SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COCA-COLA BOTTLING CO. CONSOLIDATED
(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):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
COCA-COLA BOTTLING CO. CONSOLIDATED
4100 COCA-COLA PLAZA
CHARLOTTE, NORTH CAROLINA 28211
(704) 551-4400
------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on
May 10, 2000
------------------------------------------------------
TO THE STOCKHOLDERS OF
COCA-COLA BOTTLING CO. CONSOLIDATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Coca-Cola
Bottling Co. Consolidated (the "Company") will be held at the Company's Snyder
Production Center, 4901 Chesapeake Drive, Charlotte, North Carolina on
Wednesday, May 10, 2000, at 10:00 a.m., local time, for the purpose of
considering and acting upon the following:
1.Election of three members to the Board of Directors for a term of three
years and until their successors are elected and qualified.
2.Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on March 24, 2000 as
the record date for determining the stockholders entitled to notice of and to
vote at the meeting or any adjournment thereof, and only holders of Common Stock
and Class B Common Stock of the Company of record on such date will be entitled
to notice of or to vote at the meeting. A list of stockholders will be available
for inspection at least ten days prior to the meeting at the principal executive
offices of the Company at 4100 Coca-Cola Plaza, Charlotte, North Carolina.
The Board of Directors will appreciate the prompt return of the enclosed
proxy, dated and signed. The proxy may be revoked at any time before it is
exercised and will not be exercised if you attend the meeting and vote in
person.
By order of the Board of Directors.
Henry W. Flint
SECRETARY
April 6, 2000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF
COCA-COLA BOTTLING CO. CONSOLIDATED
TO BE HELD ON MAY 10, 2000
INTRODUCTION
This Proxy Statement is being furnished by the Board of Directors of
Coca-Cola Bottling Co. Consolidated (the "Company") in connection with the
solicitation of proxies by the Company for use at the Annual Meeting of
Stockholders to be held at the Company's Snyder Production Center, 4901
Chesapeake Drive, Charlotte, North Carolina on Wednesday, May 10, 2000, at 10:00
a.m., local time, and at any adjournment thereof. This Proxy Statement and
accompanying form of proxy are first being mailed to stockholders of the Company
on or about April 6, 2000. The principal executive offices of the Company are
located at 4100 Coca-Cola Plaza, Charlotte, North Carolina 28211.
RECORD DATE, VOTE REQUIRED AND RELATED MATTERS
The Board of Directors has fixed the close of business on March 24, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the annual meeting. As of the close of business on March 24, 2000,
the Company had issued and outstanding 6,392,252 shares of Common Stock and
2,341,077 shares of Class B Common Stock. Each share of Common Stock is entitled
to one vote per share and each share of Class B Common Stock is entitled to 20
votes per share (or an aggregate of 53,213,792 votes with respect to the Common
Stock and the Class B Common Stock voting together as a single class). Each
stockholder may exercise his right to vote either in person or by properly
executed proxy. The Common Stock and Class B Common Stock will vote as a single
class on the election of directors at the annual meeting.
Any proxy delivered in the accompanying form may be revoked by the person
executing the proxy at any time before the authority thereby granted is
exercised by filing an instrument revoking it or a duly executed proxy bearing a
later date with the Secretary of the Company or if the person executing the
proxy attends the meeting and elects to vote in person. If a choice is specified
in the proxy, shares represented thereby will be voted in accordance with such
choice. If no choice is specified, the proxy will be voted FOR the action
proposed.
The presence, in person or by proxy, of the holders of a majority of the
votes eligible to be cast by the holders of Common Stock and Class B Common
Stock is necessary to constitute a quorum at the annual meeting. Directors are
elected by a plurality of the votes cast at a meeting at which a quorum is
present. Provided a quorum is present, abstentions and shares not voted are not
taken into account in determining a plurality.
The Board of Directors has been informed that J. Frank Harrison, Jr., J.
Frank Harrison, III and Reid M. Henson intend to vote an aggregate of 1,987,252
shares of the Company's Common Stock and 2,339,250 shares of the Company's Class
B Common Stock (representing an aggregate of 91.7% of the total voting power)
FOR electing the Board of Directors' nominees as directors.
1
The Board of Directors of the Company is not aware of any matters to be
brought before the annual meeting or any adjournment thereof other than the
election of three directors and routine matters incidental to the conduct of the
meeting. If, however, other matters are properly presented, it is the intention
of the persons named in the accompanying proxy or their substitutes to vote the
proxy in accordance with their best judgment on such matters.
PRINCIPAL STOCKHOLDERS
At March 1, 2000, the only persons known to the Company to be beneficial
owners of more than 5% of the Common Stock or Class B Common Stock of the
Company were as follows:
AMOUNT AND
NATURE OF PERCENTAGE PERCENTAGE
BENEFICIAL OF TOTAL OF TOTAL
NAME AND ADDRESS CLASS OWNERSHIP CLASS VOTES(1) VOTES(1)
- ------------------------------- ---------------- ------------------------ ------------ ---------- -----------
J. Frank Harrison, Jr., Common Stock 4,812,288(2)(4) 53.6%
J. Frank Harrison, III, Class B Common 2,339,250(3)(4) 99.9% 49,258,038 92.6%
Reid M. Henson, J. Frank
Harrison Family, LLC and
three Harrison family
limited partnerships, as a
group
2 Union Square
Chattanooga, TN 37402
The Coca-Cola Company Common Stock 1,984,495(5) 31.0%
One Coca-Cola Plaza Class B Common 497,670(5) 21.3% 11,937,895 22.4%
Atlanta, GA 30313
Coca-Cola Enterprises Inc. Common Stock 550,000(6) 8.6% 550,000 1.0%
2500 Windy Ridge Parkway
Atlanta, GA 30339
Tweedy, Browne Company, Common Stock 453,530(7) 7.1% 453,530 0.9%
LLC
52 Vanderbilt Avenue
New York, NY 10017
- ------
(1) In calculating the total votes and percentage of total votes, no effect is
given to conversion of Class B Common Stock into Common Stock or the
exercise of options to purchase Common Stock.
(2) Consists of (a) 235,786 shares held by a trust for the benefit of certain
relatives of Mr. Harrison, Jr. as to which he has sole voting power and no
investment power; (b) 1,984,495 shares held by The Coca-Cola Company subject
to the terms of the Voting Agreement and Irrevocable Proxy (described in
note (4) below) as to which Mr. Harrison, III has shared voting and no
investment power; (c) 757 shares held by Mr. Harrison, III as custodian for
certain of his children as to which Mr. Harrison, III has sole voting and
investment power; (d) 2,000 shares owned by Mr. Henson; (e) 2,339,250 shares
of Class B Common Stock beneficially owned by such persons as described in
note (3) that are convertible into shares of Common Stock;
2
(f) 100,000 shares of Common Stock that Mr. Harrison, Jr. presently has the
right to acquire upon the exercise of options; and (g) 150,000 shares of
Common Stock that Mr. Harrison, III presently has the right to acquire upon
the exercise of options.
(3) Consists of (a) a total of 1,605,534 shares held by the JFH Family Limited
Partnership -- FH1, JFH Family Limited Partnership -- SW1 and JFH Family
Limited Partnership -- DH1 (collectively, the "Harrison Family Limited
Partnerships"), as to which Mr. Harrison, Jr., in his capacity as the
manager of J. Frank Harrison Family, LLC (the general partner of each of the
Harrison Family Limited Partnerships), exercises sole voting and investment
power; (b) 235,786 shares held by a trust for the benefit of Mr. Harrison,
Jr. and certain of his relatives as to which Mr. Harrison, III and Mr.
Henson share investment power as co-trustees and as to which Mr. Harrison,
Jr. possesses sole voting power; (c) 260 shares held by Mr. Harrison, III as
custodian for certain of his children as to which Mr. Harrison, III
possesses sole voting and investment power; and (d) 497,670 shares held by
The Coca-Cola Company subject to the terms of the Voting Agreement, Stock
Rights and Restrictions Agreement and Irrevocable Proxy (see note (4) below
and "Certain Transactions"), as to which Mr. Harrison, III has shared voting
and no investment power.
(4) Messrs. Harrison, Jr., Harrison, III and Henson (as trustee of certain
trusts), J. Frank Harrison Family LLC and the Harrison Family Limited
Partnerships are parties to a Voting Agreement and Irrevocable Proxy with
The Coca-Cola Company pursuant to which, among other things, Mr. Harrison,
III has been granted an Irrevocable Proxy for life concerning the shares of
Common Stock and Class B Common Stock owned by The Coca-Cola Company.
See "Certain Transactions."
(5) Such information is derived from Amendment No. 21 to Schedule 13D filed by
The Coca-Cola Company on December 7, 1999. With respect to the Common Stock,
the amount shown excludes 497,670 shares issuable upon conversion of shares
of Class B Common Stock.
(6) Such information is derived from Amendment No. 1 to Schedule 13G filed by
Coca-Cola Enterprises Inc. on February 14, 2000.
(7) Such information is derived from Amendment No. 6 to Schedule 13D filed by
Tweedy, Browne Company, LLC ("TBC") and TBK Partners, L.P. ("TBK") on May
27, 1998. TBC is a registered broker-dealer and investment adviser and TBK
is a private investment partnership. Certain of the general partners of TBK
are also members of TBC. TBC has investment discretion with respect to
453,350 shares held in discretionary accounts of various TBC customers and
has sole voting power with respect to 404,614 of such shares. TBK reported
in Amendment No. 6 that it no longer beneficially owns any shares.
3
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors consists of between nine and twelve
members as fixed from time to time by the stockholders of the Company or the
Board of Directors. The Board of Directors is divided into three classes, as
nearly equal in number as possible, with staggered three-year terms. The Board
of Directors is permitted to appoint individuals as directors to fill the
unexpired terms of directors who resign. The Board of Directors has recommended
to the stockholders electing the three nominees listed below to serve for a
three-year term. Directors elected at this year's annual meeting will hold
office until the 2003 Annual Meeting of Stockholders, or until their successors
are elected and qualified.
It is the intention of the persons named as proxies in the accompanying
form of proxy to vote all proxies solicited for the three nominees listed below,
unless the authority to vote is withheld. Each nominee is currently a member of
the Board of Directors. If for any reason any nominee shall not become a
candidate for election as a director at the meeting, an event not now
anticipated, the proxies will be voted for the three nominees including such
substitutes as shall be designated by the Board of Directors.
Certain information with respect to the nominees and directors is set
forth below.
NOMINEES FOR ELECTION OF DIRECTORS IN 2000
(Terms Expiring in 2003)
H. W. MCKAY BELK, age 43, is President, Merchandising and Marketing of
Belk, Inc., an operator of retail department stores, a position that he has
held since May 1998. Mr. Belk served as President and Chief Merchandise Officer
of Belk Store Services, Inc., a provider of services to retail department
stores, from March 1997 to April 1998. Mr. Belk served as President,
Merchandise and Sales Promotion of Belk Stores Services, Inc. from April 1995
through March 1997. He has been a director of the Company since May 1994 and is
Chairman of the Compensation Committee and a member of the Finance Committee.
H. REID JONES, age 65, is retired. Prior to his retirement in 1982, he was
a Commercial Account Representative of Bagwell & Bagwell, Inc., an independent
insurance agency in Raleigh, North Carolina. He has been a director of the
Company since 1970 and is a member of the Audit Committee.
JOHN W. MURREY, III, age 57, is a member of the law firm of Witt, Gaither
& Whitaker, P.C., in Chattanooga, Tennessee with which he has been associated
since 1970. He has been a director of the Company since March 1993 and is a
member of the Audit Committee and the Retirement Benefits Committee. Mr. Murrey
is a director of The Dixie Group, Inc.
CONTINUING DIRECTORS
(Terms Expiring in 2001)
J. FRANK HARRISON, JR., age 69, is Chairman Emeritus of the Board of
Directors of the Company. Mr. Harrison, Jr. served the Company as Chairman of
the Board of Directors from 1977
4
through December 1996, and served as Chief Executive Officer of the Company
from August 1980 until April 1983. He had previously served the Company as Vice
Chairman of the Board of Directors. He has been a director of the Company since
1973. Mr. Harrison, Jr. is Chairman of the Executive Committee and the Finance
Committee.
J. FRANK HARRISON, III, age 45, is Chairman of the Board of Directors and
Chief Executive Officer of the Company. Mr. Harrison, III served in the
capacity of Vice Chairman of the Board of Directors from his election in
November 1987 through his election as Chairman in December 1996 and was
appointed as the Company's Chief Executive Officer in May 1994. He was first
employed by the Company in 1977, and has served as a Division Sales Manager and
as a Vice President. Mr. Harrison, III is a director of Wachovia Bank & Trust
Co., N.A., Southern Region Board. He is a member of the Executive Committee,
the Audit Committee and the Finance Committee.
JAMES L. MOORE, JR., age 57, is President and Chief Operating Officer of
the Company. He has been President of the Company since March 1987. Mr. Moore
is a director of Park Meridian Bank. He is a member of the Executive Committee
and is Chairman of the Retirement Benefits Committee.
NED R. MCWHERTER, age 69, is Chairman of the Board of Directors of
Volunteer Distributing Company, Inc., a beverage distributor, and Eagle
Distributors, Inc., a snack food distributor. He is also a director of Piedmont
Natural Gas Company, Inc. Mr. McWherter served as Governor of the State of
Tennessee from January 1987 to January 1995. He has been a director of the
Company since 1995 and is a member of the Compensation Committee and the
Finance Committee.
(Terms Expiring in 2002)
JOHN M. BELK, age 80, is Chairman and Chief Executive Officer of Belk,
Inc., an operator of retail department stores, and of Belk Stores Services,
Inc., a provider of services to retail department stores, both in Charlotte,
North Carolina, positions he has held since May 1998 and 1956, respectively.
Mr. Belk presently is a director of Texas Industries, Inc. Mr. Belk has been a
director of the Company since 1972 and is a member of the Audit Committee.
CARL WARE, age 56, is Executive Vice President, Global Public Affairs and
Administration for The Coca-Cola Company, a position he has held since January
2000. Before that time, he served as Senior Vice President and President, Africa
Group of The Coca-Cola Company from January 1993 to January 2000. Mr. Ware has
been a director of the Company since February 24, 2000, when he was appointed by
the Board to fill the position vacated upon the resignation of Charles L.
Wallace. Mr. Ware is a member of the Finance Committee and the Compensation
Committee.
REID M. HENSON, age 60, has served as a Vice Chairman of the Board of
Directors of the Company since 1983. Prior to that time, Mr. Henson served as a
consultant to JTL Corporation, a management company, and later as President of
JTL Corporation. He has been a director of the Company since 1979 and is
Chairman of the Audit Committee and a member of the Executive Committee, the
Retirement Benefits Committee and the Finance Committee.
J. Frank Harrison, III is J. Frank Harrison, Jr.'s son and H. W. McKay
Belk is John M. Belk's nephew.
5
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table presents certain information as of March 1, 2000
regarding the beneficial ownership of the Common Stock and Class B Common Stock
of the Company by its directors and nominees, by the Named Executive Officers in
the Summary Compensation Table and by all directors and executive officers as a
group. Information concerning beneficial ownership of the Common Stock and Class
B Common Stock by Messrs. Harrison, Jr., Harrison, III and Henson is presented
above under the caption "Principal Stockholders" and is not included in the
following table.
AMOUNT AND
NATURE OF PERCENTAGE
BENEFICIAL OF
NAME CLASS(1) OWNERSHIP CLASS
- -------------------------------------------------- ------------- ------------ --------------
H.W. McKay Belk Common Stock 520(2) *
John M. Belk Common Stock 10,475(3) *
H. Reid Jones Common Stock 80,091(4) 1.3%
Ned R. McWherter Common Stock 1,000 *
James L. Moore, Jr. Common Stock 0 *
John W. Murrey, III Common Stock 1,000 *
David V. Singer Common Stock 2,000 *
James B. Stuart(5) Common Stock 1,000 *
Carl Ware Common Stock 0 *
Directors and executive officers as a group
(excluding Messrs. Harrison, Jr., Harrison, III
and Henson) (19 persons) Common Stock 95,093 1.5%
- ------
* Less than 1% of the outstanding shares of such class.
(1) None of such persons beneficially owns any shares of Class B Common Stock.
(2) Includes 300 shares held by Mr. Belk as custodian for certain of his
children.
(3) Consists of (a) 8,975 shares held by a trust of which Mr. Belk serves as
trustee and with respect to which he has sole voting and investment power
and (b) 1,500 shares held by a trust for the benefit of Mr. Belk's daughter
as to which his wife serves as trustee with sole voting and investment
power.
(4) Includes 376 shares held by his wife.
(5) Mr. Stuart left the Company at the end of fiscal 1999. Information on Mr.
Stuart presented in this table is based on facts known to the Company at
such time.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and certain persons who beneficially own more
than 10% of the Company's Common Stock to file with the Commission initial
reports of ownership and reports of changes in ownership of the Common Stock and
other equity securities of the Company. Executive officers, directors and such
greater than 10% stockholders are required to furnish the Company with copies of
all such reports they file. Based solely on its review of the copies of such
reports received by it and written representations that no other reports were
required for such persons, the Company believes that, during fiscal 1999,
6
all filing requirements applicable to its executive officers, directors and such
greater than 10% stockholders were complied with on a timely basis.
DIRECTORS' FEES AND ATTENDANCE
Directors who are not employees of the Company are paid an annual retainer
of $20,000, $1,100 for each Board meeting attended and $880 for each committee
meeting attended. The Board of Directors held four meetings during 1999. No
director attended fewer than 75% of the total number of meetings of the Board of
Directors and any committees of the Board of Directors on which he served during
1999.
The Board of Directors has an Audit Committee whose current members are
Messrs. John M. Belk, Harrison, III, Henson, Jones and Murrey. The Audit
Committee evaluates audit performance, handles relations with the Company's
independent accountants and evaluates policies and procedures relating to
internal accounting functions and controls. The Audit Committee recommends to
the Board of Directors the appointment of the independent accountants for the
Company. The Audit Committee met four times in 1999.
The Board of Directors has a Compensation Committee whose current members
are Messrs. H. W. McKay Belk, McWherter and Ware. The Compensation Committee
administers the Company's compensation plans, reviews and establishes the
compensation of the Company's officers and makes recommendations to the Board
of Directors concerning such compensation and related matters. The Compensation
Committee met two times in 1999.
The Board of Directors does not have a standing nominating committee.
7
EXECUTIVE COMPENSATION
The table below shows certain compensation information for the three fiscal
years ended January 2, 2000 concerning the Company's Chief Executive Officer and
its four other most highly compensated executive officers (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION(2)
- ----------------------------------- ------ ----------- ----------- ----------------- ----------------
J. Frank Harrison, III 1999 $604,692 $470,935 $188,233 $257,197
Chairman of the Board 1998 536,456 607,102 125,155 253,257
and Chief Executive Officer 1997 424,229 436,881 163,691 249,224
Reid M. Henson 1999 421,962 328,432 (3) 62,255
Vice Chairman of 1998 402,022 423,644 (3) 58,582
the Board of Directors 1997 384,584 382,930 (3) 56,256
James L. Moore, Jr. 1999 553,491 430,999 (3) 110,485
President and Chief 1998 522,554 550,868 (3) 105,872
Operating Officer 1997 497,670 493,158 (3) 103,005
David V. Singer 1999 317,637 124,200 (3) 37,311
Vice President 1998 290,272 153,115 (3) 34,107
and Chief Financial Officer 1997 273,945 129,316 (3) 31,601
James B. Stuart 1999 301,123 117,445 48,075 68,507
Vice President, Marketing (4) 1998 290,656 153,025 (3) 64,743
1997 280,717 132,361 (3) 58,993
- ------
(1) With respect to Mr. Harrison, III, includes $153,265, $104,698 and $121,955
attributable to personal use of the Company's aircraft for fiscal 1999, 1998
and 1997, respectively. With respect to Mr. Stuart, includes $42,158 of
country club dues for fiscal 1999.
(2) The components of the amounts shown in this column consist of (a) Company
contributions to the Company Savings Plan for Messrs. Harrison, III, Henson,
Moore, Singer and Stuart of $5,000 each for fiscal 1999, $3,800 each for
fiscal 1998 and $3,175 each for fiscal 1997, (b) Company contributions to
the Supplemental Savings Incentive Plan for Messrs. Harrison, III, Henson,
Moore, Singer and Stuart, respectively, of $20,711, $20,455, $23,431,
$13,472 and $21,933 for fiscal 1999, $17,709, $17,982, $20,018, $11,468 and
$19,369 for fiscal 1998 and $13,686, $16,281, $17,776, $9,587 and $14,184
for fiscal 1997 and (c) split-dollar life insurance premiums paid by the
Company for the benefit of Messrs. Harrison, III, Henson, Moore, Singer and
Stuart, respectively, of $231,486, $36,800, $82,054, $18,839 and $41,574 for
fiscal 1999, $231,748, $36,800, $82,054, $18,839 and $41,574 for 1998 and
$232,363, $36,800, $82,054, $18,839 and $41,574 for 1997.
(3) Such Named Executive Officer did not receive personal benefits during the
listed years in excess of the lesser of $50,000 or 10% of his annual salary
and bonus.
(4) Mr. Stuart left the Company at the end of fiscal 1999.
8
FISCAL YEAR END OPTION INFORMATION
The table below sets forth certain information related to the fiscal year
end number and value of stock options held by the Named Executive Officers.
NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END(#) AT FY-END($)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------- --------------- ------------- --------------
J. Frank Harrison, III 150,000 -- 2,643,750 --
LONG-TERM INCENTIVE PLAN AWARDS
The table below sets forth certain information related to long-term
incentive plan awards made to the Named Executive Officers in 1999.
PERFORMANCE OR
NUMBER OF SHARES OTHER PERIOD UNTIL
NAME OF CLASS B COMMON STOCK MATURATION OR PAYOUT
- --------------------------- --------------------- ---------------------
J. Frank Harrison, III 200,000 (1)
- ------
(1) The 200,000 shares of Class B Common Stock vest in ten equal annual
installments at the beginning of each fiscal year commencing on January 3,
2000. The vesting of each annual installment is contingent upon the Company
achieving for the previous fiscal year at least 80% of the overall goal
achievement factor for the six selected performance indicators used in
determining bonuses for all officers under the Company's Annual Bonus Plan.
See "Report of the Compensation Committee on Annual Compensation of
Executive Officers" for a discussion of the overall goal achievement factor
and the performance indicators. If the Company fails to achieve at least 80%
of the overall goal achievement factor for any given year during the vesting
period (as was the case with respect to fiscal 1999), then the 20,000 shares
of restricted stock for that year would not vest and that portion of the
award would be canceled.
9
RETIREMENT PLAN
The Company has in effect a retirement plan for the majority of its
non-union employees (including the Named Executive Officers) (the "Retirement
Plan") providing for payments computed on an actuarial basis. The following
table sets forth the estimated annual benefits payable upon retirement at age 65
to persons born in 1949 at the compensation and years of service classifications
set forth below.
ANNUAL BENEFIT UNDER RETIREMENT PLAN
YEARS OF SERVICE
-------------------------------------------------------------
FIVE-YEAR
AVERAGE COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------------------- ---------- ---------- ---------- ---------- ---------
$ 125,000 $24,538 $32,718 $40,897 $49,077 $49,077
150,000 30,538 40,718 50,897 61,077 61,077
160,000(1) 32,938 43,918 54,897 65,877 65,877
- ------
(1) Prior to 1989, the formula for determining benefits under the Retirement
Plan did not limit the amount of compensation that could be considered.
Benefits that accrue after December 31, 1988, however, are limited as to the
amount of compensation that may be considered. The maximum amount of
compensation that could be considered was initially set at $200,000 in 1989
and was reduced to $150,000 in 1994, in each case, however, subject to cost
of living adjustments. The maximum amount of compensation that could be
considered in determining benefits under the Retirement Plan was $160,000
through the end of 1999. Because the annual benefit amount was the same for
all compensation levels greater than $160,000, information for compensation
levels above $160,000 is not presented.
The benefits listed in the table are based on straight life annuity amounts
and are not subject to any deduction for Social Security or other offset
amounts, except to the extent that the benefits formula includes average
compensation in excess of covered compensation (i.e., the average of the Social
Security taxable wage base during the 35 year period ending in the year that the
participant reaches full Social Security retirement age). At any point in time,
this taxable wage base is assumed to continue without increasing for all years
after the year in which it is calculated. As of January 2, 2000, the Named
Executive Officers had the following years of service for purposes of the
Retirement Plan: Mr. Harrison, III, 23 years; Mr. Henson, 17 years; Mr. Moore,
13 years; Mr. Singer, 14 years; and Mr. Stuart, 10 years. Pursuant to these
assumptions, covered compensation for 1999 for the Named Executive Officers was:
Mr. Harrison, III, $66,060; Mr. Henson, $44,328; Mr. Moore, $49,752; Mr. Singer,
$67,752 and Mr. Stuart, $49,752.
OFFICER RETENTION PLAN
Under the Company's Officer Retention Plan (the "Retention Plan"), eligible
participants (including Named Executive Officers) receive a 20-year annuity
payable in equal monthly installments commencing at retirement or, in certain
instances, upon termination of employment. The retirement benefits under the
Retention Plan increase with each year of participation based on the product of
an assumed rate of increase in a participant's beginning salary (as determined
by the Compensation Committee) and other factors prescribed by the Retention
Plan. Benefits under the Retention Plan are reduced by 50% for participants who
do not remain employed by the Company until they reach age 60, except in the
event of total disability (at which time benefits would be paid on a present
value
10
basis). The Retention Plan also provides for a lump sum death benefit. If a
participant dies before annuity payments have begun, this death benefit equals
the retirement benefit accrued as of the date of death, reduced by 50% if the
participant dies before age 60. If a participant dies after annuity payments
have begun, the present value of the remaining monthly installments (assuming an
8% per annum discount rate) is paid to the participant's beneficiary in a lump
sum.
The Retention Plan provides participants with the right to be paid benefits
in certain change in control situations. These situations generally include both
(a) the acquisition by any person or group of voting control of the Company
(which is presumed to occur if J. Frank Harrison, Jr. and his descendants cease
to have 50% of the total votes for the election of directors (a "Change in
Control")) and (b) either an adverse change in the Retention Plan or the
termination without cause, demotion or material reduction in compensation and
benefits of a participant. In these circumstances, a participant can elect to be
paid 100% of the retirement benefits to which he was entitled at the time of
such Change in Control plus 50% of any increase in his retirement benefits that
accrued between the date of the Change in Control and the date of such election.
The estimated annual benefits payable upon retirement at age 60 for each
of the Named Executive Officers (except Mr. Stuart) are currently: Mr.
Harrison, III, $1,133,000; Mr. Henson, $163,000; Mr. Moore, $320,000 and Mr.
Singer, $586,000. Mr. Stuart, who left the Company at the end of fiscal 1999,
is entitled to $129,000 per year for the next twenty years.
SUPPLEMENTAL SAVINGS INCENTIVE PLAN
Pursuant to the Company's Supplemental Savings Incentive Plan
("Supplemental Savings Plan"), eligible participants defer a portion of their
annual salary and bonus. The Company matches 30% of the first 6% of salary
(excluding bonuses) deferred by the participant. The Company also makes
discretionary contributions to participants' accounts based on merit. These
discretionary contributions are intended to offset the reductions in maximum
benefits payable under the Retirement Plan. Participants are immediately vested
in all contributions they make and become fully vested in Company contributions
upon death, disability, retirement at or after age 55, five years of continued
service after the date of a Company contribution (vesting in 20% installments)
or a Change in Control (as defined above). Participants' account balances may be
placed in either a fixed benefit option or invested in certain investment funds
specified by the Company. Balances in the fixed benefit option accrue up to a
13% return depending upon the participant's age, years of service and other
factors.
During 1999, Company contributions for the Named Executive Officers under
the Supplemental Savings Plan were: Mr. Harrison, III, $20,711; Mr. Henson,
$20,455; Mr. Moore, $23,431; Mr. Singer, $13,472 and Mr. Stuart, $21,933. No
Named Executive Officer received a distribution under the Supplemental Savings
Plan in 1999.
EMPLOYMENT ARRANGEMENTS
James L. Moore, Jr., is employed as the Company's President and Chief
Operating Officer pursuant to an employment agreement at an annual salary of at
least $275,000. Mr. Moore is also entitled to fringe benefits that are made
available generally to the Company's other executive officers. The
11
employment agreement may be terminated at any time by either party. If Mr.
Moore's employment is terminated by the Company for cause or Mr. Moore resigns,
he will receive benefits accrued through the date of termination. If the
Company terminates Mr. Moore's employment without cause, Mr. Moore will receive
severance of $440,000 per year for two years.
The Company has entered into an agreement with J. Frank Harrison, Jr., who
previously served as the Company's Chairman of the Board of Directors, pursuant
to which Mr. Harrison, Jr. agreed to continue to serve as a director of the
Company and as chairman of the Board's Executive and Finance Committees. Mr.
Harrison, Jr. has also agreed to (a) assist the Company with major strategic
decisions and special projects, (b) provide the Company with general oversight
and guidance and (c) assist the Company in maintaining good relations with The
Coca-Coca Company. Mr. Harrison, Jr. receives a fee of $200,000 per year for
his consulting services and a retirement benefit of $500,000 per year under
this agreement. Mr. Harrison, Jr. is provided with insurance and other fringe
benefits comparable with the Company's past practices. The agreement contains
confidentiality and non-competition provisions and provides that, in the event
of a change in control of the Company, Mr. Harrison, Jr. will continue to
receive the retirement benefit for the remainder of his lifetime. The agreement
was initially for a one-year term and automatically renews for additional
one-year terms.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, H.W. McKay Belk, Ned R. McWherter and Charles L. Wallace
served on the Compensation Committee. None of such persons has ever been an
officer or employee of the Company or any of its subsidiaries.
REPORT OF THE COMPENSATION COMMITTEE
ON ANNUAL COMPENSATION OF EXECUTIVE OFFICERS
The Board's Compensation Committee, currently composed of Messrs. H.W.
McKay Belk, Ned R. McWherter and Carl Ware, administers the Company's
compensation plans, reviews executive compensation and makes recommendations to
the Board concerning such compensation and related matters. The following report
relates to the Company's compensation policy for its executive officers,
including the Named Executive Officers, for fiscal 1999.
COMPENSATION POLICY AND FISCAL 1999 COMPENSATION
The Company's executive compensation policy is designed to establish an
appropriate relationship between executive pay and the creation of long term
shareholder value, while motivating and retaining key employees. To achieve
these goals, the Company's executive compensation policy supplements annual base
compensation with an opportunity to earn bonuses based upon corporate
performance as well as factors related to each individual's performance.
Accordingly, a significant portion of any executive's compensation may consist
of performance-based bonuses. Measurement of corporate performance is primarily
based on Company objectives, which are set based on industry conditions and
industry-wide performance levels and approved by the Board of Directors. The
performance of individual executives is evaluated on the basis of both
pre-determined performance goals for the Company and factors related to the
contributions of each individual.
12
Base salaries, including the base salary of J. Frank Harrison, III, the
Company's Chairman and Chief Executive Officer, were adjusted from the prior
year. The Committee periodically reviews base salary levels for its executives
in comparison with those of other companies in the soft drink bottling industry,
as well as other industries. For fiscal 1999, the Committee used a study
published by Watson Wyatt Data Services that surveyed 1,200 public corporations,
including many "Fortune 500" companies but excluding financial services
companies and non-profits. The survey provided compensation information by
separate categories of employers. Employer categorization factors included those
defined by industry, size and geographic location. The Company strives to
maintain base executive salaries at a level that will permit it to compete with
other major companies for managers with comparable qualifications and abilities.
Based on information contained in the Watson Wyatt survey, the Compensation
Committee believes that the overall compensation of the Company's executive
officers places them above the median compensation of similarly situated
executives in all industries covered by the survey. The Committee believes that
Mr. Harrison, III's overall compensation places him at the median compensation
of similarly situated executives.
Other factors considered by the Committee in its periodic review of
executive salary levels include (i) the Company's total operating budget for
each fiscal year, (ii) the impact of annual changes in the consumer price index
and (iii) a comparison of the Company's executive compensation program to
available information concerning those of other public companies in the soft
drink bottling industry. Due to wide disparities in levels of executive
compensation revealed in the published information regarding the companies
included in the Company's peer group index, the Compensation Committee did not
believe that such information provided a meaningful basis for evaluating the
overall compensation of the Company's executive officers for the current fiscal
year, and therefore relied principally upon the information contained in the
Watson Wyatt survey for purposes of such evaluation.
The Company's Annual Bonus Plan is administered by the Compensation
Committee, which annually selects participants who hold key positions with the
Company or its subsidiaries. The total cash bonus awardable to a participant is
determined by multiplying such participant's base salary by three factors: (i)
the participant's approved bonus percentage factor; (ii) the participant's
indexed performance factor; and (iii) the Company's overall goal achievement
factor. The participant's approved bonus percentage factor is based on the
relative responsibility and contribution to the Company's performance attributed
to the participant's position with the Company, while the individual's indexed
performance factor is determined by such individual's actual performance during
the fiscal year. The overall goal achievement factor is determined by the
Company's performance in relation to pre-set goals, as discussed below.
Annual goals for selected performance indicators are set in the fourth
quarter for the succeeding year. These goals are reviewed by the Compensation
Committee and approved by the Board of Directors. The selected performance
indicators for fiscal 1999 were operating cash flow, free cash flow, net income,
equivalent case volume, market share and a value measure. The Compensation
Committee assigns different weights to each of the performance indicators based
on the perceived need to focus more or less on any particular objective in a
given year. The corporate performance indicators and
13
related weights are established after evaluating the industry conditions,
available information on performance of other companies in the soft drink
bottling industry, prior year performance and the Company's specific needs for
the current year. For 1999, the following weights were assigned to the
performance indicators: operating cash flow -- 30%; free cash flow -- 15%; net
income -- 10%; equivalent case volume -- 30%; market share -- 5%; and value
measure -- 10%. The performance indicators, as weighted, make up the Company's
overall goal achievement factor, which is calculated on the basis of a graduated
scale ranging from a goal achievement of between 89% and 110% of each particular
performance indicator. Target goals were met or exceeded for two of the
performance indicators. For two other performance indicators, actual performance
exceeded the pay out threshold of 89% but was below the 100% target.
Although the Company's Annual Bonus Plan enables the Compensation Committee
to calculate bonuses derived from the factors described above, the Compensation
Committee has absolute discretion to decrease or eliminate awards under the
Company's Annual Bonus Plan. The Compensation Committee elected to award bonuses
to executive officers in an amount equal to 69.5% of 1999 base salary multiplied
by each officer's approved bonus percentage factor. The amount of annual bonus
awards under the Annual Bonus Plan for each of the Named Executive Officers for
the years 1997, 1998 and 1999 is included in the Summary Compensation Table
under the heading "Bonuses."
In addition to bonuses under the Annual Bonus Plan, the Company pays its
executive officers additional amounts of cash compensation in recognition of
outstanding individual performance in connection with the advancement of the
Company's long-term goals the Committee believes are not reflected in the
performance measures used in the Annual Bonus Plan. Payment of such additional
compensation is decided by the Committee in its discretion and is intended to be
made only in rare instances of significant advancement of long-term goals
through substantial efforts of particular officers. For 1999, the Committee
determined to make such awards based upon four accomplishments: the successful
introduction of a new product; progress in the implementation of certain
strategies; progress in the implementation of the value chain initiative; and
the successful completion of certain acquisitions. For 1999, a total of $294,000
in such additional compensation was awarded to the Company's executive officers,
of which $49,000 was awarded to Mr. Harrison, III, $34,000 was awarded to Mr.
Henson, $44,500 was awarded to Mr. Moore, $13,000 was awarded to Mr. Singer and
$12,500 was awarded to Mr. Stuart. These amounts are also included in the
Summary Compensation Table under the heading "Bonuses."
The Company's executive officers are also eligible to participate in the
Company's Long Term Incentive Plan adopted effective January 1, 1998. Incentive
payments made under the Long Term Incentive Plan will be paid solely based on
the Company's performance in meeting specified objectives with respect to both a
value growth factor and a volume growth factor, over a period of three calendar
years designated by the Compensation Committee as an incentive period. Once the
Company's performance with respect to both factors exceeds the specified
threshold level, then the amount of each participant's incentive payment will be
calculated as a percentage of the participant's average annual base salary
during the incentive period. The percentages that may be used to calculate the
value
14
of the incentive payments range from 25% to 175%, with the exact percentages
applicable to specified increases in the value growth factor and the volume
growth factor being determined by the Compensation Committee prior to the
beginning of each three-year Incentive Period.
The Company's total annual compensation package for its executives also
includes the opportunity: (i) to participate, on the same basis as other
non-union employees, in the Company's Savings Plan; (ii) to participate in the
Officers' Split-Dollar Life Insurance Plan; (iii) to participate in the
Company's Retirement Plan; (iv) to elect to defer a portion of compensation and
receive limited matching contributions from the Company under the Supplemental
Savings Plan; and (v) for certain key executives selected by the Compensation
Committee, to receive additional retirement and survivor benefits pursuant to
the Retention Plan. This overall package is designed to attract and retain
qualified executives and to ensure that such executives have a continuing stake
in the long-term success of the Company.
During 1999 Mr. Harrison, III also received a restricted stock award of
200,000 shares of the Company's Class B Common Stock that will vest over a 10
year period subject to the achievement of certain objective performance
criteria. This restricted stock award is intended to qualify as
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code. The primary purpose of the award is to make a significant portion of Mr.
Harrison, III's compensation dependent on the Company achieving its performance
goals. See "Long-Term Incentive Plan Awards." The award was approved by the
Company's stockholders at the annual meeting held on May 12, 1999.
The Company believes that all compensation paid or payable to its executive
officers covered under Section 162(m) of the Internal Revenue Code will qualify
for deductibility under such section. The Company's compensation policies apply
equally to all of its executive officers, including the Chief Executive Officer.
Submitted by the Compensation Committee of the Board of Directors.
H. W. McKay Belk Carl Ware
Ned R. McWherter
15
COMMON STOCK PERFORMANCE GRAPH
Presented below is a line graph comparing the yearly percentage change in
the cumulative, total return on the Company's Common Stock against the
cumulative total return of the Standard & Poors 500 Index and a peer group for
the period commencing December 31, 1994 and ending December 31, 1999, covering
the Company's last five fiscal years. This peer group is comprised of
Anheuser-Busch Companies, Inc.; Cadbury Schweppes plc; Coca-Cola Enterprises
Inc.; The Coca-Cola Company; Cott Corporation; National Beverage Corp.; PepsiCo,
Inc.; The Quaker Oats Company; Triarc Companies, Inc.; Whitman Corporation; and
The Seagram Company Ltd.
CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1994
WITH DIVIDENDS REINVESTED
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
DEC-94 DEC-95 DEC-96 DEC-97 DEC-98 DEC-99
- --------------------------------------------------------------------------------
Coca-Cola Bottling Co. $100 $136 $195 $282 $239 $200
Consolidated
- --------------------------------------------------------------------------------
S&P 500(R) $100 $138 $169 $226 $290 $351
- --------------------------------------------------------------------------------
Peer Group $100 $143 $184 $236 $263 $236
- --------------------------------------------------------------------------------
- ------
(1) Assumes that $100 was invested in the Company's Common Stock, in the S&P 500
and in the peer group on December 31, 1994 and that all dividends were
reinvested on a quarterly basis. Returns for the companies included in the
peer group have been weighted on the basis of total market capitalization
for each company.
16
CERTAIN TRANSACTIONS
TRANSACTIONS WITH THE COCA-COLA COMPANY
The Company's business consists primarily of producing, marketing and
distributing soft drink products of The Coca-Cola Company, which is the sole
owner of the secret formulas under which the primary components (either
concentrates or syrups) of its soft drink products are manufactured.
Accordingly, the Company purchases a substantial majority of its requirements of
concentrates and syrups from The Coca-Cola Company in the ordinary course of its
business. During fiscal 1999, the Company paid The Coca-Cola Company
approximately $258 million for sweetener, syrup, concentrate and other
miscellaneous purchases. Additionally, the Company engages in a variety of
marketing programs, local media advertising and similar arrangements to promote
the sale of products of The Coca-Cola Company in bottling territories operated
by the Company. During fiscal 1999, total direct marketing support provided to
the Company by The Coca-Cola Company was approximately $55 million.
Additionally, the Company received approximately $15 million from The Coca-Cola
Company in 1999 related to cold drink infrastructure support. The marketing
funding related to cold drink infrastructure support is covered under a
multi-year agreement that includes certain annual performance requirements. The
Company was in compliance with all such performance requirements in 1999, as
amended. In addition, the Company spent approximately $29 million on local media
and marketing expenses pursuant to cooperative advertising and cooperative
marketing arrangements with The Coca-Cola Company.
On July 2, 1993, Piedmont Coca-Cola Bottling Partnership (the
"Partnership") was formed by wholly owned subsidiaries of the Company and The
Coca-Cola Company to engage in the business of distributing and marketing
finished bottle/can and fountain beverage products under trademarks of The
Coca-Cola Company and other third party licensors in portions of North Carolina,
South Carolina, Virginia and Georgia. The Company and The Coca-Cola Company each
beneficially own a 50% interest in the Partnership. The Partnership has an
initial term of 25 years subject to early termination as a result of certain
events. Each partner's partnership interest is subject to certain limitations on
transfers, rights of first refusal and other purchase rights upon the occurrence
of specified events. The partnership agreement obligates the Company to
negotiate in good faith with The Coca-Cola Company between July 2, 1999 and July
2, 2001 to purchase The Coca-Cola Company's interest.
The Company manufactures and packages products and manages the Partnership
pursuant to a management agreement. In connection with the management agreement,
the Company receives a fee based on total case sales, reimbursement for its
out-of-pocket expenses and reimbursement for sales branch, divisional and
certain other expenses. The term of the management agreement is 25 years,
subject to early termination in the event of certain change in control events, a
termination of the Partnership or a material default by either party. During
1999, the Company received management fees of approximately $14.2 million from
the Partnership. The Company subleases various fleet and vending equipment to
the Partnership at cost. These sublease rentals amounted to approximately $10.0
million in 1999. The Partnership also subleases various fleet and vending
equipment to the Company at cost. These sublease rentals amounted to
approximately $.2 million during fiscal 1999.
17
Pursuant to a Stock Rights and Restrictions Agreement dated January 27,
1989 (the "Rights and Restrictions Agreement") between the Company and The
Coca-Cola Company, The Coca-Cola Company agreed (a) not to acquire additional
shares of Common Stock or Class B Common Stock except in certain circumstances
and (b) not to sell or otherwise dispose of shares of Class B Common Stock
without first converting them into Common Stock. The Coca-Cola Company granted
the Company a right of first refusal with respect to any proposed disposition of
any shares owned by it, and the Company granted The Coca-Cola Company certain
registration rights with respect to such shares. In the Rights and Restrictions
Agreement, The Coca-Cola Company agreed that if its equity ownership reaches
30.67% or more of the Company's outstanding common stock of all classes, or its
voting interest reaches 23.59% or more of the votes of all outstanding shares of
all classes (both as adjusted by the Company's right to call described below),
then it will negotiate in good faith with the Company to sell to the Company the
number of shares of Common Stock or convert the number of shares of Class B
Common Stock necessary to reduce its equity ownership to 29.67% of the
outstanding common stock of all classes (including ownership of between 20% and
21% of the outstanding shares of Class B Common Stock) and to maintain its
voting interest at between 22.59% and 23.59% of the votes of all outstanding
shares of all classes, as adjusted.
Additionally, if the Company issues new shares of Class B Common Stock upon
the conversion or exercise of any security, warrant or option of the Company
that results in The Coca-Cola Company owning less than 20% of the outstanding
shares of Class B Common Stock and less than 20% of the total votes of all
outstanding shares of all classes of the Company, The Coca-Cola Company has the
right to exchange shares of Common Stock for shares of Class B Common Stock in
order to maintain its ownership of at least 20% of the outstanding shares of
Class B Common Stock and at least 20% of the total votes of all outstanding
shares of all classes of the Company. Under the Rights and Restrictions
Agreement, The Coca-Cola Company also has a preemptive right to purchase a
percentage of any newly issued shares of any class in order for it to maintain
ownership of both 29.67% of the outstanding shares of Common Stock of all
classes and 22.59% of the total votes of all outstanding shares of all classes.
The number of shares issuable to The Coca-Cola Company as a result of any
exercise of its conversion right or its preemptive right is subject to
adjustment by the Company's right to call described below and by any voluntary
disposition of the shares held by The Coca-Cola Company.
Pursuant to the Rights and Restrictions Agreement, The Coca-Cola Company
has also granted the Company the right, from January 27, 1995 through January
27, 2002, to call for redemption that number of shares that would reduce The
Coca-Cola Company's ownership of the equity of the Company to 20% at a price
(which will not be less than $42.50 per share) and on such terms as set forth in
the Rights and Restrictions Agreement.
The Coca-Cola Company was also given the right to have its designee
proposed by the Company for nomination to the Company's Board of Directors and
to have such person nominated at each subsequent election of the Company's
directors, subject to certain conditions. Carl Ware's appointment as a director
of the Company was made in accordance with the terms of the Rights and
Restrictions Agreement. Mr. Ware is Executive Vice President, Global Public
Affairs and Administration of The Coca-Cola Company. Charles L. Wallace, a
director of the Company until February 2000, was Vice President and Executive
Assistant to the Chairman of The Coca-Cola Company.
18
The Coca-Cola Company, Mr. Harrison, Jr., Mr. Harrison, III and Mr.
Henson, in his capacity as co-trustee of certain trusts, also entered into a
Voting Agreement dated January 27, 1989 (the "Voting Agreement"). Pursuant to
the Voting Agreement, Mr. Harrison, Jr., Mr. Harrison, III and Mr. Henson (as
co-trustee) agreed to vote their shares of Common Stock and Class B Common
Stock for a nominee of The Coca-Cola Company for election as a director to the
Company's Board of Directors, and The Coca-Cola Company granted an irrevocable
proxy (the "Irrevocable Proxy") with respect to all shares of Class B Common
Stock and Common Stock owned by The Coca-Cola Company to Mr. Harrison, III for
life and thereafter to Mr. Harrison, Jr. The Irrevocable Proxy covers all
matters on which holders of Class B Common Stock or Common Stock are entitled
to vote, other than certain mergers, consolidations, asset sales and other
fundamental corporate transactions.
Pursuant to the terms of the Voting Agreement, Mr. Harrison, III (or, in
the event of his death, Mr. Harrison, Jr.) was granted the option (assignable
to the Company or to Mr. Harrison, Jr.) to purchase the shares of Class B
Common Stock held by The Coca-Cola Company at a price per share determined in
accordance with the Voting Agreement, exercisable on certain conditions
relating to termination of the disproportionate voting rights of the Class B
Common Stock.
The Voting Agreement and Irrevocable Proxy terminate upon the written
agreement of the parties or at such time as The Coca-Cola Company no longer
beneficially owns any shares of the Company's common stock. The Irrevocable
Proxy also terminates at such time as either (a) Mr. Harrison, Jr. or Mr.
Harrison, III do not collectively own the 712,796 shares of Class B Common Stock
that are currently part of the holdings of the Harrison Family Limited
Partnerships or (b) certain trusts that beneficially own shares of Class B
Common Stock subject to the Voting Agreement do not collectively beneficially
own at least 50% of the Class B Common Stock held by them at the date of the
Voting Agreement.
OTHER TRANSACTIONS
The Company has a production arrangement with Coca-Cola Enterprises Inc.
to buy and sell finished products at cost. Sales to Coca-Cola Enterprises Inc.
under this arrangement were $21.0 million in fiscal 1999. Purchases from
Coca-Cola Enterprises Inc. under this arrangement were $15.3 million in fiscal
1999.
The Company leases its Snyder Production Center from Harrison Limited
Partnership One ("HLP") pursuant to a ten-year lease expiring November 30,
2000. HLP's sole general partner is a corporation of which Mr. Harrison, Jr. is
the sole shareholder. HLP's sole limited partner is a trust of which Mr.
Harrison, III and Mr. Henson are co-trustees and Mr. Harrison, Jr. and his
descendants are beneficiaries. Total payments under this lease were $2.6
million in 1999.
The Company leases its corporate headquarters and an adjacent office
building from Beacon Investment Corporation, of which Mr. Harrison, III is the
sole shareholder. Total payments under this lease were $3.1 million in 1999.
The Company purchases certain computerized data management products and
services from Data Ventures LLC, of which the Company holds a 31.25% equity
interest and Mr. Harrison, III owns a
19
32.5% equity interest. During fiscal 1999, the Company paid approximately
$154,000 to Data Ventures LLC in connection with the purchase of such products
and services. Data Ventures LLC has an unsecured line of credit from the
Company. Borrowings of $2.1 million were outstanding on the line of credit on
January 2, 2000. Borrowings bear interest at the prime rate as published by THE
WALL STREET JOURNAL, less one percent, adjusted on the first day of each month.
During fiscal 1999, the Company paid legal fees of $527,840 to Witt,
Gaither & Whitaker, P.C., a law firm in which John W. Murrey, III, a director of
the Company, is a shareholder.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, independent public accountants, audited the
financial statements of the Company for fiscal year 1999 and for each fiscal
year since 1968. Representatives of PricewaterhouseCoopers LLP are expected to
be present at the annual meeting with an opportunity to make a statement if they
desire to do so, and they are expected to be available to respond to appropriate
questions. The Board of Directors, consistent with past practice, will defer the
annual selection of independent accountants until after the annual meeting. The
Audit Committee of the Board of Directors will then consider the engagement of
independent public accountants to audit the Company's financial statements for
the current fiscal year and will make its recommendation to the Board of
Directors for final approval.
STOCKHOLDER PROPOSALS
If any stockholder wishes to present a proposal to the stockholders of the
Company at the 2001 annual meeting of stockholders, such proposal must be
received by the Company for inclusion in the proxy statement and form of proxy
relating to such meeting on or before December 7, 2000. In addition, if the
Company receives notice of stockholder proposals after February 20, 2001, then
the persons named as proxies in such proxy statement and form of proxy will have
discretionary authority to vote on such stockholder proposals, without
discussion of such matters in the proxy statement and without such proposals
appearing as a separate item on the proxy card.
ADDITIONAL INFORMATION
The entire cost of soliciting proxies will be borne by the Company. In
addition to this proxy statement, proxies may be solicited by the Company's
directors, officers and other employees by personal interview, telephone and
other methods. Such persons will receive no additional compensation for such
services. Georgeson & Co., Inc., Wall Street Plaza, New York, New York 10005 has
been retained to assist the Company in the solicitation of brokers, banks and
other similar entities holding shares for other persons. Georgeson & Co., Inc.
will receive a payment of $6,500 (plus out-of-pocket expenses) for these
services. All brokers, banks and other similar entities and other custodians,
nominees and fiduciaries will be requested to forward solicitation materials to
the beneficial owners of the shares of Common Stock and Class B Common Stock
held of record by such persons, and the Company will pay such brokers, banks and
other fiduciaries all of their reasonable out-of-pocket expenses incurred in
connection therewith.
20
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE
UPON WRITTEN REQUEST TO DAVID V. SINGER, VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, COCA-COLA BOTTLING CO. CONSOLIDATED, P. O. BOX 31487, CHARLOTTE, NORTH
CAROLINA 28231.
Henry W. Flint
SECRETARY
April 6, 2000
21
APPENDIX A
- FOLD AND DETACH HERE -
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY COCA-COLA BOTTLING CO. CONSOLIDATED
ANNUAL MEETING OF STOCKHOLDERS, MAY 10, 2000
The undersigned hereby appoints J. Frank Harrison, Jr., J. Frank Harrison,
III, James L. Moore, Jr. and Ned R. McWherter, and each of them, proxies, with
full power of substitution, to act and to vote the shares of Common Stock or
Class B Common Stock that the undersigned is entitled to vote at the Annual
Meeting of Stockholders to be held on May 10, 2000, and any adjournment
thereof, as follows:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary below) to vote for all nominees listed below
H. W. McKay Belk; H. Reid Jones; John W. Murrey, III
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
(continued on other side)
- FOLD AND DETACH HERE -
-----------------------------------------------------------------------------
(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF THE ELECTION OF ALL NOMINEES AS DIRECTORS. THIS PROXY WILL
BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXYHOLDERS IN ACTING
UPON ANY OTHER BUSINESS THAT MAY BE PROPERLY BROUGHT BEFORE SAID MEETING OR
ANY ADJOURNMENT THEREOF.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and the Proxy Statement dated April 6, 2000.
If you plan to attend the Annual Meeting of
Stockholders on May 10, 2000, please check
the following box: [ ]
Dated this_____day of _________________, 2000
_______________________________________(Seal)
Note: Signature should agree with name on
stock certificate as printed thereon.
Executors, administrators, trustees and other
fiduciaries and persons signing on behalf of
corporations, limited liability companies or
partnerships should so indicate when signing.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING PREPAID
SELF-ADDRESSED ENVELOPE. THANK YOU.