsel and
Secretary
ALL CURRENT EXECUTIVE OFFICERS AS A GROUP...... 955,900
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION AND
APPROVAL OF THE FLOWERS FOODS, INC. ANNUAL EXECUTIVE BONUS PLAN.
PROPOSAL IV
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Our board of directors has appointed PricewaterhouseCoopers LLP as our
independent public accountants for the fiscal year ending December 28, 2002. Our
board of directors recommends that this appointment be ratified.
Representatives of PricewaterhouseCoopers LLP will be present at the
meeting and will have the opportunity to make a statement, if they desire to do
so, and to respond to appropriate questions.
FISCAL 2001 AUDIT FIRM FEE SUMMARY
During fiscal 2001, we retained our principal auditor,
PricewaterhouseCoopers LLP, to provide services in the following categories and
amounts:
AUDIT FEES
PricewaterhouseCoopers LLP has billed us $475,000, in the aggregate, for
professional services it rendered for the audit of our annual financial
statements for the fiscal year ended December 29, 2001 and the reviews of the
interim financial statements included in our Forms 10-Q filed during the fiscal
year ended December 29, 2001.
23
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PricewaterhouseCoopers LLP has not billed us for financial information
design and implementation fees described in paragraph (c)(4)(ii) of Rule 2-01 of
Regulation S-X, since it did not render any of those services for us during the
fiscal year ended December 29, 2001.
ALL OTHER FEES
PricewaterhouseCoopers LLP has billed us $1,702,500, in the aggregate, for
all other professional services it rendered during the fiscal year ended
December 29, 2001, primarily for audits of our employee benefit plans,
registration statement services, due diligence services, income tax compliance
and related tax services and internal audit related services.
The audit committee has concluded that the provision of non-audit services
by our principal auditor is compatible with maintaining auditor independence.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT ACCOUNTANTS FOR
FISCAL YEAR 2002.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
We do not know of any matters other than those stated above which are to be
brought before the meeting. However, if any other matters should be properly
presented for consideration and voting, it is the intention of the persons named
in the proxy to vote on those matters in accordance with their judgment.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at our 2003 annual
meeting must be forwarded in writing and received at our principal executive
offices no later than December 23, 2002, directed to the attention of the
corporate secretary, for consideration for inclusion in our proxy statement for
such meeting. Moreover, with regard to any proposal by a shareholder not seeking
to have its proposal included in the proxy statement but seeking to have its
proposal considered at our 2003 annual meeting, if that shareholder fails to
notify us in the manner set forth above of its proposal by March 8, 2003, then
the persons appointed as proxies may exercise their discretionary voting
authority if the proposal is considered at our 2003 annual meeting,
notwithstanding that shareholders have not been advised of the proposal in the
proxy statement for the 2003 annual meeting. Any shareholder proposals must
comply in all respects with the rules and regulations of the Securities and
Exchange Commission.
A copy of Flowers Foods' Annual Report on Form 10-K for the fiscal year
ended December 29, 2001, which has been filed with the Securities and Exchange
Commission, may be obtained without charge by written request to Shareholder
Relations Department, Flowers Foods, Inc., 1919 Flowers Circle, Thomasville, GA
31757.
24
ANNEX A
FLOWERS FOODS, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
1. MISSION STATEMENT
2. ORGANIZATION
3. ROLE AND RESPONSIBILITIES
MAY 16, 2001
MISSION STATEMENT
The Audit Committee (Committee) will assist the Board of Directors in
fulfilling its oversight responsibilities. Through management, external auditors
and legal counsel, the Committee will review the financial reporting process,
the system of internal control, the audit process, and the Company's process for
monitoring compliance with laws and regulations and with the Company's code of
conduct. In performing its duties, the Committee will maintain effective working
relationships with the Board of Directors, management, and the internal and
external auditors. To effectively perform his or her role, each committee member
will obtain an understanding of the detailed responsibilities of committee
membership as well as the company's business, operations, and risks.
ORGANIZATION
SIZE
The Committee will consist of at least three independent directors.
MEMBERSHIP QUALIFICATIONS
The Nominating Committee of the Board of Directors will appoint members to
the Committee. To serve on the Committee the director must be independent.
Directors will be considered to be independent if they have no relationship that
may interfere with the exercise of their independence from management and the
corporation.
In determining independence the Board will adhere to the requirements of
the New York Stock Exchange.
Each member of the Committee must be "financially literate" or must become
"financially literate" within a reasonable period of time after appointment to
the Committee. The Board will determine, in its business judgement, whether a
director meets the financial literacy requirement.
At least one member of the Committee must have "accounting or related
financial management expertise", as determined by the Board in its business
judgement.
TERM OF OFFICE
The Board of Directors has the authority to set the term of office for each
Committee member.
MEETINGS
The Committee will meet regularly, but at its discretion, in order to
fulfill its responsibilities. The Committee will, at a minimum, hold meetings:
- prior to the release of the Company's annual audited consolidated
financial statements
- to review both the internal and external audit plans, and
- on at least one other occasion to review the findings and status of the
completion of the internal audits and
- to review the status of the annual audit of the Company's consolidated
financial statements.
In addition, the Committee will conduct either telephonic or face-to-face
meetings, prior to the Company's release to the public, to review the Company's
quarterly results and financial position.
In addition to the general meetings, the Committee will meet in a private
session at least once a year with each of: management, internal auditors, and
external auditors. Each of these groups will have direct and unrestricted access
to the Committee.
A-2
ROLES & RESPONSIBILITIES
INTERNAL CONTROL
Review with management the Company's system of internal controls.
Obtain from the external auditors assurance that they will inform the
Company's management concerning any information indicating that an illegal act
has or may have occurred that could have a material effect on the Company's
financial statements, and assure that such information has been conveyed to the
Committee.
FINANCIAL REPORTING
GENERAL
Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements, and understand their impact on the
financial statements.
ANNUAL FINANCIAL STATEMENTS
Discuss with management and the external auditors, the financial statements
and results of the audit, including matters required to be communicated to the
Committee by the external auditors.
Review the expected impact of new accounting and reporting pronouncements.
Review complex and/or unusual transactions such as restructuring charges
and use of derivatives.
Review judgmental areas such as those involving valuation of assets and
liabilities, including, for example, the accounting for and disclosure of
obsolete or slow-moving inventory; warranty, product, and environmental
liability; litigation reserves; and other commitments and contingencies.
Based on these reviews and discussions, advise the Board of Directors
whether the Committee recommends that the audited financial statements be
included in the Annual Report on Form 10-K.
INTERIM FINANCIAL STATEMENTS
Be briefed on how management develops and summarizes quarterly financial
information and the extent of involvement by the internal and external auditors
in performing a pre-issuance review of quarterly financial information.
Meet with management and, if a pre-issuance review was completed, with the
external auditors, either telephonically or in person, to review the interim
financial statements and the results of the review.
Discuss with the external auditors those matters, if any, required to be
communicated to the Committee by professional standards.
COMPLIANCE WITH LAWS AND REGULATIONS
Review the effectiveness of the system for monitoring compliance with laws
and regulations and the results of management's investigation and follow-up
(including disciplinary action) on any material fraudulent acts or accounting
irregularities.
COMPLIANCE WITH CODE OF CONDUCT
Review the program for monitoring compliance with the code of conduct.
Periodically obtain updates from management and general counsel regarding
compliance.
A-3
INTERNAL AUDIT
Review the activities and organizational structure of the internal audit
function.
Review the qualifications of the internal audit function and concur in the
appointment, replacement, reassignment, or dismissal of the director of internal
audit or changes in the use of an outside firm if internal audit is outsourced.
Review the effectiveness of the internal audit function.
EXTERNAL AUDIT
Review and approve the external auditors' proposed audit scope and
approach.
Review the performance of the external auditors and recommend to the board
of directors the appointment or discharge of the external auditors. The external
auditors are ultimately accountable to the Board of Directors and the Committee
as representatives of shareholders.
Review and confirm the independence of the external auditors by reviewing
the non-audit services provided and the auditors' assertion of their
independence in accordance with professional standards.
OTHER RESPONSIBILITIES
Review, with the Company's counsel, any legal matters that could have a
significant impact on the Company's financial statements.
Review with management, any tax matters that could have a significant
impact on the Company's financial statements.
Review the fees paid to the external auditors for audit and non-audit
services.
Review the policies and procedures in effect for considering officers'
expenses and perquisites.
If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist.
Perform other oversight functions as requested by the full Board.
Annually review and reassess the adequacy of the charter; receive approval
of changes from the Board.
(i) Reporting
RESPONSIBILITIES
Regularly update the Board of Directors about Committee activities and make
appropriate recommendations.
A-4
ANNEX B
FLOWERS FOODS, INC.
2001 EQUITY AND PERFORMANCE INCENTIVE PLAN
1. Purpose. The purpose of the 2001 Equity and Performance Incentive Plan
is to attract and retain directors, officers and other key employees for Flowers
Foods, Inc., a Georgia corporation and its Subsidiaries and to strengthen the
mutuality of interests between such key persons and the Company's shareholders
by offering performance and equity-based incentives and rewards for superior
performance.
2. Definitions. As used in this Plan,
"Board" means the Board of Directors of the Company and, to the extent of
any delegation by the Board to a committee (or subcommittee thereof) pursuant to
Section 17 of this Plan, such committee (or subcommittee).
"Change in Control" shall have the meaning provided in Section 12 of this
Plan.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the Compensation Committee of the Board, which shall
consist of a committee of two (2) or more Nonemployee Directors appointed by the
Board to exercise one or more administrative functions under the Plan.
"Common Stock" means the common stock, par value $.01 per share, of the
Company or any security into which such Common Stock may be changed by reason of
any transaction or event of the type referred to in Section 11 of this Plan.
"Company" means Flowers Foods, Inc., a Georgia corporation.
"Covered Employee" means a Participant who is, or is determined by the
Board to be likely to become, a "covered employee" within the meaning of Section
162(m) of the Code (or any successor provision).
"Date of Grant" means the date specified by the Board on which a grant of
Option Rights, Performance Stock or Performance Units or a grant or sale of
Restricted Stock or Deferred Stock shall become effective which date shall not
be earlier than the date on which the Board takes action with respect thereto.
"Deferral Period" means the period of time during which Deferred Stock is
subject to deferral limitations under Section 7 of this Plan.
"Deferred Stock" means an award made pursuant to Section 7 of this Plan of
the right to receive Common Stock at the end of a specified Deferral Period.
"Director" means a member of the Board of Directors of the Company.
"Disability" means disability as determined under procedures established by
the Committee for purposes of this Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
"Fair Market Value" means (i) the average of the highest and the lowest
quoted selling price of a share of Common Stock as reported on the composite
tape for securities listed on the New York Stock Exchange, or such other
national securities exchange as may be designated by the Committee, or, in the
event that the Common Stock is not listed for trading on a national securities
exchange but is quoted on an automated system, on such automated system, in any
such case on the valuation date (or, if there were no sales on the valuation
date, the average of the highest and the lowest quoted selling prices as
reported on said composite tape or automated system for the most recent day
during which a sale occurred), or (ii), if clause (i) does not apply, the fair
market value of the Common Stock as determined by the Board. Notwithstanding the
foregoing, for purposes of determining Fair Market Value for grants made during
the period March 26 through
B-1
April 5, 2001, the value determined according to (i) above shall be averaged for
the first twenty (20) trading days commencing on the date of said grant.
"Immediate Family" has the meaning ascribed thereto in Rule 16a-1(e) under
the Exchange Act (or any successor rule to the same effect) as in effect from
time to time.
"Incentive Stock Options" means Option Rights that are intended to qualify
as "incentive stock options" under Section 422 of the Code or any successor
provision.
"Management Objectives" means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Stock or Performance Units or, when so determined by the
Board, Option Rights, Restricted Stock and dividend credits pursuant to this
Plan. Management Objectives may be described in terms of Company-wide objectives
or objectives that are related to the performance of the individual Participant
or of the Subsidiary, division, department, region or function within the
Company or Subsidiary in which the Participant is employed. The Management
Objectives may be made relative to the performance of other corporations. The
Management Objectives applicable to any award to a Covered Employee shall be
based on specified levels of or growth in one or more of the following criteria:
1. cash flow;
2. earnings per share;
3. earnings before interest and taxes;
4. earnings per share growth;
5. net income;
6. return on assets;
7. return on assets employed;
8. return on equity;
9. return on invested capital;
10. return on total capital;
11. revenue growth;
12. stock price;
13. total return to shareholders;
14. economic value added; and
15. operating profit growth; or
any combination of the foregoing.
If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which
it conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Committee may in its discretion modify such
Management Objectives or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Covered Employee where such action would result in the loss of the
otherwise available exemption of the award under Section 162(m) of the Code. In
such case, the Committee shall not make any modification of the Management
Objectives or minimum acceptable level of achievement.
"Nonemployee Director" means a Director who is not an employee of the
Company or any Subsidiary.
"Nonqualified Options" mean Option Rights that are not intended to qualify
as Incentive Stock Options.
"Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.
"Option Price" means the purchase price payable on exercise of an Option
Right.
"Option Right" means the right to purchase Common Stock upon exercise of an
option granted pursuant to Section 5 or Section 9 of this Plan.
"Participant" means a person who is selected by the Board to receive
benefits under this Plan and who is at the time an officer or other key employee
of the Company or any one or more of its Subsidiaries, or who has
B-2
agreed to commence serving in any of such capacities within thirty (30) days of
the Date of Grant, and shall also include each Nonemployee Director who receives
an award of Option Rights or Restricted Stock.
"Performance Period" means, in respect of Performance Stock or a
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating to such Performance Stock
or Performance Unit are to be achieved.
"Performance Stock" means a bookkeeping entry that records the equivalent
of one Common Stock awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a unit equivalent
to $1.00 awarded pursuant to Section 8 of this Plan.
"Plan" means this Flowers Foods, Inc. 2001 Equity and Performance Incentive
Plan.
"Restricted Stock" means shares of Common Stock granted or sold pursuant to
Section 6 or Section 9 of this Plan as to which neither the substantial risk of
forfeiture nor the prohibition on transfers referred to in such Section 6 has
expired.
"Retirement" means termination of employment on or after attainment of age
65.
"Spread" means the excess of the Fair Market Value per share on the date
when Option Rights are surrendered in payment of the Option Price of other
Option Rights, over the Option Price.
"Subsidiary" means a corporation, company or other entity
(i) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of directors or
other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may be
the case in a partnership, joint venture or unincorporated association),
but more than fifty percent (50%) of whose ownership interest representing
the right generally to make decisions for such other entity is,
now or hereafter, owned or controlled, directly or indirectly, by the Company.
Notwithstanding the foregoing, for purposes of determining whether any person
may be a Participant for purposes of any grant of Incentive Stock Options,
"Subsidiary" means any corporation in which, at the time, the Company owns or
controls, directly or indirectly, more than fifty percent (50%) of the total
combined voting power represented by all classes of stock issued by such
corporation.
3. Stock Available Under the Plan.
(a) Subject to adjustment as provided in Section 3(b) and Section 11 of
this Plan, the number of shares of Common Stock that may be issued or
transferred (i) upon the exercise of Option Rights, (ii) as Restricted Stock and
released from substantial risks of forfeiture thereof, (iii) as Deferred Stock,
(iv) in payment of Performance Stock or Performance Units that have been earned,
(v) as awards to Nonemployee Directors or (vi) in payment of dividend
equivalents paid with respect to awards made under the Plan shall not exceed in
the aggregate 3,000,000 shares of Common Stock, plus any shares described in
Section 3(b). Such shares may be shares of original issuance or treasury shares
or a combination of the foregoing.
(b) The number of shares available in Section 3(a) above shall be adjusted
to account for shares relating to awards that expire, are forfeited or are
transferred, surrendered or relinquished upon the payment of any Option Price by
the transfer to the Company of shares of Common Stock or upon satisfaction of
any withholding amount. Upon payment in cash of the benefit provided by any
award granted under this Plan, any shares that were covered by that award shall
again be available for issue or transfer hereunder.
(c) Notwithstanding anything in this Section 3, or elsewhere in this Plan,
to the contrary and subject to adjustment as provided in Section 11 of this
Plan,
(i) the aggregate number of shares of Common Stock actually issued or
transferred by the Company upon the exercise of Incentive Stock Options
shall not exceed 3,000,000 shares of Common Stock;
B-3
(ii) no Participant shall be granted Option Rights, in the aggregate,
for more than 1,500,000 shares of Common Stock during any period of three
(3) consecutive years;
(iii) the number of shares issued as Restricted Stock, Deferred Stock
or Performance Stock shall not in the aggregate exceed 1,500,000 shares of
Common Stock;
(iv) during any period of three (3) consecutive fiscal years, the
maximum number of shares of Common Stock covered by awards of Restricted
Stock, Deferred Stock or Performance Stock granted to any one Participant
shall not exceed 750,000 shares of Common Stock; and
(v) no Nonemployee Director shall be granted Option Rights and
Restricted Stock, in the aggregate, for more than 75,000 shares of Common
Stock during any fiscal year of the Company.
(d) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any one (1) calendar year receive an award of
Performance Stock and Performance Units having an aggregate maximum value as of
their respective Dates of Grant in excess of $5,000,000.
4. Eligibility. The Board shall have full authority and the absolute
discretion to determine which Participants are to receive an award of Option
Rights, Restricted Stock, Deferred Stock, Performance Stock or Performance
Units, the time or times when those grants are to be made, the number of shares
of Common Stock to be covered by each such grant in the case of Option Rights,
Restricted Stock, Deferred Stock and Performance Stock, the status of the
granted option as either an Incentive Stock Option or a Nonqualified Option in
the case of an Option Right, the time or times when each Option Right is to
become exercisable, the maximum term for which the Option Right is to remain
outstanding and the vesting schedule (if any) applicable to the awards granted
under this Plan.
5. Option Rights. The Board may, from time to time and upon such terms
and conditions as it may determine, authorize the granting to Participants of
options to purchase Common Stock. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements contained in the
following provisions:
(a) Each grant shall specify the number of shares of Common Stock to
which it pertains subject to the limitations set forth in Section 3 of this
Plan.
(b) Each grant shall specify an Option Price per share, which may not
be less than the Fair Market Value per share on the Date of Grant. To the
extent required for "Incentive Stock Option" status under Section 422 of
the Code, the aggregate Fair Market Value (determined as of the Date of
Grant) of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
under the Plan and/or any other stock option plan of the Company (within
the meaning of Section 422 of the Code) shall not exceed $100,000.
(c) Each grant shall specify whether the Option Price shall be payable
(i) in cash, by check or other consideration acceptable to the Company,
(ii) by the actual or constructive transfer to the Company of shares of
Common Stock owned by the Optionee for at least six (6) months (or other
consideration authorized pursuant to Section 5(d)) having a value at the
time of exercise equal to the total Option Price, or (iii) by a combination
of such methods of payment.
(d) The Board may determine, at or after the Date of Grant, that
payment of the Option Price of any Option Right (other than an Incentive
Stock Option) may also be made in whole or in part in the form of
Restricted Stock or other Common Stock that are forfeitable or subject to
restrictions on transfer, Deferred Stock, Performance Stock (based, in each
case, on the Fair Market Value per share on the date of exercise), other
Option Rights (based on the Spread on the date of exercise) or Performance
Units. Unless otherwise determined by the Board at or after the Date of
Grant, whenever any Option Price is paid in whole or in part by means of
any of the forms of consideration specified in this Section 5(d), the
shares of Common Stock received upon the exercise of the Option Rights
shall be subject to such risks of forfeiture or restrictions on transfer as
may correspond to any that apply to the consideration surrendered, but only
to the extent, determined with respect to the consideration surrendered, of
(i) the number of
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shares of Performance Stock, (ii) the Spread of any unexercisable portion
of Option Rights, or (iii) the stated value of Performance Units.
(e) Any grant may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker on a date satisfactory
to the Company of some or all of the shares to which such exercise relates.
(f) Any grant may provide for payment of the Option Price, at the
election of the Optionee, in installments, with or without interest, upon
terms determined by the Board.
(g) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain
unexercised.
(h) Each grant shall specify the period or periods of continuous
service by the Optionee with the Company or any Subsidiary that is
necessary before the Option Rights or installments thereof will become
exercisable and may provide for the earlier exercise of such Option Rights
in the event of a Change in Control or in the event of Retirement,
Disability or death of the Participant.
(i) Any grant of Option Rights may specify Management Objectives that
must be achieved as a condition to the exercise of such rights.
(j) Option Rights granted under this Plan may be (i) Incentive Stock
Options, (ii) Nonqualified Options, or (iii) combinations of the foregoing.
(k) The Board may, at or after the Date of Grant of any Option Rights
(other than Incentive Stock Options), provide for the payment of dividend
equivalents to the Optionee on either a current or deferred or contingent
basis or may provide that such equivalents shall be credited against the
Option Price.
(l) No Option Right shall be exercisable more than ten (10) years from
the Date of Grant.
(m) An Optionee may exercise an Option Right in whole or in part at
any time and from time to time during the period within which an Option
Right may be exercised and for such number of shares of Common Stock as
shall be determined by the Board and set forth in the agreements evidencing
the grant of such Option Right. To exercise an Option Right, an Optionee
shall give written notice to the Company specifying the number of shares of
Common Stock to be purchased and provide payment of the Option Price and
any other documentation that may be required by the Company.
(n) Each grant of Option Rights shall be evidenced by an agreement
executed on behalf of the Company by an officer and delivered to the
Optionee and containing such terms and provisions, consistent with this
Plan, as the Board may approve.
6. Restricted Stock. The Board may also authorize the grant or sale of
Restricted Stock to Participants. Each grant or sale of Restricted Stock may
utilize any or all of the authorizations, and shall be subject to all of the
requirements, contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate transfer of
the ownership of shares of Common Stock to the Participant in consideration
of the performance of services, entitling such Participant to voting,
dividend and other ownership rights, but subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than Fair Market Value per share at the Date of Grant.
(c) Each such grant or sale shall provide that the Restricted Stock
covered by such grant or sale shall be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a period of
not less than three (3) years to be determined by the Board at the Date of
Grant and may provide for the earlier lapse of such substantial risk of
forfeiture in the event of a Change in Control, or in the event of
Retirement, Disability or death of the Participant. If the Board conditions
the nonforfeitability of Restricted Stock upon service alone, such vesting
may not occur before three (3) years from the Date of Grant of such
Restricted Stock, and if the Board conditions the
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nonforfeitability of Restricted Stock on Management Objectives, such
nonforfeitability may not occur before one (1) year from the Date of Grant
of such Restricted Stock.
(d) Each such grant or sale shall provide that during the period for
which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Stock shall be prohibited or restricted
in the manner and to the extent prescribed by the Board at the Date of
Grant (which restrictions may include, without limitation, rights of
repurchase or first refusal in the Company or provisions subjecting the
Restricted Stock to a continuing substantial risk of forfeiture in the
hands of any transferee).
(e) Any grant of Restricted Stock may specify that termination or
early termination of the restrictions applicable to such shares may occur
(i) upon achievement of Management Objectives or (ii) upon the expiration
of a stated period of time, with or without the payment of additional
consideration by the participant at said time. Each grant may specify in
respect of such Management Objectives a minimum acceptable level of
achievement and may set forth a formula for determining the number of
shares of Restricted Stock on which restrictions will terminate if
performance is at or above the minimum level, but falls short of full
achievement of the specified Management Objectives.
(f) Any such grant or sale of Restricted Stock may require that any or
all dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional
Restricted Stock, which may be subject to the same restrictions as the
underlying award.
(g) Each grant or sale of Restricted Stock shall be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and shall contain such terms and
provisions, consistent with this Plan, as the Board may approve. Unless
otherwise directed by the Board, all certificates representing shares of
Restricted Stock shall be held in custody by the Company until all
restrictions thereon shall have lapsed, together with a stock power or
powers executed by the Participant in whose name such certificates are
registered, endorsed in blank and covering such Restricted Stock.
7. Deferred Stock. The Board may also authorize the granting or sale of
Deferred Stock to Participants. Each grant or sale of Deferred Stock may utilize
any or all of the authorizations, and shall be subject to all of the
requirements contained in the following provisions:
(a) Each such grant or sale shall constitute the agreement by the
Company to deliver shares of Common Stock to the Participant in the future
in consideration of the performance of services, but subject to the
fulfillment of such conditions during the Deferral Period as the Board may
specify.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than the Fair Market Value per share at the Date of Grant.
(c) Each such grant or sale shall be subject to a Deferral Period of
not less than one (1) year, as determined by the Board at the Date of
Grant, and may provide for the earlier lapse or other modification of such
Deferral Period in the event of a Change in Control, or in the event of
Retirement, Disability or death of the Participant. If the Board conditions
the nonforfeitability of shares of Deferred Stock upon service alone, such
vesting may not occur before three (3) years from the Date of Grant of such
shares of Deferred Stock, and if the Board conditions the nonforfeitability
of shares of Deferred Stock on Management Objectives, such
nonforfeitability may not occur before one (1) year from the Date of Grant
of such shares of Deferred Stock.
(d) During the Deferral Period, the Participant shall have no right to
transfer any rights under his or her award and shall have no rights of
ownership in the Deferred Stock and shall have no right to vote them, but
the Board may, at or after the Date of Grant, authorize the payment of
dividend equivalents on such shares of Deferred Stock on either a current
or deferred or contingent basis, either in cash or in additional Common
Stock.
(e) Each grant or sale of Deferred Stock shall be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and shall contain such terms and
provisions, consistent with this Plan, as the Board may approve.
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8. Performance Stock and Performance Units. The Board may also authorize
the granting of Performance Stock and Performance Units that will become payable
to a Participant upon achievement of specified Management Objectives. Each such
grant may utilize any or all of the authorizations, and shall be subject to all
of the requirements, contained in the following provisions:
(a) Each grant shall specify the number of shares of Performance Stock
or Performance Units to which it pertains, which number may be subject to
adjustment to reflect changes in compensation or other factors; provided,
however, that no such adjustment shall be made in the case of a Covered
Employee where such action would result in the loss of the otherwise
available exemption of the award under Section 162(m) of the Code.
(b) The Performance Period with respect to each Performance Share or
Performance Unit shall be such period of time not less than one (1) year,
commencing with the Date of Grant as shall be determined by the Board at
the time of grant which may be subject to earlier lapse or other
modification in the event of a Change in Control or in the event of
Retirement, Disability or death of the Participant.
(c) Any grant of Performance Stock or Performance Units shall specify
Management Objectives which, if achieved, will result in payment or early
payment of the award, and each grant may specify in respect of such
specified Management Objectives a minimum acceptable level of achievement
and shall set forth a formula for determining the number of shares of
Performance Stock or Performance Units that will be earned if performance
is at or above the minimum level, but falls short of full achievement of
the specified Management Objectives. The grant of Performance Stock or
Performance Units shall specify that, before the Performance Stock or
Performance Units shall be earned and paid, the Board must certify that the
Management Objectives have been satisfied.
(d) Each grant shall specify the time and manner of payment of shares
of Performance Stock or Performance Units that have been earned. Any grant
may specify that the amount payable with respect thereto may be paid by the
Company in cash, in shares of Common Stock or in any combination thereof
and may either grant to the Participant or retain in the Board the right to
elect among those alternatives.
(e) Any grant of Performance Stock may specify that the amount payable
with respect thereto may not exceed a maximum specified by the Board at the
Date of Grant. Any grant of Performance Units may specify that the amount
payable or the number of shares of Common Stock issued with respect thereto
may not exceed maximums specified by the Board at the Date of Grant.
(f) The Board may, at or after the Date of Grant of Performance Stock,
provide for the payment of dividend equivalents to the holder thereof on
either a current or deferred or contingent basis, either in cash or in
additional shares of Common Stock.
(g) Each grant of Performance Stock or Performance Units shall be
evidenced by an agreement executed on behalf of the Company by any officer
and delivered to and accepted by the Participant, which agreement shall
state that such shares of Performance Stock or Performance Units are
subject to all the terms and conditions of this Plan, and contain such
other terms and provisions, consistent with this Plan, as the Board may
approve.
9. Awards to Nonemployee Directors. The Board may, from time to time and
upon such terms and conditions as it may determine, authorize the granting to
Nonemployee Directors of Option Rights and may also authorize the grant or sale
of Restricted Stock to Nonemployee Directors.
(a) Each grant of Option Rights awarded pursuant to this Section 9
shall be upon terms and conditions consistent with Section 5 of this Plan
and shall be evidenced by an agreement in such form as shall be approved by
the Board. Each grant shall specify an Option Price per share, which shall
not be less than the Fair Market Value per share on the Date of Grant. Each
such Option Right granted under the Plan shall expire not more than ten
(10) years from the Date of Grant and shall be subject to earlier
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termination as hereinafter provided. Unless otherwise determined by the
Board, such Option Rights shall be subject to the following additional
terms and conditions:
(i) Each grant shall specify the number of shares of Common Stock
to which it pertains subject to the limitations set forth in Section 3
of this Plan.
(ii) Each such Option Right shall become exercisable six (6)
months after the Date of Grant. Such grant may provide for the earlier
exercise of such Option Rights in the event of a Change in Control or in
the event of Retirement, Disability or death of the Nonemployee
Director.
(iii) In the event of the termination of service on the Board by
the holder of any such Option Rights, other than by reason of
Retirement, Disability, or death, the then outstanding Option Rights of
such holder may be exercised to the extent that they would be
exercisable on the date of such termination until the date that is one
(1) year after the date of such termination, but in no event after the
expiration date of such Option Rights.
(iv) In the event of the Retirement, Disability, or death of the
holder of any such Option Rights, each of the then outstanding Option
Rights of such holder may be exercised at any time within one (1) year
after such Retirement Disability, death, or, but in no event after the
expiration date of the term of such Option Rights.
(v) If a Nonemployee Director subsequently becomes an employee of
the Company or a Subsidiary while remaining a member of the Board, any
Option Rights held under the Plan by such individual at the time of such
commencement of employment shall not be affected thereby.
(vi) Option Rights may be exercised by a Nonemployee Director only
upon payment to the Company in full of the Option Price of the shares of
Common Stock to be delivered. Such payment shall be made in cash or in
shares of Common Stock then owned by the Optionee for at least six (6)
months, or in a combination of cash and such shares of Common Stock.
(b) Each grant or sale of Restricted Stock pursuant to this Section 9
shall be upon terms and conditions consistent with Section 6 of this Plan.
10. Transferability. Except as otherwise determined by the Board, no
Option Right or other derivative security granted under the Plan shall be
transferable by a Participant other than by will or the laws of descent and
distribution. Except as otherwise determined by the Board, Option Rights shall
be exercisable during the Optionee's lifetime only by him or her or by his or
her guardian or legal representative.
(b) The Board may specify at the Date of Grant that part or all of the
shares of Common Stock that are (i) to be issued or transferred by the
Company upon the exercise of Option Rights, upon the termination of the
Deferral Period applicable to Deferred Stock or upon payment under any
grant of Performance Stock or Performance Units or (ii) no longer subject
to the substantial risk of forfeiture and restrictions on transfer referred
to in Section 6 of this Plan, shall be subject to further restrictions on
transfer.
(c) Notwithstanding the provisions of Section 10(a), Option Rights
(other than Incentive Stock Options) shall be transferable by a
Participant, without payment of consideration therefor by the transferee,
to any one or more members of the Participant's Immediate Family (or to one
or more trusts established solely for the benefit of one or more members of
the Participant's Immediate Family or to one or more partnerships in which
the only partners are members of the Participant's Immediate Family);
provided, however, that (i) no such transfer shall be effective unless
reasonable prior notice thereof is delivered to the Company and such
transfer is thereafter effected in accordance with any terms and conditions
that shall have been made applicable thereto by the Company or the Board
and (ii) any such transferee shall be subject to the same terms and
conditions hereunder as the Participant.
11. Adjustments. The Board may make or provide for such adjustments in
the numbers of shares of Common Stock covered by outstanding Option Rights,
Deferred Stock, and Performance Stock granted hereunder, in the Option Price,
and in the kind of shares covered thereby, as the Board, in its sole discretion,
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exercised in good faith, may determine is equitably required to prevent dilution
or enlargement of the rights of Participants or Optionees that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or (b)
any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Moreover, in the event of any such transaction or event, the Board, in its
discretion, may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced. The Board may also make or provide for such
adjustments in the numbers of shares specified in Section 3 of this Plan as the
Board in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this Section 11;
provided, however, that any such adjustment to the number specified in Section
3(c)(i) shall be made only if and to the extent that such adjustment would not
cause any Option Right intended to qualify as an Incentive Stock Option to fail
so to qualify.
12. Change in Control. For purposes of this Plan, except as may be
otherwise prescribed by the Board in an agreement evidencing a grant or award
made under the Plan, a "Change in Control" shall mean the occurrence during the
term of any of the following events, subject to the provisions of Section 12(f)
hereof:
(a) the Company merges into itself, or is merged or consolidated with,
another entity and as a result of such merger or consolidation less than
51% of the voting power of the then-outstanding voting securities of the
surviving or resulting entity immediately after such transaction are
directly or indirectly beneficially owned in the aggregate by the former
shareholders of the Company immediately prior to such transaction; or
(b) all or substantially all the assets accounted for on the
consolidated balance sheet of the Company are sold or transferred to one or
more entities or persons, and as a result of such sale or transfer less
than 51% of the voting power of the then-outstanding voting securities of
such entity or person immediately after such sale or transfer is directly
or indirectly beneficially held in the aggregate by the former shareholders
of the Company immediately prior to such transaction or series of
transactions; or
(c) a person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in
effect on the Effective Date of this Plan) of the Exchange Act becomes the
beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange
Commission pursuant to the Exchange Act) of (i) 15% or more but less than
35% of the voting power of the then-outstanding voting securities of the
Company without prior approval of the Board, or (ii) 35% or more of the
voting power of the then-outstanding voting securities of the Company;
provided, however, that the foregoing does not apply to any such
acquisition that is made by (w) any Subsidiary; (x) any employee benefit
plan of the Company or any Subsidiary; or (y) any person or group of which
employees of the Company or of any Subsidiary control a greater than 25%
interest unless the Board determines that such person or group is making a
"hostile acquisition;" or (z) any person or group of which the Company is
an affiliate; or
(d) a majority of the members of the Board are not Continuing
Directors, where a "Continuing Director" is any member of the Board who (x)
was a member of the Board on the Effective Date of this Plan or (y) was
nominated for election or elected to such Board with the affirmative vote
of a majority of the Continuing Directors who were members of such Board at
the time of such nomination or election; or
(e) The Board determines that (A) any particular actual or proposed
merger, consolidation, reorganization, sale or transfer of assets,
accumulation of shares of the Company or other transaction or event or
series of transactions or events will, or is likely to, if carried out,
result in a Change in Control falling within Subsections (a), (b), (c) or
(d) and (B) it is in the best interests of the Company and its
shareholders, and will serve the intended purposes of this Section 12, if
the provisions of awards which provide for earlier exercise or earlier
lapse of restrictions or conditions upon a Change in Control shall
thereupon become immediately operative.
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(f) Notwithstanding the foregoing provisions of this Section (12):
(i) If any such merger, consolidation, reorganization, sale or
transfer of assets, or tender offer or other transaction or event or
series of transactions or events mentioned in Section (12)(e) shall be
abandoned, or any such accumulations of shares shall be dispersed or
otherwise resolved, the Board may, by notice to the Participant, nullify
the effect thereof and reinstate the award as previously in effect, but
without prejudice to any action that may have been taken prior to such
nullification.
(ii) Unless otherwise determined in a specific case by the Board, a
"Change in Control" shall not be deemed to have occurred for purposes of
Section (12)(c) solely because (X) the Company, (Y) a Subsidiary, or (Z)
any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the
Exchange Act disclosing beneficial ownership by it of shares of the
then-outstanding voting securities of the Company, whether in excess of
20% or otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the future by
reason of such beneficial ownership.
13. Deferrals. In accordance with rules and procedures established by the
Committee, the Committee (i) may permit a Participant at or after the time of
grant to defer receipt of payment or settlement of some or all of an award to
one or more dates elected by the Participant, subsequent to the date on which
such award is payable or otherwise to be settled, or (ii) may require at or
after the time of grant that the portion of an award in excess of an amount
specified by the Committee be mandatorily deferred until one or more dates
specified by the Committee under the Plan pursuant to such rules, procedures or
programs as it may establish for purposes of this Plan. Amounts deferred in
accordance with the preceding sentence shall be noted in a bookkeeping account
maintained by the Company for this purpose and may periodically be credited with
notional interest or earnings in accordance with procedures established by the
Committee from time to time. Deferred amounts shall be paid in cash, shares of
Common Stock or other property, as determined by the Committee at or after the
time of deferral, on the date or dates elected by the Participant or, in the
case of amounts which are mandatorily deferred, on the date or dates specified
by the Committee. The Committee also may provide that deferred issuances and
settlements include the payment or crediting of dividend equivalents or interest
on the deferred amounts.
14. Fractional Shares. The Company shall not be required to issue any
fractional shares of Common Stock pursuant to this Plan. The Board may provide
for the elimination of fractions or for the settlement of fractions in cash.
15. Withholding Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for such withholding are insufficient, it
shall be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory
to the Company for payment of the balance of such taxes required to be withheld,
which arrangements (in the discretion of the Board) may include relinquishment
of a portion of such benefit. Shares of Common Stock or benefits shall not be
withheld in excess of the minimum number required for such tax withholding. The
Company and a Participant or such other person may also make arrangements with
respect to the payment in cash of any taxes with respect to which withholding is
not required.
16. Foreign Employees. In order to facilitate the making of any grant or
combination of grants under this Plan, the Board may provide for such special
terms for awards to Participants who are foreign nationals or who are employed
by the Company or any Subsidiary outside of the United States of America as the
Board may consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. Moreover, the Board may approve such supplements to
or amendments, restatements or alternative versions of this Plan as it may
consider necessary or appropriate for such purposes, without thereby affecting
the terms of
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this Plan as in effect for any other purpose, and the Secretary or other
appropriate officer of the Company may certify any such document as having been
approved and adopted in the same manner as this Plan. No such special terms,
supplements, amendments or restatements, however, shall include any provisions
that are inconsistent with the terms of this Plan as then in effect unless this
Plan could have been amended to eliminate such inconsistency without further
approval by the shareholders of the Company.
17. Administration of the Plan.
(a) This Plan shall be administered by the Board, which may from time to
time delegate all or any part of its authority under this Plan to the Committee
(or subcommittee thereof). A majority of the Committee (or subcommittee) shall
constitute a quorum, and the action of the members of the Committee (or
subcommittee) present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the Committee (or
subcommittee). To the extent of any such delegation, references in this Plan to
the Board shall be deemed to be references to the Committee or subcommittee.
(b) The Committee may delegate its responsibility with respect to the
administration of the Plan to one or more officers of the Company, to one or
more members of the Committee or to one or more members of the Board; provided,
however, that the Committee may not delegate its responsibility (i) to make
awards to individuals who are subject to Section 16 of the Exchange Act, (ii) to
make awards under Section 8 which are intended to constitute "qualified
performance-based compensation" under Section 162(m) of the Code or (iii) to
amend or terminate the Plan in accordance with Section 18. The Committee may
also appoint agents to assist in the day-to-day administration of the Plan and
may delegate the authority to execute documents under the Plan to one or more
members of the Committee or to one or more officers of any of the Companies.
(c) The interpretation and construction by the Board of any provision of
this Plan or of any agreement, notification or document evidencing the grant of
Option Rights, Restricted Stock, Deferred Stock, Performance Stock or
Performance Units and any determination by the Board pursuant to any provision
of this Plan or of any such agreement, notification or document shall be final
and conclusive. The Board shall be entitled to rely in good faith upon any
report or other information furnished to it by any officer or employee of the
Company or from the financial, accounting, legal or other advisers of the
Company. Each member of the Board, each individual to whom the Board delegates
authority hereunder, each individual designated by the Board to administer the
Plan and each other person acting at the direction of or on behalf of the Board
shall not be liable for any determination or anything done or omitted to be done
by him or by any other member of the Board or the Committee or any other such
individual in connection with the Plan, except for his own willful misconduct or
as expressly provided by statute, and, to the extent permitted by law and the
bylaws of the Company, shall be fully indemnified and protected by the Company
with respect to such determination, act or omission.
18. Amendments, Etc.
(a) The Board may at any time and from time to time amend the Plan in whole
or in part; provided, however, that any amendment which must be approved by the
shareholders of the Company in order to comply with applicable law or the rules
of the New York Stock Exchange or, if the Common Stock are not traded on the New
York Stock Exchange, the principal national securities exchange upon which the
Common Stock are traded or quoted, shall not be effective unless and until such
approval has been obtained. Presentation of this Plan or any amendment hereof
for shareholder approval shall not be construed to limit the Company's authority
to offer similar or dissimilar benefits under other plans without shareholder
approval.
(b) The Board shall not, without the further approval of the shareholders
of the Company, authorize the amendment of any outstanding Option Right to
reduce the Option Price. This Section 18(b) is intended to prohibit the
repricing of "underwater" Option Rights and shall not be construed to prohibit
the adjustments provided for in Section 11 of this Plan.
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19. General Provisions.
(a) The Board may condition the grant of any award or combination of awards
authorized under this Plan on the surrender or deferral by the Participant of
his or her right to receive a cash bonus or other compensation otherwise payable
by the Company or a Subsidiary to the Participant.
(b) In case of termination of employment by reason of Retirement,
Disability, or death, or in the case of hardship or other special circumstances,
of a Participant who holds an Option Right not immediately exercisable in full,
or any Restricted Stock as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or any Deferred Stock as
to which the Deferral Period has not been completed, or any Performance Stock or
Performance Units which have not been fully earned, or who holds shares of
Common Stock subject to any transfer restriction imposed pursuant to Section
10(b) of this Plan, the Board may, in its sole discretion, accelerate the time
at which such Option Right may be exercised or the time at which such
substantial risk of forfeiture or prohibition or restriction on transfer will
lapse or the time when such Deferral Period will end or the time at which such
Performance Stock or Performance Units will be deemed to have been fully earned
or the time when such transfer restriction will terminate or may waive any other
limitation or requirement under any such award.
(c) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any
Subsidiary, nor shall it interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate such Participant's employment or
other service at any time.
(d) To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify as an Incentive Stock Option from qualifying
as such, that provision shall be null and void with respect to such Option
Right. Such provision, however, shall remain in effect for other Option Rights
and there shall be no further effect on any provision of this Plan.
(e) Payments received by a Participant under any award made pursuant to the
Plan shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement provided
by the Company, unless otherwise specifically provided for under the terms of
such plan or arrangement or by the Board.
20. Unfunded Plan. The Plan is intended to constitute an "unfunded" plan
for incentive and deferred compensation. With respect to any payments not yet
made to a Participant by the Company, nothing contained herein shall give any
such Participant any rights that are greater than those of a general creditor of
the Company. In its sole discretion, the Board may authorize the creation of
trust or other arrangements to meet the obligations created under the Plan to
deliver stock or payments in lieu of or with respect to awards hereunder;
provided, however, that, unless the Board otherwise determines with the consent
of the affected Participant the existence of such trust or other arrangement
must be consistent with the "unfunded" status of the Plan for federal income tax
purposes and for purposes of the Employee Retirement Income Security Act of
1974.
21. Effective Date. This Plan shall be effective when adopted by the
Board (the "Effective Date"); provided, however, that the effectiveness of this
Plan, the exercisability of Option Rights under this Plan is conditioned on its
approval by the shareholders of the Company at a meeting duly held in accordance
with Georgia law within twelve (12) months after the date this Plan is adopted
by the Board. All awards under this Plan shall be null and void if the Plan is
not approved by the shareholders within such 12-month period. Subject to such
limitation, the Board may grant Option Rights under the Plan at any time after
the Effective Date of the Plan and before the date fixed herein for termination
of the Plan.
22. Governing Law. The Plan and all grants and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Georgia, without reference to the principles of conflict of laws.
B-12
23. Termination. No grant shall be made under this Plan more than ten
(10) years after the date on which this Plan is first approved by the
shareholders of the Company, but all grants made on or prior to such date shall
continue in effect thereafter subject to the terms thereof and of this Plan.
24. Exclusion from Certain Restrictions. Notwithstanding anything in this
Plan to the contrary, not more than three percent (3%) of the shares of Common
Stock in the aggregate available under this Plan may be subject to awards as
follows:
(a) in the case of grants of Restricted Stock, which do not meet the
requirements of the last sentence of Section 6(c) or to which the Board may
accelerate or waive any restrictions imposed under Section 6(c);
(b) in the case of grants of Deferred Stock, which do not meet the
requirements of the last sentence of Section 7(c); or
(c) in the case of Performance Stock and Performance Units, which do
not meet the requirements of Section 8(b).
B-13
ANNEX C
FLOWERS FOODS, INC.
ANNUAL EXECUTIVE BONUS PLAN
THIS ANNUAL EXECUTIVE BONUS PLAN (the "Plan") is entered into by Flowers
Foods, Inc. (the "Company"), a Georgia corporation, for the purpose of providing
annual cash incentive bonuses to certain designated executives in order to
encourage and reward their efforts toward the growth and economic success of the
Company. The terms of the Plan are as follows, effective April 1, 2001:
1. Participants. The Participants in this Plan shall be those key
executive employees of the Company or any subsidiary of the Company who have
been designated as participants with respect to a fiscal year of the Company by
the Compensation Committee of the Board of Directors of the Company.
2. Calculation of Bonus. Each Participant is eligible to receive a Bonus,
payable in cash, which is a percentage of his Base Compensation for the Plan
Year, which shall be the fiscal year of the Company, except that the first Plan
Year will commence April 1, 2001, and end December 29, 2001. The amount of said
Bonus shall be determined by multiplying a x b x c where
a = the Participants' Base Compensation as established by the
Compensation Committee prior to the commencement of the Plan Year;
b = the incentive guideline percentage ("Target Bonus Percentage")
appropriate to the Participant's salary grade on the first day of
the Plan Year according to the following schedule:
INCENTIVE SALARY
GUIDELINE GRADE
--------- ------
75% 39
50% 32
50% 31
40% 30
c = a percentage determined by the relationship of the Company's
actual earnings before interest, taxes, depreciation and
amortization ("Actual EBITDA") for the Plan Year compared with the
earnings before interest, taxes, depreciation and amortization
goal ("EBITDA Goal") for the Plan Year established by the
Compensation Committee no later than 90 days following the
beginning of said Plan Year; for these purposes, if the Actual
EBITDA is equal to the EBITDA Goal, the resulting percentage is
100%; if Actual EBITDA is less than the EBITDA Goal, the
applicable percentage will drop by 5% for every 1% by which the
EBITDA Goal exceeds the Actual EBITDA; and if Actual EBITDA
exceeds the EBITDA Goal, the applicable percentage shall increase
by 10% for every 1% by which the Actual EBITDA exceeds the EBITDA
Goal. Notwithstanding the foregoing, the Compensation Committee
may determine that a goal other than EBITDA is appropriate for
certain executives whose responsibilities pertain more
specifically to discrete elements of the Company's business; in
such cases, the Committee may prescribe a goal based on the
performance of a product group, division, subsidiary or other
management reporting unit, or any combination of the above.
In no event, however, shall the applicable percentage exceed 200%,
and in no event shall the Bonus paid to any Participant for a Plan
Year exceed $1,500,000.
3. Payment of Bonus. The Bonus shall be paid to all Participants no later
than 90 days after the close of the Plan Year, in cash, unless the Participant
has made a valid election to defer said Bonus pursuant to the terms of any
applicable deferred compensation plan maintained by the Company. Payment shall
be made from the Company's general assets; no trust fund shall be established
for purposes of funding said payments. The
C-1
Bonus may not be assigned, transferred, mortgaged or hypothecated prior to
actual receipt, except for any assignment to secure a debt to the Company
itself, and any such attempt will be null and void.
4. Termination of Employment Prior to Year End; Change of Control. The
Bonus will not be paid for a Participant who voluntarily terminates employment,
or whose employment is terminated by the Company, prior to the end of the Plan
Year; provided, however, that a pro rata Bonus will nonetheless be paid if
termination is a consequence of the Participant's death, disability (as
determined by the Committee) or retirement pursuant to The Flowers Foods, Inc.
Retirement Plan No. 1 or The Flowers Foods, Inc. 401(k) Retirement Savings Plan,
or follows a Change of Control as discussed below. Said prorated Bonus will be
calculated by inserting the actual amount of Base Compensation received by the
Participant during the Plan Year in which termination occurs in the formula
contained in paragraph 2 above.
In the event of a Change of Control of the Company, as said phrase is
defined in Section 12 of the Company's 2001 Equity Performance Incentive Plan
(as the same exists on March 26, 2001), any Bonus for the Plan Year (or portion
thereof during which a Participant remains employed, if applicable) in which
said Change of Control occurs will be paid to the Participant regardless of
whether he remains employed by the Company on the last day of said Plan Year,
subject to any separation agreement which may exist between the Company and the
Participant. This provision of the Plan may not be amended during the Plan Year
in which a Change of Control occurs. The authority to amend the definition of
Change of Control provided for in said Section 12 shall be exercised, for
purposes of this Plan only, by the Compensation Committee.
5. Administration. This Plan shall be administered by the Compensation
Committee of the Company's Board of Directors. Said Committee shall have the
authority to interpret the provisions of this Plan, direct the calculation and
payment of Bonuses in accordance with the terms hereof, and make final decisions
with respect to the entitlement of any Participant to a Bonus. Notwithstanding
the foregoing, the Committee shall have no discretion to change the elements of
the formula described in paragraph 2 above by which Bonuses are calculated. The
Committee's actions may be reflected in the minutes of its meetings.
6. Payment Upon Death. In the event that the Participant dies before
payment of his Bonus, said amount shall be paid to his estate.
7. Qualification as Performance-Based Compensation. It is intended that
Bonuses paid pursuant to this Plan will constitute performance-based
compensation within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended.
8. Shareholder Approval; Duration. Commencing with the Company's 2002
fiscal year, this Plan is subject to the approval of a majority of the Company's
shareholders present and entitled to vote at a duly constituted meeting thereof.
In the absence of such approval for the 2002 and subsequent fiscal years, no
Bonuses may be paid hereunder. This Plan shall continue indefinitely; provided,
however, that the Board of Directors of the Company may terminate this Plan at
any time on a prospective basis, and may provide that proportionate Bonuses will
be paid for the Plan Year during which termination occurs.
9. Amendment. The Compensation Committee may amend the Plan at any time.
To the extent that any amendment to the Plan would require shareholder approval
in order for Bonuses paid thereunder to continue to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended, such amendment shall not be effective until shareholder approval is
received. To the extent that any amendment of the Plan is retroactive or affects
Bonuses to be paid for the Plan Year in which adopted, and would reduce the
amount of any Bonus, and unless said amendment is necessary for purposes of
complying with the provisions of said Section 162(m), the consent of a
Participant shall be required with respect to the effect of the amendment on his
own Bonus.
10. Miscellaneous. This Plan shall be interpreted according to the laws
of the State of Georgia. Any reference herein to the singular shall be deemed to
include the plural where appropriate.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed as of
the day and year first above referenced.
C-2
[FORM OF PAPER PROXY -- FRONT]
FLOWERS FOODS, INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy. Your
vote is important and we encourage you to exercise your right to vote your
shares. Please mark the boxes on the reverse side of this proxy card to indicate
your vote. Then sign the card and return it in the enclosed postage-paid
envelope.
Your vote must be received prior to the Annual Meeting of Shareholders on
May 31, 2002.
Thank you.
Flowers Foods, Inc.
--------------------------------------------------------------------------------
FLOWERS FOODS, INC.
1919 FLOWERS CIRCLE
THOMASVILLE, GEORGIA 31757
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 31, 2002
The undersigned hereby appoints Amos R. McMullian and Jimmy M Woodward
as proxies, with power to act without the other, and with full power of
substitution, and hereby authorizes them to represent and vote, as designated
on the reverse side, all common stock of Flowers Foods, Inc. held of record on
April 8, 2002 by the undersigned, at the Annual Meeting of Shareholders to be
held on May 31, 2002, and at any adjournment or postponement thereof.
The above-named proxies of the undersigned are authorized to vote, in
their discretion, upon such other matters as may properly come before the
Annual Meeting and any adjournment(s) or postponement(s) thereof.
The proxies will vote on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified on the reverse side and are
authorized to vote, in their discretion, on any other business that may come
properly before the meeting.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE INSTRUCTIONS INDICATED ON THE REVERSE SIDE. IF NO INDICATION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTOR NOMINEES LISTED ON THE
REVERSE SIDE AND "FOR" PROPOSALS 2, 3 AND 4.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THE PROXY IN
THE RETURN ENVELOPE PROVIDED.
[FORM OF PAPER PROXY -- BACK]
FLOWERS FOODS, INC.
ATTN: INVESTOR RELATIONS DEPT.
1919 FLOWERS CIRCLE
THOMASVILLE, GA 31757
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time on May 30, 2002. Have
your proxy card in hand when you access the web site. You will be prompted to
enter your 12-digit Control Number which is located below to obtain your
records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time on May 30, 2002. Have your proxy card in hand when you
call. You will be prompted to enter your 12-digit Control Number which is
located below and then follow the simple instructions the Vote Voice provides
you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Flowers Foods, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
*HOUSEHOLDING ELECTION (HH)
Mark "FOR" to enroll this account to receive certain future security holder
documents in a single package per household. Mark "AGAINST" if you do not wish
to participate. See enclosed notice. To change your election in the future,
call 1-800-542-1081.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
FLOWERS FOODS, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTOR NOMINEES:
Election of Directors
1. Nominees: 01) Joseph L. Lanier, Jr., 02) Jackie M. Ward,
03) C. Martin Wood III
[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT
To withhold authority to vote, mark "For All Except" above and write the
nominee's number on the line below.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
2. To approve the Flowers Foods, Inc. 2001 Equity and Performance
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the Flowers Foods, Inc. Annual Executive Bonus Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for Flowers Foods for the 2002 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please date this Proxy and sign it exactly as your name or names appear on your
stock certificates or on a label affixed hereto. When shares are held jointly,
EACH joint owner should sign. When signing as attorney, executor,
administrator, trustee, guardian, corporate officer, etc., give full title as
such. If shares are held by a corporation, please sign in full the corporate
name by its president or other authorized officer. If shares are held by a
partnership, please sign in the partnership name by an authorized person.
*Householding Election (HH)
[ ] FOR [ ] AGAINST
---------------------------------------- ----------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
[FORM OF PAPER PROXY -- FRONT]
Dear Plan Participant:
The purpose of this letter is to provide you with important information
concerning your voting rights as a participant in the Flowers Foods, Inc.
401(k) Retirement Savings Plan.
The Annual Meeting of Shareholders of Flowers Foods, Inc. is scheduled for
May 31, 2002. As a participant in the Flowers Foods, Inc. 401(k) Retirement
Savings Plan, you have the right to direct State Street Bank and Trust Company,
the Trustee of the Plan, how to vote the Flowers Foods, Inc. common shares
allocated to your Stock Account. Any unvoted or unallocated shares will be
voted by the Trustee in its discretion. The number of shares you are eligible
to vote is based on your balance in the Plan on April 8, 2002, the record date
for the determination of shareholders eligible to vote.
Your instructions to the Trustee are confidential and will be known only by
State Street Bank.
If, in addition to your Plan participation, you own stock directly in your own
name or indirectly through a bank or broker, you will receive a separate proxy
card and voting instruction form. Please be sure to return each proxy or voting
instruction card in the postage-paid return envelope provided with each
separate package.
We encourage you to exercise your voting rights under the Plan. Please review
the enclosed documents carefully before deciding how to vote your shares.
Because the shares in the Plan are registered in the name of State Street Bank,
as Trustee, you will not be ale to vote your shares in the Plan in person at
the annual meeting on May 31, 2002. Please return your voting instruction care,
signed and dated, in the enclosed postage-paid envelope as soon as possible.
Sincerely,
State Street Bank and Trust Company,
Trustee of the Flowers Foods, Inc. 401(k) Retirement Savings Plan
--------------------------------------------------------------------------------
FLOWERS FOODS, INC.
1919 FLOWERS CIRCLE
THOMASVILLE, GEORGIA 31757
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 31, 2002
The undersigned hereby appoints Amos R. McMullian and Jimmy M Woodward
as proxies, with power to act without the other, and with full power of
substitution, and hereby authorizes them to represent and vote, as designated
on the reverse side, all common stock of Flowers Foods, Inc. held of record on
April 8, 2002 by the undersigned, at the Annual Meeting of Shareholders to be
held on May 31, 2002, and at any adjournment or postponement thereof.
The proxies will vote on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified on the reverse side and are
authorized to vote, in their discretion, on any other business that may come
properly before the meeting and any adjournment(s) or postponement(s) thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE INSTRUCTIONS INDICATED ON THE REVERSE SIDE. IF NO INDICATION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTOR NOMINEES LISTED ON THE
REVERSE SIDE AND "FOR" PROPOSALS 2, 3 AND 4.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THE PROXY IN
THE RETURN ENVELOPE PROVIDED.
[FORM OF PAPER PROXY -- BACK]
FLOWERS FOODS, INC.
ATTN: INVESTOR RELATIONS DEPT.
1919 FLOWERS CIRCLE
THOMASVILLE, GA 31757
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time on May 29, 2002. Have
your proxy card in hand when you access the web site. You will be prompted to
enter your 12-digit Control Number which is located below to obtain your
records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time on May 29, 2002. Have your proxy card in hand when you
call. You will be prompted to enter your 12-digit Control Number which is
located below and then follow the simple instructions the Vote Voice provides
you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Flowers Foods, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
FLOWERS FOODS, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTOR NOMINEES:
Election of Directors
1. Nominees: 01) Joseph L. Lanier, Jr., 02) Jackie M. Ward,
03) C. Martin Wood III
[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT
To withhold authority to vote, mark "For All Except" above and write the
nominee's number on the line below.
-----------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
2. To approve the Flowers Foods, Inc. 2001 Equity and Performance
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the Flowers Foods, Inc. Annual Executive Bonus Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for Flowers Foods for the 2002 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
-------------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date