Horizon Organic Horizon Holding Company
| Horizon's Majority Stock Holder Suiza Foods Corp Corporate Profile Suiza Foods Corporation, based in Dallas, is the nation's leading dairy processor and distributor, producing a full line of company-branded and customer-branded products. National brands include International Delight(R), Second Nature(R), Naturally Yours(R), Mocha Mix(R), Sun Soy(TM), kidsmilk(TM) and fitmilk(R). Regional brands consist of Adohr Farms(R), Barbe's(R), Brown's Dairy(TM), Broughton(R), Country Fresh(R), Dairy Gold(R), Dairymen's(R), Flav-O-Rich(R), Garelick Farms(TM), Lehigh Valley Farms(R), London's(R), Meadow Gold(R), Model Dairy(R), Oak Farms(R), Poudre Valley(R), Robinson(R), Schenkel's All Star Dairy, Schepps(R), Shenandoah's Pride(R), Suiza Dairy(R), Louis Trauth Dairy(R), Tuscan(R), Velda Farms(R) and West Lynn Creamery(R), as well as Celta(R) in Spain. Suiza also sells products under partner or licensed brands in certain regions, including Borden(R), Lactaid(R), Foremost(R) and Pet(R). Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation's largest manufacturers of rigid plastic containers. Horizon Packaging Information: MilkOur half-gallon and quart milk cartons are constructed out of an earth-friendly, recyclable opaque paperboard. Horizon Organic Dairy uses the safest packaging possible which is why our milk cartons do not contain harmful chemicals, such as chlorine, and are colored using food-safe water-based inks. The state-of-the-art, chlorine-free process used to whiten our paperboard results in no harmful residues, including dioxins. Gallon containers are made of recyclable #2 HDPE plastic. Their opaque-white color serves as a barrier to the ultra-violet rays of store lights, thus protecting milk's freshness and nutritional value. The fibers of a milk package can be reused up to six times and converted into different non-food paper products. |
Horizon Organic Holding Corp. produces, processes and markets a brand of certified organic fluid milk and a full line of refrigerated certified organic dairy products. Horizon Organic introduced its first products, organic nonfat yogurts, in 1992. The Company introduced organic fluid milk in 1993 and since that time it has developed and introduced a number of new organic dairy products, including cottage cheese, hard cheese, butter, sour cream and more recently, organic citrus juices. In addition, the Company currently licenses its brand to Glenwood Foods LLC and NuCal Foods Inc. for use in connection with the sale of organic eggs. Horizon markets its products in the UK under the brand names Rachel's, Meadow Farms and Organic Matters. In fiscal 2000, the Company's two largest accounts were United Natural Foods and H.P. Hood.
6311 Horizon Lane
Longmont,CO 80503
(303) 530-2711
(303) 530-2714
http://www.horizonorganic.com
info@horizonorganic.com
Number of Employees 335
1-Yr. Sales Change 50.06%
Fiscal Year Ending Date 12/31/00
Net Income (in millions) $-0.58
Sales (in millions) $127.21
1-Yr. Net Income Change n.a.
Stock Data
Market Capitalization (in millions) 71.88
Percent Owned by Institutions 19.43
Shares Outstanding (in millions) 9.90
Number of Institutional Shareholders 52
Public Float (in millions)* 5.00
Percent Owned by Insiders 49.50
Latest Dividend n.a.
Last Stock Split n.a.
Date of Last Dividend n.a.
Date of Last Split n.a.
Dividend Yield n.a.
P/E Ratio (without extraordinary items) 142.35%
P/E Ratio (with extraordinary items) 142.35%
*Shares outstanding, minus shares controlled by insiders, restricted stock and
shares held by 5% owners
Short Interest
Total for current month 38,000
Short Interest Ratio** 1.27
Total for previous month 50,000
Short Interest as % of Public Float 0.76
**Number of days of average daily volume needed to close out total short
position.
Thomas D. McCloskey, Jr, Chairman
Held current title since: 1999
Director since: 1994
Officer since: 1999
Age: 53
Thomas D. McCloskey, Jr. has served as a director of the Company since April
1994 and served as Chairman of the Board of Directors from May 1994 until
November 1997 and again from May 1999 until the present. Mr. McCloskey has
served as Chairman of Cornerstone Holdings, LLC (and predecessor corporation),
an investment firm, since 1981. Mr. McCloskey received a B.A. degree from the
University of Notre Dame and a M.B.A. from The Wharton School of the University
of Pennsylvania.
Thomas P. Briggs Chief Financial Officer, Senior Vice President
of Finance and Administration
Held current title since: 2001
Officer since: 2000
Prior to joining Horizon Organic, Mr. Briggs was Vice President of Finance for
Denver-based Leprino Foods Company, the world's largest manufacturer of
mozzarella cheese and one of the largest companies in the U.S. dairy industry.
As part of his financial responsibilities for the company, Mr. Briggs negotiated
and implemented long-term milk supply agreements and managed the cheese-plant
site selection process. In addition to serving as a senior manager at the
national accounting firm, Deloitte and Touche, and Vice President of Finance for
Sanford Homes Inc., Mr. Briggs was Chief Financial Officer for both Energetics
(Nasdaq) and Calvin Exploration, Inc. (Nasdaq). His responsibilities at both
companies included communications with the financial community. Mr. Briggs holds
a Bachelor of Arts degree in Accounting from Duke University, Durham, N.C., and
a Juris Doctor degree from Georgetown University Law Center in Washington, D.C.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE NAMED NOMINEE
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
http://www.sec.gov/Archives/edgar/data/1041255/000091205701008085/0000912057-01-008085.txt
MARK A. RETZLOFF, age 52, is a co-founder of the Company, and has served as a director of the Company since December 1991. Mr. Retzloff has held several positions with the Company, including President and Treasurer from December 1991 to May 1995, Vice President, Sales and Marketing and Treasurer from May 1995 to May 1997, Vice President, Sales from May 1997 to January 1999, Senior Vice President Corporate Development from January 1999 to January 2000, President, International from January 1999 to February 2001 and is currently serving as a consultant to the Company. Mr. Retzloff co-founded Alfalfa's, Inc., a natural foods supermarket chain, and served as its President and Chairman of the Board of Directors from July 1978 to June 1990. Mr. Retzloff also co-founded a national chain of natural foods grocery stores under the trade name "Rainbow Grocery" with which he was employed from 1974 through 1979. Mr. Retzloff has served on the Board of Directors of the Organic Trade Association since September 1992 and as its President since September 1996. Mr. Retzloff received a B.S. degree from the University of Michigan.
CHARLES "CHUCK" F. MARCY, age 50, joined the Company as President and Chief Operating Officer in November 1999 and in January 2000 was appointed Chief Executive Officer. Mr. Marcy has served as a director of the Company since his appointment as Chief Executive Officer. Mr. Marcy served as President and Chief Executive Officer of the Sealright Corporation, Kansas, City, Mo., a publicly traded (NASDAQ) manufacturer of dairy packaging and packaging systems from 1995 to 1998. From 1993 to 1995 Mr. Marcy was President of the Golden Grain Company, a subsidiary of Quaker Oats Company and maker of the Near East brand of all-natural grain-based products. From 1991 to 1993 Mr. Marcy was President of the dairy division of Kraft General Foods. From 1974 to 1991 Mr. Marcy held various senior marketing and strategic planning roles with Sara Lee Corporation and General Foods. Mr. Marcy received his undergraduate degree in mathematics and economics from Washington and Jefferson College. He received his master of business administration degree with a concentration in marketing and general management from the Harvard Business School. He has twice served on the board of directors of the International Dairy Foods Association.
G. IRWIN GORDON, age 50, has served as a director of the Company since July 1998. Mr. Gordon has held the position of President and CEO of Gruma Corporation since July 2000. Mr. Gordon served as President and Chief Operating Officer of Suiza Foods Corporation ("Suiza") from February 1998 to October 1999. Mr. Gordon joined Suiza in August 1997 as its Executive Vice President and Chief Marketing Officer. Prior to joining Suiza, Mr. Gordon served in various capacities for PepsiCo, Inc. beginning in March 1983, including most recently as Senior Vice President Global Branding for Frito Lay, from May 1996 until August 1997, Senior Vice-President Marketing from September 1992 until April 1996, Region President-Southern Europe from November 1991 until August 1992 and President and General Manager of various international Frito Lay companies from 1985 until October 1991. Prior to joining PepsiCo in 1992, Mr. Gordon served in various capacities at the Kellogg Company. Mr. Gordon received an Education Degree from the University of British Columbia and a Management Certificate from Stanford University.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2003 ANNUAL MEETING
PAUL B. REPETTO, age 64, a co-founder of the Company, has served as Secretary and a director of the Company since December 1991. Mr. Repetto served as the Company's Vice President, Operations from December 1991 until December 1997, Vice President, Marketing from December 1997 until January 1999, and as the Company's Senior Vice President, Marketing until January 2000. During 2000, Mr. Repetto worked on special projects for the Company. From 1988 to December 1991, Mr. Repetto served as President of Westbrae/Little Bear Natural Foods, the main unit of Vestro Foods, a public company marketing a wide variety of food products. Prior to 1988, Mr. Repetto was President of Natural Protein Products, a natural snack company he acquired. Prior to 1978, Mr. Repetto held senior positions with private advertising agencies. Mr. Repetto has served on the Steering Committee of the Organic Foods Alliance and on the Board of the Organic Foods Production Association of North America, the predecessor organizations to the Organic Trade Association. Mr. Repetto received a B.S. degree from the Massachusetts Institute of Technology.
CLARK MANDIGO II, age 57, has served as a director of the Company since July 1996. Since 1991, Mr. Mandigo has been self-employed as a business consultant and investor and has owned an interest in a Papa John's Pizza franchise since April 1995. He currently serves as a director of Lone Star Steakhouse & Saloon Inc., a retail restaurant chain, where he is a member of the audit and nominating committees and is the chairman of the compensation committee. Mr. Mandigo also serves as a Trustee for Accolade Funds, where he serves on the audit committee, and as a Trustee for U.S. Global Investors Funds, where he also serves on the audit committee. Mr. Mandigo received a B.A. and a J.D. degree from the University of Kansas.
RICHARD L. ROBINSON, age 71, has served as a director of the Company since July 1996. Mr. Robinson has been the Chairman of Robinson Dairy, Inc. since 1975 and has served as Chief Executive Officer of Robinson Dairy, Inc. from 1975 to July 1999. From 1993 to 1999 Mr. Robinson served as a Director for U.S. Bancorp. Mr. Robinson currently serves as a director for HCA Health One and is a member of the Management Committee for Consolidated Container Corp. Mr. Robinson has in the past served as a director of Asset Investors, Inc., from 1986 to 2000, and U.S. Exploration, Inc. Mr. Robinson received a B.S. degree from Colorado State University.
MICHELLE GOOLSBY, age 43, has served as a director of the Company since November 1999. Ms. Goolsby joined Suiza in July 1998 as Executive Vice-President, General Counsel and Secretary. In September 1999, she assumed the additional duties of Chief Administrative Officer. From September 1988 until July 1998, she held various positions with the law firm of Winstead Sechrest & Minick. Prior to joining Winstead Sechrest & Minick, she held various positions with the Trammell Crow Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of the Company's Common Stock as of March 14, 2001 by: (i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its Common Stock.
<TABLE>
<CAPTION>
Number of Shares Percent Beneficially
Name of Beneficial Owner (1) Beneficially Owned (2) Owned (2)
- ---------------------------- ---------------------- --------------------
<S> <C> <C>
Suiza Foods Corporation 1,188,000 11.99
2515 McKinney Avenue, Suite 1200
Dallas, Texas 75201
Michelle Goolsby (3) 1,188,596 12.00 c/o Suiza Foods Corporation 2515 McKinney Avenue, Suite 1200 Dallas, Texas 75201
Thomas D. McCloskey, Jr. (4) 1,166,170 11.77
McCloskey 1998 GRAT 595,976 6.01
Lord Abbett & Co. (5) 819,082 8.27 767 Fifth Avenue New York, New York 10153-0203
Paul B. Repetto (6) 405,490 4.09
Mark A. Retzloff (7) 328,294 3.31
Barnet M. Feinblum (8) 374,516 3.78
Charles F. Marcy (9) 126,149 1.27
Clark R. Mandigo II (10) 81,522 **
G. Irwin Gordon (11) 9,782 **
Richard L. Robinson (12) 52,208 **
Clark Driftmier (13) 7,500 **
Kyle Joe Langley (14) 8,969 **
Kevin O'Rell (15) 9,111 **
All executive officers and directors as a group (12 persons) (16) 3,758,307 37.95 </TABLE>
** Less than one percent.
(1) Unless otherwise set forth, all addresses are c/o the Company, 6311 Horizon Lane, Longmont, Colorado 80503.
(2) This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the Securities and Exchange Commission (the "SEC"). Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 9,901,098 shares of Common Stock outstanding as of March 14, 2001 adjusted as required by rules promulgated by the SEC. All warrants are currently exercisable and share amounts include stock options exercisable within 60 days of March 14, 2001.
(3) Includes 1,888,000 shares held by Suiza Foods Corporation. Ms. Goolsby is the Chief Administration Officer of Suiza Foods Corporation and disclaims any beneficial ownership of the shares held by Suiza Foods Corporation.
(4) Includes 595,976 shares held by the McCloskey 1998 GRAT, of which Mr. McCloskey's children are the beneficiaries; 28,334 shares held by the McCloskey Children's Trust, of which Mr. McCloskey's children are the beneficiaries; 219,803 shares held by the McCloskey Trust, of which Mr. McCloskey is a trustee; and an aggregate of 14,250 shares held in trusts by each of his four children (collectively, the "Trust Shares"); and 155,280 shares held by McCloskey Ventures LLC, of which Mr. McCloskey is a manager (the "LLC Shares"). Mr. McCloskey disclaims any beneficial interest in the Trust Shares and the LLC shares, except to the extent of his pecuniary interest in the LLC Shares arising from his role therein. Also includes 25,250 shares subject to stock options.
(5) Based on a Schedule 13GA filing as of January 19, 2001.
(6) Includes 3,680 shares held by his spouse and 49,250 shares subject to stock options.
(7) Includes 23,000 shares held by his spouse, an aggregate of 40,000 shares held by spouse as custodian for his three children and 45,250 shares subject to stock options.
(8) Includes 25,085 shares held by his spouse, 19,538 shares held by the Feinblum Investment Management LLLP and 150,066 shares subject to stock options. Mr. Feinblum disclaims any beneficial interest in the shares held by his spouse.
(9) Includes 100,000 shares subject to stock options.
(10) Includes 56,786 shares held jointly with his spouse, an aggregate of 23,236 shares held in trust for his four children and 1,500 shares subject to stock options.
(11) Includes 3,000 shares subject to stock options.
(12) Includes 11,000 shares subject to stock options.
(13) Includes 7,500 shares subject to stock options.
(14) Includes 7,500 shares subject to stock options.
(15) Includes 7,500 shares subject to stock options.
(16) Includes 407,816 shares subject to stock options. See Notes 4 and 6 through 15 above.
MANAGEMENT
Executive Officers
The following table sets forth certain information concerning the executive officers of the Company as of March 14, 2001:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Thomas McClosky, Jr. 54 Chairman of the Board of Directors
Charles F. Marcy 50 President, Chief Executive Officer, and Director
Paul B. Repetto 64 Secretary and Director
Thomas P. Briggs 52 Senior Vice President, Finance & Administration, Chief Financial Officer,
Treasurer and Assistant Secretary
Clark Driftmier 47 Senior Vice President, Sales & Marketing
Stephen Jacobson 57 Vice President, Operations
Kyle Joe Langley 44 Vice President, Sales
Kevin O'Rell 49 Vice President, Quality Assurance and Research and Development
Gary Merriman 49 Vice President, Human Resources
THOMAS P. BRIGGS joined the Company as Vice President, Finance & Administration, Chief Financial Officer, Treasurer and Assistant Secretary in June 2000. He has served as Senior Vice President, Finance & Administration, Chief Financial Officer, Treasurer and Assistant Secretary since January 2001. Mr. Briggs has 10 years experience in the dairy foods industry and 30 years in finance. From 1990 through 2000, Mr. Briggs served as Vice President of Finance for Denver-based Leprino Foods Company, the world's largest manufacturer of mozzarella cheese and one of the largest companies in the U.S. dairy industry. Mr. Briggs has both national accounting firm and public company experience. He began his career in 1969 as a senior tax manager for Price Waterhouse and in the late 1980s was a senior manager with Deloitte & Touche. He also served as Chief Financial Officer for both Energetics, Inc. (from 1981 to 1985) and Calvin Exploration, Inc. (from 1979 to 1981). Mr. Briggs holds a bachelor of arts degree in accounting from Duke University, Durham, N.C., and a juris doctor degree from Georgetown University Law Center in Washington, D.C.
CLARK F. DRIFTMIER, joined the Company as Vice President of Marketing in February 2000. He has served as Senior Vice President of Sales and Marketing since January 2001. From September 1994 to February 2000, Mr. Driftmier served at Small Planet Foods LLC, parent company of Cascadian Farm and Muir Glen, two leading organic brands. His most recent position at Small Planet was Senior Vice President of Marketing. From 1989 to 1994, Mr. Driftmier served at Ralston Purina Company in several marketing capacities, including Product Manager of Chex breakfast cereals and other national brands. Prior to joining Ralston Purina, Mr. Driftmier served as Executive Vice President of Wilmore Nurseries, Inc., a large family nursery company. Mr. Driftmier received a BME degree from Oberlin College, and an MBA degree from Darden Graduate Business School, University of Virginia, where he was the winner of the faculty award for academic excellence. Mr. Driftmier currently serves on the Marketing Committee of the Organic Trade Association. Previously, he served on the board of directors of the Colorado Nursery Association.
STEPHEN JACOBSON, joined the Company as Director of Operations in January 2000. He has served as Vice President of Operations since December 2000. From 1997 to 2000, Mr. Jacobson served as Director of Finance and Budgeting for Recycling Industries, Inc. From 1995 to 1997 he served as Regional Distribution Director for Meadow Gold Dairies, a national milk processing, marketing and distribution company. From 1993 to 1995 he served as a consultant with the Denver Management Group which consults in the dairy and beverage industry. Mr. Jacobson received a BA from Hofstra University in Finance and Economics.
KYLE JOE LANGLEY has served as Vice President, Sales of the Company since January 1999. From 1977 until 1998, Mr. Langley served in various capacities at The Dannon Company, Inc., including most recently as Western Division Manager from 1994 until 1998, Central Division Manager from 1992 until 1994, Region Manager from 1988 until 1992, and District Manager from 1985 until 1988.
KEVIN O'RELL has served as Vice President, Research & Development/Quality Assurance since May 1999. From 1987 to 1999, Mr. O'Rell was president of Brotech, a food and dairy consulting firm. Prior to that Mr. O'Rell held various technical positions at Beatrice Foods, Crest Foods and Dannon. Mr. O'Rell received his bachelors degree in food science from the University of Illinois.
GARY MERRIMAN has served as Vice President, Human Resources since January 1999. From 1995 to 1999, Mr. Merriman held various positions at General Electric Corporation, GE Information Technology Distribution, including Vice President, Human Resources and Director, Human Resources. From 1994 to 1995, Mr. Merriman was the director of human resources for Green Technologies, Inc. From 1989 to 1994, Mr. Merriman held various human resources positions at Valleylab, Inc.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director receives $1,000 for each Board meeting attended and $500 for each Committee meeting attended on a date separate from any Board meeting. These fees are paid in grants of shares of the Company's Common Stock, calculated by dividing the relevant amount by the per-share price, which will be equal to the fair market value of the Company's Common Stock as reported on the NASDAQ National Market on the date of such meeting. Directors are also reimbursed for certain expenses in connection with attendance at Board and Committee meetings. In the fiscal year ended December 31, 2000, the total compensation paid to non-employee directors was $25,500 in the form of Company Stock.
In addition, each non-employee director is entitled to receive a grant of options exercisable for 3,000 shares of the Company's Common Stock under the Company's 1998 Equity Incentive Plan (the "Plan") after each annual meeting of stockholders at an exercise price equal to the fair market value of the Company's Common Stock as reported on the NASDAQ National Market on the date of such annual meeting. Additionally, each non-employee director elected to serve as a director will receive an option grant exercisable for 3,000 shares of the Company's Common Stock upon his or her appointment to the Board. In the fiscal year ended December 31, 2000, the Company granted options to Ms. Goolsby and Messrs. Mandigo, Gordon, McClosky and Robinson for 3,000 shares each of the Company's common stock at an exercise price of $9.50.
As of March 14, 2001 no options had been exercised by non-employee directors under the Plan.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ended December 31, 1998, 1999, and 2000 compensation awarded or paid to, or earned by, the Company's Chief Executive Officer and its other four most highly compensated executive officers at December 31, 2000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
----------------------------------------------- ---------------------------
Securities All Other
Underlying Compensation
Name and Principal Position Fiscal Year Salary ($)(1) Bonus ($)(1) Options (#) ($)(2)
- --------------------------- ----------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Charles F. Marcy, President and 2000 267,377 54,208 40,000 57,100
Chief Executive Officer (3) 1999 19,284 -0- 200,000 -0-
Barnet M. Feinblum, former 2000 -0- -0- -0- 197,216 President and Chief Executive 1999 180,000 32,400 12,000 5,653 Officer 1998 140,000 96,040 -0- 4,819
Mark A. Retzloff 2000 150,000 24,636 20,000 12,579
President, International 1999 150,000 18,000 8,000 4,771
1998 120,000 52,800 -0- 4,219
Clark Driftmier 2000 119,166 12,785 30,000 3,240 Senior Vice President Sales and Marketing (4)
Kevin O'Rell (5) 2000 128,909 36,844 10,000 4,150 Vice President QA/R&D 1999 89,096 14,450 20,000 6,804
Joe Langley 2000 123,125 13,858 10,000 4,623 Vice President Sales 1999 120,000 14,450 20,000 15,000
(1) Includes amounts, if any, deferred pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended.
(2) Includes matching contributions made by the Company to the 401(k) Plan, premiums for long-term disability and life insurance paid by the Company, severance pay and relocation costs reimbursed by the Company.
(3) Mr. Marcy joined the Company in November 1999.
(4) Mr. Driftmier joined the Company in February 2000.
(5) Mr. O'Rell joined the Company in April of 1999.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under the Plan. As of December 31, 2000, options to purchase a total of 1,025,279 shares were outstanding under the Plan and options to purchase 474,721 shares remained available for grant thereunder.
The following table sets forth for the Named Executive Officers certain information regarding options granted for the fiscal year ended December 31, 2000:
OPTION GRANTS IN FISCAL 2000
Percent of Potential Realizable Value
Number of Total Options At Assumed Annual Rates
Shares Granted to of Stock price Appreciation
Underlying Employees in Exercise for Option Terms ($)(3)
Options Fiscal Price Expiration ---------------------------
Name Granted (1) Year (2) ($/Share) Date 5% 10%
- ---- ----------- ------------ --------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Marcy 12,500 4.08 7.38 1/03/05 117,736 148,569
37,500 12.24 7.38 1/03/05 353,210 445,708
Barnet M. Feinblum -0- -0- -0- -0- -0- -0-
Mark A. Retzloff 18,236 5.95 9.50 5/16/05 221,105 279,007
1,764 0.57 9.50 5/16/05 21,387 26,988
Clark Driftmier 20,000 6.53 9.25 2/21/05 236,112 297,944
10,000 3.26 9.50 5/16/05 121,246 152,998
Kevin O'Rell 10,000 3.26 9.50 5/16/05 121,246 152,998
Kyle Joe Langley 10,000 3.26 9.50 5/16/05 121,246 152,998
(1) 25% of the options vest and will become exercisable upon the first
anniversary of the grant date and will become exercisable as to the remainder of
the grant in three equal annual installments thereafter.
(2) Based on 306,150 total options granted in fiscal 2000.
(3) The potential realizable value is calculated assuming that the fair market value of Common Stock on the date of the grant as determined by the Board appreciates at the indicated annual rate compounded annually for the entire term of the option and that the option is exercised and the Common Stock received therefor is sold on the last day of the term of the option for the appreciated price. The 5% and 10% rates of appreciation are mandated by the rules of the Securities and Exchange Commission (the "SEC") and do not represent the Company's estimate or projection of future increases in the price of its Common Stock.
AGGREGATED OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR END OPTION VALUES
The following table sets forth for the Named Executive Officers the shares acquired and the value realized on each exercise of stock options during the fiscal year ended December 31, 2000 and the fiscal year end number and value of unexercised options:
Number of Securities Underlying
Value of Unexercised
Shares Acquired on Value Unexercised Options at 12/31/00 In-the-Money Options at 12/31/00
Name Exercise (#) Realized ($) Exercisable/Unexercisable (#)(1) Exercisable/Unexercisable ($)(2)
- ---- ------------------ ------------ -------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Charles F. Marcy -- -- 87,500/162500 0/0
Barnet M. Feinblum 50,000 237,500 148,000/24,000 269,950/0
Mark A. Retzloff -- -- 40,750/34,750 56,600/0
Clark Driftmier -- -- 0/30,000 0/0
Kevin O'Rell -- -- 5,000/25,000 0/0
Kyle Joe Langley -- -- 5,000/25,000 0/0
(1) Includes both "in-the-money" and "out-of-the-money" options. "In-the-money" options are options with exercise prices below the market price of the Company's Common Stock at December 31, 2000.
(2) Based on the fair market value of the Common Stock as of December 31, 2000 of $4.43 per share, minus the per share exercise price of "in-the-money" unexercised options, multiplied by the number of shares represented by such options.
EMPLOYMENT AGREEMENTS
Messrs. Feinblum and Retzloff (each, an "Executive") have entered into Amended Executive Employment Agreements with effective dates of January 1, 1998 and Mr. Marcy has entered into an Amended and Restated Employment Agreement with an effective date as of November 29, 1999 (collectively, the "Employment Agreements"). Mr. Feinblum resigned from his position as Chief Executive Officer of the Company in January 2000. The Employment Agreement with Mr. Feinblum provides that he would receive an annual salary of $140,000, which was eligible for adjustments annually by the Compensation Committee, and the Employment Agreement with Mr. Retzloff provides that he would receive an annual salary of $120,000, which was eligible for adjustments annually by the Compensation Committee. The Employment Agreement with Mr. Marcy provides that he receive an annual salary of $250,000 while he was performing duties as the President and Chief Operating Officer of the Company and an annual salary of $275,000 while performing duties as the President and Chief Executive Officer of the Company, which may be adjusted annually by the Compensation Committee. Mr. Marcy was appointed President and Chief Operating Officer beginning in November 1999 and was appointed Chief Executive Officer in January 2000.
Additionally, for the year ended December 31, 2000, each Executive was eligible to receive incentive bonuses in an amount up to 60% (110% for Mr. Marcy and no bonus for Mr. Feinblum) of his base salary. The Employment Agreements also provide that each Executive will be entitled to (i) four weeks paid vacation (26 days for Mr. Marcy per year plus 10 additional days during the first year), (ii) participation in any employee benefit plans the Company makes available to its other employees, (iii) life insurance in the minimum amount of $100,000 for Messrs. Retzloff and Feinblum, (iv) disability insurance, and (v) reimbursement of reasonable business expenses. Mr. Feinblum's Employment Agreement also provided that all 135,000 of the incentive stock options granted to him under the stock option agreement dated June 1, 1995 are fully vested and exercisable. Mr. Marcy's Employment Agreement provides that the Company reimburse him all costs related to his relocation to Colorado which totaled $48,000 in 2000. Mr. Feinblum retired as an operating officer of the Company in January 2000 and Mr. Retzloff retired as an operating officer of the Company in February 2001.
Each Employment Agreement provides that the Company may terminate the Executive at any time. In the case of Messrs. Feinblum and Retzloff, if the Executive is terminated without cause or if the Executive terminates his Employment Agreement for cause, the Company is obligated to pay the Executive's salary for a period equal to the longer of (i) twelve months after the date of termination or (ii) the remainder of the employment period. In such case, the Executive also is entitled to a pro rata incentive bonus for the year in which termination occurs. Under this provision, Mr. Feinblum received his base salary through December 31, 2000. The Employment Agreements for Messrs. Feinblum and Retzloff also contain noncompete provisions which prohibit the Executives, without the consent of the Company, for a period of twenty-four months after the termination or expiration of the Executive's employment with the Company from (i) owning more than 5% of the outstanding stock of a publicly-traded competitive company; (ii) owning any stock of a privately held competitive company; (iii) participating in the financing, operation, management or control of any competitive company; and (iv) soliciting employees of the Company. In Mr. Marcy's Employment Agreement, if the Executive is terminated without cause, the Company is obligated to pay the Executive's salary for a period equal to eighteen (18) months provided Mr. Marcy executes a release and non-compete agreement for a duration of eighteen (18) months and limited to the organic products industry.
CHIEF EXECUTIVE OFFICER COMPENSATION
For the fiscal year ended December 31, 2000, Charles F. Marcy, the current President and Chief Executive Officer of the Company received total cash payments of $267,377 in salary and $54,208 as a bonus. The base salary of Mr. Marcy was set at an annual rate of $250,000 in 1999 for services rendered by Mr. Marcy as the President and Chief Operating Officer of the Company. That base salary was increased to an annual rate of $275,000 at the time Mr. Marcy became President and Chief Executive Officer of the Company upon the effective resignation of Barnet M. Feinblum in January, 2000. Mr. Marcy's salary is based largely on review of competitive salaries in the industry and other subjective factors.
For the fiscal year ended December 31, 2000, Barnet M. Feinblum, the President and Chief Executive Officer of the Company until January 2000 received total cash payments of $180,000 in salary as severance. The base salary of Mr. Feinblum was set at an annual rate of $140,000 commencing January 1, 1998, which represented an increase from his base salary of $125,000 in 1997. Mr. Feinblum's base salary was based largely on review of competitive salaries in the industry and other subjective factors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEMNITY AGREEMENTS
The Company has entered into indemnity agreements with certain officers and directors which provide, among other things, that the Company will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he may be required to pay in actions or proceedings which he is or may be made a party by reason of his position as a director, officer or other agent of the Company, and otherwise to the full extent permitted under Delaware law and the Company's Bylaws.
SUIZA AGREEMENTS
Suiza is a majority shareholder in the Company. In 1998, Horizon entered into agreements with Suiza, a leading manufacturer and distributor of fresh milk and related dairy products. The Company's arrangement with Suiza includes processing and distribution agreements with certain of Suiza's subsidiaries. Horizon's relationship with Suiza includes five-year processing and distribution agreements with three of Suiza's subsidiaries: Model Dairy, a fluid milk processor located in Reno, Nevada, which currently processes organic fluid milk for Horizon; Robinson Dairy, a fluid milk processor located in Colorado, which currently processes organic milk for Horizon; and Garelick Farms, a fluid milk processor and distributor with several locations in the northeastern United States, which does not currently process any products for Horizon. The processing and distribution agreement with Model provides that Model Dairy will distribute all SKUs of Horizon's organic fluid milk products which are available for sale in its territory. Amounts paid to Suiza and its subsidiaries under these agreements total $8,814,00, $4,487,000 and $1,677,000 in 2000, 1999 and 1998, respectively. In addition, Mr. Robinson, a director of the Company, is the Chairman of Robinson Dairy.
Management believes the terms of all of the foregoing transactions were fair to the Company and were no less favorable to the Company than would have been obtained from an unaffiliated third party in arms' length negotiations. All future transactions with affiliates will be subject to the approval of the Company's disinterested directors and will be on terms believed by such directors to be no less favorable to the Company than those available from unaffiliated third parties.
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