Charles B. Bonner.
Mr. Bonner served as a Director of the Company from 1993 through January 1995,
and was reappointed as a Director effective September 1995. Mr. Bonner is
Principal and Founder of Pacific Resources, Inc., a mergers and acquisitions
advisory firm, a position he has held since September 1989. From 1975 to 1988
he was president of Bonner Packing Co., an $80MM dried fruit processing and
marketing company which was sold to Dole Food Company in 1988.
Eric C. Eddings
,
Mr. Eddings was appointed by the Board of
Directors as President and Chief Executive Officer of Monterey Gourmet Foods in
September 2006. Prior to his appointment, he was the President of the Natural
Foods Division of Monterey Gourmet Foods. Previously Mr. Eddings was the Chief
Operating Officer and minority shareholder of CIBO Naturals, LLC which he and
his associates purchased in June, 2002. CIBO Naturals was acquired by Monterey
Gourmet Foods in January 2004 and later became part of the Natural Foods
Division of Monterey Gourmet Foods. Prior to his employment with CIBO Naturals,
Mr. Eddings was the Vice President of Wholesale/Plant Operations of Tully’s
Coffee Corporation in Seattle, Washington. Mr. Eddings also has previously
worked for Dreyers Grand Ice Cream, Haagen – Dazs Company and Frito Lay, Inc.
Mr. Eddings has a Masters of Business Administration degree from the University
of Redlands and a Bachelors of Arts degree in Business Administration from
California State University at Fullerton.
Van Tunstall.
Mr.
Tunstall was elected to the Board of Directors in February 1997. Since 1997, he
has served as President of the Central Coast Group, a strategic consulting and
business services firm. Mr. Tunstall has been an independent consultant with a
variety of companies since 1997. Mr. Tunstall was a senior executive with
Gilroy Foods, Inc., an international manufacturer of various food product
ingredients, from 1977 to 1995. He served as President and Chairman of the
Board of Gilroy Foods, Inc. from 1991 through 1995. Previously, Mr. Tunstall
held several executive positions with McCormick & Company, Inc. Mr.
Tunstall has also served on the boards of other food companies such as Rudi’s
Organic Bakery, Inc., Wildwood Natural Foods, Inc, Kalsec, Inc, and Cascade Specialties, Inc.
Walter L. Henning.
Mr. Henning was elected to the Board of
Directors in December 1999 and elected as Vice-Chairman in 2006. He has over 35
years experience in the production and distribution of a multitude of food
products, including spices, extracts, seasoning mixes, and dehydrated onion,
garlic and capsicums. He has held the position of Vice-President
Operations for Divisions of Rykoff-Sexton, Burns-Philp, ConAgra Foods, and
McCormick & Co, Inc. He also served as Chairman of the State of Iowa’s
Manufacturing Council from 1990 - 1995. His responsibilities with both
McCormick and ConAgra included managing an extensive farming operation as well
as multiple onion/garlic dehydration facilities. Mr. Henning has B.S. and M.S. degrees in Food
Science and Technology from the University of California, and currently holds
an APICS Certification in Production and Inventory Management. He retired from
McCormick and Co. in January, 2007 and now teaches upper division courses in
Operations Management in the School of Business at California State University-
Monterey Bay.
John H. McGarvey
.
Mr.
McGarvey was elected to the Board of Directors in February 2006. He served from
1990 to 2007 as an associate and/or partner of Cybus Capital Markets, LLC, an
investment bank specializing in capital placement and formation services for
middle market companies in the food and agribusiness areas. Mr. McGarvey is an
owner and director of McGarvey & Affiliates, Inc, a financial consulting
firm. Currently, Mr. McGarvey serves on the board of Dominex LLC. Mr. McGarvey
is a law graduate of Creighton University, received a Masters degree in
Taxation from New York University, and has earned continuing education credit
in finance from the Wharton Business School.
Viji
Sampath.
Mr. Sampath was elected to the Board
of Directors as of January 1, 2008. He has over 25 years corporate and
management consulting experience in corporate development, strategic planning,
mergers and acquisitions, and international business development. His industry
experience includes senior Corporate Planning and Development positions at
ConAgra Foods, Baskin-Robbins Ice Cream, Basic American Foods, and Hunt-Wesson
Foods. As a senior manager at Price Waterhouse, Mr. Sampath led manufacturing strategy,
financial and general management consulting engagements for clients in food
processing and quick service restaurant industries. Mr. Sampath has earned a
Bachelor of Science degree in Chemical Engineering from University of Madras,
India and Master of Science degree in Chemical Engineering and a Master of
Business Administration degree in Finance from Illinois Institute of
Technology, Chicago, Illinois.
3
Mark C. Frandsen.
Mr. Frandsen was elected to the Board of
Directors in 2008. Since 1994, Mr. Frandsen has served as president and CEO of
New Season Foods, Inc. in Forest Grove, Oregon. Mr. Frandsen also owns and
operates the Grove Commerce Center, an industrial park for food processing and
technology-related companies as well as regional manufacturing and service
businesses. He has served as chairman of the Northwest Food Processors
Association and as a director of the American Frozen Food Institute. He
currently serves on the board of directors of the Association for Corporate
Growth, the board of trustees for Pacific University, and as vice chairman of
TOC Management Services. Mr. Frandsen earned a bachelor of science in finance
and international business from the University of Oregon and an MBA from the
University of Southern California. He also graduated from Nyenrode Business
Universiteit in The Netherlands.
Tammy G. Katz.
Ms. Katz was elected to the Board of
Directors as of January 1, 2009. Ms. Katz is CEO and founder of Katz Marketing
Solutions, a marketing and brand management consulting firm specializing in
food and consumer products, in Columbus, Ohio. She is an experienced food
marketing and innovation executive and has led marketing of major brands at
Frito-Lay, Miller Brewing Company, Mead-Johnson Nutritionals, Borden, and The
Scotts Company. Ms. Katz is also Adjunct Instructor of Brand Management at The
Ohio State University Fisher College of Business MBA Program and serves on
several central Ohio philanthropic boards. Ms. Katz earned a Bachelor of
Science in Marketing from The Ohio State University and an MBA in Marketing and
Finance from The Ohio State University.
Scott S. Wheeler.
Mr.
Wheeler joined the company in April 2003 as Corporate Controller, and was
promoted to Chief Financial Officer, effective October 27, 2003 and was elected
as a Board member in June 2004. His most recent position was Vice President and
Financial Officer of KBC Edible Beans Division of ConAgra Foods, where he
worked for three years. Prior to that, he worked for Mallard’s Food Products
both when it was an independent company and after it was sold to Tyson Foods,
Inc. He began his career at Mallard’s Food Products in 1994 as Chief Financial
Officer until 1999 when he was promoted to General Manager until joining KBC in
April of 2000. Prior to joining Mallard’s, Mr. Wheeler held a variety of
positions with Basic American Foods over a thirteen-year period. He is a CPA
with an MBA in finance from Golden Gate University in San Francisco, CA.
Board
Meetings and Committees
The
Board of Directors held seven meetings during the calendar year ended December
31, 2008. The Board of Directors has an Audit Committee, a
Compensation/Nominating Committee, and a Corporate Governance Committee. During
the last calendar year, all the directors attended a minimum of 75% of all of
the meetings of the Board and all of the committees of the Board of which each
director was a member.
Audit
Committee.
The
members of the Audit Committee are John H. McGarvey, who acts as Chairman of
the Committee, Viji Sampath, and Charles B. Bonner. Each of the Audit Committee
members is independent for purposes of the NASDAQ Marketplace Rules as they
apply to audit committee members. Mr. Bonner and Mr. McGarvey are audit
committee financial experts, as defined in the rules of the Securities and
Exchange Commission. The Audit Committee held eight meetings during the
calendar year ended December 31, 2008. The Committee operates under a written
charter adopted by the Board of Directors, a copy of which will be provided
free of charge to any stockholder upon written request to Scott Wheeler,
Secretary, Monterey Gourmet Foods, Inc. 8030 South 228
th
Street,
Building A, Kent, Washington 98032. The Audit Committee provides oversight of
financial management and the independent auditors and ensures that management
is maintaining an adequate system of internal controls such that there is
reasonable assurance that assets are safeguarded and that financial reports are
properly prepared; that there is consistent application of generally accepted
accounting principles; and that there is compliance with management’s policies
and procedures. In performing these functions, the Audit Committee meets
periodically with the independent registered public accounting firm and management
to review their work and confirm that they are properly discharging their
respective responsibilities. The audit committee also meets with the
independent registered accounting firm without management to discuss issues of
a confidential nature. In addition, the Audit Committee is responsible for the
appointment of the independent registered public accounting firm.
Compensation/Nominating
Committee.
The
members of the Compensation/Nominating Committee are Walter L. Henning, who
acts as Chairman of the Committee, Mark C. Frandsen, and Tammy G. Katz. Each of
the members of this Committee is independent for purposes of the NASDAQ
Marketplace Rules. The Compensation Committee’s function is to set the
compensation policy for the Company, review and recommend executive
compensation, including officer salary levels, incentive compensation programs
and stock option grants. The Nominating Committee researches and proposes
potential candidates for the Company’s Board of Directors and is responsible
for executive recruitment matters. The Compensation/Nomination Committee held
four meetings during the calendar year ended December 31, 2008. The Committee
operates under a written charter, a copy of which will be provided free of
charge upon written request to Scott Wheeler, Corporate Secretary, Monterey
Gourmet Foods, Inc., 8030 South 228
th
Street Building A, Kent,
Washington 98032.
4
Corporate Governance Committee.
The members of
the Corporate Governance Committee are the Chairman of the Board and Chairmen
of the Audit Committee and Compensation Committee. Van Tunstall acts as
Chairman of the Committee, and serves with Walter L. Henning and John H.
McGarvey. All three members of the Corporate Governance Committee are
independent for purposes of the NASDAQ Marketplace Rules. The Corporate
Governance Committee is responsible for overseeing matters of corporate
governance, including the evaluation of the performance and practices of the
Board of Directors. The Corporate Governance Committee held four meetings
during the calendar year ended December 31, 2008.
Executive Sessions
The
non-employee directors met four times during 2008 in Executive Session without
the CEO, CFO or any other member of management present.
Director
Nominations
The
Nominating Committee considers candidates for director nominees proposed by
directors, the Chief Executive Officer and stockholders. In reviewing potential
candidates for the Board, the committee considers individuals who have
distinguished records for leadership and success in their area of activity and
who will make meaningful contributions to the Board. The committee selects
nominees for director on the basis of broad experience, character, integrity,
wisdom, ability to make independent analytical inquiries, think strategically,
as well as their understanding of the Company’s business environment. Further
criteria include a candidate’s personal and professional ethics, integrity and
values, as well as the willingness to devote sufficient time to attend meetings
and participate effectively on the Board.
Potential
candidates are screened and interviewed by the Nominating Committee. All
members of the Board may interview the final candidates. The same identifying
and evaluating procedures apply to all candidates for director nomination,
including candidates submitted by stockholders.
If
you would like the Nominating Committee to consider a prospective candidate, in
accordance with our Bylaws, please submit the candidate’s name and qualifications
to: Scott Wheeler, Secretary, Monterey Gourmet Foods, 8030 South 228
th
Street Building A, Kent, Washington 98032.
Communications
with Directors
The
Board of Directors maintains a process for stockholders to communicate with the
Board or any Board member. Stockholders who desire to communicate with the
Board should send any communication to the Company’s Corporate Secretary, c/o
Monterey Gourmet Foods, 8030 South 228
th
Street Building A, Kent,
Washington 98032. Any communication must state the number of shares of Common
Stock beneficially owned by the stockholder making the communication. The
Corporate Secretary will forward such communication to the full Board of
Directors or to any individual director or directors to whom the communication
is directed unless the communication is threatening or illegal, uses
inappropriate expletive language or is similarly inappropriate, in which case
the Corporate Secretary has the authority to discard the communication or take
appropriate legal action regarding the communication.
Director
Attendance at Annual Meetings
It
has been the longstanding practice of the Company for all directors to attend
the Annual Meeting of Stockholders. All directors who were elected to the board
at the last Annual Meeting were in attendance.
Committee
Charters and Other Corporate Governance Materials
The
Board has adopted a charter for each of the committees described above and
principles of corporate governance. The Board has also adopted a Code of Business
Conduct that applies to all of our employees, officers and directors. A copy of
the Code of Business Conduct, which also complies with the definition of a
“code of ethics” under section 406(c) of the Sarbanes-Oxley Act of 2002, is
available upon request to any stockholder. Requests should be addressed in
writing to Mr. Scott Wheeler, Corporate Secretary, 8030 south 228
th
Street Building A, Kent, Washington 98032.
5
REPORT
OF THE AUDIT COMMITTEE
Information
contained in the following Report of the Audit Committee shall not be deemed
“soliciting material” or to be “filed” with the Commission, nor shall such
information be incorporated by reference into any of the Company’s filings
under the Exchange Act, notwithstanding anything to the contrary set forth in
any such filing, except to the extent that the Company specifically
incorporates it by reference into such filing.
The
Audit Committee oversees Monterey Gourmet Foods’ financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including internal control
systems. Our independent registered public accounting firm is responsible for
expressing an opinion as to the conformity of our audited consolidated
financial statements with generally accepted accounting principles.
The
Audit Committee consists of three directors each of whom, in the judgment of
the Board, is an “independent director” as defined in the listing standards for
The NASDAQ Global Market. The Audit Committee acts pursuant to a written
charter that has been adopted by the Board of Directors, a copy of which will
be provided free of charge to any stockholder upon written request to Scott
Wheeler, Secretary, Monterey Gourmet Foods, Inc. 8030 South 228
th
Street Building A, Kent, Washington 98032.
The
Committee has discussed and reviewed with the auditors all matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Committee has met with the independent registered public
accounting firm, with and without management present, to discuss the overall
scope of public accounting firm’s audit, the results of its examinations, its
evaluations of Monterey Gourmet Foods’
internal controls and the overall quality of its financial reporting. The
Committee has implemented a “Whistle Blower” policy whereby employees can speak
directly with the Chairman of the Audit Committee regarding issues at the
Company. As of March 31, 2009, no calls have been placed with the Audit
Committee Chairman.
The
Audit Committee has received the Independent Registered Public Accounting Firm’s
disclosures and formal written affirmation required by Rule 3526 of the Public Company
Accounting Oversight Board (“PCAOB”) (Communication with Audit Committees
Concerning Independence) regarding any relationship that might impact the auditor’s
objectivity and independence. The Audit Committee has discussed the auditor’s
independence with the auditor and is satisfied that the auditor is independent.
Based
on the review and discussions referred to above, the Committee recommended to
the Board of Directors that Monterey
Gourmet Foods audited financial statements be included in Monterey Gourmet Foods’ Annual Report
on Form 10-K for the fiscal year ended December 31, 2008.
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Audit Committee
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John H. McGarvey, Chairman
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Charles B. Bonner
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Viji Sampath
|
6
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee of the Board of Directors of Monterey Gourmet Foods has
selected McGladrey & Pullen, LLP as independent registered public
accounting firm to audit the consolidated financial statements of Monterey Gourmet Foods for the fiscal
year ending December 31, 2009. The 2009 fiscal year will be McGladrey &
Pullen’s first year auditing the Company’s financial records and systems. A
representative of McGladrey & Pullen, LLP is expected to be present at the
annual meeting, with the opportunity to make a statement if the representative
desires to do so, and is expected to be available to respond to appropriate
questions.
Audit
and Non-Audit Fees
The
following table sets forth the aggregate fees billed to Monterey Gourmet Foods
for the fiscal years ended December 31, 2008 and 2007 by the Company’s former
independent registered accounting firm BDO Seidman, LLP:
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2008
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2007
|
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|
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|
|
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Audit Fees
(1)
|
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$
|
338,000
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$
|
335,000
|
|
|
Audit-Related Fees
(2)
|
|
$
|
65,000
|
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$
|
26,000
|
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|
Tax Fees
(3)
|
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$
|
58,000
|
|
$
|
56,000
|
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|
All Other Fees
|
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$
|
0
|
|
$
|
0
|
|
(1)
Audit
Fees consist of fees billed for professional services rendered for the audit of
the Company’s consolidated annual financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by BDO Seidman, LLP in connection with
statutory and regulatory filings or engagements.
(2)
Audit-Related
Fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the Company’s
consolidated financial statements and are not reported under “Audit Fees.”
These services generally include consulting fees related to reporting, accounting and internal control
matters.
(3)
Tax
Fees consist of fees billed for professional services rendered for annual compliance filings and ongoing tax
planning.
Audit Committee Pre-Approval Policies
and Procedures
The
Audit Committee must pre-approve audit and non-audit services provided to the
Company by the independent registered public accounting firm (or subsequently
approve non-audit services in those circumstances where a subsequent approval
is necessary and permissible); in this regard, the Audit Committee has the sole
authority to approve the hiring and firing of the independent registered public
accounting firm, all audit engagement fees, terms and all non-audit
engagements, as may be permissible, with the independent registered public
accounting firm. Pre-approval was obtained from the Audit Committee for all
fees charged by the independent registered public accounting firm.
Vote
Required and Board of Directors’ Recommendation
Approval
of this proposal requires the affirmative vote of a majority of the votes cast
at the annual meeting of stockholders, as well as the presence of a quorum
representing a majority of all outstanding shares of Common Stock of Monterey
Gourmet Foods, Inc., either in person or by proxy. Abstentions and broker
non-votes will each be counted as present for purposes of determining the
presence of a quorum but will not have any effect on the outcome of the
proposal.
7
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
THE APPOINTMENT OF
McGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
table below sets forth as of December 31, 2008, except as noted in the
footnotes to the table, certain information with respect to the beneficial
ownership of the Company’s Common Stock by (i) all persons known by the Company
to be the beneficial owners of more than 5% of the outstanding Common Stock of
the Company, (ii) each director and director-nominee of the Company, (iii) the
executive officers named in the Summary Compensation Table, and (iv) all such
executive officers and directors of the Company as a group.
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Shares
Owned
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Name and Address of Beneficial
Owner
(1)
|
|
Number
of Shares
|
|
Percentage
of Class
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Gruber and McBaine Capital Management
(2)
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2,413,205
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14.4
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%
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50 Osgood Place, Penthouse
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San Francisco, CA 94133
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Signia Capital Management
(3)
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1,893,977
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11.3
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%
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108 North Washington, Suite 305
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Spokane, WA 99021
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T. Rowe Price Associates, Inc.
(4)
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1,522,800
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9.1
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%
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100 East Pratt Street
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Baltimore, MD 21202
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Dimensional Fund Advisors
(5)
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1,470,756
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8.8
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%
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1299 Ocean Ave.
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Santa Monica, CA 90401
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Frank Russell Company.
(6)
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1,349,458
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8.0
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%
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909 A. Street
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Tacoma, WA 98402
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RBF Capital, LLC and Richard B. Fullerton
(7)
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982,045
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5.9
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%
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35 Sycamore Avenue
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Mill Valley, CA 94941
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Heartland Advisors, Inc.
(8)
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1,025,400
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6.1
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%
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789 North Water Street
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Milwaukee, WI 53202
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Van Tunstall
(9)
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172,934
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1.0
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%
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Michael P. Schall
(10)
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89,917
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*
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Tammy G. Katz
(11)
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0
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*
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Charles B. Bonner
(12)
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189,407
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1.1
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%
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Scott S. Wheeler
(13)
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74,334
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*
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Walter L. Henning
(14)
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128,701
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*
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Eric C. Eddings
(15)
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186,593
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1.1
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%
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John H. McGarvey
(16)
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41,668
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*
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Mark C. Frandsen
(17)
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9,166
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*
|
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Viji Sampath
(18)
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8,250
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*
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All Officers and Directors as a group (10 persons)
(19)
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900,970
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5.2
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%
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* Represents less than 1%
8
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(1)
|
Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock subject
to options or warrants held by that person that are currently exercisable or
will become exercisable within sixty (60) days after December 31, 2008 are
deemed outstanding, while such shares are not deemed outstanding for purposes
of computing percentage ownership of any other person. Options granted under
the Company’s 2002 Stock Option Plan (the “2002 Stock Option Plan”) generally
become exercisable as the underlying shares vest. Unless otherwise indicated
in the footnotes below, the persons and entities named in the table have sole
voting and investment power with respect to all shares beneficially owned,
subject to community property laws where applicable. Unless otherwise
indicated, the address of each of the individuals listed in the table is: c/o
Monterey Gourmet Foods, Inc., 8030 South 228
th
Street Building A,
Kent, Washington 98032.
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(2)
|
Jon D. Gruber and J. Patterson McBaine are the only
managers of, and hold all executive offices of, Gruber and McBaine Capital
Management LLC (“GMCM”), an investment advisor. GMCM is the general partner
of Lagunitas Partners, L.P. (“Lag”), a California investment limited
partnership. As of December 31, 2008, GMCM had shared voting and investment
power over 2,413,205 shares; Mr. Gruber had sole voting and investment power
over 311,820 shares and shared voting and investment power over 1,767,635
shares; Mr. McBaine had sole voting and investment power over 331,750 shares
and shared voting and investment power over 2,413,205 shares; Lag has shared
voting and investment power over 1,767,635 shares. Neither Mr. Gruber nor Mr.
McBaine participate in the management of the Company, direct the policies of
the Company, or serve on the Board of Directors of the Company.
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|
|
|
(3)
|
Signia Capital
Management, LLC. had sole dispositive power for an entire holding of
1,893,977 shares and sole voting power over 786,335 shares. Signia Capital
Management LLC is an investment advisor in accordance with Rule 13-1 (b) (1)
(ii) (E).
|
|
|
|
|
(4)
|
T. Rowe Price Associates, Inc (“Price Associates”)
had sole dispositive power for an entire holding of 1,522,800 shares and sole
voting power over 262,800 shares. These securities are owned by various
individual and institutional investors for whom Price Associates serves as
investment advisor with power to direct investments and/or sole power to vote
the securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.
|
|
|
|
|
(5)
|
Dimensional Fund Advisors Inc (“Dimensional”) an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940 which furnishes investment advice to four investment companies
registered under the Investment Company Act of 1940 and serves as investment
manager to certain other commingled groups trusts and separate accounts
directly or indirectly held 1,464,756 shares of Company stock. In its role as
investment advisor or manager, Dimensional possesses investment and/or voting
power over 1,470,756 shares. However, Dimensional disclaims beneficial
ownership of these securities. In addition, no Dimensional officer serves as
an executive officer or director of the Company.
|
|
|
|
|
(6)
|
Frank Russell Company
(“Russell”), in its capacity of investment advisor, may be deemed to have
beneficial ownership of 1,349,458 shares of the common stock of the Company.
Russell is a parent holding company or control person in accordance with
Section 240.13d-1(b)(1)(ii)(G).
|
|
|
|
|
(7)
|
RBF Capital, LLC (“RBF”)
and Richard B. Fullerton, in the capacity of investment advisor, may be
deemed to have beneficial ownership of 982,045 shares of the common stock of
the Company. Mr. Fullerton is the controlling principal of RBF. RBF has
voting power and/or dispositive power over 982,045 shares.
|
|
|
|
|
(8)
|
Heartland Advisors, Inc. is an investment adviser
registered with the SEC, and William J. Nasgovitz, President is the principal
shareholder of Heartland Advisors, Inc. Heartland Advisors, Inc. may be
deemed to have beneficial ownership of 1,025,400 shares within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, by virtue of its
investment discretion and voting authority granted by certain clients, which
may be revoked at any time; and William J. Nasgovitz may be deemed to have
such beneficial ownership as a result of his ownership interest in Heartland
Advisors, Inc. Heartland Advisors, Inc. and Mr. Nasgovitz each specifically
disclaim beneficial ownership of any shares of the Company.
|
|
|
|
|
(9)
|
Includes 120,834 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
|
|
|
|
(10)
|
Includes 77,917 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
9
|
|
|
|
(11)
|
Tammy G. Katz was newly
elected to the Board of Directors and does not own any of the Company’s stock
and has not been issued any options under the 2002 Stock Option Plan which
are exercisable within sixty (60) days of December 31, 2008.
|
|
|
|
|
(12)
|
Includes 101,251 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
|
|
|
|
(13)
|
Includes 68,334 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
|
|
|
|
(14)
|
Includes 6,200 shares
held in an IRA account in the name of Teresa A. Henning to which Mr. Henning
claims beneficial ownership, and 100,001 shares subject to options granted
under the 2002 Stock Option Plan which are exercisable within sixty (60) days
of December 31, 2008.
|
|
|
|
|
(15)
|
Includes 115,000 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
|
|
|
|
(16)
|
Includes 16,668 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
|
|
|
|
(17)
|
Includes 4,166 shares
subject to options granted under the 2002 Stock Option Plan which are exercisable
within sixty (60) days of December 31, 2008.
|
|
|
|
|
(18)
|
Includes 6,250 shares subject to options granted
under the 2002 Stock Option Plan which are exercisable within sixty (60) days
of December 31, 2008.
|
|
|
|
|
(19)
|
Includes 610,421 shares
subject to options granted under the 2002 Stock Option Plan which are
exercisable within sixty (60) days of December 31, 2008.
|
Equity Compensation Plan Information
The
following table provides information about our common stock that may be issued
upon the exercise of options, warrants or rights under all of our existing
equity compensation plans as of December 31, 2008, including the Monterey
Gourmet Foods 2002 Stock Option Plan and the Monterey Gourmet Foods 2001
Nonstatutory Stock Option Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities to
be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
|
Number of securities
remaining available for future issuance under equity compensation plans
(excluding securities reflected in column (a))
|
|
|
Plan category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security
holders
|
|
2,015,501
|
(1)
|
|
$
|
3.91
|
|
992,222
|
|
|
|
Equity compensation plans not approved by security
holders
|
|
41,000
|
(2)
|
|
$
|
6.55
|
|
139,000
|
|
|
|
|
|
Total
|
|
2,056,501
|
|
|
$
|
3.96
|
|
1,131,222
|
|
|
|
|
|
|
(1)
|
Issued under the Monterey
Gourmet Foods 2002 Stock Option Plan.
|
|
(2)
|
Issued to Company employees
under the Monterey Gourmet Foods 2001 Nonstatutory Stock Option Plan.
|
10
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview of Compensation Policy
The
Company’s Compensation Committee is empowered to review and approve, or in some
cases recommend for the approval of the full Board of Directors the annual compensation
for the executive officers of the Company. This Committee has the
responsibility for establishing, implementing, and monitoring the Company’s
compensation strategy and policy. Among its principal duties, the Committee
ensures that the total compensation of the executive officers is fair,
reasonable and competitive.
Objectives and Philosophies of Compensation
The
primary objective of the Company’s compensation policy, including the executive
compensation policy, is to help attract and retain qualified, energetic
managers who are enthusiastic about the Company’s mission and products. The
policy is designed to reward the achievement of specific annual and long-term
strategic goals aligning executive performance with company growth and shareholder
value. In addition, the Board of Directors strives to promote an ownership
mentality among key leaders and the Board of Directors.
Setting Executive Compensation
The
compensation policy is designed to reward performance. In measuring executive
officers’ contribution to the Company, the Compensation Committee considers
numerous factors including the Company’s growth and financial performance as
measured by revenue, gross margin and net income before taxes among other key
performance indicators.
Regarding
most compensation matters, including executive and director compensation,
management provides recommendations to the Compensation Committee; however, the
Compensation Committee does not delegate any of its functions to others in
setting compensation. The Compensation Committee does not currently engage any
consultant to provide advice regarding executive and/or director compensation
matters.
Stock
price performance has not been a factor in determining annual compensation
because the price of the Company’s Common Stock is subject to a variety of
factors outside of management’s control. The Company does not subscribe to an
exact formula for allocating cash and non-cash compensation. However, a
significant percentage of total executive compensation is performance-based.
Historically, the majority of the incentives to executives have been in the
form of non-cash incentives in order to better align the goals of executives
with the goals of stockholders.
Elements of Company’s Compensation Plan
The
principal components of compensation for the Company’s executive officers are:
|
|
|
|
|
|
·
|
base salary
|
|
|
·
|
performance-based incentive cash compensation
|
|
|
·
|
right to purchase the company’s stock at a preset
price (stock options)
|
|
|
·
|
retirement and other benefits
|
Base Salary
The
Company provides named executive officers and other employees with base salary
to compensate them for services rendered during the calendar year. Base salary
ranges for named executive officers are determined for each executive based on
his or her position and responsibility.
11
During
its review of base salaries for executives, the Committee primarily considers:
|
|
|
|
|
|
·
|
market data;
|
|
|
·
|
internal review of the
executives’ compensation, both individually and relative to other officers;
and
|
|
|
·
|
individual performance
of the executive.
|
Salary
levels are typically evaluated annually as part of the Company’s performance
review process as well as upon a promotion or other change in job
responsibility. Due to current national
economic conditions, management chose not to accept any increases to their base
salaries for 2009.
Performance-Based Incentive Compensation
The
management incentive plan gives the Committee the latitude to design cash and
stock-based incentive compensation programs to promote high performance and
achievement of corporate goals, encourage the growth of stockholder value and
allow key employees to participate in the long-term growth and profitability of
the Company. Stock-based compensation continues to be a viable part of the Company’s
compensation strategy.
For
stock-based programs, the Committee may grant participants stock options which
are the only non-cash incentive currently approved by the stockholders of the
Company. In granting these awards, the Committee establishes parameters such as
vesting schedules and terms of the grants.
All
awards of shares of the Company’s stock options are made at the market price at
the time of the award. Annual awards of stock options to executives are made at
the Committee’s regularly scheduled meeting while the stock options awarded to
outside Board members are automatically granted at the regularly scheduled
annual shareholders meeting.
Newly
hired or promoted executives receive their award of stock options on the first
business day of their hire or promotion or at the time the Committee meets and
approves such grants.
Ownership Guidelines
To
directly align the interests of the Board of Directors with the interests of
the stockholders, the Committee recommends that each Board member maintain a
minimum ownership interest in the Company. Currently, the Compensation
Committee recommends that each Board member own a minimum of 5,000 shares of
the Company’s common stock with such stock to be acquired within a reasonable
time following election to the Board.
Stock Option Program
The
Stock Option Program assists the Company to:
|
|
|
|
|
|
·
|
enhance the link
between the creation of stockholder value and long-term executive incentive
compensation;
|
|
|
·
|
provide an opportunity
for increased equity ownership by executives; and
|
|
|
·
|
maintain competitive
levels of total compensation.
|
Stock
option award levels are determined based on market data, vary among
participants based on their positions within the Company and are granted at the
Committee’s regularly scheduled meeting.
Options are awarded at the NASDAQ’s closing price of the Company’s
Common Stock on the date of the grant.
The Committee has never granted options with an exercise price that is
less than the closing price of the Company’s Common Stock on the grant date,
nor has it granted options which are priced on a date other than the grant
date.
Options
granted by the Committee vest at a rate of 33% per year over the first
three years of the ten-year option term. Prior to the exercise of an option,
the holder has no rights as a stockholder with respect to the shares subject to
such option, including voting rights.
Beginning
on January 1, 2006, the Company began accounting for stock-based payments
including its Stock Option Program and its Employee Stock Purchase Plan in
accordance with the requirements of FASB Statement 123(R), which requires that
the fair value of options, calculated as of the date of grant, be expensed over
the vesting period of each option.
12
Retirement and Other Benefits
All
employees in the United States are eligible to participate in the Company’s
401-k Retirement Plan and Employee Stock Purchase Plan.
401-k Retirement Plan
In
1996, the Company instituted a 401(k) Plan covering substantially all full-time
employees with six months of service.
Under the Plan, employees may elect to defer up to 15% of compensation
(subject to certain limitations).
Beginning in January 2003 and ending March 2009 the Company used a Safe
Harbor Plan that matches employee contributions up to 4% of compensation. After March 2009, the Company ceased its
Safe Harbor provisions of the 401K plan and is not matching employee
contributions. However, the Company may
make an annual discretionary profit-sharing contribution. Employee contributions, Company matching
contributions and related earnings are always 100% vested.
Employee Stock Purchase Plan
In
October 1994, the Company’s Board of Directors adopted a qualified employee
stock purchase plan. Under the purchase
plan, eligible employees (those who have completed one year of continuous
employment with the Company) may purchase shares of the Company’s common stock
through payroll deductions not to exceed 10% of gross wages. The Company has reserved 200,000 shares of
its common stock for issuance under the purchase plan, which remains in effect
until terminated by the Company’s Board of Directors, or until all of the
shares reserved for issuance under the purchase plan have been issued. Unless the Board has otherwise provided a
higher amount prior to the commencement of an offering period, the offering
exercise price for each purchase period is 85% of the lesser of (a) the fair
market value of the shares on the offering date of such offering period or (b)
the fair market value of the shares on the given purchase date.
Perquisites and Other Personal Benefits
The
Company provides some executive officers with perquisites and other personal
benefits, including automobile allowance, that the Company and the Committee
believe are reasonable and consistent with its overall compensation program to
better enable the Company to attract and retain superior employees for key
positions. The Committee periodically reviews the levels of perquisites and
other personal benefits provided to named executive officers.
Each
employee of the Company is entitled to term life insurance, premiums for which
are paid by the Company in the amount of one-times annual base salary. In addition, each employee is entitled to
receive certain medical and dental benefits and part of the cost is funded by
the employee.
Accounting and Tax Considerations
The
Company’s stock option grant policy has been impacted by the implementation of
SFAS No. 123R, which was adopted in the first quarter of fiscal year 2006.
Under this accounting pronouncement, the Company is required to value unvested
stock options granted prior to the adoption of SFAS 123 under the fair value
method and expense those amounts in the income statement over the stock
option’s remaining vesting period.
Section
162(m) of the Internal Revenue Code restricts deductibility of executive
compensation paid to Monterey Gourmet
Foods’ chief executive officer and each of the four other most highly
compensated executive officers holding office at the end of any year to the
extent such compensation exceeds $1,000,000 for any of such officers in any
year and does not qualify for an exception under Section 162(m) or related
regulations. The Committee’s policy is
to qualify its executive compensation for deductibility under applicable tax
laws to the extent practicable. In the
future, the Committee will continue to evaluate the advisability of qualifying
its executive compensation for full deductibility.
13
Executive
Officers
The
following table sets forth certain formation concerning the Company’s executive
officers:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
|
|
Eric C. Eddings
|
|
48
|
|
President and Chief Executive Officer since 2006
(1)
|
|
|
|
Scott S. Wheeler
|
|
54
|
|
Chief Financial Officer and Corporate Secretary
since 2003
(2)
|
|
|
|
Michael P. Schall
(3)
|
|
55
|
|
Vice-President since 2008
(3)
|
(1)
Previous to his appointment as President and Chief Executive Officer of
the Company, Mr. Eddings was President of the Company’s Natural Foods Division
following the Company’s acquisition of Cibo Naturals in 2004. Previous to that
acquisition, Mr. Eddings was Chief Operating Officer and a minority shareholder
of Cibo Naturals.
(2) Mr. Wheeler
joined the Company as its Controller in April 2003, and was previously Vice
President and Financial Officer of the KBC Edible Beans Division of ConAgra
Foods.
(3) Mr. Schall was
a director of the Company from 2001 through 2007. Mr. Schall was formerly
President of Strategic Marketing Methods, a consulting and advisory firm
providing sales and marketing, business development advisory and new product
expertise to the food and foodservice industries, and served as Senior Vice
President of Sales, Marketing, and Direct Store Delivery for Wise Foods, a
snack food company, from January 2002 until March 2003.
Summary Compensation Table
The
following table includes information concerning compensation for the three year
period ended December 31, 2008 in reference to the most highly compensated
executive officers of the Company, including the CEO and CFO (“Named Executive
Officers”).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
|
Year
|
|
Salary
$ (4)
|
|
Bonus
$ (5)
|
|
Option
Awards (6)
|
|
All
Other
Compensation (7)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C. Eddings (1)
|
|
|
2008
|
|
$
|
310,000
|
|
$
|
75,600
|
|
$
|
80,839
|
|
$
|
18,200
|
|
$
|
484,639
|
|
|
President and CEO
|
|
|
2007
|
|
$
|
292,692
|
|
$
|
195,495
|
|
$
|
167,976
|
|
$
|
21,068
|
|
$
|
677,231
|
|
|
|
|
|
2006
|
|
$
|
227,950
|
|
$
|
155,622
|
|
$
|
74,631
|
|
$
|
16,431
|
|
$
|
474,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott S. Wheeler (2)
|
|
|
2008
|
|
$
|
202,094
|
|
$
|
20,608
|
|
$
|
38,267
|
|
$
|
52,514
|
(8)
|
$
|
313,483
|
|
|
Chief Financial Officer
|
|
|
2007
|
|
$
|
195,673
|
|
$
|
48,850
|
|
$
|
37,823
|
|
$
|
8,427
|
|
$
|
290,773
|
|
|
|
|
|
2006
|
|
$
|
177,308
|
|
$
|
15,000
|
|
$
|
24,549
|
|
$
|
7,092
|
|
$
|
223,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Schall (3)
|
|
|
2008
|
|
$
|
217,500
|
|
$
|
13,422
|
|
$
|
40,234
|
|
$
|
11,602
|
|
$
|
282,758
|
|
|
Vice President
|
|
|
2007
|
|
$
|
616
|
|
$
|
—
|
|
$
|
4
|
|
$
|
—
|
|
$
|
620
|
|
|
|
|
|
(1)
|
Mr. Eddings joined the Company in January 2004 as part of the
acquisition of CIBO Naturals LLC. Mr.
Eddings became President and Chief Executive Officer on September 5, 2006.
|
|
(2)
|
Mr. Wheeler joined the Company in April 2003 and was promoted to Chief
Financial Officer in October 2003.
|
|
(3)
|
Mr. Schall began working as Vice President on December 31,
2007. Before December 31, 2007, Mr.
Schall served as a director for the Company.
|
|
(4)
|
Includes amounts (if any) deferred at the named executive officer’s
option under the Company’s 401(k) plan.
|
|
(5)
|
Bonuses were based on the Company’s performance and other objectives
obtained.
|
|
(6)
|
Amounts calculated
utilized the provisions of SFAS No. 123R “Share-based Payments” of the
consolidated financial statements and reconciled to the amounts expensed in
the Company’s 2008 financial statements excluding the effects of
forfeitures. Since the vesting of
option awards occurs generally over a three-year period, this amount
represents only a portion of the fair value of the options granted during
2005, 2006, 2007 and 2008. See Option
Award Expense for 2008 below.
|
14
|
|
|
|
(7)
|
The Company matched 100% of the
employee contributions to the Company’s 401-k plan up to 4% of individual
compensation. All of the named
executives contributed a minimum of 4% of base salary to the 401-k plan and
the Company matched that contribution.
Also, Mr. Eddings and Mr. Schall received a car allowance.
|
|
(8)
|
Mr. Wheeler received $44,400 in relocation funds to relocate from the
State of California to the State of Washington.
|
Option Award Expense for 2008
Some
compensation figures included in the “Summary Compensation Table” section of
this Proxy Statement were paid to executives in 2008 for performance in prior
years. Under SEC Rules, the Company is
required to report dollar amounts of the stock options for each Named Executive
Officer, recognized or expensed by the Company in the previous calendar year as
compensation costs for financial reporting purposes (excluding forfeiture
assumptions) in accordance with FAS 123R.
The amounts that the Company expensed for calendar year 2008 are
reported in the Summary Compensation Table above. The table below shows for each Named Executive Officer the total
dollar amounts of stock options expensed in 2008, along with a breakdown of the
grant date fair values of the options made in 2005, 2006, 2007 and 2008 and the
portion of each of those grants that was expensed in 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Option Grants ($)
|
|
Total
2008
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
|
|
|
12/9/2005
|
|
9/13/2006
|
|
3/2/2007
|
|
4/30/2008
|
|
12/4/2008
|
|
Expense
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C.
Eddings
|
|
|
Fair Value of Grant
|
|
$
|
31,982
|
|
$
|
317,085
|
|
$
|
—
|
|
$
|
—
|
|
$
|
46,883
|
|
|
|
|
|
President and CEO
|
|
|
2008 Expense
|
|
|
3,590
|
|
|
75,200
|
|
|
—
|
|
|
—
|
|
|
2,049
|
|
$
|
80,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott S.
Wheeler
|
|
|
Fair Value of Grant
|
|
|
42,642
|
|
|
—
|
|
|
52,872
|
|
|
36,168
|
|
$
|
28,130
|
|
|
|
|
|
Chief Financial Officer
|
|
|
2008 Expense
|
|
|
4,786
|
|
|
—
|
|
|
17,948
|
|
|
14,303
|
|
|
1,230
|
|
|
38,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Option Grants ($)
|
|
|
|
Total
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
|
|
|
5/19/2006
|
(1)
|
6/22/2007
|
(1)
|
12/31/2007
|
|
4/30/2008
|
|
|
|
Expense
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Schall
|
|
|
Fair Value of Grant
|
|
$
|
40,211
|
|
$
|
20,136
|
|
$
|
12,894
|
|
$
|
36,168
|
|
|
|
|
|
|
|
|
Vice President
|
|
|
2008 Expense
|
|
|
7,377
|
|
|
8,714
|
|
|
9,840
|
|
|
14,303
|
|
|
|
|
$
|
40,234
|
|
|
(1)
Issued as a
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grants of Plan-Based Awards for 2008
The
following table sets forth certain information with respect to the options
granted during or for the calendar year ended December 31, 2008 to each of the
Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
|
Grant Date
|
|
All Other
Option Awards:
Number of Securities Underlying Options (1)
|
|
Exercise or Base Price of Option Awards
|
|
Grant Date Fair Value of Stock and Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C. Eddings
|
|
|
12/4/2008
|
|
100,000
|
|
|
$
|
1.12
|
|
$
|
46,883
|
|
|
President and CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott S. Wheeler
|
|
|
4/30/2008
|
|
30,000
|
|
|
$
|
3.02
|
|
$
|
36,168
|
|
|
Chief Financial Officer
|
|
|
12/4/2008
|
|
60,000
|
|
|
$
|
1.12
|
|
$
|
28,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michal P. Schall
|
|
|
4/30/2008
|
|
30,000
|
|
|
$
|
3.02
|
|
$
|
36,168
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) All options listed above vest at a rate of 33% per
year over the first three years of the ten-year option term.
15
Outstanding Equity Awards at December 31, 2008
The
following table includes certain information with respect to the value at the
calendar year end December 31, 2008 of all unexercised options previously
awarded to the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Number of Securities Underlying Unexercised Options
Exercisable
|
|
Number of Securities Underlying Unexercised Options
Unexercisable (1)
|
|
Option Exercise Price
|
|
Option Expiration Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C.
Eddings
|
|
15,000
|
|
|
—
|
|
|
$
|
3.95
|
|
12/9/2015
|
|
|
|
President and CEO
|
|
100,000
|
|
|
50,000
|
|
|
$
|
3.89
|
|
9/13/2016
|
|
|
|
|
|
—
|
|
|
100,000
|
|
|
$
|
1.12
|
|
12/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott S.
Wheeler
|
|
10,000
|
|
|
—
|
|
|
$
|
3.39
|
|
4/26/2013
|
|
|
|
Chief Financial Officer
|
|
15,000
|
|
|
—
|
|
|
$
|
3.76
|
|
10/29/2013
|
|
|
|
|
|
15,000
|
|
|
—
|
|
|
$
|
3.44
|
|
11/11/2014
|
|
|
|
|
|
20,000
|
|
|
—
|
|
|
$
|
3.95
|
|
12/9/2015
|
|
|
|
|
|
8,334
|
|
|
16,666
|
|
|
$
|
4.43
|
|
3/2/2017
|
|
|
|
|
|
—
|
|
|
30,000
|
|
|
$
|
3.02
|
|
4/30/2018
|
|
|
|
|
|
—
|
|
|
60,000
|
|
|
$
|
1.12
|
|
12/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P.
Schall
|
|
15,000
|
|
|
—
|
|
|
$
|
6.94
|
|
10/25/2011
|
|
|
|
Vice President
|
|
15,000
|
|
|
—
|
|
|
$
|
5.85
|
|
10/25/2012
|
|
|
|
|
|
15,000
|
|
|
—
|
|
|
$
|
3.71
|
|
10/27/2013
|
|
|
|
|
|
6,250
|
|
|
—
|
|
|
$
|
3.25
|
|
7/29/2014
|
|
|
|
|
|
10,000
|
|
|
—
|
|
|
$
|
3.36
|
|
7/28/2015
|
|
|
|
|
|
6,666
|
|
|
3,333
|
|
|
$
|
7.14
|
|
5/19/2016
|
|
|
|
|
|
10,000
|
|
|
—
|
|
|
$
|
3.19
|
|
12/31/2017
|
|
|
|
|
|
—
|
|
|
30,000
|
|
|
$
|
3.02
|
|
4/30/2018
|
|
|
(1) Options with an expiration
date before December 8, 2015 vest over
24 months and all options with an expiration date after December 8, 2015
(except for options issued to outside directors beginning in 2008) vest at a
rate of 33% per year over the first three years of the ten-year option term.
Option Exercises and Stock Vested in
2008
No options were exercised
by the Named Executive Officers during the calendar year ended December 31,
2008.
Compensation
of Directors
The
following table provides compensation information for the one year period ended
December 31, 2008 for each non-employee member of the Company’s Board of
Directors holding office during calendar year 2008. Compensation information regarding the two management directors,
Eric C. Eddings and Scott S. Wheeler, is included in the Summary Compensation
Table.
16
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or Paid in Cash (1)
|
|
Option
Awards (2)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles B. Bonner
|
|
$
|
20,000
|
|
$
|
18,189
|
|
$
|
38,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Frandsen
|
|
$
|
10,000
|
|
$
|
2,862
|
|
$
|
12,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van Tunstall
|
|
$
|
30,000
|
|
$
|
28,586
|
|
$
|
58,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Wong
|
|
$
|
21,000
|
|
$
|
18,189
|
|
$
|
39,189
|
|
|
(Retired
12/31/2008)
|
|
|
|
|
|
|
|
|
|
|
|
Walter L Henning
|
|
$
|
26,000
|
|
$
|
20,287
|
|
$
|
46,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John H. McGarvey
|
|
$
|
26,000
|
|
$
|
22,131
|
|
$
|
48,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viji Sampath
|
|
$
|
20,000
|
|
$
|
5,244
|
|
$
|
25,244
|
|
|
|
|
|
1.
|
Independent directors
are reimbursed for out-of-pocket travel expenses which are not included in
this table. Each Board member
receives a stipend of $5,000 for each Board meeting attended. The Audit
Committee Chairperson receives a stipend of $1,500 for each Audit Committee
meeting chaired, the Compensation Committee chairperson receives a stipend of
$1,000 for each committee meeting chaired, and the Board Chairman receives a
stipend of $2,500 for each meeting chaired.
|
|
2.
|
The vesting of
outstanding option awards issued between December 8, 2005 and December 31,
2007 occurs over three years. Options
issued after January 1, 2008 vest immediately upon issuance. This amount includes 100% of the value of
the options issued in 2008 and only a portion of the fair value of the
options granted previous to 2008. The
fair value of the options granted in 2008 is: Mr. Bonner $2,098; Mr. Frandsen $2,862; Mr. Tunstall $6,293;
Mr. Wong $2,098; Mr. Henning $4,195; Mr. McGarvey $4,195; and Mr. Sampath
$5,244.
|
Certain Relationships and Related Transactions
The
Company’s policy is to forbid all related party transactions; hence there is no
separate policy to govern Board of Directors review or approval of such
matters. As of December 31, 2008, there were no related party transactions. We
are party to indemnification agreements with each of the executive officers and
directors. Such indemnification agreements require us to indemnify these individuals
to the fullest extent permitted by law.
Employment
Contracts and Termination of Employment
Eric
Eddings has served as President and Chief Executive Officer of Monterey Gourmet
Foods since September 5, 2006, pursuant to an employment contract signed on
September 15, 2006. A copy of this agreement was filed with the SEC in the
Company’s Report on Form 8-K filed September 21, 2006 and is incorporated here
by reference.
Pursuant
to the agreement, the Company pays Mr. Eddings a competitive base salary per
year. He is also eligible for an annual
cash bonus based on performance and achieving certain goals. In addition, Mr. Eddings received an
incentive stock option to purchase shares of the Company’s common stock vesting
and exercisable in equal installments on each of the first, second, and third
anniversaries of his employment agreement.
For 2008, Mr. Eddings received a base compensation of $310,000 and
received incentive stock options to purchase an additional 100,000 shares. As part of the agreement, if Mr. Eddings is
terminated by the Board of Directors without cause, Mr. Eddings will be
eligible for severance compensation equal to twelve months of his then
applicable base annual salary.
17
Change-in-Control
Arrangements
The
Company has Change-in-Control agreements with Mr. Eddings, Mr. Wheeler and Mr.
Schall. The compensation in the
agreements become payable upon their termination of employment or reduction in
status occurring in connection with the closing of a sale or conveyance of all
or a majority (over 50%) of the consolidated assets or business of the Company
and its subsidiaries, directly or indirectly, whether through the sale of stock
or other equity interests, the sale of assets, or by merger, consolidation or
other business combination, or any combination thereof; or any other
transaction or series of related transactions having an economic effect
substantially equivalent to the above.
The agreements call for the payment to Mr. Eddings of two years of his
base salary, and for payment to Mr. Wheeler and Mr. Schall of one year of their
base salary.
Compensation Committee Interlocks and
Insider Participation
Executive
compensation is administered by a Compensation Committee comprised of three
independent members of the Board of Directors Walter L. Henning, Mark C.
Frandsen, and Tammy G. Katz. No Named
Executive Officer served as a director or member of the compensation committee
of any other entity.
Report of Compensation Committee on Executive Compensation
We
have reviewed and discussed with management the Compensation Discussion and
Analysis provided above in this Proxy Statement. Based on the reviews and
discussions referred to above, we recommend to the Board of Directors that the
Compensation Discussion and Analysis be included in the Company’s Proxy
Statement for the Annual Meeting of Shareholders.
|
|
|
|
|
Compensation
Committee
|
|
|
|
|
|
Walter Henning, Chairman
Mark C. Frandsen
Tammy G. Katz
|
COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a)
of the Securities Exchange Act of 1934 requires our executive officers and
directors and persons who beneficially own more than 5% of our Common Stock to
file initial reports of beneficial ownership and reports of changes in
beneficial ownership with the SEC. Such
persons are required by SEC regulations to furnish us with copies of all
Section 16(a) forms filed by such person.
Based
solely on our review of such forms furnished to us and written representations
from certain reporting persons, we believe that all filing requirements
applicable to our executive officers, directors and greater-than-5%
stockholders were complied with during the calendar year which ended December
31, 2008.
18
COMPARISON
OF STOCKHOLDER RETURN
Set
forth below is a line graph comparing the annual percentage change in the
cumulative total return on the Company’s Common Stock with the cumulative total
return of the NASDAQ Global Market Index (U.S. Companies) and peer issuers for
the years ended December 31, 2003 through 2008.
Comparison
of Cumulative Total Return from December 31, 2003 through December 31, 2008:
Monterey
Gourmet Foods, NASDAQ Global Index (U.S. Companies) and Peer Issuers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
Dec. 31,
2003
|
|
Dec. 31,
2004
|
|
Dec. 31,
2005
|
|
Dec. 31,
2006
|
|
Dec. 31,
2007
|
|
Dec. 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monterey
Gourmet Foods
|
|
|
100.00
|
|
|
90.90
|
|
|
108.04
|
|
|
117.42
|
|
|
85.38
|
|
|
28.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NASDAQ
Stock Market (US Companies)
|
|
|
100.00
|
|
|
108.84
|
|
|
111.16
|
|
|
122.11
|
|
|
132.42
|
|
|
63.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer
Group of Companies
|
|
|
100.00
|
|
|
112.25
|
|
|
140.50
|
|
|
190.11
|
|
|
128.18
|
|
|
40.16
|
|
The index level for all
series was set to $100.00 on 12/31/2003, and it was assumed that all dividents
were reinvested. No dividents have been declared on Monterey Gourmet Foods’
Common Stock. Stockholder returns over the indicated period should not be
considered indicative of future stockholder returns.
19
STOCKHOLDER
PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Stockholder
proposals may be included in our proxy materials for an annual meeting so long
as they are provided to us on a timely basis and satisfy the other conditions
set forth in applicable SEC rules. For
a stockholder proposal to be included in our proxy materials for the 2010
annual meeting, the proposal must be received at our principal executive
offices, addressed to the Secretary, not later than February 19, 2010.
TRANSACTION
OF OTHER BUSINESS
At
the date of this Proxy Statement, the Board of Directors knows of no other
business that will be conducted at the 2008 annual meeting other than as
described in this Proxy Statement. If
any other matter or matters are properly brought before the meeting, or any
adjournment or postponement of the meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
|
|
|
|
|
By order of the Board of
Directors
|
|
|
|
|
|
|
|
|
SCOTT
S. WHEELER
|
|
|
Secretary
|
April 30, 2009
20
Front
Side of Proxy Card
MONTEREY GOURMET FOODS, INC.
Proxy for Annual Meeting of
Stockholders
This Proxy Is Solicited by the Board of Directors
And May Be Revoked Prior to Its Exercise
The undersigned hereby
appoint(s) Eric C. Eddings and Scott S. Wheeler, and each of them, with full
power of substitution to represent the undersigned and to vote all of the
shares of stock in Monterey Gourmet Foods, Inc. (“the Company”) which the
undersigned is(are) entitled to vote at the Annual Meeting of Stockholders of
said Company to be held at the Embassy Suites Hotel, 15920 West Valley Highway,
Seattle, Washington 98188 on Friday, June 19, 2009 at 10:00 a.m., local time,
and at any adjournment thereof (1) as hereinafter specified upon the proposals
listed on the reverse side and as more particularly described in the Company’s
Proxy Statement, receipt of which is hereby acknowledged, and (2) in the
proxyholders’ discretion upon such other matters as may properly come before
the meeting.
The Shares
represented hereby shall be voted as specified. If no specification is made,
such shares shall be voted for proposals 1 and 2.
CONTINUED AND TO BE SIGNED ON REVERSE
SIDE
Reverse Side of Proxy Card
|
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|
|
A vote
FOR the following proposals is recommended by the Board of Directors:
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|
|
|
|
|
|
|
|
1. To elect nine directors to hold office until the Company’s
annual Meeting of Stockholders in 2010 and until their successors are duly
elected and qualified or until their earlier resignation or removal:
NOMINEES:
Charles B. Bonner, Mark C. Frandsen, Van
Tunstall, Tammy C. Katz, Walter L. Henning, Eric C. Eddings, John H.
McGarvey, Viji Sampath, Scott S. Wheeler
|
|
MARK
HERE
FOR ADDRESS CHANGE
AND NOTE BELOW
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|
o
FOR
|
o
WITHHELD
|
|
|
Even
if you are planning to attend the meeting in person, you are urged
to sign and mail the Proxy in the return envelope so that your shares may be
represented at the meeting.
|
|
|
|
|
|
|
|
o
For all nominees except as noted above (line
through votes to be withheld)
|
|
|
|
|
2. To approve the selection of McGladrey & Pullen, LLP,
as the Company’s independent registered public accounting firm for the fiscal
year ended December 31, 2009.
|
|
Sign exactly as your
name(s) appear(s) on your stock certificate. If shares of stock stand on
record in the names of two or more persons or in the name of husband and
wife, whether as joint tenants or otherwise, both or all of such persons
should sign the above Proxy.
|
|
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
|
If shares of stock are held on record by a
corporation, the Proxy should be executed by the President or Vice President
and the Secretary or Assistant Secretary, and the corporate seal should be
affixed thereto. Executors, administrators or other fiduciaries who execute
the above Proxy for a deceased stockholder should give their full title.
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|
|
Please
date the Proxy
|
|
|
|
|
|
|
|
Signature(s)____________________________________
|
|
|
Date ____________________________________
|
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|
|
|
Address (if changed)
|
Monterey Gourmet Foods (MM) (NASDAQ:PSTA)
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