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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
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þ Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Dean Foods Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (11-01) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
Notice of Stockholders Meeting
We will hold this years annual stockholders meeting on Friday, May 19, 2006, at 10:00
a.m. at the Dallas Museum of Art, 1717 North Harwood, Dallas, Texas 75201.
At the meeting, we will ask you to consider and vote on the
following proposals recently adopted by our Board of Directors:
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Proposal One: A proposal to re-elect Lewis M. Collens, Janet Hill,
Hector M. Nevares, Pete Schenkel and Jim L. Turner as
members of our Board of Directors for a three-year term, and |
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Proposal Two: A proposal to ratify our Audit Committees selection
of Deloitte & Touche LLP as our independent auditor for 2006. |
We will also vote on a proposal submitted by a shareholder that is
opposed by our Board of Directors.
Finally, we will discuss and take action on any other business that
is properly brought before the meeting.
If you were a stockholder on March 24, 2006, you are entitled to
vote on the proposals to be considered at this years meeting.
This Notice and the accompanying proxy statement are first being
mailed to stockholders on or about April 10, 2006.
By order of the Board of Directors,
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Sincerely, |
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Michelle P. Goolsby |
Executive Vice President, |
Chief Administrative Officer, |
General Counsel and Corporate Secretary |
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Table of Contents
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1
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
You Are Invited
April 3,
2006
Dear Fellow Stockholders,
We hope that you will come to our annual
stockholdersmeeting on Friday, May 19, 2006. At the
annual meeting, after we vote on the proposals described
in this proxy statement, we will present a brief report
on our 2005 results and our outlook for 2006 and beyond.
As always, we will conclude the meeting by inviting you
to ask questions and make comments. For your
convenience, we will present a live webcast of the annual
meeting, which you can access through our corporate
website at www.deanfoods.com.
If you have questions regarding any of the matters
contained in this proxy statement, please contact our
Investor Relations department at 800.431.9214. We look
forward to seeing you at this years meeting.
Sincerely,
Gregg L. Engles
Chairman of the Board and
Chief Executive Officer
2
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Questions and Answers
Why did I receive this proxy statement?
On April 10, 2006, we began mailing this proxy
statement to everyone who was a stockholder of our
company on March 24, 2006. One purpose of this proxy
statement is to let our stockholders know when and where
we will hold our annual stockholdersmeeting.
More importantly, this proxy statement:
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Includes detailed information about
the matters that will be discussed and voted
on at the meeting, and |
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Provides updated information about our
company that you should consider in order to make
an informed decision at the meeting. |
I received more than one proxy statement. Why?
If you received more than one proxy
statement, your shares are probably registered
differently or are in more than one account. Please
vote each proxy that you received.
What will occur at the annual meeting?
First we will determine whether enough
stockholders are present at the meeting to conduct
business. A stockholder will be deemed to be present at
the meeting if the stockholder:
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Is present in person, or |
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Is not present in person but has voted
by telephone, internet or mail prior to the
meeting. |
According to our bylaws, holders of at least 67,951,918
shares of our common stock (which is a majority of the
shares of our common stock that were outstanding on March
24, 2006) must be present at this years meeting in order
to conduct the meeting. Abstentions and broker
non-votes are counted as present and entitled to vote for
purposes of determining if enough stockholders are
present (in person or by proxy) to conduct the meeting. A
broker non-vote occurs when a bank, broker or other
holder of record holding shares for a beneficial owner
does not vote on a particular proposal because that
holder does not have discretionary voting power for that
particular item and has not received instructions from
the beneficial owner.
If holders of fewer than 67,951,918 shares are
present at the meeting, we will reschedule the meeting.
The new meeting date will be announced at the meeting.
If enough stockholders are present at the meeting to
conduct business, then we will vote on:
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Proposal One: A proposal to re-elect Lewis M. Collens, Janet Hill,
Hector M. Nevares, Pete Schenkel and Jim L. Turner as
members of our Board of Directors for a three-year
term, and |
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Proposal Two: A proposal to ratify our Audit Committees selection of
Deloitte & Touche LLP as our independent auditor for 2006. |
Proposals One and Two have been approved by our Board of
Directors. The Board of Directors is now soliciting your
vote on these proposals and recommends that you vote FOR
each of Proposals One and Two.
We will also vote on a stockholder proposal that our Board of
Directors opposes.
On each proposal, you are entitled to one vote for
each share of stock that you owned on March 24, 2006.
Cumulative voting is not permitted.
After each proposal has been voted on at the
meeting we will discuss and take action on any
other matter that is properly brought before the
meeting. Also, our management team will report on
the highlights of 2005 and our outlook for 2006.
How many votes are necessary to re-elect the nominees for director?
The five nominees receiving the highest number of yes votes will be
elected as directors. This number is called a plurality.
Our common stock was the only class of stock
outstanding on March 24, 2006. As of that date, there were
135,903,834 shares of common stock outstanding.
3
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Questions and Answers
What if a nominee for director is unwilling or unable to stand for re-election?
Each of the persons nominated for re-election has
agreed to stand for re-election. However, if unexpected
events arise which cause one or more of them to be unable
to stand for re-election, then either:
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The Board of Directors can vote at the
meeting to reduce the size of the Board of
Directors, or |
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The Board of Directors may, during the
meeting, nominate another person for director. |
Please understand that if our Board of Directors
nominates someone at the meeting, the person(s) to whom
you have given your proxy will be able to use his or her
discretion to vote on your behalf.
How many votes are necessary to pass the other proposals?
The Audit Committee of our Board of Directors has
responsibility for selection of our independent auditor.
Stockholder ratification is not required. However, the
Board of Directors is soliciting your opinion regarding
the selection of Deloitte & Touche LLP. The Audit
Committee of the Board of Directors plans to take your
opinion into account in selecting our independent
auditor for 2007.
Proposal Two and the stockholder proposal must
receive the affirmative vote of a majority of the
shares having voting power present (in person and by
proxy) at the meeting in order to pass.
How do I vote?
To vote, follow the instructions on the enclosed proxy card or voting card.
If
you are a registered stockholder, you can also
vote at the meeting. If your shares are in a brokerage
account, you might not be a registered stockholder. In
this case, your shares would not be officially registered
in your name; rather, they would be registered in your
brokers name (which is sometimes called street name).
If your shares are in street name, you cannot vote in
person at the meeting unless you have a proper power of
attorney from your broker. You should, therefore, vote by
telephone, internet or mail according to the instructions
on the enclosed voting card in order to ensure that your
vote is counted.
Please understand that voting by any means other
than voting in person at the meeting has the effect of
appointing Gregg Engles, our Chairman of the Board and Chief Executive
Officer, and Michelle Goolsby, our Executive Vice
President, Chief Administrative Officer,
General
Counsel and Corporate Secretary, as your
proxies. They will be required to vote on the proposals
described in this proxy statement exactly as you have
voted.
However, if any other matter requiring a stockholder
vote is properly raised at the meeting, then Mr. Engles and
Ms. Goolsby will be authorized to use their discretion to
vote on such issues on your behalf.
If you sign your proxy card, but do not specify
how you want to vote on a proposal, your shares will
be voted FOR Proposals One and Two, and AGAINST the
stockholder proposal.
We encourage you to vote now (by telephone,
internet or mail) even if you plan to attend the
meeting in person.
Where can I find the voting results of the meeting?
We will announce preliminary voting results at the
meeting. We will publish the final results in our
quarterly report on Form 10-Q for the second quarter of
2006. We will file that report with the Securities and
Exchange Commission (SEC) by August 9 of this year, and
you can obtain a copy on our website at
www.deanfoods.com, on the SECs website at www.sec.gov,
or by contacting our Investor Relations office at
800.431.9214 or the SEC at 800.SEC.0330.
What if I want to change my vote?
You can revoke your vote on a proposal at any time before the meeting
for any reason. To revoke your proxy before the meeting, either:
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Write to our Corporate Secretary at
2515 McKinney Avenue, Suite 1200, Dallas, Texas
75201, or |
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Vote again, either by telephone or internet
(the last vote before the meeting begins will be
counted). |
If you are a registered stockholder (or if you hold your
shares in street name and have a proper power of
attorney from your broker), you may also come to the
meeting and change your vote in writing or orally.
4
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Questions and Answers
What if I do not vote?
If you do
not vote, your failure to vote could
affect whether there are enough stockholders present at
the meeting to hold the meeting. Holders of a majority
of the outstanding shares of our common stock must be
present (in person or by proxy) in order to conduct the
meeting. If there are enough stockholders present to
conduct the meeting, your failure to vote will not affect
the outcome of the proposals.
If
your shares are held in street name and you do not vote, your
brokerage firm could:
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Vote for you, if it is permitted by the
exchange or organization of which your broker is a
member, or |
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Leave your shares unvoted. |
Generally, your broker will be permitted to vote for you
on Proposal One and Two regarding the election of
directors and the ratification of Deloitte & Touche LLP.
If you do not provide your broker with proper
instructions, your broker will not be permitted to vote
for you on the stockholder proposal.
How do I raise an issue for discussion or vote at the annual meeting?
According
to our bylaws, if a stockholder wishes to
present a proposal for consideration at an annual
meeting, he or she must send written notice of the
proposal by certified mail to our Corporate Secretary no
later than March 1 of the year of the meeting. We have
not received notice of any stockholder proposals pursuant
to this bylaw provision to be presented at this years
meeting.
If you would like your proposal to be included in
next years proxy statement, you must submit it to our
Corporate Secretary in writing no later than December
12, 2006. We will include your proposal in our next
annual proxy statement if it is a proposal that we are
required to include in our proxy statement pursuant to
the rules of the Securities and Exchange Commission.
You may write to our Corporate Secretary at 2515 McKinney Avenue, Suite 1200, Dallas, TX 75201.
According
to our bylaws, any proposal properly
raised at the meeting by a stockholder will require
the affirmative vote of a majority of the shares
deemed present at the meeting (whether in person or by
proxy).
How much will this solicitation cost and who will pay for it?
We have engaged Georgeson Shareholder to assist in
the distribution of proxy materials and the solicitation
of votes. In addition, certain of our officers may solicit
proxies by mail, telephone, fax, e-mail or in person. We
will pay Georgeson Shareholder a fee of up to $8,500,
plus certain expenses. We also will pay all other costs
associated with this proxy statement and the solicitation
of proxies. Upon request, we will reimburse
stockbrokers, dealers, banks and trustees, or their
nominees, for reasonable expenses incurred by them in
forwarding proxy materials to beneficial owners of shares
of our common stock.
Our
transfer agent, The Bank of New York,
will count the votes and act as inspector of
election.
5
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
About the Proposals
Proposal One: Re-Election of Directors
Our Board of Directors is divided into three
classes serving three year terms. This years nominees
for re-election to the Board of Directors for a
three-year term are the following Class II directors:
Lewis M. Collens
Director since December 2001
Mr. Collens, age 68, has served as the President of Illinois Institute of
Technology (IIT) and Chairman of IIT Research Institute since 1990.
From 1974 to 1990, he served as Dean
of IIT Chicago Kent College of Law.
Mr. Collens was originally elected to our Board of Directors in
connection with our acquisition of the former Dean Foods
Company (Legacy Dean) on December 21, 2001. Mr. Collens
had served on the Board of Directors of Legacy Dean
since 1991 and was Chairman of its Audit Committee and a
member of its Corporate Governance Committee.
Janet Hill
Director since December 2001
Mrs. Hill, age 58, has served as Vice President of Alexander & Associates, a
corporate consulting firm, since 1981. She was originally elected to our
Board of Directors in connection with our acquisition of Legacy Dean in
December 2001. Mrs. Hill had served on the Board of Directors of Legacy
Dean since 1997 and was a member of its Audit and Corporate Governance Committees. In addition to
ours, Mrs. Hill serves on the Boards of two other public companies, including Wendys International (where she also
serves on the Compensation Committee) and Sprint Nextel Corporation (where she also serves on the Compensation
and Corporate Governance and Nominating Committees).
Hector M. Nevares
Director since October 1994
Mr. Nevares, age 55, was President of Suiza Dairy, a Puerto Rico dairy processor,from June 1983 until
September 1996,having served in additional executive capacities at Suiza Dairy since June 1974.
Mr. Nevares served as a consultant for us from March 1998 until April 2000,when he retired.
Pete Schenkel
Director since January 2000
Mr. Schenkel, age 70, joined our company in January 2000 as President of our
Dairy Group and a member of our Board of Directors. Effective December
31, 2005, Mr. Schenkel retired as President of our Dairy Group. He now serves as
Vice Chairman of our Board of Directors.
From 1959 to December 31, 1999, he served in various capacities at Southern Foods Group (now a part of our
Dairy Group), including Chairman of the Board and Chief Executive Officer from 1994 through 1999, and President
from 1987 to 1994. He was originally elected to our Board
of Directors in connection with our acquisition of
Southern Foods Group in January 2000.
Jim L. Turner
Director since November 1997
Mr. Turner, age 60, retired in June 2005 from Dr Pepper/Seven Up Bottling Group, Inc., where he served as
President and Chief Executive Officer since its formation in 1999. Prior to that, since 1985, he was the Chairman
of the Board and Chief Executive Officer of the Turner Beverage Group, the
largest privately owned independent bottler in the United States. Mr. Turner was a member of the Board of
Directors of The Morningstar Group Inc. prior to our acquisition of that company in November 1997. Mr. Turner
also serves on the Board of Directors and Compensation Committee of Crown Holdings, Inc., a manufacturer of
consumer packaging products, and is Chairman-elect of Baylor Universitys Board of Regents.
Our Board of Directors recommends that
you vote for Mr. Collens, Mrs. Hill, Mr. Nevares,
Mr. Schenkel and Mr. Turner.
6
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
About the Proposals
Mr.
Collens, Mrs. Hill, Mr. Nevares, Mr. Schenkel and
Mr. Turner were each unanimously nominated for
re-election by our Board of Directors following the
recommendation of the Governance Committee of our Board
of Directors. They have each consented to be re-elected
as members of our Board of Directors.
Proposal Two: Ratification of Selection of Independent Auditor
The Audit Committee of our Board of Directors has
selected Deloitte & Touche LLP to serve as our
independent auditor for the 2006 fiscal year and is
soliciting your ratification of that selection.
Your ratification of the Audit Committees
selection of Deloitte & Touche LLP is not necessary
because the Audit Committee has responsibility for
selection of our independent auditor. However, the Audit
Committee will take your vote on this proposal into
consideration when selecting our independent auditor in
the future.
The Audit Committee of our Board of Directors
has responsibility for overseeing our financial
reporting and various other matters. See page 14 of
this proxy statement for further information about
the responsibilities of our Audit Committee and
page 16 for an important report by the Audit
Committee.
Our Board of Directors recommends that you vote for the
proposal to ratify the selection of Deloitte & Touche LLP as
our independent auditor for 2006.
Stockholder Proposal
We received a proposal from the Office of the
Comptroller of New York City, as the custodian and trustee
of the New York City Employees Retirement System, the New
York City Teachers Retirement System, the New York City
Police Pension Fund and the New York City Fire Department
Pension Fund and custodian of the New York City Board of
Education Retirement System (collectively, the Funds),
whose address is The City of New York, Office of the
Comptroller, 1 Centre Street, Room 736, New York, New York
10007. The Funds beneficially own approximately 576,435
shares of our common stock. The Office of the Comptroller
of New York City intends to introduce the following
resolution at our annual meeting of stockholders and has
furnished the following statement in support of the
proposal:
Whereas:
Investors increasingly seek disclosure of
companies social and environmental practices in the
belief that they impact shareholder value. Many
investors believe companies that are good employers,
environmental stewards,and corporate citizens are more
likely to be accepted in their communities and to
prosper long-term.
Sustainability refers to development that meets
present needs without impairing the ability of future
generations to meet their own needs. It includes
encouraging long lasting social well being in
communities where companies operate, interacting with
different stakeholders (e.g., clients, suppliers, employees, government, local
communities and non-governmental organizations) and
responding to their specific and evolving needs, thereby
securing a long-term license to operate, superior
customer and employee loyalty, and ultimately superior
financial returns. (Dow Jones Sustainability Group)
Globally,
approximately 1,500 companies produce reports on
sustainability issues (Association of Chartered Certified
Accountants, www.corporateregister.com), including more
than half of the global Fortune 500 (KPMG International
Survey of Corporate Responsibility Reporting 2005).
Ford Motor Company states, Sustainability issues
are neither incidental nor avoidable they are at the
heart of our business. American Electric Power has
stated, Management and the Board have a fiduciary duty
to carefully assess and disclose to stockholders
appropriate information on the companys environmental
risk exposure.
Global expectations regarding sustainability reporting are changing rapidly.
The European Commission recommends corporate sustainability
reporting, and listed companies in Australia, South Africa
and France must now provide investors with information
on their social and environmental performance.
Resolved:
Stockholders request that the Board of Directors issue a
sustainability report to stockholders, at reasonable
cost, and omitting proprietary information, by September 1, 2006.
Supporting Statement
The report should include the companys definition of
sustainability, as well as a company-wide review of
company policies and practices related to long-term
social and environmental sustainability.
We recommend that the company use the Global
Reporting Initiatives Sustainability Reporting
Guidelines (the Guidelines) to prepare the report.
The Global Reporting Initiative
7
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
About the Proposals
(www.globalreporting.org) is an international
organization with representatives from the
business, environmental, human rights and labor
communities. The Guidelines provide guidance on report
content, including performance in six categories (direct
economic impacts, environmental, labor practices and
decent work conditions, human rights, society, and product
responsibility). The Guidelines provide a flexible
reporting system that permits the omission of content
that is not relevant to company operations. Over 700
companies use or consult the Guidelines for
sustainability reporting.
What is the Companys position regarding the stockholder proposal?
Our Board of Directors has considered the above
proposal and recommends that our stockholders vote
against the proposal for the following reasons.
We believe that our policies and practices already
address more than adequately the concerns raised by the
proposal. We are fully committed to ensuring that all of
our facilities,whether in the U.S. or any other
country, are operated legally, ethically and responsibly.
Our Code of Ethics,which is posted on our website at
www.deanfoods.com, guides our activities around the
world. It commits all of our employees, officers and
directors to honest and ethical behavior and obedience of
all laws and regulations applicable to our business. It
outlines our pledge to conduct business with the highest
ethical standards. We also have many other policies and
practices designed to ensure that we conduct our
operations in a manner that provides a safe and healthy
workplace, that complies with all applicable occupational
safety and health standards and that safeguards the
environment.
We are committed to nurturing and supporting the
communities where we do business. We give back to our
communities to strengthen them and to foster a healthier
and better tomorrow. Our community support efforts are
focused in three main areas health/nutrition
(including hunger), education/arts and environmental
stewardship/conservation. We support worthy
organizations at the corporate level, through our
WhiteWave Foods subsidiary, and through our network of
dairy processing facilities nationwide.
Because we make wholesome and nutritious products
that are essential for good health, we look for
opportunities to bring a message to consumers about
healthy foods and their role in fostering healthy
lifestyles. With childhood obesity becoming one of our
nations most serious health issues, we are pleased to
announce our funding of the Dean LEAN
(Lifestyle, Exercise and Nutrition) Families Program at
Childrens Medical Center of Dallas. This treatment
program is a family-focused, multidisciplinary, hospital-based initiative
aimed at weight management for high-risk patients who
have medical conditions resulting from or associated
with being overweight or obese. The program expects to
see its first patients later this year. We also support
organizations that work to enhance the health of
individuals and communities. We support the Susan
G. Komen Breast Cancer Foundation and its efforts to fund
breast cancer research, education, screening and
treatment. Our Horizon Organic brand is a leading
sponsor of Healthy Mothers Healthy Babies, a recognized
leader and resource in maternal and child health and
well-being. We also support the American Cancer Society,
the American Heart Association, the National Multiple
Sclerosis Society, the Muscular Dystrophy Association
and many other worthwhile causes that work daily to
eradicate, prevent and treat illness.
We recognize that good and healthy food choices are
not an option for many millions of Americans who go
hungry. We support the North Texas Food Bank by holding
canned food and fund drives and by providing needed
volunteers to sort donated food and other items. We also
support the World Initiative for Soy and Human Health and
the Emergency Family Assistance Association. Our
processing plants across the country are vital partners
of food banks and food pantries, including many members of
the Americas Second Harvest network, providing needed
dairy and other healthy food products for families in
need. After Hurricanes Katrina and Rita, we donated
substantial amounts of dairy products, water and juice to
those living in temporary shelters.
In our communities, we also support programs that
improve the education of and opportunities for
children, particularly at-risk children. In
Dallas, Texas, home of our corporate office, we support
the Notre Dame School, which provides a quality
education to students with mental disabilities. We fund
the schools cafeteria program, which not only provides
daily meals, but also serves as a vocational
job-training site for the schools older students. In
addition, our plants nationwide regularly partner with
local schools to serve a variety of needs, all to
enhance the quality of education in their communities.
We also believe that access to the arts is vital to
the health of a community and exposure to the arts is
extremely beneficial in child development. In Dallas, we
sponsor the Dallas Museum of Art, Nasher Sculpture Center
and North Texas Business Committee for the Arts. We also
are the major sponsor of the Dallas Symphony Orchestras
Young Strings program, which provides talented
African-American and Hispanic string students with
private lessons, mentoring, performance opportunities,
concert tickets and instrument loans. We also are
helping to fund the construction of the Dallas Center
for the Performing Arts, which we believe will
provide unlimited
8
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
About the Proposals
opportunities for artistic and cultural growth for
the Dallas community and beyond. As part of this
partnership, our Schepps Dairy continues to sponsor
the Dallas Theater Centers Project Discovery, which
provides arts accessibility and education programming
to Dallas middle and high school students.
Our Dairy Group maintains a crime reward
program, which pays monetary rewards for information
offered to police in connection with local crimes. This
successful program, started at our Schepps Dairy in
Dallas, Texas, in the early 1970s, has been extended to
other cities across the country. This program provides a
tangible way for us to contribute to the quality of life
and safety in the communities we serve.
Our community involvement is outlined on our corporate website
www.deanfoods.com/aboutus/community.
We believe that partnering with our communities
means not just supporting them today, but sustaining them
for tomorrow. We contribute to causes and organizations
that further sustainable agriculture, conservation of
natural resources, animal welfare and preservation of
family farms and rural communities. We are a proud
supporter of organizations such as Beyond
Pesticides, Earth Share, Heifer International, the
Bonneville Environmental Foundation, the Environmental
Media Association and Undo It, an environmental defense
movement addressing the critical issue of global
warming.
We are committed to leadership in sustainable
business practices. Two of our largest brands, Silk and
Horizon Organic®, are inherently sustainable
and socially responsible as they are certified organic.
Organic foods are produced without antibiotics, added
growth hormones or pesticides, providing added health
benefits for consumers. Production of organic foods
promotes sustainable agriculture, benefiting the land and
animals that produce the raw materials in these
products.
As the largest organic foods company in the United
States, we are major advocates for sustainable agriculture
through support of Americas farmers. We work with more
than 500 organic family farmers nationwide to produce
organic milk and soymilk products, to promote
environmentally friendly farming methods and to ensure a
healthy food supply. We provide significant support to
organic family farms through our HOPE (Horizon Organic
Producer Education) program. The HOPE program includes:
hands-on training and support from our dedicated producer
relations field staff; significant financial assistance
during the three-year process of converting a farm to
organic;access to an advisory team of dairy and land
conservation experts who can help farmers implement best
practices on grazing, animal welfare and land
restoration; and assistance in obtaining organic
certification. In addition, we work
with state and federal legislators to create economic
incentives for organic farmers, and we also provide
financial assistance to organizations such as Farm Aid
who are dedicated to preserving and protecting the
family farmer. Through our HOPE program, more than 240
family farms have been converted to organic since 2001.
Over 325 family farms now supply their organic milk to
Horizon Organic. An additional 179 family farms are
currently in transition to organic production. More than
250,000 new acres of farmland are now under organic
production as a result of our HOPE program, and hundreds
of tons of pesticides and toxic chemicals have been
prevented from leaching into our soil, water and food
supply.
Our Dairy Group is also committed to improving our
environment. Our Dairy Group, which operates approximately
100 plants across the country, has a vigorous program of
auditing our plants for environmental compliance and for
waste reduction opportunities. We are currently
investigating the feasibility of converting some of our
waste into biogas, which may then be used to generate
electricity or as a replacement fuel in our boilers. We
also are using detergents that are more environmentally
friendly, with low or no amounts of phosphorus and
chlorine.
We work hard to be a good corporate citizen.
Sustainable business practices are important to us. We
have been, and will continue to be, committed to upholding
and abiding by all laws and regulations that govern our
operations, wherever we operate. We have been, and will
remain, committed to treating all of our employees with
dignity, fairness and respect, protecting the health and
safety of our employees, protecting the environment and
enhancing the quality of life in the communities in which
we operate.
We believe that requiring our company to prepare the
proposed sustainability report is not in the best
interests of our company or our stockholders. The
proposed sustainability report is unnecessary and would
not result in any additional benefit to our stockholders
or employees. In addition, the proposed report would be
costly and time-intensive and would be duplicative of
many of our existing policies, initiatives and efforts. We
believe that our corporate resources can be put to more
productive use.
For these reasons, our Board of Directors recommends that
you vote against the stockholder proposal.
9
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Who is on our Board of Directors?
In addition to the five directors proposed for re-election, the
following persons currently serve on our Board of Directors:
Alan J. Bernon
Director since August 1997
Mr. Bernon, age 51, has served as
President of our Dairy Group since
January 1, 2006. From 1997 through the
end of 2005, he served as Chief
Operating Officer of the Northeast
Region of our Dairy Group. He was
originally elected to our Board of Directors in connection with our
acquisition of The Garelick Companies in 1997. From
September 1985 until July 1997, Mr. Bernon served as
President of The Garelick Companies. His term will
expire in 2007.
Tom C. Davis
Director since March 2001
Mr. Davis, age 57, has served as Chief
Executive Officer of The Concorde
Group, a private investment firm, since
March 2001. He was the managing
partner and head of banking and
corporate finance for the Southwest
division of Credit Suisse First Boston (formerly DLJ) from March
1984 to February 2001. In this position, Mr. Davis worked
with several large private equity firms, in addition to
a variety of public and private companies, including
companies in the broadcast and
telecommunications, energy, foodservice, food processing
and retailing industries. In addition to ours, Mr. Davis
also serves on the Boards of Directors of Affirmative
Insurance Holdings, Inc., an insurance holding
company, and Westwood Holdings Group, an investment
management and trust services company, both of which
have issued publicly-traded securities. His term will
expire in 2008.
Gregg L. Engles
Chairman of the Board, Director since
October 1994
Mr. Engles, age 48, has served as our Chief Executive
Officer and as a director since the formation of our
company in October 1994. From October 1994 until
December 21, 2001, he served as Chairman of the Board.
When we acquired Legacy Dean, Mr. Howard Dean was named
Chairman of the Board pursuant to the merger agreement
concerning our acquisition of Legacy Dean, and Mr. Engles
was named Vice Chairman of the Board. In April
2002, Mr. Dean retired, and Mr. Engles resumed his position
as Chairman of the Board. Prior to the formation of our
company, he served as Chairman of the Board and Chief
Executive Officer of certain predecessors to our
company. In addition, Mr. Engles serves on the Board of
Directors of TreeHouse Foods, Inc. His term will expire
in 2007.
Stephen L. Green
Director since October 1994
Mr. Green, age 55, has served as a
general partner of Canaan Capital
Partners, L.P., the general partner of
Canaan Capital Limited Partnership and
Canaan Capital Offshore Limited
Partnership, C.V., since November 1991.
From October 1985 until November 1991, Mr. Green
served as Managing Director of GE Capitals
Corporate Finance Group. His term will expire in
2008.
Joseph S. Hardin, Jr.
Director since May 1998
Mr. Hardin, age 60, served as Chief Executive Officer of Kinkos, Inc. from
May 1997 until January 2001. Currently retired, Mr. Hardin held a
variety of positions from 1986 to April 1997 with increasing
responsibility at Wal-Mart Stores, Inc., ultimately as an Executive Vice
President and as the President and Chief Executive Officer of SAMs Club, the wholesale division of Wal-Mart
Stores, Inc. In addition to ours, Mr. Hardin also serves on the Boards of Directors, and on the
Governance/ Nominating Committees, of American Greetings
Corporation and of Petsmart, Inc. His term will expire in
2008.
10
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Ronald Kirk
Director since February 2003
Mr. Kirk, age 51, has been a partner with the law firm of
Vinson & Elkins since February of 2005. He was a partner
with the law firm of Gardere Wynne Sewell LLP from 1994
through January 2005. From June 1995 to November 2001, he
also served as Mayor of the City of Dallas, Texas. In
addition to ours, Mr. Kirk also serves on the Boards of two
other public companies, including Brinker International, a
restaurant operator (where he also serves on the Audit
Committee), and Petsmart, Inc. (where he also serves on the
Corporate Governance Committee). His term will expire in 2007.
John S. Llewellyn, Jr.
Director since December 2001
Mr. Llewellyn, age 71, served as President and Chief
Executive Officer of Ocean Spray Cranberries, Inc. from
1988 until his retirement in 1997. He was originally
elected to our Board of Directors in connection with our
acquisition of Legacy Dean in December 2001.
Mr. Llewellyn had served on the Board of Directors of
Legacy Dean since 1994 and was a member of its
Compensation and Corporate Governance Committees. His
term will expire in 2007.
John R. Muse
Director since November 1997
Mr. Muse, age 55, is Chairman and co-founding partner of
Hicks, Muse, Tate & Furst Incorporated, a private equity
firm. Prior to the formation of Hicks, Muse, Tate & Furst
in 1989, Mr. Muse headed the investment/merchant banking
activities of Prudential Securities for the southwest
region of the United States from 1984 to 1989. Mr. Muse
was a member of the Board of Directors of The Morningstar
Group Inc. prior to our acquisition of that company in
November 1997. In addition to ours, he also serves on the
Board of Directors of Swift & Company, a meat packing
company, which has issued publicly-traded securities. His
term will expire in 2008.
11
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Who are our independent directors?
Our Board of Directors conducts an annual
assessment of the independence of each member of our
Board of Directors, taking into consideration all
relationships between our company and/or our officers, on
the one hand, and each director on the other. In 2006, the
Board determined that the following members of our Board
of Directors are independent, as that term is used in
the New York Stock Exchanges guidelines: Lewis Collens,
Tom Davis, Steve Green, Joseph Hardin, Janet Hill, Ron
Kirk, John Muse, Hector Nevares and Jim Turner. Mr. Engles,
Mr. Schenkel and Mr. Bernon are all current employees of
our company and, therefore, they are not independent. Our
Board of Directors has determined that Mr. Llewellyn is
not independent because his son became a partner with
Deloitte & Touché, our independent audit firm, in
December 2005.
Mr. Kirk serves on the Board of Directors of Brinker
International and Mrs. Hill serves on the Boards of
Directors of Wendys International and Sprint Nextel
Corporation. We sell products to Brinker International
and Wendys International and we purchase products and
services from Sprint Nextel Corporation, all in the
ordinary course of our business. In 2005, Wendys
International paid approximately $39.4 million and
Brinker International paid approximately $9.8 million for
purchases of our products. We paid approximately $2.2
million for products and services purchased from Sprint
Nextel in 2005. These amounts are not material either to
us or to the other party. In addition, we have used the
services of Heidrick & Struggles, a large international
executive search firm where Mr. Kirks wife is a partner.
We paid approximately $74,000 to Heidrick & Struggles in
2005, which is not material either to us or to Heidrick &
Struggles. Our Board of Directors has determined,
considering all relevant facts and circumstances, that
these relationships are not material and do not impact
Mr. Kirks or Mrs. Hills status as independent
directors, as defined by the rules of the New York Stock
Exchange.
In
2005, we made a contribution of approximately
$41,000 to Students in Free Enterprise (SIFE), a
non-profit charitable organization. Mr. Hardin and Mr.
Engles both serve on the Board of Directors of SIFE.
There are more than 200 people currently serving on the
Board of Directors of SIFE. The contribution that we made
to SIFE is not material to us or to SIFE. Our Board of
Directors has determined, considering all
relevant facts and circumstances, that neither our
relationship nor Mr. Engles relationship with SIFE is
material and that Mr. Hardins relationship with SIFE
does not have a material impact on his relationship with
us or with Mr. Engles. Therefore, our Board of Directors
has determined that Mr. Hardin is an independent
director, as defined by the rules of the New York Stock
Exchange.
What
are the responsibilities
of our Board of Directors?
Our Board of Directors is responsible for
overseeing and interacting with senior management with
respect to key aspects of our business, including
strategic planning, management development and
succession, operating performance, compliance and
shareholder returns. It is the responsibility of the
Board of Directors to select and evaluate a
well-qualified Chief Executive Officer of high
integrity, and to approve the appointment of other
members of the senior management team. The Board of
Directors provides general advice and counsel to our
Chief Executive Officer and other senior executives.
All directors are expected to avoid conflicts of
interest and to represent the best interests of our
stockholders in maintaining and enhancing the success
of our business. The Board conducts a self-evaluation
annually to ensure that it is functioning effectively.
Members of our Board of Directors are required to
regularly attend Board meetings and to attend our Annual
Meeting of Stockholders, unless an emergency prevents
them from doing so. All directors attended our 2005
Annual Meeting of Stockholders.
12
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Our Board of Directors meets according to a set schedule and also holds special meetings
and acts by written consent from time to time as appropriate. The Board met seven times during
2005, including four regular meetings and three special meetings, and acted by written consent one
time. In 2005,all directors attended at least 75% of the meetings of the Board of Directors and the
Committees on which they serve.
The Board of Directors has adopted a set of Corporate Governance Principles for our company,
including certain director qualification
standards and continuing education requirements, a copy of which is accessible through our
corporate website at www.deanfoods.com.
Our Board of Directors has elected Mr. Hardin to serve as our Lead Director. According to the
requirements of our Corporate Governance Principles, the Lead Director, who must be an independent
director, (1) calls all Board meetings, (2) approves the schedule of and agenda for all Board
meetings, (3) presides at executive sessions of the Board, and (4) acts as a
liaison between the non-employee directors and our Chief Executive Officer. Our Board meets in
executive session at the end of each regularly scheduled Board meeting.
How much are Board members paid?
In 2005, we paid the following to our non-employee directors:
|
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|
Non-Stock |
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|
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|
|
|
|
|
Fees Earned or |
|
Stock |
|
Option |
|
Incentive |
|
All Other |
Name |
|
Total(1) |
|
Paid in Cash(2)(3) |
|
Awards(4) |
|
Awards(4) |
|
Compensation |
|
Compensation(3)(5)(6) |
|
Collens |
|
$ |
269,993 |
|
|
$ |
71,000 |
|
|
$ |
89,862 |
|
|
$ |
73,650 |
|
|
|
|
|
|
$ |
35,481 |
|
Davis |
|
|
269,993 |
|
|
|
71,000 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
35,481 |
|
Green |
|
|
309,741 |
|
|
|
97,500 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
48,729 |
|
Hardin |
|
|
332,019 |
|
|
|
109,000 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
59,507 |
|
Hill |
|
|
233,512 |
|
|
|
70,000 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
|
|
Kirk |
|
|
231,762 |
|
|
|
54,000 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
14,250 |
|
Llewellyn |
|
|
292,152 |
|
|
|
85,750 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
42,890 |
|
Muse |
|
|
237,053 |
|
|
|
49,000 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
24,541 |
|
Nevares |
|
|
267,014 |
|
|
|
69,000 |
|
|
|
89,862 |
|
|
|
73,650 |
|
|
|
|
|
|
|
34,502 |
|
Turner |
|
|
280,137 |
|
|
|
77,750 |
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|
|
89,862 |
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|
|
73,650 |
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|
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|
|
|
38,875 |
|
|
|
|
(1) |
|
Represents the sum of the numbers shown in the columns to the right.
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|
(2) |
|
This column represents the fees earned by each
director in 2005, whether paid in cash or in shares of
restricted stock. Non-employee directors receive: |
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|
|
A $35,000 annual retainer, payable quarterly in arrears, plus |
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|
$3,000 for each meeting (Board of Directors or
Committee) attended in person and $1,000 for each
such meeting attended by telephone, plus |
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|
$5,000
per year for serving on the Audit Committee or
Compensation Committee and $2,000 per year for
serving on any other Board Committee, plus |
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|
$10,000 per year for chairing the Audit Committee
or Compensation Committee and $4,000 for chairing
any other Committee. |
|
|
In March 2006, our Board of Directors approved an
amendment to our Corporate Governance Principles that clarified and
strengthened the Lead Director role. At the same
time, the Compensation Committee of our Board of
Directors established a fee for the Lead Director
role of $25,000 per year, to be paid quarterly in
arrears. Mr. Hardin serves as our Lead Director. We
will begin paying this fee effective January 1,2006. |
|
(3) |
|
Directors may elect to receive their earned fees in
shares of restricted common stock rather than in cash. If
a director makes this election, he or she will receive
shares with a value equal to 150% of the cash amount owed
to him or her, determined as of the last day of the
quarter based on the average closing price of our common
stock over the last 30 trading days of the quarter.
One-third of the restricted shares vest on the grant
date; 1/3vest on the
first anniversary of the grant date; and the final 1/3vest on the second
anniversary of the grant date. In 2005, Mrs. Hill elected
to receive all of her fees in cash, and Mr. Kirk elected
to receive 1/2 of his
fees in cash. All other directors elected to receive
their fees in shares of restricted stock. |
(4) |
|
On June 30 of each year, each non-employee director
receives a grant of 7,500 immediately exercisable stock
options and 2,550 stock units that vest over a
three-year period (except in the event of a change in
control, in which case the stock units would
automatically vest).
The value reflected in this column is the
aggregate grant date fair value of the award,
computed in accordance with FAS 123R (applying
the same valuation model and assumptions as we
use for financial statement reporting purposes). |
|
(5) |
|
The numbers reflected in this column represent the
value of restricted stock granted to directors who
elected to receive their fees in stock rather than in
cash, over and above the amount of fees earned that are
reflected in the column entitled Fees Earned or Paid in
Cash. The value reflected in this column is the
aggregate grant date fair value of the shares granted,
computed in accordance with FAS 123R (applying the same
valuation model and assumptions as we use for financial
statement reporting purposes), less the amount shown in
the Fees Earned or Paid in Cash column. In 2005, we
paid the expenses, which were in the aggregate amount of
approximately $5,000, for our Lead Directors wife to
accompany him to attend a company-sponsored customer
event. The amount shown for him in this column includes
that amount. No other compensation was paid to our
directors in 2005. |
|
(6) |
|
We pay, or in some cases reimburse, all travel,
lodging and meal expenses associated with attending
Board meetings, Committee meetings and other company
functions. These amounts are not reflected in the
table because we do not consider them to be
compensation. |
13
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
What are the Committees of our Board of Directors and who serves on those Committees?
Our Board of Directors has established certain Committees to assist in the performance of its
various functions. The chart below lists all of the Committees of our Board of Directors, and
indicates who currently serves on those Committees and how many times each Committee met during
2005.
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Board Member |
|
Audit(2)(3) |
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|
Compensation(2) |
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|
Executive |
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Governance(2) |
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Strategic Planning |
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|
Bernon |
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* |
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Collens |
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* |
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Davis |
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* |
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Engles |
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* |
(1) |
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* |
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Green |
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* |
(1) |
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* |
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* |
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Hardin |
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* |
(1) |
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* |
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* |
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* |
(1) |
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Hill |
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* |
(1) |
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Kirk |
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* |
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Llewellyn |
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* |
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Nevares |
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* |
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* |
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Schenkel |
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* |
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Turner |
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* |
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* |
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Meetings in 2005 |
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8 |
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6 |
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1 |
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6 |
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0 |
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|
* |
|
Committee Member |
|
(1) |
|
Committee Chair |
|
(2) |
|
Our Board of Directors has determined that all of the members of our Audit, Compensation and
Governance Committees are independent, as determined in accordance with New York Stock Exchange
guidelines, and are appointed by the Board of Directors.
|
|
(3) |
|
Our Board of Directors has determined that all of the members of the Audit Committee are audit
committee financial experts, as that term is defined by the Securities and Exchange Commission. |
What are the responsibilities of our Board Committees?
Audit Committee: The
Audit Committee is responsible for assisting our Board of
Directors in monitoring (1) the integrity of our
financial statements, (2) our independent auditors
qualifications and independence, (3) the performance of
our internal audit function and independent auditor, and
(4) our compliance with applicable legal and regulatory
requirements.
The Audit Committee has sole authority to appoint
and replace our independent auditor and is directly
responsible for the compensation and oversight of the
independent auditor for the purpose of preparing or
issuing an audit report or related work. The Audit
Committee is responsible for approving all permitted
non-audit services to be performed by our independent
auditor, and has established guidelines for doing so.
See the Report of the Audit Committee on page 16 for
more information.
The Audit Committee has authority to retain
independent legal, accounting or other advisors, at our
expense. The Audit Committee meets regularly with
members of our management and with our independent
auditor outside the presence of management.
The Audit Committee makes regular reports to the
Board of Directors and reviews its own performance
annually. The Committee operates under a charter, a copy
of which is attached hereto as Annex I and is accessible
on our corporate website at www.deanfoods.com, and is
required to meet not less frequently than quarterly.
Compensation Committee: Our
Compensation Committee is responsible for setting our
executive compensation policies and objectives and
administering our executive compensation programs. The
Compensation Committee evaluates the performance of, and
determines compensation for, our Chief Executive
Officer. The Committee also determines the
compensation of our executive officers and certain other
key employees, and acts in an advisory role on
non-executive employee compensation. The Committee
administers our stock option and stock award plans and
makes final determinations regarding grants of stock
options and other stock-based awards. The Compensation
Committee operates under a charter, a copy of which is
accessible on our corporate website at
www.deanfoods.com, and performs annual self-evaluations.
14
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Executive Committee:
The Executive Committee may act on behalf of the
Board of Directors when the Board of Directors is not in
session on a limited basis, as to matters specifically
delegated to the Executive Committee from time to time.
This Committee meets only as needed.
Governance Committee: The Governance Committee is responsible for
considering, developing and making recommendations to
the Board of Directors regarding corporate governance
principles generally and the appropriate composition,
size, function and operation of the Board and its
Committees to optimize the effectiveness of the Board of
Directors. Specifically, the Governance Committee must
(1) consider, recommend and recruit candidates to fill
new or open positions on the Board, (2) review candidates
recommended by stockholders, (3) conduct the appropriate
and necessary inquiry into the backgrounds and
qualifications of possible candidates, and (4) recommend
director nominees for approval by the Board of Directors
and our stockholders. When searching for or considering
a candidate for Board membership (including any
candidate who may be recommended by a shareholder), the
Governance Committee will generally require that the
candidate have the highest ethical standards, integrity,
sound business judgment and a willingness to devote
adequate time to Board duties. Their ultimate goal when
considering the composition of our Board of Directors is
to ensure that the Board includes members with
appropriately diverse backgrounds, skills and
experience, including financial and other expertise
relevant to the business of our company. The Committee
also considers possible conflicts of interest of Board
members and senior executives, recommends Board
Committee members, recommends director development
activities and is involved in succession planning and
management development for senior
management. The Governance Committee operates under a
charter, a copy of which is accessible on our corporate
website at www.deanfoods.com, and performs annual
self-evaluations. The Governance Committee will consider
stockholder recommendations submitted in writing to the
address set forth below.
Strategic Planning Committee: The Strategic
Planning Committee
has been assigned the task of working with our
executives to chart the strategic course of our company,
with the goal of maximizing stockholder returns over the
medium to long term. Specific areas considered by the
Committee include business mix, strategic initiatives,
capital and other resource allocation and earnings
growth.
How can you communicate with our Board of Directors?
Should you wish to contact our Lead Director or any
of the other members of our Board of Directors on a
board-related issue, you may write to him or her in care
of our Corporate Secretary at 2515 McKinney Avenue, Suite
1200, Dallas, Texas 75201. Relevant communications will be
distributed to the Board, or to any individual director
or directors as appropriate, depending on the facts and
circumstances outlined in the communication.
Communications that are unrelated to the duties and
responsibilities of the Board will not be forwarded, such
as:
|
|
business solicitations or advertisements, |
|
|
|
junk mail and mass mailings, |
|
|
|
new product suggestions, |
|
|
|
product complaints, |
|
|
|
product inquiries, |
|
|
|
resumes and other forms of job inquiries, |
|
|
|
spam, and |
|
|
|
surveys. |
In addition, material that is unduly hostile,
threatening, illegal or similarly unsuitable will be
excluded. Any communication that is filtered out will
be made available to any outside director upon his or
her request.
15
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Reports to You From Our Board Committees
Report of the Audit Committee
We have met with representatives of Deloitte &
Touche LLP and company management to review and discuss
the companys audited consolidated financial statements
for the year ended December 31, 2005 and the assessment of the companys internal control over
financial reporting. We have discussed significant
accounting policies applied by the company in its
financial statements, as well as alternative treatments.
We discussed with the companys Chief Audit Executive and
with Deloitte & Touche the overall scope and plans for
their respective audits. We met with the Chief Audit
Executive and with Deloitte & Touche, with and without
management present, to discuss the results of their
examinations, the evaluations of the companys internal
controls and the overall quality of the companys
financial reporting. We also regularly review and discuss
the companys activities with respect to risk assessment
and risk management, and receive regular reports
regarding the companys compliance program.
We
regularly discuss with Deloitte & Touche, and
they have provided written disclosures to us, regarding
(1) the matters required to be communicated under
generally accepted auditing standards (Standard
No. 61, Communication with Audit Committees), and (2)
Deloitte & Touches independence, as required by the
Independence Standards Board (Standard No. 1, Independence
Discussions with Audit Committees).
Deloitte & Touche has served as independent auditor
for the company since its formation. Deloitte & Touche
periodically changes the personnel who work on the audit.
In addition to performing the audit of the companys
consolidated financial statements, Deloitte & Touche also
provides various other services to the company. All of
the services provided for the company by Deloitte &
Touche in 2005
were approved by us. The aggregate fees and reimbursable
expenses billed to the company and its subsidiaries by
Deloitte & Touche for 2005 and 2004 were:
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
2004 |
|
|
Audit Fees(1) |
|
$ |
5,791,000 |
|
|
$ |
6,430,000 |
|
Audit-Related Fees(2) |
|
|
3,304,000 |
|
|
|
4,069,000 |
|
Tax Fees(3) |
|
|
1,112,000 |
|
|
|
875,000 |
|
All Other Fees(4) |
|
|
180,000 |
|
|
|
546,000 |
|
|
|
|
Total |
|
$ |
10,387,000 |
|
|
$ |
11,920,000 |
|
|
|
|
|
|
|
(1) |
|
Audit Fees includes fees and expenses billed
for the audit of the companys annual financial
statements and review of financial statements included
in the companys quarterly reports on Form 10-Q, and
services provided in connection with statutory and
regulatory filings. Audit fees also includes the audit
of the companys internal controls. |
|
(2) |
|
Audit-Related Fees includes fees billed for
services that are related to the performance of the audit
or review of the companys financial statements (which
are not reported above under the caption Audit
Fees), such as fees for accounting due diligence on
acquisitions and divestitures and audits of company
employee benefit plans. In 2005, Audit Related Fees also
included fees for the stand-alone audit of TreeHouse
Foods and other work related to the TreeHouse spin-off. |
|
(3) |
|
For 2005,Tax Fees includes $738,000 for tax work
related to the TreeHouse spin-off, $120,000 for work
related to benefit plans and $254,000 for tax
compliance work. For 2004, Tax Fees includes $252,000
for tax preparation and compliance and $623,000 for tax
advice and planning. |
|
(4) |
|
All Other Fees includes fees billed in connection
with the companys benefit plans and a license fee for
certain tax preparation software. |
We have considered whether the services
performed by Deloitte & Touche other than audit services
or services related to the audit are compatible with
maintaining the independence of Deloitte & Touche, and we
have concluded that they are. Based on our reviews and
discussions with management and Deloitte & Touche, as
described above, we recommended to the Board of Directors
that the audited consolidated financial statements be
included in the companys annual report on Form 10-K for
the year ended December 31, 2005, for filing with the
Securities and Exchange Commission.
We have also recommended that Deloitte & Touche be selected as
the companys independent auditor for 2006.
We have sole authority to engage and determine the
compensation of the companys independent auditor. Our
pre-approval is required for any engagement of Deloitte
& Touche, and we have established the following
pre-approval policies and procedures. Annually, we
pre-approve services to be provided by Deloitte &
Touche. We also consider the engagement of Deloitte &
Touche for the provision of other services during the
year. In addition to conducting the companys 2006
audit, we have pre-authorized Deloitte & Touche to
provide services to the company in connection with the
following types of non-audit matters:
16
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Audit-Related Engagements
|
|
Audit of combined financial statements for
Dean Dairy Group or any other subsidiary |
|
|
|
Ordinary course accounting consultations |
|
|
|
Due diligence services related to
potential acquisitions and divestitures of
businesses |
Tax Engagements
|
|
U.S. federal, state and local tax compliance advice |
|
|
|
International tax compliance advice |
|
|
|
Review of federal, state, local and
international income, franchise and other tax
returns |
|
|
|
Advice on tax audits |
|
|
|
Tax structuring and related advice in
connection with potential acquisitions,
divestitures and restructurings. |
Other
|
|
Licensing of tax return preparation software. |
The pre-approval described above will expire in November
2006. In the event a matter of a type listed above arises
before November 2006, we have authorized management, if
necessary, to negotiate, for the Chairmans approval and
execution, an engagement agreement related to that
matter. For each such matter, management is required to
provide us, at our next regularly scheduled meeting, with
detailed documentation about the services to be provided.
Any service that management wishes Deloitte & Touche to
provide that is of a type that has not been pre-approved
must be considered at a meeting of the Committee before
the service is provided. In determining whether to
approve the engagement of Deloitte & Touche, we consider
whether such service is consistent with their
independence. We also consider the amount of audit and
audit-related fees in comparison to all other fees paid
to Deloitte & Touche and we review such comparisons
regularly.
Representatives of Deloitte & Touche will be
present at the annual meeting to make a statement, if
they choose, and to answer any questions you have.
This report is presented by:
The Members of the Audit Committee
Stephen L. Green (Chairman)
Lewis M. Collens
Tom C. Davis
Hector M. Nevares
Report of the Compensation Committee
Our Objectives
Our objectives in setting compensation for our executive officers and
our senior operating officers are:
|
|
To attract and retain top talent, |
|
|
|
To motivate the performance of officers
in support of achievement of the companys
strategic, financial and operating performance
objectives, |
|
|
|
To reward performance, and |
|
|
|
To align our officers interests with
the long-term interests of our stockholders
through awards of stock options and other equity
vehicles. |
In order to ensure that managements interests are
aligned with those of stockholders and to motivate and
reward individual initiative and effort, we have put an
emphasis on performance-based compensation so that
attainment of company, business unit and, in some cases,
individual performance goals, is rewarded. Through the
use of performance-based plans that emphasize attainment
of company and/or business-unit goals, we seek to foster
an attitude of teamwork, and the use of tools such as
equity ownership is important to ensure that the efforts
of management are consistent with the objectives of
stockholders.
The Elements of Our Compensation System and Our Methodology
At present, the compensation of the executive
officers and senior operating officers consists of base
salary, annual cash incentive compensation, long-term
incentive awards, and benefits. We determine base salary,
annual incentive compensation and long-term incentive
awards for the Chief Executive Officer and for each of
the other executive officers and senior operating
officers after review of:
|
|
Publicly available information and
available executive compensation survey data
concerning the base salaries of persons with
similar responsibilities in our Comparison Group
(as defined below), as well as at companies of
comparable size in general industry, |
|
|
|
The responsibilities of each officer, and |
|
|
|
The subjective evaluation of such
officers overall performance and contribution
to the company. |
17
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
In order to ensure that we are able to attract
and retain the highest caliber management, we endeavor to
ensure that total compensation, including all elements in
the aggregate, is comparable to that offered by
competitors for the companys management talent.
Specifically, we considered the following companies
(referred to in this report as the Comparison Group):
Archer-Daniels-Midland Company, Campbell Soup Company,
The Clorox Company, Coca-Cola Enterprises Inc.,
Colgate-Palmolive Company, ConAgra Foods, Inc., Cott
Corporation, Del Monte Foods Company, General Mills,
Inc., H.J. Heinz Company, Hershey Foods Corporation,
Hormel Foods Corporation, The J. M. Smucker Company,
Kellogg Company, Kimberly-Clark Corporation, McCormick &
Co., Inc., The Pepsi Bottling Group, Inc., The Procter &
Gamble Company, Sara Lee Company, Smithfield Foods, Inc.,
Tyson Foods, Inc. and The Wrigley Company.
Generally, it is our practice to set base salaries
near the median of market range, adjusted slightly to
reflect each officers individual
performance and contributions. The companys Chief
Executive Officer provides us with recommendations
regarding increases to executive officers base salaries
excluding himself.
Annual cash incentive compensation is designed to
motivate officers to achieve annual financial and other
goals based on the strategic, financial and operating
performance objectives of the company. In conjunction
with our review of the strategic and operating plans of
the company, each year we establish target performance
levels for management based either on the companys
earnings per share, the performance of particular
operating units over which an officer has control or on
individual goals, or some combination thereof. A copy of
the Companys Executive Incentive Compensation Plan is
on file with the Securities and Exchange Commission as
Exhibit 10.6 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2005. It is our practice
to set bonus levels at the median to 75th percentile of
the Comparison Group, adjusted to reflect individual
performance and contributions.
Target incentive compensation payout amounts for the persons
who were named executive officers in 2005 were:
|
|
|
|
|
|
|
Target Cash Incentive |
|
|
|
Compensation (expressed as a |
|
Name |
|
percentage of base salary) |
|
Gregg Engles |
|
|
120 |
% |
Chairman of the Board and
Chief Executive Officer |
|
|
|
|
Pete Schenkel |
|
|
90 |
% |
Vice Chairman of the Board
(former President of Dean Dairy Group
through December 31, 2005) |
|
|
|
|
Michelle Goolsby |
|
|
65 |
% |
Executive Vice President,
Chief Administrative Officer, General
Counsel and Corporate Secretary |
|
|
|
|
Barry Fromberg |
|
|
65 |
% |
Executive Vice President and
Chief Financial Officer |
|
|
|
|
Ron Klein |
|
|
50 |
% |
Senior Vice President
Corporate Development |
|
|
|
|
Pursuant to our Executive Incentive Compensation
Plan, executives are eligible to receive 0% to 200% of
their target cash incentive compensation amount,
depending on the level of achievement of the performance
criteria established for that person by the Compensation
Committee. Mr.Engles 2005 performance criteria were based
entirely on the level and growth of the companys
earnings per share. Eighty percent of Ms. Goolsbys,
Mr.Frombergs and Mr. Kleins 2005 performance
criteria was based on the level and growth of the
companys earnings per share. The remaining 20% was based
on their achievement of certain individual performance
goals. Eighty percent of Mr. Schenkels 2005 performance
criteria was based on the level and growth of the Dairy
Groups operating income. The remaining 20% was based on
his achievement of certain individual performance goals.
For the 2005 performance period, the company
significantly exceeded the performance criteria that we
established for Mr. Engles, Ms. Goolsby, Mr. Fromberg
and Mr. Klein and therefore, in accordance with the
terms of the Executive Incentive Compensation Plan, each
of them received the maximum amount of annual cash
incentive compensation payable under the plan, which was
200% of their target
18
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
incentive compensation amounts. The Dairy
Group also exceeded its operating income targets for
2005, which resulted in Mr. Schenkel receiving 175% of
his target annual incentive compensation amount.
We believe that a significant portion of officer
compensation should be dependent on long-term value
created for our stockholders. Each year, our officers
receive a long-term incentive award (consisting of stock
options and restricted stock units) at a market
percentile based on the companys total stockholder
return over the preceding three years relative to the
total stockholder return of the Comparison Group. Our
goal is for these grants to be from the 25th to the 75th
percentile, depending on our total stockholder return as
compared to that of the Comparison Group. Through
2004, the companys total stockholder return for the
preceding three years ranked at the 95th percentile of
the Comparison Group. Based on this performance, 2005
long-term incentive grants were targeted at the 75th
percentile of the Comparison Group.
Beginning in 2003, we began awarding stock units
in addition to stock options, with the award values
weighted approximately 50% each. The same approach was
used in 2004 and again in 2005.
Officers also receive benefits typically offered to
executives by companies engaged in businesses similar to
the companys and various benefits generally available
to all employees of the company (such as health
insurance). We have reviewed the companys executive
benefit plans and the methods by which benefits are
earned under the plans. We found the plans to be
appropriate components of the companys compensation
program.
We used Mercer Human Resource Consulting, Inc. to
assist us in connection with setting compensation for
2005 and 2006. We rely on our compensation consultant to
collect market compensation data. We then work with the
consultant to ensure that position descriptions are
appropriately comparable and to properly adjust the data
so that it is appropriate for a company of Dean Foods
size. Using this data, the consultant makes preliminary
compensation recommendations based on our Committees
stated compensation philosophy. Our Committee meets
several times to discuss setting individual compensation
levels, and we adjust the initial recommendations based
on our assessments of the personal attributes and
achievements of the individual officers. We go through a
similar process in considering and establishing the
companys short-term and long-term incentive plans and
other executive benefits.
Stock option awards under the companys long-term
incentive plans qualify for the exemption offered by
Section 162(m) of the U.S. tax code, which allows
performance-based compensation paid to an executive in
excess of $1,000,000 to be tax deductible if certain
conditions are met. All other compensation that we pay
does not currently qualify for the Section 162(m)
exemption. In 2005, the following compensation was not
deductible:
|
|
|
|
|
Name |
|
Non-Deductible Compensation |
|
Gregg Engles |
|
$ |
8,423,204 |
|
Pete Schenkel |
|
|
3,101,564 |
|
Barry Fromberg |
|
|
678,446 |
|
Michelle Goolsby |
|
|
653,767 |
|
Because the instances where our officers non-exempt
compensation has exceeded $1 million have been limited,
we have not adopted a policy of strict compliance with
the Section 162(m) exemption. 2005 was an exceptional
year due to the early vesting in July 2005 of stock units
granted in January 2003. The units vested early because
the stock price performance target that we established at
the time we granted the units was achieved in 2005. At
this point, we believe it is more important to retain the
flexibility to compensate officers competitively. We will
continue to monitor our compensation practices, however,
and consider future opportunities to take advantage of
the Section 162(m) exemption when we feel it is in the
best interest of the company and its stockholders.
19
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
CEO Compensation
Mr. Engles base salary for 2005 was
$1,070,000, which represented a 7% increase over his base
salary for 2004. We raised Mr. Engles 2005 base salary to
a level just below the median of the Comparison Group.
His salary had not been increased since 2002 and had
fallen behind our goal of paying base compensation at
the median of market range.
Mr. Engles target annual cash incentive
compensation for 2005 was 120% of his base salary, with a
potential range of 0% to 240% of his base salary,
depending on the degree of attainment of the EPS goals we
established for 2005. Mr. Engles 2005 target annual
incentive compensation level was near the median of the
Comparison Group.
In 2005, Mr. Engles received 123,164 stock units and
options to purchase 341,068 shares of common stock. The
value of his grant was determined based on the companys
total stockholder return for the three years ended
November 30, 2004 compared to the total stockholder
return of the Comparison Group over the same period.
At the end of each year, we establish written
evaluation objectives for the Chief Executive Officer
for the upcoming year. At the end of each year, we
evaluate his performance against the evaluation
objectives and we take the results of our evaluation into
consideration when setting his compensation for the next
year. The evaluation objectives that we established for
Mr. Engles for 2005 included objectives in the following
categories: shareholder return and earnings per share
growth; his credibility with the investment community;
his relationship with the Board of Directors; development
and execution of the companys strategic plan; certain
tactical and operational initiatives; his development of
and relationship with the companys management; and his
leadership in establishing and maintaining a culture of
compliance, ethical behavior and social responsibility
throughout the company.
This report by:
The Members of the Compensation Committee
Joseph S. Hardin, Jr.(Chairman)
Stephen L. Green
Hector M. Nevares
Jim L. Turner
20
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Who are our executive officers?
The term executive officer is defined by
applicable securities law as the companys president, any
vice president in charge of a principal business unit,
division or function (such as sales, administration or
finance), any other officer who performs a policy-making
function, or any other person who performs similar
policy-making functions for the public company. According
to that definition, our Board of Directors has determined
that at the end of 2005 our executive officers were:
Gregg L. Engles Chairman of the Board and Chief Executive Officer
See Mr. Engles biography on page 10.
Barry A. Fromberg Executive Vice President and Chief Financial Officer
Mr. Fromberg, age 50, joined us in June 1998 as Executive Vice
President and Chief Financial Officer. Prior to joining
us, he served as Chairman and Chief Executive Officer of
a subsidiary of Paging Network, Inc. from 1995 to 1998.
He was Senior Vice President and Chief Financial Officer
of Paging Network, Inc. from 1993 to 1995. He served as
Executive Vice President and Chief Financial Officer of
Simmons Communications, Inc., a cable television
operator from 1987 to 1993. From 1980 to 1987, he held
various positions with Comcast Corporation. Mr. Fromberg
was a Senior Accountant with Coopers & Lybrand from 1977
to 1980. Mr. Fromberg retired on April 1, 2006.
Michelle P. Goolsby Executive Vice President, Chief Administrative
Officer, General Counsel and Corporate Secretary
Ms. Goolsby, age 48, joined us in July 1998 as Executive
Vice President, General Counsel and Corporate Secretary.
In August 1999, she assumed the additional role of Chief
Administrative Officer. From September 1988 until July
1998, Ms. Goolsby held various positions with the law firm
of Winstead Sechrest & Minick. Prior to joining Winstead
Sechrest & Minick, she held various positions with the
Trammell Crow Company.
Ronald H. Klein Senior Vice President Corporate Development
Mr. Klein, age 40, joined us in 1997 as Assistant
Treasurer. In mid-1998, he became Vice President
Corporate Development, focusing primarily on acquisition
and divestiture transactions and financial planning. In
February 2002, he became Senior Vice President
Corporate Development. In October 2005, Mr. Klein also
assumed responsibility for
our operations in Iberia. Prior to joining us, he worked
in the Corporate Finance division of Bear Stearns.
Joseph Scalzo President WhiteWave Foods Company
Mr. Scalzo, age 47, joined us in October 2005 as President
of our WhiteWave Foods Company subsidiary. Prior to
joining us, he was employed by The Gillette Company from
2001 to October 2005, serving most recently as Group
President, Personal Care and Global Value Chain. Prior to
joining The Gillette Company, Mr. Scalzo served in
various capacities at the Coca-Cola Company from 1997 to
2001, including as Vice President and General Manager of
Coca-Cola North America and as Senior Vice President and
Chief Marketing Officer of The Minute Maid Company. He
began his career at Procter & Gamble in 1985 where he
held various leadership positions. Mr. Scalzo also serves
on the Board of Directors of HNI Corporation, a leading
office furniture and wood burning fireplace manufacturer.
Pete Schenkel Vice Chairman of the Board,
Former President of Dairy Group
See Mr. Schenkels biography on page 6.
Effective December 31, 2005, Mr. Schenkel retired as
President of our Dairy Group and became Vice Chairman
of our Board of Directors. On January 1, 2006, Mr. Alan
Bernon succeeded Mr. Schenkel as President of the Dairy
Group, making him an executive officer effective
January 1, 2006. See Mr. Bernons biography on page 10.
21
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
How much are our named executive officers paid?
The following chart shows the compensation paid in each of the three years ended December
31, 2005 to our Chief Executive Officer and the next four most highly compensated executive officers
who were serving as executive officers as of December 31, 2005. Those five people are referred to in
this proxy statement as the Named Executive Officers.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation |
|
Long-Term Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Restricted |
|
Securities |
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual |
|
Stock |
|
Underlying |
|
Stock Options |
|
All Other |
|
|
|
|
|
|
Total(1) |
|
Salary(2) |
|
Bonus(2) |
|
Compensation |
|
Awards(3) |
|
Options/SARs(4) |
|
Granted(5) |
|
Compensation(6) |
Gregg L. Engles |
|
|
2005 |
|
|
$ |
9,487,305 |
|
|
$ |
1,070,000 |
|
|
$ |
2,568,000 |
|
|
$ |
167,826 |
(7) |
|
$ |
3,312,400 |
(8) |
|
|
341,068 |
|
|
$ |
2,334,679 |
|
|
$ |
34,400 |
(9) |
Chairman of the Board |
|
|
2004 |
|
|
|
6,847,372 |
|
|
|
1,000,000 |
|
|
|
|
|
|
|
238,767 |
(10) |
|
|
3,148,170 |
(8) |
|
|
364,909 |
|
|
|
2,460,435 |
|
|
|
|
|
and Chief Executive |
|
|
2003 |
|
|
|
14,000,957 |
|
|
|
1,000,000 |
|
|
|
1,151,822 |
|
|
|
148,200 |
(11) |
|
|
5,942,400 |
(8) |
|
|
650,579 |
|
|
|
5,758,535 |
|
|
|
|
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry A. Fromberg |
|
|
2005 |
|
|
|
2,123,666 |
|
|
|
435,000 |
|
|
|
565,500 |
|
|
|
5,199 |
(12) |
|
|
652,925 |
(14) |
|
|
66,319 |
|
|
|
453,967 |
|
|
|
11,075 |
(9) |
Executive Vice |
|
|
2004 |
|
|
|
1,385,294 |
|
|
|
430,000 |
|
|
|
51,886 |
|
|
|
5,438 |
(13) |
|
|
498,720 |
(14) |
|
|
59,213 |
|
|
|
399,250 |
|
|
|
|
|
President & Chief |
|
|
2003 |
|
|
|
2,565,595 |
|
|
|
430,000 |
|
|
|
270,998 |
(15) |
|
|
19,781 |
(16) |
|
|
854,220 |
(14) |
|
|
111,914 |
|
|
|
990,596 |
|
|
|
|
|
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michelle P. Goolsby |
|
|
2005 |
|
|
|
2,206,609 |
|
|
|
470,000 |
|
|
|
611,000 |
|
|
|
6,150 |
(17) |
|
|
652,925 |
(18) |
|
|
66,319 |
|
|
|
453,967 |
|
|
|
12,567 |
(9) |
Executive Vice |
|
|
2004 |
|
|
|
1,628,085 |
|
|
|
450,000 |
|
|
|
54,245 |
|
|
|
21,345 |
(19) |
|
|
623,400 |
(18) |
|
|
71,055 |
|
|
|
479,095 |
|
|
|
|
|
President, Chief |
|
|
2003 |
|
|
|
2,565,561 |
|
|
|
430,000 |
|
|
|
270,889 |
(20) |
|
|
19,856 |
(21) |
|
|
854,220 |
(18) |
|
|
111,914 |
|
|
|
990,596 |
|
|
|
|
|
Administrative Officer
& General Counsel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald H. Klein |
|
|
2005 |
|
|
|
1,223,388 |
|
|
|
325,000 |
|
|
|
325,000 |
|
|
|
1,330 |
(22) |
|
|
334,425 |
(23) |
|
|
33,870 |
|
|
|
231,847 |
|
|
|
5,786 |
(9) |
Senior Vice President- |
|
|
2004 |
|
|
|
976,307 |
|
|
|
295,000 |
|
|
|
29,645 |
|
|
|
14,121 |
(24) |
|
|
374,040 |
(23) |
|
|
39,080 |
|
|
|
263,501 |
|
|
|
|
|
Corporate Development |
|
|
2003 |
|
|
|
1,163,357 |
|
|
|
285,000 |
|
|
|
149,668 |
|
|
|
1,338 |
(25) |
|
|
334,260 |
(23) |
|
|
44,410 |
|
|
|
393,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pete Schenkel |
|
|
2005 |
|
|
|
3,262,965 |
|
|
|
700,000 |
|
|
|
1,066,012 |
|
|
|
50,412 |
(26) |
|
|
828,100 |
(27) |
|
|
84,083 |
|
|
|
575,565 |
|
|
|
42,876 |
(28) |
Vice Chairman |
|
|
2004 |
|
|
|
3,721,942 |
|
|
|
675,000 |
|
|
|
298,740 |
|
|
|
35,251 |
(29) |
|
|
1,090,950 |
(27) |
|
|
130,071 |
|
|
|
877,017 |
|
|
|
744,984 |
(30) |
|
|
|
2003 |
|
|
|
6,717,957 |
|
|
|
675,000 |
|
|
|
636,561 |
|
|
|
58,675 |
(31) |
|
|
2,228,400 |
(27) |
|
|
281,274 |
|
|
|
2,489,669 |
|
|
|
629,652 |
(32) |
|
|
|
(1) |
|
Represents the sum of the compensation
amounts (expressed in dollars) shown in the columns
to the right. |
|
(2) |
|
Includes salary and bonus deferred pursuant to our Deferred Compensation Plans. |
|
(3) |
|
The value shown is calculated by multiplying the
closing market price of our stock on the date of grant
by the number of shares granted. |
|
(4) |
|
All share numbers have been adjusted to reflect all
stock splits and adjustments as a result of the
spin-off of Tree House. |
|
(5) |
|
The value reflected in this column is the aggregate
grant date fair value of the award, computed in
accordance with FAS123(R) (applying the same valuation
model and assumptions as we use for financial statement
reporting purposes). |
|
(6) |
|
Does not include group life,
health, hospitalization, medical reimbursement, disability,
employee stock purchase plan or 401(k) match benefits
that are available to all non-represented employees.
|
|
(7) |
|
Includes $15,200 club membership, $1,509 executive
physical benefit and $151,117 for personal use of company
aircraft. |
|
(8) |
|
At December 31, 2003, Mr. Engles held 240,000 stock units with a value of $5.9 million. At
December 31, 2004, Mr. Engles held 293,000 stock units
with a value of $7.9 million. At December
31, 2005, Mr. Engles held 218,851 stock units with a
value of $8,241,929. Values are determined based on
the closing sales price on December 31. Dividends are
not paid on stock units. |
|
(9) |
|
Effective in 2005, our Compensation Committee
approved a new supplemental retirement plan for the
benefit of employees who receive salary and bonus in
excess of the amount that IRS regulations allow to be
contributed to a 401k plan (excess compensation).
Under the plan, employees who receive excess
compensation are credited with an amount equal to 4% of
his or her excess compensation. Four percent is the
employer match on our 401(k) plan. The amount shown here
is the amount credited to the named executive officer in
2005 under the new plan. Each employees plan balance
will be paid to him or her upon termination of
employment, a change in control or the employees death
or disability. |
|
(10) |
|
Includes $12,000 club membership, $2,014 executive
physical benefit and $224,753 for personal use of company
aircraft. |
|
(11) |
|
Includes $11,500 club membership, $1,497 executive
physical benefit and $135,203 for personal use of company
aircraft. |
|
(12) |
|
Includes $1,543 for executive physical benefit and
$3,656 for personal use of company aircraft. |
|
(13) |
|
Includes $5,438 for personal use of company aircraft. |
|
(14) |
|
At December 31, 2003, Mr. Fromberg held 34,500
stock units with a value of $854,220. At December
31, 2004, Mr. Fromberg held 43,600 stock units with a
value of $1.2 million.
At December 31, 2005, Mr. Fromberg held 39,437 stock
units with a value of $1,485,197. Values are
determined based on the closing sales price on
December 31. Dividends are not paid on stock units. |
|
(15) |
|
Mr. Fromberg deferred a portion of his 2003 bonus
pursuant to our Deferred Compensation Plan and
allocated the entire deferred amount toward investment
in shares of our common stock. Shares of stock
purchased under the Deferred Compensation Plan were
purchased at a 15% discount. |
|
(16) |
|
Includes $17,646 discount on shares purchased
under the Deferred Compensation Plan and $2,135
executive physical benefit. |
|
(17) |
|
Includes $2,340 for executive physical benefit and $3,810 for personal use of company
aircraft. |
|
|
|
(18) |
|
At December 31, 2003, Ms. Goolsby held 34,500 stock
units with a value of $854,220. At December 31,
2004, Ms. Goolsby held 47,600 stock units with a value of
$1.3 million. At December 31, 2005, Ms. Goolsby held
43,226 stock units with a value of $1,627,891. Values are
determined based on the closing sales price on December
31. Dividends are not paid on stock units.
|
|
(19) |
|
Includes $21,345 for personal use of company aircraft. |
|
(20) |
|
Ms. Goolsby deferred a portion of her 2003 bonus
pursuant to our Deferred Compensation Plan and allocated
the entire deferral toward investment in shares of our
common stock. Shares of stock purchased under the
Deferred Compensation Plan were purchased at a 15%
discount. |
|
(21) |
|
Includes $11,951 discount on shares
purchased under the Deferred Compensation Plan and $7,905
for personal use of company aircraft. |
|
(22) |
|
Includes $1,330 for executive physical benefit. |
|
(23) |
|
At December 31, 2003, Mr. Klein held 13,500 stock
units with a value of $334,260. At December 31,
2004, Mr. Klein held 22,800 stock units with a value of
approximately $641,448. At December 31, 2005, Mr. Klein
held 23,804 stock units with a value of $896,459. Values
are determined based on the closing sales price on
December 31. Dividends are not paid on stock units. |
|
(24) |
|
Includes $1,330 executive physical benefit and
$12,791 for personal use of company aircraft. |
|
(25) |
|
Includes $1,338 executive physical benefit. |
|
(26) |
|
Includes $10,462 for personal use of company
aircraft, $18,200 for a company-provided
automobile, $21,000 for club memberships and $750
premium for full coverage Execucare health insurance
not provided to other employees. |
|
(27) |
|
At December 31, 2003, Mr. Schenkel held 90,000
stock units with a value of $2.2 million.
At December 31, 2004, Mr. Schenkel held 107,000 stock
units with a value of $2.9 million. At December
31, 2005, Mr. Schenkel held 63,951 stock units with a
value of $2,408,395. Values are determined based on
the closing sales price on December 31. Dividends are
not paid on stock units. |
|
(28) |
|
Includes $11,420 premium for special term life and
disability insurance paid for by the company and not
offered to other employees, and $31,456 credited to Mr.
Schenkel under the new supplemental retirement plan. |
|
(29) |
|
Includes $9,201 for personal use of company
aircraft, $17,300 for a company-provided automobile,
approximately $8,000 for a club membership, and $750 for
full coverage Execucare health care insurance not
provided to other employees. |
|
(30) |
|
$700,470 of this amount represents the last of four
annual distributions Mr. Schenkel was entitled to
receive as a result of the termination of a
non-qualified retirement plan maintained by Southern
Foods prior to our acquisition of that company effective
January 2000. $44,514 is the premium for special term
life and disability insurance paid for by the company
and not offered to other employees. |
|
(31) |
|
Includes $28,425 for personal use of company
aircraft, $21,500 for a company-provided automobile,
approximately $8,000 club membership and $750 premium
for full coverage Execucare health insurance not
provided to other employees. |
|
(32) |
|
$588,064 of this amount represents the third of
four annual distributions Mr. Schenkel was entitled to
receive as a result of the termination of a
non-qualified retirement plan maintained by Southern
Foods prior to our acquisition of that company
effective January 2000. $41,588 is the premium paid by
the company for term life and disability insurance not
offered to other employees. |
22
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Option Grants in 2005 (to Named Executive Officers)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
Percent of Total |
|
|
|
|
|
|
|
|
|
Potential Realizable Value at Assumed |
|
|
Underlying |
|
Options/SARs |
|
Exercise/Base |
|
|
|
|
|
Annual Rates of Stock Price Appreciation |
|
|
Options/SARs |
|
Granted to |
|
Price |
|
Expiration |
|
For Option Term |
Name |
|
Granted(1) |
|
Employees in 2005(1) |
|
($/share) |
|
Date(2) |
|
5%(3) |
|
10%(3) |
|
Engles, Gregg L. |
|
|
341,068 |
|
|
|
14.3 |
% |
|
$ |
26.89 |
|
|
|
01/07/2015 |
|
|
$ |
5,768,672 |
|
|
$ |
14,618,948 |
|
Fromberg, Barry A. |
|
|
66,319 |
|
|
|
2.8 |
|
|
|
26.89 |
|
|
|
01/07/2015 |
|
|
|
1,121,690 |
|
|
|
2,842,583 |
|
Goolsby, Michelle P. |
|
|
66,319 |
|
|
|
2.8 |
|
|
|
26.89 |
|
|
|
01/07/2015 |
|
|
|
1,121,690 |
|
|
|
2,842,583 |
|
Klein, Ronald H. |
|
|
33,870 |
|
|
|
1.4 |
|
|
|
26.89 |
|
|
|
01/07/2015 |
|
|
|
572,862 |
|
|
|
1,451,745 |
|
Schenkel, Pete |
|
|
84,083 |
|
|
|
3.5 |
|
|
|
26.89 |
|
|
|
01/07/2015 |
|
|
|
1,422,142 |
|
|
|
3,603,988 |
|
|
|
|
(1) |
|
The total number of options granted during 2005 to all employees was 2,391,594. Numbers
shown in the table include adjustments made in connection with the Tree House Foods spin-off. |
|
(2) |
|
All vest as follows: 1/3 on first anniversary of grant, 1/3 on second anniversary of grant, and 1/3 on third anniversary of grant. |
|
(3) |
|
The 5% and 10% assumed annual rates of compounded stock price appreciation are provided in
accordance with the rules of the Securities and Exchange Commission. The actual value, if any, that
an executive may realize will depend on the excess of the stock price over the exercise price on
the date the option is exercised. |
Stock Unit Grants in 2005 (to Named Executive Officers)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value of Assumed |
|
|
|
|
|
|
|
|
|
|
Annual Rates of Stock Price Appreciation |
|
|
|
|
|
|
|
|
|
|
Over Total Vesting Period(3) |
|
|
|
|
|
|
Percent of Total Stock Units |
|
|
|
|
Name |
|
No. of Stock Units Granted(1) |
|
Granted to Employees During 2005(2) |
|
5% |
|
10% |
|
Engles, Gregg L. |
|
|
123,164 |
|
|
|
24.4 |
% |
|
$ |
4,227,542 |
|
|
$ |
5,334,637 |
|
Fromberg, Barry A. |
|
|
24,278 |
|
|
|
4.8 |
|
|
|
833,330 |
|
|
|
1,051,560 |
|
Goolsby, Michelle P. |
|
|
24,278 |
|
|
|
4.8 |
|
|
|
833,330 |
|
|
|
1,051,560 |
|
Klein, Ronald H. |
|
|
12,435 |
|
|
|
2.5 |
|
|
|
426,835 |
|
|
|
538,601 |
|
Schenkel, Pete |
|
|
30,791 |
|
|
|
6.1 |
|
|
|
1,056,886 |
|
|
|
1,333,659 |
|
|
|
|
(1) |
|
Numbers shown in the table above include adjustments made in connection with the Tree House
Foods spin-off. Each stock unit represents the right to receive one share of common stock in the
future. Stock units have no exercise price. Each employees stock unit grant vests ratably over
five years, subject to certain accelerated vesting provisions based primarily on our stock price.
All stock unit grants vest ratably over 5 years. |
|
(2) |
|
The total number of stock units granted during 2005 to all employees was 504,314. |
|
(3) |
|
The actual value that an executive may realize will depend on the stock price on the date the
underlying shares are sold. |
Option Exercises in 2005 (by Named Executive Officers)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Securities |
|
Value of Unexercised |
|
|
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
In-the-Money Options at |
|
|
|
|
|
|
|
|
|
|
Options at December 31, 2005 |
|
December 31, 2005 |
|
|
Shares Acquired |
|
Value |
|
|
|
|
|
|
|
|
Name |
|
On Exercise |
|
Realized |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
|
Engles, Gregg L. |
|
|
45,000 |
|
|
$ |
1,024,280 |
|
|
|
3,768,307 |
|
|
|
837,274 |
|
|
$ |
86,984,577 |
|
|
$ |
10,593,377 |
|
Fromberg, Barry A. |
|
|
289,027 |
|
|
|
5,846,536 |
|
|
|
134,751 |
|
|
|
143,099 |
|
|
|
2,810,840 |
|
|
|
1,785,542 |
|
Goolsby, Michelle P. |
|
|
96,408 |
|
|
|
2,264,729 |
|
|
|
502,828 |
|
|
|
150,993 |
|
|
|
10,558,166 |
|
|
|
1,875,060 |
|
Klein, Ronald H. |
|
|
|
|
|
|
|
|
|
|
139,691 |
|
|
|
74,724 |
|
|
|
2,671,812 |
|
|
|
907,629 |
|
Schenkel, Pete |
|
|
6,959 |
|
|
|
81,444 |
|
|
|
1,186,293 |
|
|
|
269,814 |
|
|
|
26,068,889 |
|
|
|
3,543,879 |
|
Stock Units Vested and Distributed in 2005 (to Named Executive Officers)
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Received |
|
|
|
|
During 2005 |
|
Value of |
Name |
|
Due to Vesting of Stock Units(1) |
|
Shares Received(2) |
|
Engles, Gregg L. |
|
|
238,735 |
|
|
$ |
8,158,088 |
|
Fromberg, Barry A. |
|
|
34,614 |
|
|
|
1,182,449 |
|
Goolsby, Michelle P. |
|
|
35,414 |
|
|
|
1,208,745 |
|
Klein, Ronald H. |
|
|
14,693 |
|
|
|
500,446 |
|
Schenkel, Pete |
|
|
88,951 |
|
|
|
3,040,396 |
|
|
|
|
(1) |
|
The named executive officer may not have actually received the number of shares shown in
this column if he or she elected to trade certain of the shares in payment of taxes due. |
|
|
|
(2) |
|
Value
is calculated based on our closing stock price on the date of distribution. |
23
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Change in Control Benefits
We have entered into agreements with all of our
named executive officers pursuant to which we must
|
|
pay each of the named executive officers a lump
sum of cash equal to three times his or her base annual
salary plus his or her target bonus for the year in
which the termination occurs, plus a pro-rated bonus for
the portion of the year served prior to termination, in
addition to a gross-up payment to pay for any applicable
excise taxes, |
|
|
|
pay each of the named
executive officers the unvested balance of his or her
401(k) account, plus three times his or her most recent
company match, |
|
|
|
continue the executives
insurance benefits for two years, and |
|
|
|
provide certain outplacement services |
if, in connection with or within two years after a
change in control (as defined in the agreements) of our
company
|
|
the named executive officers
employment is terminated by us or any successor of ours
without cause (as defined in the agreements), or |
|
|
|
the named executive officers employment is
terminated by the executive for good reason (as defined
in the agreement). |
Also, each officer has the right, at any time during the
13th month after a change in control, to voluntarily
terminate his or her employment for any reason and
receive the same benefits as if he or she had been
terminated by us or by a successor company during the
two years after a change in control as described above.
The agreements also contain
|
|
a covenant
pursuant to which the executives have agreed not to
compete with us for two years after termination, |
|
|
|
a confidentiality provision pursuant to which the
executives have agreed not to divulge any of our
confidential information, and |
|
|
|
agreements not
to solicit any of our employees for two years after
termination. |
All of the named executive officers unvested stock
options and stock units would automatically vest
immediately upon a change in control (as defined in the
agreements).
If a change in control (as defined in the
agreements) occurred during 2006 and our named
executive officers rights under the agreements were
triggered, they would receive approximately the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In |
|
|
|
|
|
|
|
|
|
|
Control Cash |
|
|
|
|
Name |
|
Total(1) |
|
Payment(2) |
|
Equity Value(3) |
|
Other(5) |
|
Engles, Gregg L. |
|
$ |
26,848,506 |
|
|
$ |
7,945,200 |
|
|
$ |
18,835,306 |
|
|
$ |
68,000 |
|
Fromberg, Barry A.(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goolsby, Michelle P. |
|
|
6,197,452 |
|
|
|
2,626,500 |
|
|
|
3,502,952 |
|
|
|
68,000 |
|
Klein, Ronald H. |
|
|
3,534,463 |
|
|
|
1,662,375 |
|
|
|
1,804,088 |
|
|
|
68,000 |
|
Schenkel, Pete |
|
|
8,270,274 |
|
|
|
2,250,000 |
|
|
|
5,952,274 |
|
|
|
68,000 |
|
|
|
|
(1) |
|
Represents the sum of the amounts shown in the columns to the right. Amounts shown in this
table do not include the tax gross-up that the executive is entitled to under the agreements. |
|
(2) |
|
Does not include the prorated bonus the executive would receive for the portion of the year served
prior to his or her termination. |
|
(3) |
|
Represents the intrinsic (in-the-money) value of all unvested stock options and stock units
held by the executive as of December 31, 2005, based on our closing stock price on December 31, 2005. |
|
(4) |
|
Mr.Fromberg retired effective April 1, 2006. |
|
(5) |
|
Includes outplacement and continued medical coverage for two years. |
24
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Other Agreements with Named Executive Officers
Retirement Agreement with Barry Fromberg
On April 1, 2006, Barry Fromberg, our former Chief
Financial Officer, retired. On November 7, 2005, we
entered into an Employment and Release Agreement with
Mr. Fromberg regarding his retirement.
Pursuant to the agreement, Mr. Fromberg agreed to
continue in his position until April 1, 2006 (the
Retirement Date) and we agreed to continue to pay him
his regular salary, at the rate of $435,000 per year,
until the Retirement Date, and he continued to be
eligible to participate in our benefit plans. In
addition, we agreed to pay him a prorated bonus for the
three months that he was employed in 2006, but only to
the extent that other senior corporate executives become
eligible to receive a bonus, which will be determined
after the end of 2006 in accordance with our Executive
Incentive Compensation Plan. Stock awards granted to
Mr. Fromberg prior to the date of the agreement that were
scheduled to vest prior to the Retirement Date vested in
accordance with their terms. Mr. Fromberg has 60 days
after the Retirement Date to exercise his vested stock
options.
Mr. Fromberg agreed to make himself available after
the Retirement Date to assist us with any transitional
issues that may arise and/or to assist his successor with
any issues that may arise. In consideration for his
agreement to remain in his position until the Retirement
Date, and to assist with transitional issues that may
arise after the Retirement Date, and in exchange for the
release contained in the agreement and Mr. Frombergs
agreement to abide by the non-solicitation, non-compete
and non-disclosure provisions contained in the agreement,
we agreed to make certain payments to Mr. Fromberg, and to
provide him with certain other benefits. Specifically, we
agreed to provide him with the following cash amounts,
all of which will be paid on October 15, 2006: (1) a
payment in an amount equal to approximately $1.4 million
(less applicable withholding), or two times the sum of his
base annual salary plus his target bonus, plus (2) a
health benefit advance in the amount of $24,000, plus (3)
a payment in an amount of $25,200, which is three times
the amount of his 2005 401(k) match. In addition, on
April 15, 2006, we will make a payment to Mr. Fromberg of
approximately $1.6 million, which is intended to
compensate him for the value of his previously granted
stock awards that would have vested in 2007 and 2008 if
he were still employed. For unvested options, the amount
of the payment will be the difference between the market
price (as defined below) of our stock and the strike
price of the associated option, times the number of
shares underlying such options. For unvested stock units,
the amount of the payment will be equal to the market
price of our stock times the number of unvested stock
units. Market price is defined in
the agreement as the highest closing price of our stock
during the 30 trading days ending on March 31, 2006.
Finally, we will continue to provide Mr. Fromberg the
annual physical benefit provided to other executives of
the company.
Pursuant to the agreement, Mr. Fromberg agreed not
to solicit any of our employees or customers for a period
of 2 years after the Retirement Date, and he has agreed
to maintain the confidentiality of our trade secrets and
other confidential information. Finally, the agreement
contains a mutual release pursuant to which Mr. Fromberg
and the company have agreed to release one another from
all claims that may arise out of or relate to his
employment with the company.
The agreement can be terminated for cause, as defined in
the agreement.
Employment Agreements with Pete Schenkel
On September 8, 2005, we announced the succession
plan for the President of our Dairy Group. Alan Bernon,
formerly Chief Operating Officer of the Northeast Region
of our Dairy Group, became President of our Dairy Group
effective January 1, 2006. Pete Schenkel, formerly the
President of the Dairy Group, resigned from that position
effective December 31, 2005. On December 2, 2005, we entered
into an employment agreement (the Employment Agreement)
with Mr. Schenkel pursuant to which he became Vice
Chairman of our Board of Directors effective January
1, 2006. As Vice Chairman, he will assist in the
transition of leadership of the Dairy Group through the
end of 2007. On December 2, 2005, we also entered into an
Independent Contractor and Noncompetition Agreement (the
Consulting and Noncompetition Agreement) with Mr.
Schenkel under which we will generally retain access to
his services through December 31, 2009, and he has agreed
to certain restrictive covenants that will preclude him
from competing with us or otherwise interfering with our
relationships with our customers and employees.
Employment Agreement
Mr. Schenkels term as Vice Chairman is expected
to continue through December 31, 2007, at which time he
will resign as Vice Chairman and as an employee. The
Employment Agreement, however, permits Mr. Schenkel to
retire prior to December 31, 2007 by providing us at
least 10 days notice (the date he retires as Vice
Chairman, whether on or before December 31, 2007, is
referred to herein as the Resignation Date).
During the period Mr. Schenkel serves as Vice
Chairman, Mr. Schenkel will assist with various
strategic, budgeting and organizational matters
pertaining to the Dairy Group and work
25
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
to facilitate a smooth transition of his
responsibilities and customer relationships to his
successor. Mr. Schenkels current Board term will expire
in May of this year. He has been nominated for
re-election by our Board of Directors. Mr. Schenkels
ability to continue to serve as Vice Chairman is subject
to him being re-elected by our stockholders. Should he
not be re-elected for another term, he will still
continue as an employee through December 31, 2007, serving
as a senior advisor with similar responsibilities.
For his services during his continued employment, we
will pay Mr. Schenkel an annual base salary of $500,000
for 2006 and $350,000 for 2007, provided he does not
resign earlier. His target bonus will be 50% of his base
annual salary for each year (prorated to reflect his
actual period of employment if he resigns prior to the
end of the year). Payment of his bonus will be subject to
the achievement of certain operating and other individual
targets to be established by our Board of Directors, all
as set forth in our Executive Incentive Compensation
Plan. Pursuant to the agreement, in January 2006 we
granted him 262,000 stock options with an exercise price
of $37.74. The options will vest in equal installments
over a 5-year period, beginning on the date of grant,
subject to any earlier vesting that may occur in the
event of a change in control of our company. Continued
vesting of the options granted in January 2006 is
expressly contingent on Mr. Schenkels continuing
compliance with the restrictive covenants contained in
the Consulting and Noncompetition Agreement. Any portion
of the options that vest prior to the termination of Mr.
Schenkels employment shall remain exercisable for a
period of no less than 12 months following termination of
his employment, unless he is terminated for cause (as
defined in the Employment Agreement), in which case they
will be exercisable only for as long as provided in the
award agreement. If his employment is terminated for
cause, any unvested options will be forfeited.
Through the Resignation Date, Mr. Schenkel will
continue to be eligible to participate in all employee
benefit plans that are available to our senior-level
executives and to receive all other benefits currently
provided to him. Stock options and other equity-based
awards granted to Mr. Schenkel prior to January 1, 2006
will fully vest on the Resignation Date, subject to any
earlier vesting provided for in such agreements or in
the change in control agreement between us and Mr.
Schenkel described elsewhere in this proxy statement,
and thereafter they will expire
according to the terms of our long-term incentive
plans and Mr. Schenkels award agreements.
We may terminate Mr. Schenkels employment at any
time with or without cause. If, prior to the
Resignation Date, we terminate his employment for any
reason other than for cause, or if Mr. Schenkel
terminates his employment for good reason (as defined in
the Employment Agreement): (1) he will receive a lump sum
payment equal to the base salary and target bonus to
which he would otherwise have been entitled through
December 31, 2007 and the payments that would have been
payable to him through December 31, 2012 under the
Consulting and Noncompetition Agreement, less lawful
deductions, (2) any unvested portion of his stock options
granted in 2006 will continue to vest in equal
installments after his termination, and shall remain
exercisable for a period of no less than twelve (12)
months from their vest date, and (3) he will be paid his
accrued and any unpaid base salary and target bonus
through the date of termination. In addition, he will
have no obligation following his termination to provide
us the advisory services contemplated in the Consulting
and Noncompetition Agreement and his obligations with
regard to the noncompetition and nonsolicitation
covenants in the Consulting and Noncompetition Agreement
will cease as of the date of such termination.
If
his employment is terminated for cause, (1) he
will be paid any accrued and any unpaid base salary
through the date of termination (but no other severance
or other payment will be made), and any unvested portion
of his stock options granted in 2006 will be
automatically forfeited; (2) any portion of his stock
options granted in 2006 which are vested prior to his
termination for cause shall remain exercisable for the
period specified above; and (3) he shall have no
obligation following his termination to provide us the
advisory services contemplated in the Consulting and
Noncompetition Agreement, and we shall have no
obligation to pay him the fees for his consulting
services under such Agreement, including any of the
benefits that would have otherwise been made available
to him following the Resignation Date pursuant to such
Agreement.
Consulting and Noncompetition Agreement
Pursuant to the Consulting and Noncompetition
Agreement, Mr. Schenkel has agreed to provide general
advice and consultation to our Chief Executive Officer
and to the Dairy Group President on matters of strategy
and execution, and to provide assistance with respect to
such specific operating initiatives as may be required
from time to time, from the Resignation Date until
December 31, 2009. For his services under the Consulting
and Noncompetition Agreement, we will pay Mr. Schenkel at
the rate of $200,000 per year. We also will provide him
with a continued car allowance, reimbursement of
expenses, club membership, office and secretarial
assistance, and other perquisites and benefits currently
provided to him. In the event that his employment under
the Employment Agreement is
26
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
terminated by us without cause or by Mr. Schenkel
for good reason or the advisory period contemplated by
the Consulting Agreement is ended by us prior to
December 31, 2009 and, in any such case, he has not
breached any of his obligations in the Consulting and
Noncompetition Agreement, we will pay him a single lump
sum payment, six months and one day after his
termination, equal to the aggregate amount of the fees
that would have been payable during the remainder of the
advisory period contemplated by the Consulting and
Noncompetition Agreement.
The Consulting and Noncompetition Agreement also
contains Mr. Schenkels agreement (1) to maintain the
confidentiality of our trade secrets and other
confidential information, (2) not to compete with our
dairy operations for a period of 2 years after the
termination of
his services (including his services under the
Consulting and Noncompetition Agreement), and (3) not to
solicit or interfere with our relationships with our
employees or our customers. In consideration for the
confidentiality, non-compete and non-solicit agreements,
we paid Mr. Schenkel $280,000 on January 2, 2006, and we
have agreed to pay him an additional $425,000 on each of
January 2, 2007, January 2, 2008, January 2, 2009, January
2, 2010, January 2, 2011 and January 2, 2012. As noted
above in the description of his Employment Agreement,
any unpaid installments will be paid in a lump sum in
the event of Mr. Schenkels termination of his
employment under the Employment Agreement by us without
cause or by him for good reason. Such unpaid amounts
also will be paid in a lump sum in the event of his
death.
Have our equity compensation plans been approved by our stockholders?
Our equity compensation plans have been approved by our stockholders. In addition, from time
to time we grant inducement grants outside our approved plans as permitted by New York Stock
Exchange rules. The following table contains certain information about our plans as of December
31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
Weighted Average |
|
|
|
|
|
|
to be Issued Upon |
|
|
Exercise Price of |
|
|
Number of Securities |
|
|
|
Exercise of |
|
|
Outstanding |
|
|
Remaining Available for |
|
|
|
Outstanding Options, |
|
|
Options, Warrants |
|
|
Future Issuance Under |
|
Plan Category |
|
Warrants and Rights |
|
|
and Rights |
|
|
Equity Compensation Plans |
|
|
Equity compensation plans approved by security holders |
|
|
18,507,305 |
|
|
|
18.87 |
|
|
|
5,942,758 |
|
Equity compensation plans not approved by security holders |
|
|
245,000 |
(1) |
|
|
37.98 |
(1) |
|
|
N/A |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These options were issued on October 11, 2005 to Joseph Scalzo, President of our WhiteWave
Foods subsidiary since October 2005, as an inducement grant, as such term is defined by the New
York Stock Exchange. These options will vest over three years and will expire on the tenth
anniversary of the date of grant. |
27
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
How much stock do our executive officers and directors own?
On this page is information as of March 24, 2006 concerning:
Each stockholder known by us to beneficially own more than 5% of our outstanding common stock,
Each director and each named executive officer, and
All directors and executive officers as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
# Shares |
|
Exercisable |
|
|
|
|
|
|
Beneficial Owner |
|
Common Stock |
|
Options(1) |
|
Total |
|
Percent(2) |
|
Notes |
|
Bernon, Alan J. |
|
|
594,878 |
|
|
|
321,798 |
|
|
|
916,676 |
|
|
|
0.6 |
% |
|
|
|
|
Collens, Lewis M. |
|
|
18,292 |
|
|
|
51,910 |
|
|
|
70,202 |
|
|
|
0.0 |
% |
|
|
|
|
Davis, Tom C. |
|
|
11,165 |
|
|
|
78,556 |
|
|
|
89,721 |
|
|
|
0.1 |
% |
|
|
|
|
Engles, Gregg L. |
|
|
2,537,371 |
|
|
|
2,057,094 |
|
|
|
4,594,465 |
|
|
|
3.1 |
% |
|
|
|
|
Fromberg, Barry A. |
|
|
19,312 |
|
|
|
|
|
|
|
19,312 |
|
|
|
0.0 |
% |
|
|
|
|
Goolsby, Michelle P. |
|
|
12,590 |
|
|
|
585,924 |
|
|
|
598,514 |
|
|
|
0.4 |
% |
|
|
|
|
Green, Stephen L. |
|
|
42,201 |
|
|
|
185,140 |
|
|
|
227,341 |
|
|
|
0.2 |
% |
|
|
|
|
Hardin, Jr., Joseph S. |
|
|
49,498 |
|
|
|
143,099 |
|
|
|
192,597 |
|
|
|
0.1 |
% |
|
|
(3 |
) |
Hill, Janet |
|
|
10,277 |
|
|
|
61,172 |
|
|
|
71,449 |
|
|
|
0.0 |
% |
|
|
|
|
Kirk, Ron |
|
|
6,456 |
|
|
|
25,264 |
|
|
|
31,720 |
|
|
|
0.0 |
% |
|
|
|
|
Klein, Ronald H. |
|
|
11,416 |
|
|
|
163,810 |
|
|
|
175,226 |
|
|
|
0.1 |
% |
|
|
|
|
Llewellyn Jr., John S. |
|
|
22,163 |
|
|
|
83,970 |
|
|
|
106,133 |
|
|
|
0.1 |
% |
|
|
|
|
McCrummen, Ronald L. |
|
|
2,527 |
|
|
|
17,766 |
|
|
|
20,293 |
|
|
|
0.0 |
% |
|
|
|
|
Muse, John R. |
|
|
246,222 |
|
|
|
158,494 |
|
|
|
404,716 |
|
|
|
0.3 |
% |
|
|
(4 |
) |
Nevares, Hector M. |
|
|
613,884 |
|
|
|
334,980 |
|
|
|
948,864 |
|
|
|
0.6 |
% |
|
|
|
|
Scalzo, Joseph E. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.0 |
% |
|
|
|
|
Schenkel, Pete |
|
|
90,776 |
|
|
|
1,356,630 |
|
|
|
1,447,406 |
|
|
|
1.0 |
% |
|
|
|
|
Turner, Jim L. |
|
|
171,182 |
|
|
|
233,990 |
|
|
|
405,172 |
|
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Total |
|
|
4,460,210 |
|
|
|
5,859,597 |
|
|
|
10,319,807 |
|
|
|
7.0 |
% |
|
|
(5 |
) |
Iridian |
|
|
7,668,947 |
|
|
|
|
|
|
|
7,668,947 |
|
|
|
5.6 |
% |
|
|
(6 |
) |
|
|
|
(1) |
|
As of March 24, 2006, including options exercisable within the next 60 days.
|
|
(2) |
|
Percentages based on 135,903,834 shares of common stock
outstanding as of March 24, 2006, plus
12,190,230, the total number of outstanding options exercisable
within 60 days, for a denominator
of 148,094,064. |
|
(3) |
|
Includes 3,350 shares held by trust. |
|
(4) |
|
Includes 3,450 shares owned by family members. |
|
(5) |
|
All executive officers and directors as a group. |
|
(6) |
|
As reported on Schedule 13G, Amendment No.3, filed on
February 3, 2006 (the Filing), by
Iridian Asset Management, LLC as investment adviser, and others as listed on the Filing. Denominator
does not include total number of outstanding options exercisable within 60 days. |
What other relationships do we have with our executive officers and directors?
Real Property Lease
We lease
the land for our Franklin, Massachusetts plant from a
partnership owned by Alan Bernon and his family. Our lease
payments during 2005 totaled $700,000.
Minority Interest in Consolidated
Container Holding Company
We hold our minority interest in Consolidated Container Company
through our subsidiary Franklin Plastics, Inc., in which we own an
approximately 99% interest. Alan Bernon and his brother, Peter
Bernon, collectively own the remaining less than 1% of Franklin
Plastics, Inc.
28
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Other Information
Professional Fees
During
2005, we paid legal fees and expenses of approximately
$170,000 to Locke Liddell & Sapp LLP, where Michelle Goolsbys
husband is a partner, for legal services rendered on various matters.
We also paid approximately $73,502 during 2005 to Heidrick &
Struggles, an executive search firm where Ron Kirks wife is a partner.
Ordinary Course Purchases and Sales
During
2005, we sold approximately $9.8 million of product (net of
rebates) to Brinker International and its subsidiaries (all of which were
through distributors). Ron Kirk sits on the Board of Directors of Brinker
International. During 2005, we sold approximately $39.0 million of
product to Wendys International and its subsidiaries (some of which
were through distributors). Janet Hill sits on the Board of Wendys
International. Also, we purchased $2.2 million of goods and services
from Sprint Nextel. Janet Hill serves on the Board of Sprint Nextel.
Charitable Contribution
In 2005, we made a charitable contribution of $41,360 to Students in
Free Enterprise, a charitable organization with which Joseph Hardin
and Gregg Engles are affiliated.
Employment of Family Members
Pete Schenkels son and son-in-law are both employed by our Dairy
Group. Stephen Schenkel, Pete Schenkels son, is the Sales Manager for
Schepps Dairy, and received total cash compensation of $129,606 in
2005 (including salary and bonus earned for 2005), in addition to
benefits available to all similarly situated employees. In
January 2005, he
was granted options to purchase 1,500 shares of Dean Foods Company
common stock. Craig Roberts, Pete Schenkels son-in-law, is General
Manager of Oak Farms Dairy,and received total cash compensation of
$169,533 in 2005 (including salary and bonus earned for 2005), in
addition to benefits available to all similarly situated employees. In
January 2005, he was granted options to purchase 1,776 shares (as
adjusted for the TreeHouse Foods spin-off) of Dean Foods Company
common stock. Options granted to Stephen Schenkel and Craig Roberts
have an exercise price of $26.89 and will expire January 2015.
How has our stock performed?
The following graph compares the cumulative total return of
our common stock since December 29, 2000, with the Standard &
Poors 500 Stock Index, and a peer group index of United States
consumer products companies, assuming a $100 investment on
December 29, 2000. Points plotted are as of December 31 of each
year. We have never paid dividends.
The peer group that we have selected includes 24 manufacturers
of food, beverages and other consumer packaged goods. This group
includes Archer-Daniels-Midland Company, Campbell Soup Company,
The Clorox Company, Coca-Cola Enterprises Inc., Colgate-Palmolive
Company, ConAgra Foods, Inc., Cott Corporation, Del Monte Foods
Company, General Mills, Inc., H.J.Heinz Company, Hershey Foods
Corporation, Hormel Foods Corporation, The J.M. Smucker Company,
Kellogg Company, Kimberly-Clark Corporation, McCormick &
Co., Inc., The Pepsi Bottling Group, Inc., The Procter & Gamble
Company, Sara Lee Company, Smithfield Foods, Inc., Tyson Foods, Inc. and
The Wrigley Company. This is the same peer group that the
Compensation Committee of our Board of Directors has selected to
compare us to for purposes of determining our executive compensation.
Notes
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The lines represent monthly index levels derived from compounded daily returns that
include all dividends. |
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The indexes are reweighted daily, using the market capitalization on the previous trading
day. |
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If the monthly interval, based on the fiscal year-end is not
a trading day, the preceding
trading day is used. |
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The index level for all series was set to $100 on
December 29, 2000. |
29
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Do we have a Code of Ethics?
We have adopted a Code of Ethics that applies to all of our directors
and employees, a copy of which is posted on our corporate website
at www.deanfoods.com and filed as Exhibit 14 to our Form 10-K. Any
amendments to or waivers of our Code of Ethics also will be posted
on our website. If you would like a hard copy of our Code of Ethics, please request one by writing or calling our Investor Relations
department at:
Dean Foods Company
Attention: Investor Relations
2515 McKinney Avenue, Suite 1200
Dallas, TX 75201
214.303.3400
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers, directors and persons who own more than 10% of
our common stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Based
solely on our review of these forms or written representations from
the executive officers and directors, we believe that all Section 16(a)
filing requirements were met during fiscal year 2005, except that
Joseph A. Hardin, Jr., outside director of the Company, was late in
filing a Form 4 relating to a purchase of 1,000 shares of our common
stock on December 6, 2005, which he did not report until
December 15, 2005. The purchase was made in his capacity as the trustee of a
trust established for his sister and her children, the beneficiaries of
the trust. Mr. Hardin disclaims all beneficial interest in the trust
except to the extent of his pecuniary interest in the trust, if any.
Annex I
Dean Foods Company Audit Committee Charter
Status
The Audit Committee is a committee of the Board of Directors of
Dean Foods Company (the Company).
Membership
The Audit Committee shall consist of no fewer than three members.
The members of the Audit Committee shall meet the independence
and experience requirements of the New York Stock Exchange,
Section 10A(m)(3) of the Securities Exchange Act of 1934 (the
Exchange Act) and the rules and regulations of the Securities and
Exchange Commission (the Commission). At least one member of
the Audit Committee shall be an audit committee financial expert
as defined by the Commission. Audit Committee members shall not
simultaneously serve on the audit committees of more than two
other public companies. Audit Committee members will be
appointed, and may be replaced, by the Board of Directors of the
Company (the Board).
Purpose
The Audit Committee will assist the Board in monitoring (1) the
integrity of the financial statements of the Company, (2) the
independent auditors qualifications and independence, (3) the
performance of the Companys internal audit function and
independent auditors, and (4) the compliance by the Company with
legal and regulatory requirements.
The Audit Committee shall prepare the report required by the
rules of the Commission to be included in the Companys annual proxy statement.
Committee Authority and Responsibilities
The Audit Committee shall have the sole authority to appoint or
replace the independent auditor (subject, if applicable, to
shareholder ratification). The Audit Committee shall be directly
responsible for the compensation and oversight of the work of the
independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or
related work.
30
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Annex I
The Audit Committee shall preapprove all permitted non-audit
services to be performed for the Company by its independent
auditor. The Audit Committee may form and delegate authority to
subcommittees consisting of one or more members when
appropriate, including the authority to grant preapprovals of non-
audit services, provided that decisions of such subcommittee to grant
preapprovals shall be presented to the full Audit Committee at its
next scheduled meeting.
The
Audit Committee shall have the authority, to the extent it
deems necessary or appropriate, to retain independent legal,
accounting or other advisors, at the expense of the Company.
The Audit Committee shall make regular reports to the Board. The
Audit Committee shall review and reassess the adequacy of this
Charter annually and recommend any proposed changes to the
Board for approval. The Audit Committee shall annually review the
Audit Committees own performance.
The
Audit Committee, to the extent it deems necessary or
appropriate, shall:
Financial Statement and Disclosure Matters
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Review and discuss with management and the independent
auditor the annual audited financial statements, including
disclosures made in the Managements Discussion and Analysis
portion of any documents filed with the Commission, and
recommend to the Board whether the audited financial statements
should be included in the Companys Form 10-K. |
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Review and discuss with management and the independent
auditor the Companys quarterly financial statements prior to the
filing of each Form 10-Q, including the results of the independent
auditors review of the quarterly financial statements. |
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Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with
the preparation of the Companys financial statements, including
any significant changes in the Companys selection or application
of accounting principles, any major issues as to the adequacy of
the Companys internal controls and any special steps adopted in
light of material control deficiencies. |
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Review and discuss quarterly reports from the independent
auditors on: |
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All critical accounting policies and practices to be used. |
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All alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditor. |
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Other material written communications between the
independent auditor and management, such as any
management letter or schedule of unadjusted differences. |
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All discussions between the independent audit team and the
firms national office regarding the audit. |
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Discuss with management the Companys earnings press releases,
including the use of pro forma or adjusted non-GAAP financial
measures, as well as financial information and earnings guidance
provided to analysts and rating agencies. Such discussion may be
done generally (consisting of discussing the types of information
to be disclosed and the types of presentations to be made). |
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Discuss with management and the independent auditor the effect
of regulatory and accounting initiatives as well as off-balance
sheet structures on the Companys financial statements. |
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Discuss with management the Companys major financial risk
exposures and the steps management has taken to monitor and
control such exposures, including the Companys risk assessment
and risk management policies. |
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Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the audit, including any difficulties encountered in
the course of the audit work,any restrictions on the scope of
activities or access to requested information, and any significant
disagreements with management. |
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Review disclosures made to the Audit Committee, if any, by the
Companys CEO and CFO during their certification process for each
Form 10-K and Form 10-Q about any significant deficiencies in the
design or operation of internal controls or material weaknesses
therein and any fraud involving management or other employees
who have a significant role in the Companys internal controls. |
Oversight of the Companys Relationship
with the Independent Auditor
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Obtain and review a report from the independent auditor at least
annually regarding (a) the independent auditors internal quality-
control procedures, (b) any material issues raised by the most
recent internal quality-control review, or peer review, of the firm, or
by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more
independent audits carried out by the firm, (c) any steps taken to
deal with any such issues, and (d) all relationships between the
independent auditor and the Company. Evaluate the qualifications,
performance and independence of the independent auditor
(including the lead partner), including considering whether the |
31
Dean Foods 2006 Proxy Statement and Notice of Annual Meeting
Annex I
auditors quality controls are adequate and the provision of permitted
non-audit services is compatible with maintaining the auditors
independence, taking into account the opinions of management and
internal auditors. The Audit Committee shall present its conclusions
with respect to the independent auditor to the Board.
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Ensure the rotation of the audit partners as required by law.
Consider whether, in order to assure continuing auditor
independence, it is appropriate to adopt a policy of rotating the
independent auditing firm on a regular basis. |
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12. |
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Recommend to the Board policies for the Companys hiring of
employees or former employees of the independent auditor who
participated in any capacity in the audit of the Company. |
Oversight of the Companys Internal Audit Function
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Review the appointment and replacement of the senior internal
auditing executive. |
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14. |
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Review the significant reports to management prepared by the
internal auditing department and managements responses. |
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Discuss with the independent auditor and management the
internal audit department responsibilities, budget and staffing
and any recommended changes in the planned scope of the
internal audit. |
Compliance Oversight Responsibilities
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Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters. |
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17. |
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Discuss with management and the independent auditor any
correspondence with regulators or governmental agencies and
any published reports which raise material issues regarding the
Companys financial statements or accounting policies. |
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18. |
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Discuss with the Companys General Counsel legal matters that
may have a material impact on the financial statements or the
Companys compliance policies. |
Meetings
The Audit Committee shall meet as often as it determines,but not
less frequently than quarterly. The Audit Committee shall meet
periodically with management, the internal auditors and the
independent auditor in separate executive sessions. The Audit
Committee may request any officer or employee of the Company or
the Companys outside counsel or independent auditor to attend a
meeting of the Committee or to meet with any members of,or
consultants to, the Committee.
Limitation of Audit Committees Role
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan
or conduct audits or to determine that the Companys financial
statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and
applicable rules and regulations. These are the responsibilities of
management and the independent auditor.
32
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DEAN FOODS
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YOUR VOTE IS IMPORTANT |
COMPANY
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VOTE BY INTERNET / TELEPHONE |
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24 HOURS A DAY, 7 DAYS A WEEK |
INTERNET
https://www.proxyvotenow.com/dfc
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Go to the website address listed above. |
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Have your proxy card ready. |
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Follow the simple instructions that appear on your computer screen. |
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TELEPHONE
1-866-564-2333
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Use any touch-tone telephone. |
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Have your proxy card ready. |
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Follow the simple recorded instructions. |
MAIL
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Mark, sign and date your proxy card. |
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Detach your proxy card. |
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Return your proxy card in the postage-paid envelope provided.
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Your telephone or internet vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned the proxy card. If you have submitted your proxy by telephone
or the internet there is no need for you to mail back your proxy.
1-866-564-2333
CALL TOLL-FREE TO VOTE
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6 DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET 6 |
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Mark, sign, date and return
this proxy card promptly using
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the enclosed envelope.
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Votes must be indicated |
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(x) in Black or Blue ink. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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Re-Election of Directors for a 3-Year Term |
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FOR all nominees
listed below
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WITHHOLD AUTHORITY to vote
for all nominees listed below
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*EXCEPTIONS
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Nominees:
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01 Lewis M. Collens, 02 Janet Hill, 03 Hector M. Nevares, 04- Pete Schenkel,
05- Jim L. Turner. |
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the Exceptions
box and write that nominees name in the space provided below).
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FOR
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AGAINST
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ABSTAIN |
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2.
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Proposal to ratify Deloitte & Touche LLP as
independent auditor.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
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FOR
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3.
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Stockholder proposal regarding
sustainability report.
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In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
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Plan to attend the Annual Meeting.
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Have written comments on the reverse
side of card.
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To change your address, please mark this box.
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Please sign exactly as your name or names appear above. For joint holders, both should sign. When
signing as executor, administrator, attorney, trustee or guardian, etc., please give your title.
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Date
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Stockholder sign here
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Co-Owner sign here |
Dear Stockholder:
On the reverse side of this card are instructions on how to vote your shares for the election of
directors and all other proposals by telephone or over the internet. We encourage you to vote now,
by telephone or over the internet. Your vote will be recorded the same as if you mailed in your
proxy card. See the enclosed proxy statement and the enclosed proxy card for further information
about voting procedures.
If you have elected to view the Dean Foods proxy statement and annual report over the internet
instead of receiving copies in the mail, you can now access the proxy statement for the 2006 annual
stockholders meeting and the 2005 annual report on the internet through the following address:
http://www.deanfoods.com, click on Investors and click on Annual Report.
If you notified us previously that you prefer to receive the annual report and proxy
electronically, then you may not have received paper copies. If you would like paper copies of the
proxy statement and annual report, Dean Foods will provide a copy to you upon request. To obtain a
copy of these documents, please call 214-303-3438.
Thank you for your attention to these matters.
Dean Foods Company
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PROXY
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DEAN FOODS COMPANY
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PROXY |
ANNUAL
MEETING OF STOCKHOLDERS MAY 19, 2006
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gregg L. Engles and Michelle P. Goolsby and each of them as
proxies for the undersigned, with full power of substitution, to act and to vote all the shares of
common stock of Dean Foods Company held of record by the undersigned on March 24, 2006, at the
annual meeting of stockholders to be held on Friday, May 19, 2006, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST THE STOCKHOLDER
PROPOSAL.
IMPORTANT IF YOU INTEND TO VOTE BY MAILING IN THIS PROXY CARD, RATHER THAN
BY PHONE OR INTERNET, YOU MUST SIGN AND DATE THE REVERSE SIDE.
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Comments: |
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DEAN FOODS COMPANY |
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P.O. BOX 11333 |
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NEW YORK, N.Y. 10203-0333 |
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