SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COCA-COLA BOTTLING CO. CONSOLIDATED
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) 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
1900 REXFORD ROAD
CHARLOTTE, NORTH CAROLINA 28211
(704) 551-4400
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
May 12, 1999
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TO THE SHAREHOLDERS OF
COCA-COLA BOTTLING CO. CONSOLIDATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Coca-Cola Bottling Co. Consolidated, a Delaware corporation (the "Company"),
will be held at the Snyder Production Center, 4901 Chesapeake Drive, Charlotte,
North Carolina 28216 on Wednesday, May 12, 1999, at 10:00 a.m., Eastern
Daylight Time, for the purpose of considering and acting upon the following:
1. Fixing the number of directors at ten;
2. Electing three directors, each for a term of three years or until his
successor shall be elected and shall qualify;
3. Approving an award of restricted stock to the Company's Chief Executive
Officer, in order to permit such award to qualify as "performance-based"
compensation within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended; and
4. Such other business as may properly come before the Annual Meeting of
Shareholders, or any adjournment or adjournments thereof.
Only shareholders of record of the Company's common stock (including both
Common Stock and Class B Common Stock) at the close of business on March 26,
1999, are entitled to notice of, and to vote at, the meeting or any adjournment
thereof. A list of shareholders will be available for inspection at least ten
days prior to the meeting at the principal executive offices of the Company,
1900 Rexford Road, Charlotte, North Carolina 28211.
By Order of the Board of Directors.
John F. Henry, Jr.
SECRETARY
Date: April 6, 1999
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
COCA-COLA BOTTLING CO. CONSOLIDATED
TO BE HELD ON MAY 12, 1999
INTRODUCTION
This Proxy Statement is being furnished by the Board of Directors of
Coca-Cola Bottling Co. Consolidated, a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Company for use at the
Annual Meeting of Shareholders to be held at the Snyder Production Center, 4901
Chesapeake Drive, Charlotte, North Carolina 28216 on Wednesday, May 12, 1999,
at 10:00 a.m., Eastern Daylight Time, and at any adjournment or adjournments
thereof (the "Annual Meeting"). It is contemplated that the Proxy Statement and
accompanying form of proxy will be mailed to shareholders of the Company on or
about April 6, 1999. The principal executive offices of the Company are located
at 1900 Rexford Road, Charlotte, North Carolina 28211, telephone (704)
551-4400.
At the Annual Meeting, holders of the Company's Common Stock, par value
$1.00 per share ("Common Stock"), and of the Company's Class B Common Stock,
par value $1.00 per share ("Class B Common Stock"), will be asked to fix the
number of directors at ten, to elect three directors, each for a term of
three years, and to approve an award of restricted stock to the Company's Chief
Executive Officer, in order to permit such award to qualify as
"performance-based" compensation within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
The Board of Directors recommends that the Company's shareholders vote FOR
fixing the number of directors at ten, FOR electing the three nominees for
director and FOR approving the restricted stock award.
RECORD DATE, VOTE REQUIRED, AND RELATED MATTERS
The Board of Directors has fixed the close of business on March 26, 1999,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting. As of the close of business on March 26,
1999, the Company had issued and outstanding 6,023,739 shares of Common Stock
(which number excludes 3,062,374 shares held in the Company's treasury)
entitled to one vote per share on all matters brought before the Annual Meeting
and 2,341,108 shares of Class B Common Stock (which number excludes 628,114
shares held in the Company's treasury) entitled to twenty votes per share on
all matters brought before the Annual Meeting (6,023,739 votes for the Common
Stock and 46,822,160 votes for the Class B Common Stock, for an aggregate of
52,845,899 votes). Each shareholder may exercise his right to vote either in
person or by properly executed proxy. Cumulative voting is not permitted. The
Common Stock and Class B Common Stock will vote as a single class on each of
the specific matters to be presented at the Annual Meeting which are discussed
herein.
Shares represented at the Annual Meeting by properly executed proxies will
be voted in accordance with the instructions indicated in the proxies unless
such proxies have previously been revoked.
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If no instructions are indicated, such shares will be voted: (i) FOR
fixing the number of directors at ten and (ii) FOR electing the Board of
Directors' nominees for director and (iii) FOR approving the restricted stock
award.
Any proxy given pursuant to this solicitation may be revoked at any time
by the shareholder giving it, insofar as it has not been exercised, by
delivering to the Secretary of the Company a written notice of revocation
bearing a later date than the proxy or by submission of a later-dated, properly
executed proxy. Attendance at the Annual Meeting will not, in and of itself,
constitute a revocation of a proxy. Any written notice revoking a proxy should
be sent to Coca-Cola Bottling Co. Consolidated, Post Office Box 31487,
Charlotte, North Carolina 28231, Attention: John F. Henry, Jr., Secretary.
The persons designated as proxies in the accompanying form of proxy have
been selected by the Board of Directors and are J. Frank Harrison, Jr., J.
Frank Harrison, III, James L. Moore, Jr. and Ned R. McWherter, directors of the
Company. The cost of solicitation of proxies will be borne by the Company.
The presence, in person or by proxy, of the holders of a majority of the
votes eligible to be cast by the holders of the outstanding shares of Common
Stock and Class B Common Stock entitled to vote (26,422,950 votes) is necessary
to constitute a quorum at the Annual Meeting. The affirmative vote of a
majority of the total votes represented at the Annual Meeting, in person or by
proxy, by holders of outstanding shares of Common Stock and Class B Common
Stock is required to fix the number of directors at ten and to approve the
restricted stock award. A plurality of the vote is necessary to elect the Board
of Directors' nominees. Abstentions and broker non-votes shall not be
considered affirmative votes, and will have no effect upon the election of
directors by a plurality vote. With respect to fixing the number of directors
at ten and approving the restricted stock award, an abstention will have the
same effect as a "NO" vote and broker non-votes will have no effect.
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 1,987,236
shares of the Company's Common Stock and 2,339,250 shares of the Company's
Class B Common Stock (representing an aggregate of 48,772,236 votes) FOR fixing
the number of directors at ten, FOR electing the Board of Directors' nominees
for director and FOR approving the restricted stock award to the Company's
Chief Executive Officer. Such number of shares includes the 1,984,495 shares of
Common Stock and the 497,670 shares of Class B Common Stock owned by The
Coca-Cola Company, which are voted by J. Frank Harrison, III pursuant to the
terms of a Voting Agreement between The Coca-Cola Company and Messrs. Harrison,
Jr., Harrison, III and Henson (in Mr. Henson's capacity as co-trustee of
certain trusts holding shares of Class B Common Stock). See "Principal
Shareholders" and "Certain Transactions." Accordingly, it is anticipated that
the number of directors will be fixed at ten, the Board of Directors' nominees
for director will be elected and the restricted stock award to the Company's
Chief Executive Officer will be approved.
The Board of Directors of the Company is not aware of any other matter to
be brought before the Annual Meeting. If, however, other matters are properly
presented, proxies received in response to this solicitation representing
shares of Common Stock and Class B Common Stock will be cast in accordance with
the best judgment of the proxyholders on such other matters.
2
A copy of the Company's Annual Report for the fiscal year ended January 3,
1999, is enclosed herewith.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as to the shares of Common
Stock and Class B Common Stock, the only classes of voting securities of the
Company with shares outstanding, beneficially owned as of March 11, 1999
(except as otherwise noted), by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock or Class B
Common Stock. As of such date, the Company had issued and outstanding 6,023,739
shares of Common Stock and 2,341,108 shares of Class B Common Stock.
AMOUNT AND
NATURE OF PERCENT PERCENT
TITLE BENEFICIAL OF AGGREGATE OF TOTAL
NAME OF CLASS OWNERSHIP(1) CLASS VOTE VOTE(2)
- --------------------------------- ---------------- ------------------------ --------- ------------ ---------
J. Frank Harrison, Jr., Common Stock 4,812,278(3)(4) 55.9%
J. Frank Harrison, III, Class B Common 2,339,250(3)(4) 99.9% 49,258,028 92.8%
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) 32.9%
One Coca-Cola Plaza Class B Common 497,670(5) 21.3% 11,937,895 22.6%
Atlanta, GA 30313
Coca-Cola Enterprises Inc. Common Stock 352,000(6) 5.8% 352,000 0.6%
2500 Windy Ridge Parkway
Atlanta, GA. 30339
Tweedy Browne Company, Common Stock 453,530(7) 7.5% 453,530 0.9%
L.P., TBK Partners, L.P.
52 Vanderbilt Avenue
New York, NY 10017
- ------
(1) In general, a person is deemed to be a beneficial owner of a security
if that person has or shares voting power, which includes the power to
vote or direct the voting of such security, or investment power, which
includes the power to dispose of, or to direct the disposition of, such
security; or if a person has the right to acquire either voting power
or investment power over such security through the exercise of an
option or conversion of another security within 60 days. More than one
person may be a beneficial owner of the same securities, and a person
may be deemed to be a beneficial owner of securities as to which he has
no personal economic interest or which he may not vote.
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(2) The percentages shown are based upon the number of shares outstanding
(net of shares held in treasury). In the case of the group composed of
J. Frank Harrison, Jr., J. Frank Harrison, III, Reid M. Henson, J.
Frank Harrison Family, LLC, JFH Family Limited Partnership -- FH1, JFH
Family Limited Partnership -- SW1 and JFH Family Limited Partnership --
DC1, in which beneficial ownership includes (i) shares of Common Stock
that would result from a conversion of Class B Common Stock into such
shares or (ii) shares of Common Stock which Messrs. Harrison, Jr. and
Harrison, III presently have the right to acquire through exercise of
options, the percentages of class shown give effect to such conversion
and to the exercise of such options. In calculating the aggregate vote
and percent of total vote, however, no effect is given to conversion of
Class B Common Stock into Common Stock or to the exercise of such
unexercised options. In the case of The Coca-Cola Company, beneficial
ownership shown in the table does not include shares of Common Stock
that would result from a conversion of Class B Common Stock into such
shares.
(3) The amounts shown include (a) as to Common Stock: (i) 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; (ii)
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 J. Frank Harrison, III has shared voting and no
investment power; (iii) 747 shares held by Mr. Harrison, III as
custodian for certain of his children under the North Carolina Uniform
Gifts to Minors Act, as to which Mr. Harrison, III possesses sole
voting and investment power; (iv) 2,000 shares owned outright by Reid
M. Henson; (v) 2,339,250 shares of Class B Common Stock, convertible
into Common Stock on a one for one basis at the option of the holder of
such shares, and which are beneficially owned by the group composed of
Messrs. Harrison, Jr., Harrison, III and Henson, J. Frank Harrison
Family, LLC and the three Harrison family limited partnerships as
described in subsection (b) of this Note (3); and (vi) 100,000 shares
of Common Stock which Mr. Harrison, Jr. presently has the right to
acquire through exercise of options and 150,000 shares of Common Stock
which Mr. Harrison, III presently has the right to acquire through
exercise of options; and (b) as to Class B Common Stock: (i) 535,178
shares held by each of the JFH Family Limited Partnership -- FH1, JFH
Family Limited Partnership -- SW1 and JFH Family Limited Partnership --
DC1, as to which Mr. Harrison, Jr., in his capacity as Manager of J.
Frank Harrison Family, LLC (the general partner of the three family
limited partnerships), exercises sole voting and investment power; (ii)
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; (iii) 260 shares held by Mr. Harrison, III
as custodian for certain of his children under the North Carolina
Uniform Gifts to Minors Act, as to which Mr. Harrison, III possesses
sole voting and investment power; and (iv) 497,670 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.
(4) J. Frank Harrison, Jr., J. Frank Harrison, III, Reid M. Henson (as
trustee of certain trusts holding shares of Class B Common Stock), J.
Frank Harrison Family, LLC, JFH Family
4
Limited Partnership -- FH1, JFH Family Limited Partnership -- SW1 and
JFH Family Limited Partnership -- DC1, are parties to a Voting Agreement
and a Shareholder's Agreement entered into with The Coca-Cola Company.
Pursuant to the Voting Agreement, Mr. Harrison, III has been granted an
Irrevocable Proxy for life and, thereafter, to Mr. Harrison, Jr.,
covering the shares of Common Stock and Class B Common Stock held by The
Coca-Cola Company. Accordingly, Messrs. Harrison, Jr., Harrison, III and
Henson, together with J. Frank Harrison Family, LLC and the three
Harrison Family Limited Partnerships, may be deemed to be a group as
such term is defined in certain regulations of the Securities and
Exchange Commission. Additional information concerning the Voting
Agreement, Shareholder's Agreement and Irrevocable Proxy is disclosed
hereinafter under the heading "Certain Transactions."
(5) The information presented is derived from a report on Schedule 13D dated
May 18, 1987, as amended through Amendment Number 18 thereto dated
November 23, 1998, filed by The Coca-Cola Company as to its beneficial
ownership (through subsidiaries) of Common Stock and Class B Common
Stock of the Company. The Coca-Cola Company has granted the power to
vote all 1,984,495 shares of Common Stock and 497,670 shares of Class B
Common Stock it beneficially owns to J. Frank Harrison, III for life
and, thereafter, to J. Frank Harrison, Jr., pursuant to a Voting
Agreement and Irrevocable Proxy described in Note (4) above.
(6) The information presented is derived from a report on Schedule 13D
dated February 22, 1999 filed by Coca-Cola Enterprises Inc. as to its
beneficial ownership of Common Stock. Coca-Cola Enterprises has
reported that it has sole investment power and sole voting power with
respect to all of such shares.
(7) The information presented is derived from a report on Schedule 13D
dated March 31, 1995, as amended through Amendment Number 6 thereto
dated May 27, 1998, filed by Tweedy, Browne Company, LLC ("TBC") and
TBK Partners, L.P. ("TBK") with respect to their aggregate beneficial
ownership of shares of Common Stock of the Company. 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. They report beneficial ownership as follows: (i) TBC has
investment discretion with respect to 453,530 shares of Common Stock
held in discretionary accounts of various TBC customers and has sole
voting power with respect to 404,614 of such shares. Amendment Number 6
to the Schedule 13D reports that TBK no longer holds any shares of the
Company's Common Stock.
PROPOSALS 1 AND 2
ELECTION OF DIRECTORS
GENERAL
The Certificate of Incorporation of the Company provides that the Board of
Directors shall consist of not less than nine nor more than twelve members as
fixed from time to time by the shareholders of the Company or the Board of
Directors. It also provides that the Board of Directors shall be
5
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 shareholders fixing the
number of directors at ten and electing the three nominees listed below to
serve for three-year terms. The directors to be elected at this year's Annual
Meeting will hold office until the 2002 Annual Meeting of Shareholders, or
until their successors are elected and qualified.
It is intended that the persons named as proxies in the accompanying form
of proxy will vote for the three nominees listed below, unless the authority to
vote is withheld. Each nominee is at present a member of the Board of
Directors. Although the Company's management expects that each of the nominees
will be available for election, in the event a vacancy in the slate of nominees
should occur, it is intended that shares represented by proxies in the
accompanying form will be voted for the election of a substitute nominee
selected by the Board of Directors.
The names and terms of office of the nominees and directors of the
Company, their ages, their principal occupations or employments (which have
continued for at least the past five years unless otherwise noted),
directorships held by them in certain other publicly held corporations or
investment companies, the dates they first became directors of the Company and
certain other information with respect to such nominees and directors are as
follows:
NOMINEES FOR ELECTION OF DIRECTORS IN 1999
(Terms Expiring in 2002)
JOHN M. BELK, age 79, is Chairman of the Board of Directors of Belk Stores
Services Inc., operators of retail department stores, and of Belk Brothers
Company, Charlotte, North Carolina. He serves as an officer or director, or
both, of approximately 110 retail corporations in the Belk organization. Mr.
Belk presently is a director of Lowe's Companies, Inc. and Texas Industries,
Inc. Mr. Belk has been a director of the Company since 1972 and is a member of
the Audit Committee.
CHARLES L. WALLACE, age 57, is Vice President and Executive Assistant to
the Chairman of The Coca-Cola Company, in which capacity he has served since
December 1997. Mr. Wallace previously served as Executive Assistant, Office of
the President of The Coca-Cola Company from July 1994 through December 1997.
From 1982 through July 1994, Mr. Wallace served as Vice President,
Contractual/Bottler Relations of Coca-Cola USA. Mr. Wallace has been a director
of the Company since February 23, 1998, when he was appointed by the Board to
fill the position vacated upon the resignation of David L. Kennedy, Jr., who
had served as a director of the Company since 1990. He is a member of the
Finance Committee and the Compensation Committee.
REID M. HENSON, age 59, 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, is Chairman
of the Audit Committee and is a member of the Executive Committee, the
Retirement Benefits Committee and the Finance Committee.
6
DIRECTORS WHOSE TERMS EXPIRE THIS YEAR
EVANDER HOLYFIELD, age 36, is a professional athlete who is the three-time
and current heavyweight boxing champion of the world. Mr. Holyfield is Chairman
of Holyfield Management, Inc., Fairburn, Georgia. Mr. Holyfield has been a
director of the Company since March 11, 1998.
DIRECTORS WHOSE TERMS DO NOT EXPIRE THIS YEAR
(Terms Expiring in 2000)
H. W. MCKAY BELK, age 42, is President, Chief Merchandise Officer of Belk
Stores Services Inc., operators of retail department stores, a position which
he has held since March 1997. Mr. Belk served as President, Merchandise and
Sales Promotion of Belk Stores Services, Inc. from April 1995 through March
1997, and he had previously served as Senior Vice President, Merchandising from
April 1992 through April 1995. Prior to April 1992, Mr. Belk had served as Vice
President, General Merchandise Manager of Belk Brothers Company, Charlotte,
North Carolina, since 1988. He has been a director of the Company since May 18,
1994 and is Chairman of the Compensation Committee and a member of the Finance
Committee.
H. REID JONES, age 64, 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 56, is a member of the law firm of Witt, Gaither
& Whitaker, P.C., general counsel to the Company, in Chattanooga, Tennessee
with which he has been associated since 1970. He served as Secretary of the
Company from 1985 to 1993. He has been a director of the Company since March
17, 1993. Mr. Murrey is a director of The Dixie Group, Inc. He is a member of
the Audit Committee and the Retirement Benefits Committee.
(Terms Expiring in 2001)
J. FRANK HARRISON, JR., age 68, 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 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 of the Company's Board of
Directors.
J. FRANK HARRISON, III, age 44, 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 of the Company. 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.
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JAMES L. MOORE, JR., age 56, is President and Chief Operating Officer of
the Company. Prior to his election as President in March 1987, he served as
President and Chief Executive Officer of Atlantic Soft Drink Co., a soft drink
bottling subsidiary of Grand Metropolitan USA. Mr. Moore has been a director of
the Company since March 1987. Mr. Moore is a director of Brothers Gourmet
Coffees, Inc. He is a member of the Executive Committee and is Chairman of the
Retirement Benefits Committee.
NED R. MCWHERTER, age 68, is Chairman of the Board of Directors of
Volunteer Distributing Company, Inc. and Eagle Distributors, Inc. of Dresden,
Tennessee. 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.
No director, nominee or executive officer of the Company has any family
relationship, not more remote than first cousin, to any other director, nominee
or executive officer, except that J. Frank Harrison, III is J. Frank Harrison,
Jr.'s son and H. W. McKay Belk is John M. Belk's nephew.
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table presents certain information regarding the amount and
nature of beneficial ownership of the Company's equity securities by its
directors and nominees, by the Company's executive officers named in the
Summary Compensation Table (see "Executive Compensation") and by all directors
and executive officers, as a group, as of March 11, 1999. Information
concerning beneficial ownership of the Company's equity securities by Messrs.
Harrison, Jr., Harrison, III and Henson is presented above under the caption
"Principal Shareholders" and is not set forth below.
PERCENT
BENEFICIAL OF
NAME CLASS OWNERSHIP(1) CLASS(2)
- ------------------------------------------ -------------- -------------- ---------
John M. Belk Common Stock 10,475(3) *
H.W. McKay Belk Common Stock 520(4) *
Evander Holyfield Common Stock -- --
H. Reid Jones Common Stock 79,715 1.3
Charles L. Wallace Common Stock 500 *
Ned R. McWherter Common Stock 1,000 *
James L. Moore, Jr. Common Stock -- --
John W. Murrey, III Common Stock 1,000 *
David V. Singer Common Stock 2,000 *
James B. Stuart Common Stock 1,000 *
Directors and executive officers as a
group (excluding Messrs. Harrison, Jr.,
Harrison, III and Henson) (22 persons) Common Stock 96,212(5) 1.6
- ------
* Indicates the number of shares owned is less than 1% of the total
shares of that class outstanding.
(1) See note 1 to table of Principal Shareholders.
8
(2) The percentages shown are based upon the number of shares outstanding
and do not include shares held in treasury.
(3) The amount shown includes (i) 8,975 shares held by a trust as to which
John M. Belk and his spouse serve as co-trustees and with respect to
which he shares voting and investment power and (ii) 1,500 shares held
by a trust for the benefit of John M. Belk's daughter, as to which his
spouse serves as trustee with sole voting and investment power.
(4) The amount shown includes 300 shares held by H.W. McKay Belk as
custodian for certain of his children under the North Carolina Uniform
Transfers to Minors Act.
(5) Of the number of shares indicated: (i) 85,737 shares of Common Stock are
owned with sole voting and sole investment power; (ii) 8,975 shares are
owned by a director and his spouse in a joint fiduciary capacity and
(iii) 1,500 shares of Common Stock are owned by directors' spouses,
either directly or in a fiduciary capacity.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, and regulations of
the Securities and Exchange Commission ("SEC") thereunder, require the
Company's executive officers and directors and persons who beneficially own
more than 10% of the Company's Common Stock, as well as certain affiliates of
such persons, to file initial reports of ownership and monthly transactions
reports covering any changes in ownership with the SEC and the National
Association of Securities Dealers. Executive officers, directors and persons
owning more than 10% of the Company's Common Stock are required by SEC
regulations to furnish the Company with 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 year 1998, all filing requirements
applicable to its executive officers, directors and owners of more than 10% of
the Company's Common Stock were complied with, except for one initial report of
beneficial ownership filed late by J. Frank Harrison Family, LLC.
DIRECTORS' FEES AND ATTENDANCE
Directors who are not employees of the Company are paid a retainer of
$20,000 per year, $1,100 for each Board meeting attended and $880 for each
committee meeting attended. During 1998, the Board of Directors held four
meetings. 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, except for Mr. Holyfield, who attended one out of the three meetings
of the Board of Directors which took place in 1998 after his appointment as a
director.
The Board of Directors has an Executive Committee whose current members
are Messrs. Harrison, Jr., Harrison, III, Henson and Moore. Except as otherwise
limited by law or by resolution of the Board of Directors, the Committee has
and may exercise all of the powers and authority of the Board of Directors for
the management of the business and affairs of the Company, which power the
Committee exercises between the meetings of the full Board of Directors. The
Executive Committee did not meet in 1998.
9
The Board of Directors has a standing Audit Committee whose current
members are Messrs. Harrison, III, John M. Belk, Jones, Henson 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 Committee
recommends to the Board of Directors the appointment of the independent
accountants for the Company. The Audit Committee met four times in 1998.
The Board of Directors has a Compensation Committee whose current members
are Messrs. H. W. McKay Belk, Wallace and McWherter. The Compensation Committee
administers the Company's compensation plans, reviews and may establish 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 1998.
The Board of Directors has a Finance Committee whose current members are
Messrs. H. W. McKay Belk, Harrison, Jr., Harrison, III, Henson, Wallace and
McWherter. The Finance Committee reviews, formulates and recommends to the
Board of Directors financial policies of the Company. The Finance Committee met
four times in 1998.
The Board of Directors has a Retirement Benefits Committee whose current
members are Messrs. Henson, Moore and Murrey. The Retirement Benefits Committee
oversees various benefits for retired employees, including those of the
Company's employee retirement plans that are intended to meet the requirements
of the Internal Revenue Code as being qualified for favorable tax treatment.
The Retirement Benefits Committee met one time in 1998.
During 1998, the Board of Directors appointed a special Independent
Committee composed of Messrs. H. W. McKay Belk, John M. Belk, Jones and
McWherter for the purpose of reviewing the terms of the Company's new lease of
office space from Beacon Investment Corporation, a North Carolina corporation
of which J. Frank Harrison, III is sole shareholder (see "Certain Transactions"
elsewhere herein for a description of the terms of such lease). This
Independent Committee met one time in 1998.
The Board of Directors does not have a standing nominating committee or
committee performing similar functions.
10
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for all services rendered in all capacities to the Company for
each of the last three (3) fiscal years for those persons who were at January
3, 1999 (i) the chief executive officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1)(2) COMPENSATION(3) COMPENSATION(4)
- ---------------------------------- ------ ----------- ------------- ----------------- ----------------
J. Frank Harrison, III 1998 $536,456 $607,102 $125,155 $253,257
Chairman of the Board 1997 424,229 436,881 163,691 249,224
and Chief Executive Officer 1996 337,325 384,087 132,192 241,915
Reid M. Henson 1998 402,022 423,644 28,571 58,582
Vice Chairman of 1997 384,584 382,930 28,863 56,256
the Board of Directors 1996 366,251 415,512 26,924 55,748
James L. Moore, Jr. 1998 522,554 550,868 45,270 105,872
President and 1997 497,670 493,158 41,523 103,005
Chief Operating Officer 1996 473,972 537,722 33,851 101,449
David V. Singer 1998 290,272 153,115 18,266 34,107
Vice President 1997 273,945 129,316 34,984 31,601
and Chief Financial Officer 1996 259,663 147,350 21,272 31,128
James B. Stuart 1998 290,656 153,025 29,412 64,743
Vice President, Marketing 1997 280,717 132,361 17,711 58,883
1996 269,816 152,995 11,143 59,276
- ------
(1) The amounts shown for Salary and Bonus include any amounts elected by
any Named Officer to be deferred under either the Company's Supplemental
Savings Incentive Plan (as discussed herein) or, pursuant to Section
401(k) of the Internal Revenue Code, under the terms of the Coca-Cola
Bottling Co. Consolidated Savings Plan. Company contributions on behalf
of the Named Officers under each of these plans are included in the "All
Other Compensation" column of this table.
(2) The Company's Bonus Plan is administered by the Compensation Committee
of the Board of Directors. Any officer of the Company or any of its
subsidiaries holding a key position with the Company (or a subsidiary)
is eligible to participate, and participants are selected annually based
on management recommendations approved by the Compensation Committee.
Annual Bonus Plan awards are determined by the Compensation Committee
based on corporate or divisional goals for selected performance
indicators which it establishes annually. Awards are generally made on
the basis of a graduated scale ranging from a "goal achievement"
exceeding 89% of the target to a maximum achievement of 110% of the
target. See "Report of the Compensation Committee on Annual Compensation
of Executive Officers."
(3) In the case of Mr. Harrison, III, the 1998 figures include an amount
($104,698), representing the value of Mr. Harrison, III's personal use
of Company aircraft.
11
(4) Detail of amounts reported in the "All Other Compensation" column for
1998 is provided in the table below. Split-dollar insurance represents
the premiums paid by the Company for the benefit of each Named Officer.
ITEM MR. HARRISON, III MR. HENSON MR. MOORE MR. SINGER MR. STUART
- ----------------------------------------- ------------------- ------------ ----------- ------------ -----------
o Company contributions to the
Company Savings Plan $ 3,800 $ 3,800 $ 3,800 $ 3,800 $ 3,800
o Company contributions to the
Supplemental Savings Incentive Plan 17,709 17,982 20,018 11,468 19,369
o Split-Dollar Insurance Premium
Value 231,748 36,800 82,054 18,839 41,574
-------- -------- -------- -------- --------
Total All Other Compensation $253,257 $ 58,582 $105,872 $ 34,107 $ 64,743
======== ======== ======== ======== ========
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
Following is information with respect to unexercised options to purchase
the Company's Common Stock held by Named Officers as of January 3, 1999. None
of the Named Officers exercised any stock options during fiscal year 1998.
Based on the closing price of $57.50 for shares of the Company's Common Stock
on NASDAQ/NMS on December 31, 1998, the last trading day prior to the end of
the Company's 1998 fiscal year, the value of the unexercised options as of the
end of the Company's fiscal year was as disclosed in the table below. The
Company has no outstanding SARs.
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/
SARS HELD AT SARS HELD AT
JANUARY 3, 1999 JANUARY 3, 1999
(#) ($)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- --------------- ------------- --------------
J. Frank Harrison, III (1) 150,000 N/A $4,162,500 N/A
- ------
(1) All options set forth above were granted to Mr. Harrison, III pursuant
to a Stock Option Agreement effective August 9, 1989 and are exercisable
at the price of $29.75 per share. The remaining unvested options became
exercisable on December 31, 1998. The vested options may be exercised in
whole or in part at any time during a 15 year period commencing on the
date of grant.
RETIREMENT PLAN
The Company has in effect a unit benefit retirement plan for the majority
of its non-union employees (the "Retirement Plan"), with payments thereunder
computed on an actuarial basis. The following table shows the estimated annual
benefits payable upon retirement at age 65 to persons born in 1948 for various
classifications of compensation and years of service.
12
ANNUAL BENEFIT UNDER RETIREMENT PLAN
For Plan Participants Born in 1948
YEARS OF SERVICE
FIVE-YEAR ------------------------------------------------------
AVERAGE
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ----------------- ---------- ---------- ---------- ---------------
$ 125,000 $24,831 $33,108 $41,385 $ 49,662
160,000(1) 33,231 44,308 55,385 66,462(2)
- ------
(1) Prior to January 1, 1989, the formula for determining benefits did not
limit the amount of compensation (generally compensation as reported on
Form W-2 for income tax withholding purposes) which could be considered.
Benefits which accrue after December 31, 1988 are limited as to the
amount of compensation which may be considered. Beginning in 1989, this
amount was limited to $200,000 to be adjusted for cost of living
increases beginning in 1990. In 1994 the amount was further reduced to
$150,000, which amount is to be adjusted for cost of living increases
beginning in 1995, but only to the extent that such increases exceed
increments of $10,000. The limit did not increase for 1995 or 1996;
however, the amount increased to $160,000 for benefits earned in 1997,
1998 and 1999. No retroactive adjustments are permitted. Since the
allowable annual benefit amount is the same for all compensation levels
in excess of the current limit of $160,000, the table does not
separately list the annual benefit for such additional levels of
compensation.
(2) The annual benefit from the Retirement Plan may not exceed $90,000 as
adjusted for cost of living increases beginning in 1988. In 1998 the
amount, as adjusted, is $130,000; it will be $130,000 in 1999. This
benefit is reduced by 1/15 for each of the first three years that actual
retirement precedes a participant's Social Security Retirement Age. For
someone born in 1948, the Social Security Retirement Age is 66. In 1998
the maximum benefit was $121,333 for a person who retires at age 65, the
earliest Normal Retirement Age specified by the Retirement Plan; the
maximum benefit amount is $121,333 for 1999.
The benefits listed in the table, which are based on straight life annuity
amounts, 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 (as defined below). As of
January 3, 1999, the Named Officers have the following full years of service as
defined in the Retirement Plan: Mr. Harrison III, 22 years; Mr. Henson, 16
years; Mr. Moore, 12 years; Mr. Singer, 13 years; and Mr. Stuart, 10 years.
Generally, compensation is remuneration paid to Retirement Plan
participants by the Company for services rendered as reported or reportable for
federal income tax withholding purposes. During a period of disability, a
participant is deemed to have earned compensation at the same rate he was paid
during the last full year prior to the disability. In general, Covered
Compensation is 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. Pursuant to these assumptions, Covered Compensation for 1998 for
the Named Officers is as follows: Mr. Moore, $48,552;
13
Mr. Stuart, $48,552; Mr. Henson, $43,488; Mr. Singer, $64,872; Mr. Harrison,
III, $63,420. No benefits are payable to a participant whose employment
terminates before he has been credited with five years of service or has both
reached age 65 and begun to participate in the Retirement Plan at least five
years before his employment terminated.
OFFICER RETENTION PLAN
Under the Company's Officer Retention Plan ("ORP"), a participant receives
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 ORP increase with each year of the participant's
participation in the ORP based on the product of an assumed rate of increase in
a participant's beginning salary (as determined by the Compensation Committee)
and factors prescribed by the ORP. The retirement benefits under the ORP are
not payable to the participants unless they remain in the employment of the
Company until they attain age 60, except in the event of total disability (at
which time they would be paid on a present value basis).
The ORP contains a death benefit which must be paid in a lump sum. If the
participant dies before annuity payments begin, then the death benefit equals
the retirement benefit accrued as of the date of death, except that there is a
further reduction of 50% of the amount otherwise payable for deceased
participants whose employment with the Company terminated prior to age 60. If
the participant dies after annuity payments have begun, the monthly
installments remaining are paid to the participant's beneficiary in a lump sum
after applying a discount rate of 8% per annum.
The ORP provides that in the event of a Change in Control in the ownership
of the common stock of the Company (as more specifically described in
connection with the Supplemental Savings Incentive Plan below), if in
connection therewith (i) the ORP is terminated by the Company or amended so as
to materially reduce the rights and benefits of an ORP participant, (ii) the
participant is terminated by the Company without cause, (iii) the participant
is demoted or has his salary and/or benefits materially reduced, or (iv) the
Company takes other action which denies the participant the position and
economic entitlements which he had under the ORP prior to the Change in
Control, then the participant may elect to have paid to him 100% of the
retirement benefits to which he was entitled at the time of the Change in
Control, plus 50% of any increase in his retirement benefits which accrued
between the date of the Change in Control through the date of his election.
The 1998 annual compensation used for determining benefits under the ORP
for the Named Officers is as follows: Mr. Harrison, III, $607,108; Mr. Henson,
$405,401; Mr. Moore, $524,636; Mr. Singer, $288,897; and Mr. Stuart, $320,115.
Each of those individuals presently is credited with eight years of
participation in the ORP.
SUPPLEMENTAL SAVINGS INCENTIVE PLAN
Pursuant to the Company's Supplemental Savings Incentive Plan ("SSIP"),
the Company and the participant agree to defer a portion of salary and bonuses.
The Company matches 30% of the first 6% of salary (excluding bonuses) deferred
by the participant. The Company may also make discretionary contributions to
any one or more participants which contributions are to be both based on merit
and
14
intended to offset the impact of the reduced compensation limit for qualified
plans (see "Retirement Plan," above). A participant is fully vested in the
salary and bonuses he defers and becomes fully vested in Company contributions
upon death, disability, retirement on or after age 55, the completion of at
least five years of service (vesting occurring at a 20% rate for each year of
service) or a Change in Control. "Change in Control" for these purposes
includes the acquisition by any person or group of more than 50% of the total
vote of all shares of common stock of the Company for the election of the Board
of Directors and is presumed to occur in the event that J. Frank Harrison, Jr.
and his issue (or persons acting on their behalf) should be entitled to vote
less than 50% of the total votes of all shares of common stock of the Company
for the election of directors. Deferrals and Company contributions may be
placed in either a Fixed Benefit Option or designated among investment funds
specified by the Company. Such investment funds are only used to measure the
value of benefits, which benefits comprise the Supplemental Account of a
participant. There is no requirement that any money held in the SSIP actually
be invested in any such fund.
The schedule of benefits for a Fixed Benefit Option provides for earnings
up to 13% (depending on the participant's age and years of service at
retirement or termination due to total disability, as applicable). Benefits
which start after age 60 are increased at the rate of 6% compounded annually
until benefit payments begin. Benefits paid on account of severance are deemed
to earn 8% compounded annually.
Amounts held in a Supplemental Account may be transferred to a Fixed
Benefit Option. No investment in a Fixed Benefit Option may be transferred to a
Supplemental Account.
Benefits paid on account of a Change in Control are made within 30 days
following a Change in Control; all other payments are made (or begin) in the
first January after a payment has been requested and satisfactory evidence has
been furnished that the participant has become entitled to receive such
benefit. Benefits for severance, benefits arising from a Change in Control,
death benefits for participants who are not insurable, and benefits payable out
of Supplemental Accounts are made in a lump sum. Other payments made from the
Fixed Benefit Option are normally paid on a monthly basis for 180 months,
although the Compensation Committee may approve a lump sum payment or an
annuity for a period of less than 180 months. No executive officer received a
distribution during 1998. The amount of Company contributions allocated to each
of the Named Officers during 1998 is reflected in the Summary Compensation
Table under the heading, "All Other Compensation."
OFFICERS' SPLIT-DOLLAR LIFE INSURANCE PLAN
The Company has established an Officers' Split-Dollar Life Insurance Plan
for all officers, including the Named Officers. Special arrangements have been
provided for J. Frank Harrison, III and Reid M. Henson, as described below.
Insurance policies purchased under the plan are whole life policies having a
face amount, in most instances, equal to approximately three times each
officer's salary (approximately six times in the case of the Named Officers).
The Company pays all premiums on each officer's policy. Policy dividends are
used to purchase paid up additions. Upon the death of any participant, the
participant's beneficiary would receive a stated death benefit, with the
balance of the proceeds from the participant's policy being paid to the
Company.
15
The dollar amount representing the insurance premiums paid by the Company
for the benefit of each of the Named Officers under the Officers' Split-Dollar
Life Insurance Plan is included in the Summary Compensation Table under the
heading "All Other Compensation."
A separate split-dollar insurance policy has been obtained covering Mr.
Henson. In the event of his death, the Company would receive an amount equal to
all premiums paid on the policy, subject to the death benefit payable to Mr.
Henson's beneficiary being not less than $1,000,000.
The split-dollar life insurance arrangement for J. Frank Harrison, III
varies from the standard split-dollar plan. A trust established by Mr.
Harrison, III pays the PS-58 cost and the Company pays the remaining portion of
the premium. This arrangement allows Mr. Harrison, III to obtain additional
insurance coverage with no increase in the net present value of the projected
costs of this arrangement for the Company. Under this revised arrangement, at
the death of the insured the Company receives a return of the aggregate
premiums it has paid.
EMPLOYMENT AGREEMENTS
James L. Moore, Jr., is employed as President and Chief Operating Officer
pursuant to an employment agreement dated March 16, 1987, as amended on May 18,
1994, at an annual salary of not less than $275,000. Mr. Moore is also entitled
under the agreement to other fringe benefits generally available from time to
time to the Company's executive officers. The agreement provides that it may be
terminated by either party at any time, with or without cause. In the event Mr.
Moore's employment is terminated by the Company for cause (as defined in the
agreement), or if Mr. Moore voluntarily terminates his employment with the
Company, Mr. Moore will receive only benefits accrued through the date his
employment is terminated. If the Company terminates Mr. Moore's employment
without cause, Mr. Moore shall receive his salary (i) at the annual rate of
$275,000 for the period through May 18, 1999 or (ii) for a period of two years
from the date of termination at the specified annual rate of $440,000,
whichever is greater.
Effective January 1, 1997, the Company entered into an Agreement for
Consultation and Services with J. Frank Harrison, Jr., who previously served as
Chairman of the Board of Directors. Pursuant to the agreement, Mr. Harrison,
Jr. has agreed to continue to serve as a director of the Company and as
Chairman of the Board of Directors' Executive Committee and Finance Committee.
He will provide consultation and assistance to management of the Company with
respect to major strategic decisions and special projects, as well as
concerning general oversight and guidance of the Company. The agreement also
provides that Mr. Harrison, Jr. will continue to personally assist the Company
in maintaining a good relationship with The Coca-Cola Company to promote the
best interests of the Company and its shareholders. Mr. Harrison, Jr. has
agreed to devote his full time business resources, as required by Company
management, to carrying out these duties. Under the terms of the agreement, Mr.
Harrison, Jr. will be paid a consulting fee of $200,000 per year and will also
receive a retirement benefit of $500,000 per year on account of his past
service as an officer of the Company, both payable in equal monthly
installments commencing January 1, 1997. He will also be provided with
insurance and other fringe benefits comparable with the past practice of the
Company. The agreement contains confidentiality and non-competition provisions
and provides that, in the event of a change in control of the Company, he will
continue to receive the retirement benefit provided under the agreement for the
16
remainder of his lifetime. The agreement is for a term of one year, and is
self-renewing for successive terms of one year each unless terminated by either
Mr. Harrison, Jr. or by the Board of Directors upon notice given at least 60
days in advance of the expiration of the prior one year term.
REPORT OF THE COMPENSATION COMMITTEE
ON ANNUAL COMPENSATION OF EXECUTIVE OFFICERS
The Board's Compensation Committee, composed of Messrs. H.W. McKay Belk,
Charles L. Wallace, and Ned R. McWherter, administers the Company's
compensation plans, reviews and may establish executive compensation and makes
recommendations to the Board concerning such compensation and related matters.
The following is a report submitted by the Compensation Committee members
addressing the Company's compensation policy as it relates to the Company's
executive officers, including the Named Officers, for 1998.
COMPENSATION POLICY AND FISCAL 1998 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.
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 Company 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 1998, the Company utilized a study published
by Watson Wyatt Data Services which surveyed 1,200 public corporations,
including many "Fortune 500" companies. The survey provided compensation
information by separate categories of employers. Employer categorization
factors included, but were not limited to, 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 (excluding
financial services and non-profits) covered by the survey. The Compensation
Committee believes that Mr. Harrison, III's overall compensation also places
him above the median compensation of similarly situated executives.
Other factors considered by the Company 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
17
available information concerning those of other companies in the soft drink
bottling industry, focusing specifically on two publicly traded soft drink
bottlers utilized by the Company as part of the "peer group index" utilized in
the stock price performance graph included elsewhere in this Proxy Statement.
Due to wide disparities in levels of executive compensation revealed in the
published information regarding the other companies included in the Company's
peer group index, the Compensation Committee does not believe that such
information provides 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 Bonus Plan is administered by the Compensation Committee,
which annually selects participants (based on management recommendations) who
hold key positions with the Company or one of 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 individual's indexed performance factor; and
(iii) the 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 1998 were operating cash flow, free cash flow, net income,
equivalent case volume, market share and a value measure. The Compensation
Committee also 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 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 fiscal
1998, the following weights were assigned to the performance indicators:
operating cash flow -- 30%; free cash flow -- 15%; net income -- 10%; unit
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 exceeding 89% of the target to a maximum achievement of 110% of the
target for each performance indicator. Target goals were met or exceeded for
four of the performance indicators. For two of the performance indicators,
actual performance exceeded the pay out threshold but was below the 100%
target.
Although the Company's Bonus Plan enables the Compensation Committee to
calculate bonuses derived from the factors described above, the Compensation
Committee has absolute discretion to decrease, eliminate or otherwise amend
awards under the Company's Bonus Plan. The Compensation Committee elected to
award bonuses to executive officers in an amount equal to 105% of 1998 base
salary multiplied by each officer's approved bonus percentage factor. The
amount of annual bonus payments for each of the Named Officers for the years
1996, 1997 and 1998 is shown in the Summary Compensation Table under the
heading "Bonuses."
18
The Company's executive officers also are 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 on account
of the company's performance in meeting specified objectives with respect to
both a Value Growth Factor and a Volume Growth Factor, over any 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 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.
In addition to the annual base salary and performance-based bonus
components, the Company's total annual compensation package for its executives
includes the opportunity: (i) to participate, on the same basis as other
non-union employees, in the Coca-Cola Bottling Co. Consolidated Savings Plan
(Company contributions for each of the Named Officers are included under "All
Other Compensation" in the Summary Compensation Table); (ii) to participate in
the Officers' Split-Dollar Life Insurance Plan; (iii) to participate in the
Company's Retirement Plan which is available to all eligible employees; (iv) to
elect to defer a certain portion of each executive's compensation and receive
limited matching contributions from the Company under the Supplemental Savings
Incentive Plan. (Company contributions for each of the Named Officers are
included under "All Other Compensation" in the Summary Compensation Table); and
(v) for certain key executives selected by the Compensation Committee, to
receive additional retirement and survivor benefits pursuant to the Officer
Retention Plan. The Retirement Plan, the Officers' Split-Dollar Life Insurance
Plan, the Supplemental Savings Incentive Plan and the Officer Retention Plan
are each discussed in greater detail in the preceding section of this Proxy
Statement. 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.
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 each of those named in the compensation table.
Submitted by the Compensation Committee of the Board of Directors.
H. W. McKay Belk Charles L. Wallace
Ned R. McWherter
COMMON STOCK PERFORMANCE
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a five-year
comparison of stock performance with a broad market equity index and with a
peer group of similar companies. The Company's Common Stock is traded on the
Nasdaq National Market System and the Company has selected the S&P 500 for use
as a broad equity market index for the purpose of this comparison. The Company
has elected to utilize
19
a peer group comprised of eleven publicly traded companies in the food and
beverage industry (the "Custom Composite Index"). 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.
[GRAPHIC OMITTED]
- ------
(1) Assumes that the value of the investment in Company Common Stock and in
each index was $100 on December 31, 1993 and that all dividends were
reinvested on a quarterly basis. Returns for the companies included in
the 11-Stock Custom Composite Index have been weighted on the basis of
total market capitalization for each company.
20
PROPOSAL 3
APPROVAL OF AWARD OF RESTRICTED STOCK TO
THE COMPANY'S CHIEF EXECUTIVE OFFICER
(EFFECTIVE JANUARY 4, 1999)
Upon the recommendation of its Compensation Committee, the Board of
Directors of the Company has approved a restricted stock award to the Company's
Chairman and Chief Executive Officer, consisting of 200,000 shares of the
Company's Class B Common Stock and directed that this restricted stock award be
submitted to the Company's shareholders for their approval at the Annual
Meeting. The restricted stock award is effective as of January 4, 1999 (the
first day of the Company's 1999 fiscal year), subject to approval by the
affirmative vote of a majority of the total votes represented at the Annual
Meeting, in person or by proxy, by holders of outstanding shares of Common
Stock and Class B Common Stock represented and entitled to vote at the Annual
Meeting. Such shares may be awarded from either authorized and unissued shares
or treasury shares.
The Company intends that the restricted stock award be "performance-based"
compensation within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended. The payment of such compensation thereby will be exempt
from the provisions of Section 162(m) that would otherwise deny the Company a
federal income tax deduction for compensation expense to the extent that
aggregate compensation payments to the Company's Chief Executive Officer might
exceed $1 million in any future period. Accordingly, the restricted stock award
is being submitted to the Company's shareholders for approval pursuant to the
requirements of Section 162(m). This restricted stock award does not apply to
any other officer or director.
The primary purpose of the restricted stock award is to make a significant
portion of Mr. Harrison, III's compensation dependent upon the Company
achieving its performance goals. To this end, the award provides that the
shares of restricted stock would vest at the rate of 20,000 shares per year
over a ten year period. The vesting of each annual installment is contingent
upon the Company achieving 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. In order to receive any credit
in the computation of the Overall Goal Achievement Factor, for any specific
performance indicator, the Company must achieve more than 89% of the annual
goal established by the Compensation Committee for that specific performance
indicator. If the Company fails to achieve at least 80% of the Overall Goal
Achievement Factor for any given year during the vesting period, then the
20,000 shares of restricted stock for that year would not vest and that portion
of the award would be canceled.
The six performance indicators used under the Company's Annual Bonus Plan
are: (1) operating cash flow; (2) free cash flow; (3) net income; (4)
equivalent case volume; (5) market share; and (6) a value measure based on
operating cash flow. Annual performance goals with respect to each of these
indicators are established by the Compensation Committee in the fourth quarter
of each year for the succeeding fiscal year. The annual performance goal for
each indicator consists of a performance target weighted (which weights must
add to 100%) on the basis of the Compensation Committee's determination
regarding need to focus more or less on any particular objective in
establishing the goals for a given year. In establishing these goals, the
Compensation Committee considers industry conditions,
21
available information on performance of other companies in the soft drink
bottling industry, performance in prior years and the Company's specific needs
for the current year.
The restricted stock award is to be administered by the Compensation
Committee of the Board of Directors, which is comprised of three members who
are "disinterested persons" within the meaning of Rule 16b-3 under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
"outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (including the
transition rules of Treasury Regulations Section 1.162-27). The Compensation
Committee will interpret the provisions of the restricted stock award, and will
be responsible for determining whether the vesting conditions have been
satisfied for each annual 20,000 share installment.
Unvested shares of Company's Class B Common Stock awarded under the
restricted stock award may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of in any manner.
The restricted stock award allows restrictions with respect to each annual
installment to be removed only upon the written certification of the
Compensation Committee of the vesting conditions described above have been
satisfied. Unvested portions of the restricted stock award would lapse without
vesting if Mr. Harrison, III were to terminate his employment with the Company
for any reason (including death or disability) prior to expiration of the
10-year term.
During the period the restricted shares of Class B Common Stock are
subject to forfeiture, Mr. Harrison, III will not be entitled to receive
dividends and other distributions on such stock and will not be entitled to
vote such stock on any matters submitted to shareholders.
The restricted stock award will terminate when all of the Company's Class
B Common Stock authorized for award thereunder has been issued and is no longer
subject to forfeiture, unless terminated earlier by the Board of Directors or
the Compensation Committee. The Board of Directors or the Compensation
Committee may amend, suspend or terminate the restricted stock award at any
time without the approval of shareowners, except for amendments for which
share-owner approval would be required to retain the benefits of Rule 16b-3
under the Exchange Act or Section 162(m) of the Internal Revenue Code of 1986,
as amended.
CERTAIN TRANSACTIONS
The Company's business consists primarily of the production, marketing and
distribution of 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 year 1998 the Company paid The Coca-Cola Company
approximately $225 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 year 1998, total direct marketing support
provided to the Company by The Coca-Cola Company was approximately $52 million.
Additionally, the Company earned approximately $16 million from The Coca-Cola
22
Company in 1998 related to cold drink infrastructure support. The marketing
funding related to cold drink infrastructure support is covered under a
multi-year agreement which includes certain annual performance requirements.
The Company was in compliance with all such performance requirements in 1998.
In addition, the Company paid approximately $28 million for local media and
marketing program expense pursuant to cooperative advertising and cooperative
marketing arrangements with The Coca-Cola Company.
On July 2, 1993, Piedmont Coca-Cola Bottling Partnership, a Delaware
general partnership (the "Partnership"), was formed by wholly owned
subsidiaries of the Company and The Coca-Cola Company (together, the
"Partners") 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, through
their respective subsidiaries, each beneficially own a 50% interest in
Piedmont. The Partnership has an initial term of 25 years subject to early
termination as a result of any Dissolving Event, as defined in the Partnership
Agreement. Each Partner's partnership Interest is subject to certain
limitations on transfers, rights of first refusal and other purchase rights
upon the occurrence of certain events.
The Company is providing the manufacture, production and packaging of the
products and the management of the Partnership pursuant to a Management
Agreement. In consideration for its services, the Company receives a management
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 a "Change in Control" as defined therein, a termination of the
Partnership or a material default by either party. For the fiscal year ending
January 3, 1999, the Company received management fees of approximately $14.2
million from the Partnership pursuant to the Management Agreement. The Company
also subleases various fleet and vending equipment to Piedmont at cost. These
sublease rentals amounted to approximately $7.1 million in fiscal 1998. In
addition, Piedmont subleases various fleet and vending equipment to the Company
at cost. These sublease rentals amounted to approximately $1.6 million during
fiscal 1998.
Mr. Charles L. Wallace, a director of the Company, is Vice President and
Executive Assistant to the Chairman of The Coca-Cola Company. During the period
1987-1998, The Coca-Cola Company and the Company have engaged in various
transactions pursuant to which The Coca-Cola Company presently owns an
aggregate of 1,984,495 shares of Common Stock (32.9% of the outstanding shares
of such class as of March 11, 1999) and 497,670 shares of Class B Common Stock
(21.3% of the outstanding shares of such class as of March 11, 1999) from the
Company. These transactions occurred pursuant to: (i) a negotiated, direct
purchase of shares from the Company; (ii) an exchange of Common Stock for all
of the outstanding shares of The Coca-Cola Bottling Company of West Virginia,
Inc., which were owned by The Coca-Cola Company; (iii) the exercise by The
Coca-Cola Company of its preemptive right to purchase additional shares of
Common Stock pursuant to the Stock Rights and Restrictions Agreement (described
below) that was triggered by the Company's issuance of Common Stock to Mr.
Harrison, Jr. in connection with the Company's acquisition of Whirl-i-Bird,
Inc. in April 1993; (iv) the Company's February 20, 1997 repurchase of 275,490
shares of Common Stock
23
from The Coca-Cola Company pursuant to the Stock Rights and Restrictions
Agreement, as described below; and (v) the exercise by The Coca-Cola Company of
its preemptive right to exchange certain shares of Common Stock for shares of
Class B Common Stock pursuant to the Stock Rights and Restrictions Agreement
(described below) that was triggered by the Company's issuance of Common Stock
to Mr. Harrison, Jr. in connection with certain estate planning transactions
involving an exchange by Mr. Harrison, Jr. and certain Harrison family trusts
of shares of Common Stock for shares of Class B Common Stock in November 1998,
as described below.
See "Principal Shareholders" and the notes to the tabular information
presented therein for additional information concerning The Coca-Cola Company's
beneficial ownership of Common Stock and Class B Common Stock.
Pursuant to a Stock Rights and Restrictions Agreement dated January 27,
1989, between the Company and The Coca-Cola Company, The Coca-Cola Company
agreed not to purchase or acquire additional shares of Common Stock or Class B
Common Stock except as contemplated or provided in the agreement; and not to
sell or otherwise dispose of shares of Class B Common Stock without converting
them into Common Stock. The Coca-Cola Company granted the Company a right of
first refusal with respect to any sale, assignment, transfer or other
disposition by The Coca-Cola Company of such shares, and the Company granted
The Coca-Cola Company certain registration rights with respect to such shares.
The Stock Rights and Restrictions Agreement contains provisions under which The
Coca-Cola Company has agreed that if its equity ownership or voting interest at
any time reaches 30.67% or more of the Company's outstanding common stock of
all classes, or 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 not less than 20% nor more
than 21% of the outstanding shares of Class B Common Stock) and to maintain its
voting interest at not less than 22.59% nor more than 23.59% of the votes of
all outstanding shares of all classes, as adjusted. Following the purchase by
the Company of (i) 508,690 shares of Common Stock pursuant to a Dutch auction
self-tender offer in December 1996 and (ii) 145,260 shares of Common Stock in a
private transaction with a single shareholder in January 1997, The Coca-Cola
Company owned shares of Common Stock and Class B Common Stock aggregating to
33.99% of the outstanding common stock of all classes and approximately 20.39%
of the votes of all outstanding shares of all classes. In accordance with the
provisions of the Stock Rights and Restrictions Agreement, the Company
repurchased 275,490 shares of Common Stock from The Coca-Cola Company at a cash
price of $47.50 per share in a negotiated transaction effective February 20,
1997. This transaction reduced The Coca-Cola Company's ownership of Common
Stock and Class B Common Stock to the levels prescribed in the Stock Rights and
Restrictions Agreement.
Additionally, in the event that the Company issues new shares of Class B
Common Stock upon the conversion or exercise of any security, warrant or option
of the Company which 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, under the Stock Rights and Restrictions Agreement, to
exchange shares of
24
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 Stock Rights and Restrictions Agreement, The Coca-Cola
Company has a preemptive right to purchase a percentage of any newly issued
shares of any class as necessary to allow 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 described herein 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.
Effective November 23, 1998, J. Frank Harrison, Jr. exchanged 792,796
shares of the Company's Common Stock for 792,796 shares of Class B Common Stock
in a transaction previously approved by the Company's Board of Directors (the
"Harrison Exchange"). Mr. Harrison, Jr. already owned the shares of Common
Stock used to make this exchange. This exchange took place in connection with a
series of simultaneous transactions related to Mr. Harrison Jr.'s personal
estate planning, the net effect of which was to transfer the entire ownership
interest in the Company previously held by Mr. Harrison and certain Harrison
family trusts into three Harrison family limited partnerships. J. Frank
Harrison, Jr., in his capacity as Manager of J. Frank Harrison Family, LLC (the
general partner of the three family limited partnerships), exercises sole
voting and investment power with respect to the shares of the Company's Common
Stock and Class B Common Stock held by the family limited partnerships. In
connection with the Harrison Exchange and the related Harrison family limited
partnership transactions, The Coca-Cola Company, in the exercise of its rights
described above under the Stock Rights and Restrictions Agreement, exchanged
228,512 shares of the Company's Common Stock which it held for 228,512 shares
of the Company's Class B Common Stock, effective November 23, 1998.
Pursuant to the Stock Rights and Restrictions Agreement, The Coca-Cola
Company granted the Company the right, from and after the sixth anniversary of
the date of such agreement through the thirtieth anniversary, at the Company's
sole option and from time to time, to call for redemption that number of
Purchased Shares (as defined in such agreement) which would reduce The
Coca-Cola Company's ownership of the equity of the Company to 20% at a price
and on such terms as set forth in the agreement; provided, however, that in no
event shall the price be less than $42.50 per share (subject to appropriate
adjustment to reflect changes in the Company's capital structure and except for
shares issued to The Coca-Cola Company to maintain its proportionate ownership
of Common Stock). Effective November 23, 1998, in connection with the Harrison
Exchange, The Coca-Cola Company agreed that the transfers to Harrison Family,
LLC and the family limited partnerships described above would not affect the
call option granted by The Coca-Cola Company to the Company under the Stock
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 (or a successor) nominated at each subsequent election of
the Company's directors, subject to certain conditions. Mr. Wallace's
nomination for election as a director of the Company was made in accordance
with the terms of this agreement.
25
The Coca-Cola Company, J. Frank Harrison, Jr., J. Frank Harrison, III and
Reid M. Henson, in his capacity as co-trustee of certain trusts holding shares
of Class B Common Stock, 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 (and any shares of Common Stock into which shares of
Class B Common Stock are converted or exchanged) to J. Frank Harrison, III for
life and thereafter to J. Frank Harrison, Jr. The Irrevocable Proxy covers any
matters on which holders of Class B Common Stock or Common Stock are entitled
to vote, other than certain mergers, consolidations, sales of assets and other
similar corporate reorganizations or corporate transactions.
Pursuant to the terms of the Voting Agreement, J. Frank Harrison, III (or,
in the event of his death, J. Frank Harrison, Jr.) was granted the option
(assignable to the Company or to J. Frank 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 is not the
beneficial owner of any shares of the Company's common stock. The Irrevocable
Proxy terminates at such time as: (i) J. Frank Harrison, Jr. or J. Frank
Harrison, III do not collectively own all 712,796 shares of Class B Common
Stock owned by J. Frank Harrison, Jr., or (ii) certain trusts holding shares of
Class B Common Stock subject to the Voting Agreement do not collectively own at
least 50% of the Class B Common Stock held by them at the date of the Voting
Agreement. Effective November 23, 1998, in connection with the Harrison
Exchange, the Voting Agreement was amended to confirm that the Irrevocable
Proxy would not terminate as a result of the Harrison Exchange transactions.
On November 30, 1992, the Company and the owner of the property on which
the Company operates its Snyder Production Center agreed to the early
termination of the Company's lease of this property. Harrison Limited
Partnership One ("HLP One"), a North Carolina limited partnership, purchased
the property contemporaneously with the termination of the lease, and the
Company and HLP One entered into an agreement pursuant to which the Company is
leasing the property for a ten-year term which commenced December 1, 1992. JFH
Management, Inc., a North Carolina corporation of which J. Frank Harrison, Jr.
is the sole shareholder, serves as sole general partner of the limited
partnership that purchased the production center property. The sole limited
partner of this limited partnership is a trust as to which J. Frank Harrison,
III and Reid M. Henson are co-trustees, share investment powers, and as to
which they share voting power for purposes of this partnership interest. The
beneficiaries of this trust are J. Frank Harrison, Jr. and his descendants. The
annual base rent the Company is obligated to pay for its lease of the Snyder
Production Center is subject to adjustment for increases in the Consumer Price
Index and for increases or decreases in interest rates, using LIBOR as the
measurement device. Rent expense under this lease totaled $2.7 million in
fiscal 1998.
26
On June 1, 1993, Beacon Investment Corporation, a North Carolina
corporation of which J. Frank Harrison, III is sole shareholder, purchased the
office building located on Rexford Road in Charlotte, North Carolina, in which
the Company leases its executive offices. Contemporaneously, the Company
entered into a ten year lease commencing June 1, 1993 with Beacon Investment
Corporation for office space within the building. Rent expense under this lease
totaled $2.1 million in fiscal 1998. On January 5, 1999, the Company entered
into a new 10-year lease agreement with Beacon Investment Corporation which
includes the Company's headquarters office building and an adjacent office
facility. The annual base rent the Company is obligated to pay under this lease
in 1999 is $2.8 million and is subject to adjustment for increases in the
Consumer Price Index and for increases or decreases in interest rates, using
the Adjusted Eurodollar Rate as the measurement device.
The Company purchases certain computerized data management products and
services from Data Ventures LLC, a Delaware limited liability company in which
the Company holds a 31.25% equity membership with a 47.7% voting interest. J.
Frank Harrison, III, Chairman of the Board of Directors and Chief Executive
Officer of the Company, also holds a 32.5% equity membership in Data Ventures,
LLC with a 49.6% voting interest. The remaining 36.25% equity membership and
2.7% voting interest in Data Ventures, LLC is held by third parties. During the
Company's fiscal year ended January 3, 1999, the Company paid approximately
$237,000 to Data Ventures, LLC in connection with the purchase of such products
and services. On September 30, 1997, Data Ventures obtained a $1.9 million
unsecured line of credit from the Company, which expires in September 1999.
Data Ventures was indebted to the Company in the amount of $1.2 million
pursuant to this line of credit as of January 3, 1999. The line of credit
provides working capital financing for Data Ventures and bears interest at a
rate per annum equal to the prime rate as published by THE WALL STREET JOURNAL,
less one percent, adjusted on the first day of each month.
During the fiscal year ended January 3, 1999, the Company paid legal fees
of $683,836 to Witt, Gaither & Whitaker, P.C., a law firm in which John W.
Murrey, III, a director of the Company, and John F. Henry, Jr., Secretary of
the Company, are members.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of
PricewaterhouseCoopers LLP to serve as the Company's independent accountants
for the fiscal year ending January 2, 2000. PricewaterhouseCoopers LLP has
served in that capacity since 1968.
A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if he desires
to do so and is expected to be available to respond to appropriate questions.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the Company's shareholders vote FOR
fixing the number of directors at ten, FOR electing the Board of Directors'
nominees for directors and FOR approving the restricted stock award to the
Company's Chief Executive Officer, as set forth in this Proxy Statement.
27
SHAREHOLDER PROPOSALS
In the event any shareholder wishes to present a proposal to the
shareholders of the Company at the 2000 Annual Meeting of Shareholders, 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 8, 1999.
ADDITIONAL INFORMATION
The entire cost of soliciting proxies will be borne by the Company. In
addition to this solicitation of proxies by mail, proxies may be solicited by
the Company's directors, officers and other employees by personal interview,
telephone and telegram. Such persons will receive no additional compensation
for such services. Furthermore, 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.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter to be acted upon at the Annual Meeting other than those
specifically referred to in this Proxy Statement. If other matters should
properly come before the Annual Meeting, it is intended that the holders of the
proxies will act in respect thereto in accordance with their best judgment.
John F. Henry, Jr.
SECRETARY
Date: April 6, 1999
28
(THIS PAGE INTENTIONALLY LEFT BLANK)
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY COCA-COLA BOTTLING CO. CONSOLIDATED
ANNUAL MEETING OF SHAREHOLDERS, MAY 12, 1999
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
which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at Snyder Production Center, 4901 Chesapeake Drive,
Charlotte, North Carolina 28216, at 10:00 a.m., E.D.T., on May 12, 1999, and
any adjournment or adjournments thereof, as follows:
1. FIXING THE NUMBER OF DIRECTORS AT TEN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary below) to vote for all nominees listed below
John M. Belk; Charles L. Wallace; Reid M. Henson
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
-----------------------------------------------------------------------
3. APPROVING THE RESTRICTED STOCK AWARD TO THE COMPANY'S CHIEF EXECUTIVE
OFFICER:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Acting upon any other business which may be properly brought before said
meeting or any adjournment or adjournments thereof; according to the number
of votes and as fully as the undersigned would be entitled to vote if
personally present, hereby ratifying and confirm-
(continued on other side)
FOLD AND DETACH HERE
-----------------------------------------------------------------------------
(continued from other side)
ing all that said proxies or any of them lawfully do or cause to be done by
virtue hereof. A majority of said proxies who shall be present and acting as
such at the meeting or any adjournment thereof, or if only one such proxy be
present and acting, then that one, shall have and may exercise all the powers
herein conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF PROPOSALS 1, 2 AND 3, AND WILL BE VOTED IN ACCORDANCE WITH
THE BEST JUDGMENT OF THE PROXYHOLDERS IN ACTING UPON ANY OTHER BUSINESS WHICH
MAY BE PROPERLY BROUGHT BEFORE SAID MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated April 6, 1999, and the Proxy Statement
furnished therewith.
If you plan to attend the Annual
Meeting of Shareholders on May 12,
1999, please check the following
box: [ ]
Dated this ____ day of_____________
_____________________________, 1999
_____________________________(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 or
partnerships, should so indicate
when signing.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING
PREPAID SELF-ADDRESSED ENVELOPE. THANK YOU.
ANNEX A
- -------
FORM OF
RESTRICTED STOCK AWARD AGREEMENT
Restricted Stock Award Agreement made effective this 4th day of January,
1999, by and between Coca Cola Bottling Co. Consolidated, Inc., a Delaware
corporation (hereinafter referred to as the "COMPANY"), and J. Frank Harrison,
III, the Chairman and Chief Executive Officer of the Company (hereinafter
referred to as "Harrison");
W I T N E S S E T H:
WHEREAS, the shareholders of the Company have approved an Annual Bonus
Plan, as amended (hereinafter referred to as the "PLAN"), for the purpose of
providing financial incentives to selected key employees of the Company who
contribute significantly to the strategic and long-term performance objectives
and growth of the Company; and
WHEREAS, the Company desires to grant to Harrison an award of restricted
shares of the Company's Class B Common Stock as a financial incentive, with the
vesting of such shares subject to achievement of certain levels of performance
under the Plan, and subject to other terms and conditions described herein; and
WHEREAS, Harrison desires to accept such award.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, for other good and valuable consideration, the parties to this Agreement
hereby agree as follows:
1. Administration. Under the Plan the Compensation Committee of the
Board of Directors of the Company ("COMMITTEE") administers the Plan, may
construe and interpret the Plan, establish rules and regulations and perform all
other acts as it believes reasonable and proper under the Plan. Any decision
made, or action taken, by the Committee shall be final, conclusive and binding
on both parties to this Agreement.
2. Award of Restricted Stock/Shareholder Approval. Effective January 4,
1999, (and subject to shareholder approval as provided for hereinafter) the
Committee hereby grants to Harrison 200,000 shares of the Company's Class B
Common Stock, par value $1.00 per share, as an award of shares of restricted
stock (the "RESTRICTED STOCK") as incentive compensation, subject to the terms
and conditions hereinafter set forth. This award of Restricted Stock is intended
to qualify as "performance based compensation," as such term is defined in the
Internal Revenue Code, and, accordingly, shall be made subject to shareholder
approval, including such approval of performance goals as is required by
Internal Revenue Code Section 162(m). The Company shall submit the award and
performance goals to its shareholders for approval at the May 1999 Annual
Meeting of Shareholders. The number of Restricted Shares which are the subject
of this award shall be subject to customary antidilution adjustments (as
determined by the Compensation Committee) for stock splits or stock dividends,
provided that any additional shares issued as a result of such an adjustment
shall be Restricted Stock as if such shares were originally issued subject
hereto. By signing below, Harrison hereby irrevocably agrees to accept such
award subject to the terms and conditions hereinafter set forth.
3. Vesting of Restricted Shares and Length of the Restricted Period. The
Restricted Stock shall vest (and the restrictions set forth herein shall lapse)
at the rate of 20,000 shares per annum, beginning on the first day of the
Company's fiscal year 2000, and ending on the first day of the Company's fiscal
year 2009. The vesting of each 20,000 share increment of the award of Restricted
Shares is conditioned upon: (i) Harrison's employment by the Company as of each
such anniversary date; and (ii) the Company's having achieved at least 80% of
the Overall Goal Achievement Factor for the six selected performance indicators
used in determining bonuses for all officers under the Plan, as determined for
such one year period. Any 20,000 share increment which does not vest shall be
forfeited and shall be returned to the Company immediately. The period of time
from the effective date hereof until the expiration of restrictions in
accordance with this paragraph is referred to herein as the "RESTRICTED PERIOD,"
with respect to each increment of 20,000 shares.
4. Restrictions on Transfer during the Restricted Period. The Restricted
Stock shall not be transferable by Harrison unless and until such shares have
vested in accordance with the terms of this Agreement. Such shares may not be
sold, assigned or transferred (whether by sale, gift or otherwise), pledged,
hypothecated or encumbered in whole or in part either directly or by operation
of law or otherwise including, but not by way of limitation, by execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
any of the Restricted Stock in violation of the foregoing provisions shall be
null and void and without effect and shall cause Harrison to immediately forfeit
all rights to the Restricted Stock, which shall immediately revert to the
Company.
5. Anti-Assignment Provision. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and the successors and assigns of
the Company and its subsidiaries. However, except as may be approved by the
Committee, where such approval will not adversely affect compliance of the
Restricted Stock Award with Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), neither the Restricted Stock nor this
Agreement shall be transferable or assignable by Harrison.
6. Termination of Employment. Upon any termination of Harrison's
employment (as defined in Section 9 hereof) prior to the expiration of the
Restricted Period with respect to any of the shares of Restricted Stock for any
reason other than Harrison's death or disability, regardless of whether such
termination is initiated by Harrison or by the Company and regardless of whether
it is for cause, or without cause, voluntary or involuntary, any portion of the
Restricted Stock which has not vested in accordance with the provisions of
paragraph 3 hereof, shall immediately revert to the Company and Harrison shall
cease to have any right or interest in such shares.
In the event of Harrison's death or disability, Harrison shall be
entitled to receive only that portion of the Restricted Stock granted hereunder
which has vested as of the date of such death or disability.
7. Certificates Issued with respect to Restricted Stock. All
certificates evidencing Restricted Stock issued to Harrison under this Agreement
shall be registered in the name of Harrison, shall be deposited by him, together
with a stock power endorsed in blank, with the Company, and shall bear a
restrictive legend in substantially the following form:
THESE SECURITIES HAVE BEEN ISSUED SUBJECT TO THE TERMS, CONDITIONS AND
LIMITATIONS CONTAINED IN A RESTRICTED STOCK AWARD AGREEMENT DATED
JANUARY 4, 1999. THESE SECURITIES MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF OR ENCUMBERED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF SUCH
AGREEMENT.
Upon vesting of the Restricted Stock represented by any such certificate, the
Company shall: (i) cancel any earlier certificate evidencing such shares which
was issued as described above; and (ii) issue and deliver to Harrison a
certificate of like tenor representing the number of shares of Class B Common
Stock which shall have vested, registered in Harrison's name but not bearing the
restrictive legend described above.
8. Rights of Harrison with respect to Restricted Stock/Conversion
Privilege. Except as otherwise provided in this Agreement, Harrison shall have
all of the rights of any holder of the Company's Class B Common Stock with
respect to such shares of Restricted Stock when they have vested, including
without limitation the right to vote such shares and to receive any dividends
declared and paid with respect to such shares. Once such shares of Restricted
Stock have vested, Harrison may convert such shares to shares of the Company's
Common Stock on a share for share basis at any time, by tendering the shares of
Class B Common Stock to be converted to the Company together with instructions
to exchange such shares, or any portion thereof, for shares of the Company's
Common Stock.
9. Employment. As used herein, the term "employment" shall mean the
employment or performance of services for the Company in Harrison's current
capacity, or in any future capacity which constitutes a promotion or increase in
Harrison's responsibilities as compared to Harrison's present position.
10. No Right to Continued Employment. It is understood that this
Agreement is not intended and shall not be construed as an agreement or
commitment by the Company to employ Harrison during the term hereof, or for any
fixed period of time.
11. Change of Control. Notwithstanding any other provision hereof, if
there should be a "change of control" of the Company during a Restricted Period
with respect to a 20,000 share increment, then and immediately upon occurrence
of such "change of control," the 20,000 share increment shall vest. For purposes
of this Agreement, a "change of control" shall be deemed to have occurred at
such time as the family of J. Frank Harrison, Jr. (the "Harrison Family") and
any trusts, estates or other entities in which the Harrison Family holds in
excess of 50% of the beneficial interest, do not hold voting power with respect
to securities which
represent more than 50% of the total outstanding voting power of the voting
securities of the Company.
12. Payment of Taxes/Withholding. The Company shall pay to Harrison the
amount of any federal or state income tax (including, for these purposes, any
surcharge) which would otherwise be due and payable by Harrison on the award of
Restricted Stock, determined on an annual basis.
13. Payment of Expenses. The Company shall pay all fees and expenses
necessarily incurred by it in connection with the issue of shares pursuant
hereto and will use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable.
14. Entire Agreement. This Agreement represents the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all negotiations, representations or agreements, either written or oral, with
respect hereto. This agreement may not be amended, modified or altered, except
in writing, duly accepted and executed by both parties.
15. Governing Law. This Agreement has been entered into pursuant to and
shall be governed by the laws of the State of Delaware.
16. Gender and Number. Any use of the masculine includes the feminine
and the neuter; and any use of the singular includes the plural, whenever such
meanings are appropriate.
17. Headings and Definitions. The headings appearing at the beginning of
each Section in this Agreement are intended only as an index and are not to be
construed to vary the meaning of the provision to which they refer. Any
capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Plan.
IN WITNESS WHEREOF, this Agreement has been duly executed by Harrison
and the Company has caused this Agreement to be duly executed by its officers
thereunto duly authorized on the date and year above written.
ATTEST: COCA COLA BOTTLING CO. CONSOLIDATED
__________________________ By:________________________
Name: Title:
Title:
ACCEPTED BY:
J. Frank Harrison, III
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