SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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mission Only (as permitted by
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[ ] Definitive Additional Materials
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John B. Sanfilippo & Son, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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(1) Amount previously paid:
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(Company Logo)
JOHN B. SANFILIPPO & SON, INC.
2299 Busse Road
Elk Grove Village, Illinois 60007
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
on October 29, 2003
-------------------
TO THE STOCKHOLDERS:
The annual meeting of stockholders of John B. Sanfilippo & Son, Inc. (the
"Company") will be held on Wednesday, October 29, 2003 at 10:00 a.m., local
time, at the Wyndham Hotel Northwest Chicago, 400 Park Boulevard, Itasca,
Illinois 60143, for the following purposes:
1. To elect directors;
2. To ratify the action of the Board of Directors in appointing
PricewaterhouseCoopers LLP as the Company's independent auditors
for the fiscal year ending June 24, 2004; and
3. To transact such other business as may properly be brought before the
annual meeting or any adjournment or postponement thereof.
The annual meeting may be postponed or adjourned from time to time without
any notice other than announcement at the meeting, and any and all business
for which notice is hereby given may be transacted at any such postponed or
adjourned meeting.
The Board of Directors has fixed the close of business on September 8, 2003
as the record date for determination of stockholders entitled to notice of
and to vote at the annual meeting. A list of these stockholders will be
available for inspection for 10 days preceding the meeting (at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, IL) and will also be
available for inspection at the meeting.
Stockholders are requested to complete and sign the enclosed proxy, which is
solicited by the Board of Directors, and promptly return it in the
accompanying envelope whether or not they plan to attend the annual meeting
in person. The proxy is revocable at any time before it is voted. Returning
the proxy will in no way limit your right to vote at the annual meeting if
you should later decide to attend and vote in person.
Because two classes of stock of the Company are now outstanding, a separate
form of proxy has been prepared with respect to each class of stock: a white
proxy, which relates to the Company's Common Stock, $.01 par value; and a
blue proxy, which relates to the Company's Class A Common Stock, $.01 par
value. Stockholders who own of record shares of only one class are being
furnished only with the proxy relating to that class. Stockholders who own
of record shares of both classes are being furnished with both proxies (in
separate mailings, each of which also includes a copy of this notice and the
proxy statement). Stockholders who receive both proxies must complete, sign
and return both proxies in order for the shares of both classes to be voted
by proxy.
By Order of the Board of Directors
/s/ MICHAEL J. VALENTINE
------------------------
MICHAEL J. VALENTINE
Secretary
Elk Grove Village, Illinois
September 15, 2003
JOHN B. SANFILIPPO & SON, INC.
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
October 29, 2003
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of John B. Sanfilippo & Son, Inc., a Delaware corporation,
of proxies for use at the annual meeting of stockholders of the Company to be
held on Wednesday, October 29, 2003 at 10:00 a.m., local time, at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143, and at
any postponement or adjournment thereof (the "Annual Meeting"). All shares
of the Company's Common Stock, $.01 par value (the "Common Stock"), and the
Company's Class A Common Stock, $.01 par value (the "Class A Stock"),
entitled to vote at the Annual Meeting which are represented by properly
executed proxies will, unless such proxies have been revoked, be voted in
accordance with the instructions given in such proxies. Any stockholder who
has given a proxy may revoke it at any time prior to its exercise at the
Annual Meeting by delivering a written notice of revocation or duly executed
proxy bearing a later date to the Secretary of the Company, or by attending
the Annual Meeting and voting in person. Any written notice of revocation or
subsequent proxy should be delivered to the Company at 2299 Busse Road, Elk
Grove Village, Illinois 60007-6057, Attention: Secretary, or hand delivered
to the Secretary, before the closing of the polls at the Annual Meeting.
Unless the context otherwise requires, references herein to the "Company"
refer to John B. Sanfilippo & Son, Inc. and its subsidiary.
This Proxy Statement and accompanying proxy are being mailed to stockholders
on or about September 15, 2003. The mailing address of the principal
executive offices of the Company is 2299 Busse Road, Elk Grove Village,
Illinois 60007-6057.
Record Date and Shares Outstanding
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The Company had outstanding on September 8, 2003, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, 5,659,864 shares of Common Stock (excluding 117,900 treasury shares)
and 3,667,426 shares of Class A Stock. The Common Stock is traded on the
Nasdaq National Market. There is no established public trading market for
the Class A Stock.
Voting and Quorum
-----------------
Pursuant to the Company's Restated Certificate of Incorporation (the
"Restated Certificate"), so long as the total number of shares of Class A
Stock outstanding is greater than or equal to 12.5% of the total number of
shares of Class A Stock and Common Stock outstanding, generally the holders
of Common Stock voting as a class are entitled to elect such number (rounded
to the next highest number in the case of a fraction) of directors as equals
25% of the total number of directors constituting the full Board of Directors
and the holders of Class A Stock voting as a class are entitled to elect the
remaining directors. The holders of Common Stock are not entitled to
cumulative voting. In connection with the election of directors, however,
each holder of Class A Stock has the right, in person or by proxy, to either
(a) vote the number of shares of Class A Stock owned by such holder for as
many persons as there are directors to be elected by holders of Class A Stock
("Class A Directors"), or (b) cumulate said votes (by multiplying the number
of shares of Class A Stock owned by such holder by the number of candidates
for election as a Class A Director) and either (i) give one candidate all of
the cumulated votes, or (ii) distribute the cumulated votes among such
candidates as the holder sees fit.
Two proposals are scheduled for stockholder consideration at the Annual
Meeting, each of which is described more fully herein: (i) the election of
seven directors of the Company; and (ii) the ratification of the action of
the Board of Directors in appointing PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending June 24, 2004. At
the meeting, the holders of Common Stock voting as a class will be entitled
to elect two of the seven directors, and the holders of Class A Stock voting
as a class will be entitled to elect the remaining five directors. With
respect to all matters other than the election of directors or any matters
for which class voting is required by law, the holders of Common Stock and
the holders of Class A Stock will vote together as a single class and the
holders of Common Stock will be entitled to one vote per share of Common
Stock and the holders of Class A Stock will be entitled to ten votes per
share of Class A Stock.
Attendance at the meeting in person or by proxy by the holders of Common
Stock entitled to cast at least a majority of the votes which the Common
Stock is entitled to cast at the Annual Meeting is required in order to
establish a quorum for the purpose of electing the directors to be elected by
holders of the Common Stock (the "Common Stock Directors"). Attendance at
the Annual Meeting in person or by proxy by the holders of Class A Stock
entitled to cast at least a majority of the votes which the Class A Stock is
entitled to cast at the Annual Meeting is required in order to establish a
quorum for the purpose of electing the Class A Directors. Attendance at the
meeting in person or by proxy by the holders of Common Stock and Class A
Stock entitled to cast at least a majority of the votes which such stock is
entitled to cast at the Annual Meeting on matters other than the election of
directors is required in order to establish a quorum for the purpose of any
other business. Assuming the presence of a quorum, (i) the affirmative vote
of a majority of the shares of Common Stock and Class A Stock, voting
separately as a class, present in person or by proxy at the Annual Meeting
will be required for the election of the Common Stock Directors and Class A
Directors, respectively, and (ii) the affirmative vote of the holders of
shares representing a majority of the votes entitled to be cast by the
holders of Common Stock and Class A Stock, voting together as one class,
present in person or by proxy at the Annual Meeting and entitled to vote
thereon shall be required to act on all other matters to come before the
Annual Meeting.
Votes may be cast by a stockholder in favor of the nominees for election as
directors or withheld. Similarly, votes may be cast by a stockholder in
favor or against ratification of the appointment of the independent auditors,
or a stockholder may elect to abstain from voting on these issues.
Directions to withhold authority, abstentions and broker non-votes (which
occur when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner) will be counted in determining the presence or absence of a
quorum for the transaction of business at the Annual Meeting. Abstentions
and directions to withhold authority will have the effect of votes against
the proposal being considered. Broker non-votes, because they are not deemed
to be entitled to vote with respect to any matter for which a broker does not
have authority to vote, are not counted in the vote totals and will have no
effect on any proposal scheduled for consideration at the Annual Meeting.
If a properly executed, unrevoked proxy does not specifically direct the
voting of the shares covered by such proxy, the proxy will be voted (a) FOR
the election of all nominees for election as director to be elected by
holders of the class of shares covered by such proxy as listed herein, (b)
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending June 24, 2004, and
(c) in accordance with the judgment of the persons named in the proxy as to
such other matters as may properly come before the Annual Meeting.
2
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth information as of September 8, 2003 with
respect to the beneficial ownership of Common Stock and Class A Stock by (a)
the persons known by the Company to be the beneficial owners of more than 5%
of the outstanding shares of Common Stock or Class A Stock, (b) each director
of the Company, (c) each of the executive officers named in the Summary
Compensation Table below ("Named Executive Officers") who currently serves as
an executive officer of the Company, and (d) all directors and executive
officers of the Company as a group. The information set forth in the table
as to directors and executive officers is based upon information furnished to
the Company by them in connection with the preparation of this Proxy
Statement. Except where otherwise indicated, the mailing address of each of
the stockholders named in the table is: c/o John B. Sanfilippo & Son, Inc.,
2299 Busse Road, Elk Grove Village, Illinois 60007-6057.
% of
No. of Outstanding % of % of Outstanding
Shares Shares of No. of Shares Outstanding Votes on Matters
of Common Common of Class Shares of Class Other than Election
Name Stock(1) Stock A Stock(1)(2) A Stock of Directors
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Jasper B. Sanfilippo(3)+- 70,600 1.2% 1,523,776 41.6% 36.1%
Mathias A. Valentine(4)+- None -- 582,588 15.9 13.7
Marian Sanfilippo(5) 8,152 * 914,720 24.9 21.6
Michael J. Valentine(6)+- 11,152 * 646,342 17.6 15.3
Jeffrey T. Sanfilippo(7)+- 28,152 * None -- *
James A. Valentine(8)- 10,102 * None -- *
John W. A. Buyers(9)+ 7,300 * None -- *
Timothy R. Donovan(10)+ 1,000 * None -- *
Governor Jim Edgar(11)+ 3,500 * None -- *
Heartland Advisors, Inc.(12) 569,400 9.9 None -- 1.3
Dimensional Fund Advisors Inc.(13) 315,500 5.5 None -- *
Bjurman, Barry & Associates(14) 298,680 5.2 None -- *
All directors and executive 156,836 2.7 2,752,706 75.1 65.2
officers as a group (14 persons,
all of whom are stockholders)
(3)(4)(6)(7)(8)(9)(10)(11)(15)
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+ Denotes Director.
- Denotes Named Executive Officer.
* Less than one percent.
(1) Except as otherwise indicated below, beneficial ownership means
the sole power to vote and dispose of shares. In calculating each
holder's percentage ownership and beneficial ownership in the
table above, shares of Common Stock which may be acquired by the
holder through the exercise of stock options exercisable on or
within 60 days of September 8, 2003 are included.
(2) Each share of Class A Stock is convertible at the option of the
holder thereof at any time and from time to time into one share of
Common Stock. In addition, the Restated Certificate provides that
Class A Stock may be transferred only to (a) Jasper B. Sanfilippo
or Mathias A. Valentine, (b) a spouse or lineal descendant of Mr.
Sanfilippo or Mr. Valentine, (c) trusts for the benefit of any of
the foregoing individuals, (d) entities controlled by any of the
foregoing individuals, (e) the Company, or (f) any bank or other
financial institution as a bona fide pledge of shares of Class A
Stock by the owner thereof as collateral security for indebtedness
due to the pledgee (collectively, the "Permitted Transferees"),
and that upon any transfer of Class A Stock to someone other than
a Permitted Transferee each share transferred will automatically
be converted into one share of Common Stock.
3
(3) Includes 163,045 shares of Class A Stock held as trustee of
certain trusts, the beneficiaries of which are the children of
Jasper and Marian Sanfilippo (two of whom - Jasper B. Sanfilippo,
Jr. and Jeffrey T. Sanfilippo are executive officers of the
Company and one of whom - Jeffrey T. Sanfilippo is a director of
the Company). Includes 49,600 shares of Common Stock held as a
trustee of a certain trust, the beneficiaries of which are the
grandchildren of Jasper and Marian Sanfilippo. Excludes shares
held or voted by Jasper B. Sanfilippo's wife, Marian Sanfilippo,
of which Mr. Sanfilippo disclaims beneficial ownership.
(4) Excludes 24 shares of Common Stock held by Mathias A. Valentine's
wife, Mary Valentine, of which Mr. Valentine disclaims beneficial
ownership.
(5) Includes 890,220 shares of Class A Stock held as trustee of
certain trusts, the beneficiaries of which are the children of
Jasper and Marian Sanfilippo (two of whom - Jasper B. Sanfilippo,
Jr. and Jeffrey T. Sanfilippo are executive officers of the
Company and one of whom - Jeffrey T. Sanfilippo is a director of
the Company). Excludes shares held or voted by Marian
Sanfilippo's husband, Jasper B. Sanfilippo, of which Mrs.
Sanfilippo disclaims beneficial ownership.
(6) Includes (a) 646,342 shares of Class A Stock held as trustee of
certain trusts (collectively, the "Valentine Trusts"), the
beneficiaries of which are the children of Mathias and Mary
Valentine, including Michael J. Valentine, and (b) 3,000 shares of
Common Stock owned by a general partnership, the general partners
of which are the Valentine Trusts.
(7) Excludes 32,609 and 178,044 shares of Class A Stock held as
trustee by Jasper B. Sanfilippo and Marian Sanfilippo,
respectively. (Jasper B. Sanfilippo is Chairman of the Board and
Chief Executive Officer and a director of the Company.)
(8) Excludes 215,447 shares of Class A Stock held as trustee by
Michael J. Valentine (Michael J. Valentine is Executive Vice
President Finance, Chief Financial Officer and Secretary and a
director of the Company.) Excludes 1,000 shares of Common Stock
owned by a general partnership, the general partners of which are
the Valentine trusts.
(9) Includes options to purchase 500 shares of Common Stock, 1,000
shares of Common Stock, 1,000 shares of Common Stock, 1,000 shares
of Common Stock, 1,000 shares of Common Stock, 1,000 shares of
Common Stock, 750 shares of Common Stock, 500 shares of Common
Stock and 250 shares of Common Stock at $6.00, $10.50, $6.625,
$6.00, $4.25, $3.4375, $4.0625, $6.05 and $7.80, respectively, per
share which are exercisable by John W. A. Buyers on or within 60
days of September 8, 2003. Mr. Buyers' mailing address is 26-238
Hawaii Belt Road, Hilo, HI 96720.
(10) Includes options to purchase 250 shares of Common Stock, 250
shares of Common Stock, 250 shares of Common Stock and 250 shares
of Common stock at $3.4375, $4.0625, $6.05 and $7.80,
respectively, per share which are exercisable by Timothy R.
Donovan on or within 60 days of September 8, 2003. Excludes (a)
38,838 shares of Common Stock held by Mr. Donovan's spouse, Elaine
Karacic as trustee of certain trusts, the beneficiaries of which
are the children of Mr. Donovan and Ms. Karacic, (b) 25,713 shares
of Common Stock held by Ms. Karacic as trustee of a certain trust,
the beneficiary of which is Ms. Karacic's sibling, and (c) 37,913
shares of Common Stock held by Ms. Karacic in her name, of which
Mr. Donovan disclaims beneficial ownership. Mr. Donovan disclaims
beneficial ownership of all of the foregoing shares of Common
Stock. Mr. Donovan's mailing address is c/o Tenneco Automotive,
Inc., 500 North Field Drive, Lake Forest, IL 60045.
(11) Includes options to purchase 1,000 shares of Common Stock, 750
shares of Common Stock, 500 shares of Common Stock and 250 shares
of Common Stock at $3.4375, $4.0625, $6.05 and $7.80,
respectively, per share which are exercisable by Governor Jim
Edgar on or within 60 days of September 8, 2003.
4
(12) The information set forth in the table above and in this footnote
is based solely on Form 13F-HR as of June 30, 2003 filed by
Heartland Advisors, Inc. dated August 14, 2003. The principal
business office of Heartland Advisors, Inc. is 789 North Water
Street, Milwaukee, WI 53202.
(13) The information set forth in the table above and in this footnote
is based solely on Form 13F-HR as of June 30, 2003 filed by
Dimensional Fund Advisors Inc. dated August 8, 2003. The principal
business office of Dimensional Fund Advisors Inc. is 1299 Ocean
Avenue, 11th floor, Santa Monica, CA 90401.
(14) The information set forth in the table above and in this footnote
is based solely on Form 13F-HR as of June 30, 2003 filed by
Bjurman, Barry and Associates dated August 14, 2003. The
principal business office of Bjurman, Barry & Associates is 10100
Santa Monica Blvd., Suite 1200, Los Angeles, CA 90067.
(15) Includes options to purchase a total of 24,025 shares of Common
Stock (including the options referred to in footnotes 9, 10 and 11
above) at prices ranging from $3.4375 to $10.50 per share which
are exercisable by certain of the directors and executive officers
on or within 60 days of September 8, 2003.
ELECTION OF DIRECTORS
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Seven directors are to be elected to serve until the next annual meeting of
stockholders and until their respective successors shall be elected and
qualified. Two of such directors are to be elected by the holders of Common
Stock voting as a class and the remaining five directors are to be elected by
the holders of Class A Stock voting as a class. While the Board of Directors
does not contemplate that any nominee for election as a director will not be
able to serve, if any of the nominees for election shall be unable or shall
fail to serve as a director, the holders of proxies shall vote such proxies
for such other person or persons as shall be determined by such holders in
their discretion or, so long as such action does not conflict with the
provisions of the Company's Restated Certificate relating to the proportion
of directors to be elected by the holders of Common Stock, the Board of
Directors may, in its discretion, reduce the number of directors to be
elected.
The Board of Directors recommends that the stockholders vote "FOR" each of
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the nominees listed herein.
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The affirmative vote of a majority of the shares of Common Stock present at
the Annual Meeting is required to elect the nominees for election by the
holders of Common Stock. The affirmative vote of a majority of the total
votes possessed by the shares of Class A Stock present at the meeting, in
accordance with the cumulative voting rights possessed by holders of Class A
Stock, is required to elect the nominees for election by the holders of Class
A Stock.
5
NOMINEES FOR ELECTION BY THE HOLDERS OF COMMON STOCK
----------------------------------------------------
The name of and certain information regarding each nominee for election to
the Company's Board of Directors by the holders of Common Stock, as reported
to the Company, is set forth below.
JOHN W. A. BUYERS, DIRECTOR, age 75 -- Mr. Buyers is Chairman of the Board of
C. Brewer and Company, Limited ("C. Brewer") where he has served since 1982
and as Chief Executive Officer from 1975 to 2001. Mr. Buyers is also the
Chairman of the Board of Buyco, Inc., the privately held parent company of C.
Brewer, and has served in those capacities since 1986. Mr. Buyers is
Chairman & Chief Executive Officer of D. Buyers Enterprises, LLC ("DBE")
since 2001. DBE is a company of diversified agriculture, frozen juice, real
estate development, and management. In addition, Mr. Buyers currently
serves on the board of directors of First Hawaiian Bank, ML Macadamia
Orchards, L.P. and Outrigger Enterprises, Inc. Mr. Buyers has been a member
of the John B. Sanfilippo & Son, Inc.'s Board of Directors since January 1992
and is a member of the Company's Audit and Compensation Committees.
GOVERNOR JIM EDGAR, DIRECTOR, age 57 -- Governor Edgar is currently a
Distinguished Fellow at the University of Illinois Institute of Government
and Public Affairs where he is also a teacher and lecturer. He has been in
this position since January 1999. He was also a Resident Fellow at the John
F. Kennedy School of Government at Harvard University beginning in the 1999
fall semester. Gov. Edgar served as governor of Illinois from January 14,
1991 through January 11, 1999. Prior to his election, Gov. Edgar served as
Illinois Secretary of State from 1981 to 1991. Gov. Edgar's retirement from
public office marked 30 years of state government service. Gov. Edgar serves
on the board of directors of Alberto Culver Company, Kemper Insurance
Companies, Scudder Mutual Funds, Horizon Group Properties, Inc., and
Youbet.com. Governor Edgar has been a member of the Company's Board of
Directors since October 1999 and is a member of the Company's Audit
Committee.
6
NOMINEES FOR ELECTION BY THE HOLDERS OF CLASS A STOCK
-----------------------------------------------------
The name of and certain information regarding each nominee for election to
the Company's Board of Directors by the holders of Class A Stock, as reported
to the Company, is set forth below.
JASPER B. SANFILIPPO, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER AND
DIRECTOR, age 72 -- Mr. Sanfilippo has been employed by the Company since
1953. Mr. Sanfilippo served as the Company's President from 1982 to December
1995 and was the Company's Treasurer from 1959 to October 1991. He became
the Company's Chairman of the Board and Chief Executive Officer in October
1991 and has been a member of the Company's Board of Directors since 1959.
Mr. Sanfilippo is also a member of the Company's Compensation Committee and
was a member of the Stock Option Committee until February 27, 1997 (when that
Committee was disbanded). Mr. Sanfilippo is the father of Jasper B.
Sanfilippo, Jr., an executive officer of the Company, and Jeffrey T.
Sanfilippo, an executive officer and director of the Company, the brother-in-
law of Mathias A. Valentine, the President and a director of the Company, the
uncle of Michael J. Valentine, a director and an executive officer of the
Company, and James A. Valentine, an executive officer of the Company. Mr.
Sanfilippo is also the uncle by marriage of Timothy R. Donovan, a director of
the Company.
MATHIAS A. VALENTINE, PRESIDENT AND DIRECTOR, age 70 -- Mr. Valentine has
been employed by the Company since 1960 and was named its President in
December 1995. He served as the Company's Secretary from 1969 to December
1995, as its Executive Vice President from 1987 to October 1991 and as its
Senior Executive Vice President and Treasurer from October 1991 to December
1995. He has been a member of the Company's Board of Directors since 1969.
Mr. Valentine is also a member of the Company's Compensation Committee and
was a member of the Stock Option Committee until February 27, 1997 (when that
Committee was disbanded). Mr. Valentine is the brother-in-law of Jasper B.
Sanfilippo, Chairman of the Board and Chief Executive Officer and a director
of the Company, the father of Michael J. Valentine, a director and an
executive officer of the Company, and James A. Valentine, an executive
officer of the Company. Mr. Valentine is the uncle of Jasper B. Sanfilippo,
Jr., an executive officer of the Company, and Jeffrey T. Sanfilippo, an
executive officer and director of the Company. Mr. Valentine is also the
uncle by marriage of Timothy R. Donovan, a director of the Company.
MICHAEL J. VALENTINE, EXECUTIVE VICE PRESIDENT FINANCE, CHIEF FINANCIAL
OFFICER AND SECRETARY, age 44 -- Mr. Valentine has been employed by the
Company since 1987 and in January 2001was named Executive Vice President
Finance, Chief Financial Officer and Secretary. Mr. Valentine was elected as
a director of the Company in April 1997. Mr. Valentine served as the
Company's Senior Vice President and Secretary from August 1999 to January
2001. He served as Vice President and Secretary from December 1995 to August
1999. He served as Assistant Secretary and the General Manager of External
Operations for the Company from June 1987 and 1990, respectively, to December
1995. Mr. Valentine is the son of Mathias A. Valentine, the President and a
director of the Company, the brother of James A. Valentine, an executive
officer of the Company, the nephew of Jasper B. Sanfilippo, Chairman of the
Board and Chief Executive Officer of the Company, and cousin of Jasper B.
Sanfilippo, Jr., an executive officer of the Company, and Jeffrey T.
Sanfilippo, an executive officer and director of the Company. Mr. Valentine
is also a first cousin by marriage of Timothy R. Donovan, a director of the
Company.
JEFFREY T. SANFILIPPO, EXECUTIVE VICE PRESIDENT SALES AND MARKETING, age 40
-- Mr. Sanfilippo has been employed by the Company since 1991 and was named
its Executive Vice President Sales and Marketing in January 2001. Mr.
Sanfilippo became a director of the Company in August 1999. He served as
Senior Vice President Sales and Marketing from August 1999 to January 2001
and as General Manager West Coast Operations from September 1991 to September
1993. He served as Vice President West Coast Operations and Sales from
October 1993 to September 1995. He served as Vice President Sales and
Marketing from October 1995 to August 1999. Mr. Sanfilippo is the son of
Jasper B. Sanfilippo, the Chairman of the Board and Chief Executive Officer
and a director of the Company, the nephew of Mathias A. Valentine, the
President and a director of the Company, the brother of Jasper B. Sanfilippo,
Jr., an executive officer of the Company, the cousin of Michael J. Valentine,
an executive officer and director of the Company, and James A. Valentine, an
executive officer of the Company. Mr. Sanfilippo is also a first cousin by
marriage of Timothy R. Donovan, a director of the Company.
TIMOTHY R. DONOVAN, DIRECTOR, age 47 -- Since December of 2001, Mr. Donovan
has been the Executive Vice President and General Counsel of Tenneco
Automotive Inc., one of the world's largest producers of emissions control
and ride control systems and products for the automotive industry. In June
2001, Mr. Donovan was appointed to the position of Managing Director of
Tenneco Automotive's International Group, responsible for all of the
company's business operations in Asia and South America and its Japanese
original equipment parts business throughout the world. Mr. Donovan served
as Tenneco's Senior Vice President and General Counsel from August 1999 to
December 2001. Mr. Donovan was elected as a director of the Company in
7
October 1999 and is chairman of the Company's Audit Committee. Mr. Donovan
is the nephew by marriage of Messrs. Jasper B. Sanfilippo and Mathias A.
Valentine, who are directors and executive officers of the Company, and the
first cousin by marriage of Jasper B. Sanfilippo, Jr., Jeffrey T. Sanfilippo,
Michael J. Valentine and James A. Valentine, each of whom is an executive
officer and certain of whom are also directors of the Company. Mr. Donovan
was a partner in the law firm of Jenner & Block from 1989 until his
resignation in September 1999, and from approximately 1997 through 1999
served as the Chairman of the firm's Corporate and Securities Department and
as a member of its Executive Committee. Mr. Donovan joined Jenner & Block
in 1982 after serving as a staff trial attorney at the Chicago District
Counsel's Office of the Internal Revenue Service.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
-------------------------------------------------
The Board of Directors of the Company met four times during fiscal 2003.
During fiscal 2003, all directors attended at least 75% of the meetings of
the Board of Directors and the committees thereof on which they served.
Standing committees of the Board of Directors include the Audit Committee and
the Compensation Committee. The Board does not have a nominating committee,
and the usual functions of such a committee are performed by the entire
Board.
The Audit Committee reviews and, as it deems appropriate, approves internal
accounting and financial controls for the Company and accounting principles
and auditing practices and procedures to be employed in the preparation and
review of financial statements of the Company. The Audit Committee also
makes recommendations to the Board concerning the engagement of independent
public auditors to audit the annual consolidated financial statements of the
Company and arranges with such auditors the scope of the audit to be
undertaken by them. Further, the Audit Committee also reviews related party
transactions in accordance with the rules promulgated by the National
Association of Securities Dealers, Inc. The current members of the Audit
Committee are John W. A. Buyers, Timothy R. Donovan and Governor Jim Edgar,
all of whom are independent directors as defined in Rule 4200(a)(14) of the
National Association of Securities Dealers listing standards. The Audit
Committee held five meetings during fiscal 2003.
The Compensation Committee reviews and makes recommendations to the Board
with respect to the salaries, bonuses and other compensation of officers and
other executives, including matters relating to stock options, which are
determined by the entire Board of Directors. The Compensation Committee
consists of Jasper B. Sanfilippo, Timothy R. Donovan, John W.A. Buyers and
Mathias A. Valentine. The Compensation Committee held one meeting during
fiscal 2003.
AUDIT COMMITTEE REPORT
----------------------
Our Audit Committee has (1) reviewed and discussed the audited financial
statements with management, (2) discussed with PricewaterhouseCoopers LLP,
the Company's independent auditors, the matters required to be discussed by
the Statement on Auditing Standards No. 61, and (3) received the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, and has discussed the auditors'
independence with the independent auditors. Based upon these discussions and
reviews, the Audit Committee recommended to the Board that the audited
financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended June 26, 2003 and filed with the Securities and Exchange
Commission.
Respectfully submitted by the members of the Audit Committee of the Board of
Directors.
Timothy R. Donovan, Chairman
John W. A. Buyers
Governor Jim Edgar
The information contained in the preceding report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
8
Audit Committee Charter
-----------------------
The Board has a written charter for the Audit Committee, the adequacy of
which has been reviewed and reassessed by the Audit Committee during fiscal
2003.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
------------------------------------------------
Compensation of Directors
-------------------------
Compensation to directors who are not employees of the Company is paid at the
rate of $26,000 per year plus $1,500 for each Board meeting attended, $500
for each telephonic meeting of the Board in which they participate, $1,000
for each committee meeting attended and $500 for each telephonic committee
meeting in which they participate. In addition, the Audit Committee Chairman
will receive $5,000 per year. Directors are also reimbursed for their
expenses incurred in attending such meetings. Directors who are employees of
the Company receive no additional compensation for their services as
directors.
Under the 1998 Equity Incentive Plan (the "1998 Plan"), a director who is not
an employee of the Company, its subsidiary, or any of their affiliates (an
"Outside Director") is automatically granted an option to purchase 1,000
shares of Common Stock on the date of his or her election to the Company's
Board, and on each date of his or her re-election to the Board. Options
granted to Outside Directors under the 1998 Plan are granted at an exercise
price equal to the Fair Market Value (as defined in the 1998 Plan) of a share
of Common Stock on the date of grant. Options granted to Outside Directors
will become exercisable in equal increments of 250 shares of Common Stock on
the first four anniversaries of the date of grant and expire 10 years
following the date of grant. Pursuant to the 1998 Plan, on October 30, 2002,
Mr. Buyers, Mr. Donovan and Governor Edgar each were granted an option to
purchase up to 1,000 shares of Common Stock at an exercise price of $7.80 per
share.
9
Executive Compensation
----------------------
The following table sets forth a summary of compensation for services in all
capacities to the Company during the fiscal year ended June 26, 2003, the
fiscal year ended June 27, 2002 and the fiscal year ended June 28, 2001, paid
to or accrued for (i) the Company's Chief Executive Officer, and (ii) each of
the four additional most highly compensated executive officers of the
Company, (collectively the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
--------------------------
Long Term
Compensation
Annual Compensation Awards
---------------------------- ------------
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Other(1) Options(#) Compensation
-------------------------- ---- -------- -------- -------- ------------ --------------
Jasper B. Sanfilippo 2003 $508,029 $390,343 $3,914 -- $60,801(2)(3)
Chairman of the 2002 477,663 125,800 3,668 -- 144,854
Board and Chief 2001 457,187 113,395 4,291 -- 148,784
Executive Officer
Mathias A. Valentine 2003 $329,721 $253,205 $2,277 -- $50,882(3)(4)
President 2002 308,463 81,199 2,005 -- 79,917
2001 287,932 71,367 1,787 -- 81,075
Michael J. Valentine 2003 $197,539 $142,006 $4 -- $4,879(5)
Executive Vice President 2002 181,692 44,807 4 -- 4,712
Finance, Chief Financial 2001 149,985 33,057 5 -- 2,975
Officer and Secretary
Jeffrey T. Sanfilippo 2003 $197,539 $142,006 $4 -- $4,919(6)
Executive Vice President 2002 181,692 44,807 3 -- 4,764
Sales and Marketing 2001 149,985 33,044 5 -- 3,108
James A. Valentine 2003 $196,923 $141,508 $12 -- $3,219(7)
Executive Vice President 2002 177,692 43,819 6 -- 3,063
Information Technology 2001 145,500 30,758 -- -- 2,568
------------------------------------
(1) None of the Named Executive Officers received perquisites in excess of
the lesser of $50,000 or 10% of the aggregate of such officer's salary and
bonus. The Other Annual Compensation reflected is the Company's
reimbursement to the named executives for the tax liability incurred by
the named executives for a life insurance benefit as described in the
subsequent footnotes.
(2) Includes $29,126 of premiums paid by the Company under a split-dollar
agreement with Mr. Sanfilippo covering certain joint and survivor life
insurance policies issued on the joint lives of Jasper B. Sanfilippo and
his spouse. In October 2002, the Company suspended payment of premiums for
split dollar life insurance policies until it is determined whether this
type of transaction is permitted under the Sarbanes-Oxley Act of 2002.
Also includes $20,159 of life insurance premiums and $3,000 of matching
contributions to the 401(k) Plan. During fiscal 2003, the Company paid
$8,516 for the term portions of the split-dollar life insurance premiums
of Mr. Sanfilippo.
10
(3) The split-dollar agreements require that the Company be reimbursed for
all premiums paid upon either the surrender of the policies or the death
of both insureds. The reimbursement obligation is secured by a collateral
assignment to the Company of certain rights in the policies. The Company
is required to pay the monthly premiums; provided, however, each of
Messrs. Sanfilippo and Valentine may elect in any year to pay that portion
of the monthly premiums which would otherwise be treated as taxable
compensation to him under the Internal Revenue Code of 1986, as amended
(the "Code"). The Company reflects the total amount of premiums it pays
under the split-dollar agreements as an asset on its financial statements.
In October 2002, the Company suspended payment of premiums for split
dollar life insurance policies until it is determined whether this type of
transaction is permitted under the Sarbanes-Oxley Act of 2002.
(4) Includes $10,002 of premiums paid by the Company under a split-dollar
agreement with Mr. Valentine covering certain joint and survivor life
insurance policies issued on the joint lives of Mathias A. Valentine and
his spouse. In October 2002, the Company suspended payment of premiums
for split dollar life insurance policies until it is determined whether
this type of transaction is permitted under the Sarbanes-Oxley Act of
2002. Also includes $31,430 of life insurance premiums and $4,681 of
matching contributions to the 401(k) Plan. During 2003, the Company paid
$4,769 for the term portions of the split-dollar life insurance premiums
of Mr.Valentine.
(5) Includes $4,184 of matching contributions to the 401(k) Plan and $695
of life insurance premiums paid by the Company for fiscal 2003.
(6) Includes $4,224 of matching contributions to the 401(k) Plan and $695
of life insurance premiums paid by the Company for fiscal 2003.
(7) Includes $2,538 of matching contributions to the 401(k) Plan and $681
of life insurance premiums paid by the Company for fiscal 2003.
Incentive Bonus Program
-----------------------
During 1997, the Compensation Committee established an Incentive Bonus
Program (the "Incentive Bonus Program") to provide qualifying employees,
including executive officers, with cash bonuses. Under the Incentive Bonus
Program, cash bonuses are awarded based on the Company's earnings per share
and vary according to each qualifying employee's job category. For fiscal
2003, the Company paid bonuses under the Incentive Bonus Program of
approximately $2,776,435 in August 2003. For fiscal 2002, the Company paid
aggregate bonuses of $1,025,546 in August 2002. For fiscal 2001, the Company
paid aggregate bonuses of $857,602 in August 2001.
11
The Report of the Compensation Committee on Executive Compensation and the
Performance Graph below shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement or any
portion hereof into any filing under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, and shall not otherwise
be deemed filed under such Acts.
JOINT REPORT OF THE BOARD OF DIRECTORS AND THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
-----------------------------------------------------------
Executive Compensation Principles
---------------------------------
The Company's Executive Compensation Program is based on principles designed
to align executive compensation with Company objectives, management
initiatives and business financial performance. These principles are applied
by the Board of Directors and Compensation Committee to:
-- Attract and retain key executives critical to the success of the
Company and its subsidiary;
-- Reward executives for long-term strategic management and the
enhancement of stockholder value; and
-- Support a performance-oriented environment that rewards performance
based on Company goals.
Overview of Executive Compensation Program
------------------------------------------
The Company's total compensation program for its executive officers consists
of both cash and, except with respect to the Chief Executive Officer and the
President, equity based compensation. Each executive officer's annual
compensation consists of a base salary, eligibility for matching
contributions to the 401(k) Plan and eligibility for an annual bonus under
the Incentive Bonus Program. In addition, the Company provides life
insurance (including split-dollar life insurance) for certain executive
officers. In October 2002, the Company suspended payment of premiums for
split dollar life insurance policies until it is determined whether this type
of transaction is permitted under the prohibition on loans to insiders
contained in Section 402 of the Sarbanes-Oxley Act of 2002. The Compensation
Committee determines the level of base salary for key executive officers,
including the Chief Executive Officer, and a base salary range for other
executive officers. The Compensation Committee generally determines such
salary or salary range based on a number of factors and criteria, including
the salaries paid by the Company to its executive officers during the
immediately preceding year, the rate of inflation, the Company's performance
during the immediately preceding fiscal year, the performance of the
executive officer during the immediately preceding fiscal year and the
salaries paid to the executive officers of certain other companies engaged in
the food or agricultural commodity business with annual sales of less than
$1.0 billion (the "Compensation Comparison Group"). The weight and
importance given each year to the foregoing factors, the individual
components of each factor and the decision whether to consider additional
factors, lies within the subjective discretion of the Compensation Committee.
The compensation levels of the Company's executive officers are currently
below compensation levels that would be affected by the limitations on the
deduction of executive salaries imposed by Section 162(m) of the Code
("Section 162(m)"). However, the Compensation Committee recognizes the need
to retain flexibility to make compensation decisions that may not meet
Section 162(m) standards when necessary to enable the Company to meet its
overall objectives, even if the Company may not deduct all of the
compensation. Accordingly, the Compensation Committee may determine that
approving non-deductible compensation in appropriate circumstances is in the
Company's best interests. The 1998 Plan provides for certain limits,
consistent with Code Section 162 and the regulations promulgated thereunder,
on the maximum number of shares of Common Stock subject to options that may
be granted to any grantee in any one calendar year.
Fiscal 2003 Executive Compensation
----------------------------------
The Company's fiscal 2003 year consisted of the fifty-two week period ended
June 26, 2003. The Company's fiscal 2002 year consisted of the fifty-two
week period ended June 27, 2002. The Company's fiscal 2001 year consisted of
the fifty-two week period ended June 28, 2001.
12
The base salaries and salary ranges for the Company's executive officers have
continued to be determined at the first meetings of the Compensation
Committee and Board of Directors of the calendar year. Accordingly, fiscal
2003 base salaries and salary ranges include one-half year of amounts set as
of the beginning of calendar 2003.
The Compensation Committee primarily based calendar 2001, 2002 and 2003
salaries and salary ranges of the Company's executive officers, including the
Chief Executive Officer, on the salaries paid to such executive officers in
2000, 2001 and 2002, respectively. For calendar 2001, 2002 and 2003, such
base salaries and salary ranges were generally increased by a percentage
slightly greater than the percentage change in the Consumer Price Index in
2000, 2001 and 2002, respectively. The Compensation Committee did not use
the salaries of executive officers of the Compensation Comparison Group to
establish base salaries and salary ranges for the Company's executive
officers, including the Chief Executive Officer, but did compare its
determination of such salaries and salary ranges against the base salaries
reported for executive officers of the Compensation Comparison Group as an
independent measure of reasonableness. The calendar 2001, 2002 and 2003 base
salaries for the Company's executive officers set by the Compensation
Committee were, in general, at the low to medium ranges when compared to the
base salaries of the Compensation Comparison Group executives. However, the
Compensation Committee does not currently have an established policy with
regard to the salaries and salary ranges of the Company's executive officers,
including the salary of the Chief Executive Officer, relative to the salaries
paid to the Compensation Comparison Group executive officers.
The Company awards annual bonuses to executive officers of the Company
pursuant to the Incentive Bonus Program. Under the Incentive Bonus Program,
each executive officer receives a set percentage of his salary as a bonus if
the Company's earnings per share for the prior fiscal year meet or exceed
specified levels, which percentage increases as the Company's earnings per
share increase. The Board of Directors, when it adopted the Incentive Bonus
Program, set the earnings per share targets and salary percentages for
executive officers based on the subjective judgment of the directors, as well
as management's recommendations regarding a number of factors such as
position held and annual performance. The Company paid bonuses of
$1,646,320, $447,249 and $362,250, in the aggregate, to the Company's
executive officers for fiscal 2003, fiscal 2002 and fiscal 2001,
respectively, pursuant to the Incentive Bonus Program.
The Company provides long-term incentives to its executive officers through
its stock option plans. Through the award of stock option grants, the
objective of aligning executive officers' long-range interests with those of
the stockholders is met by providing the executive officers with the
opportunity to build a meaningful stake in the Company. In fiscal 2003, the
Board awarded stock options under the 1998 Plan to certain of its executive
officers (other than Jasper B. Sanfilippo and Mathias A. Valentine, who are
not eligible to participate in the 1998 Plan). The Board of Directors did
not award any stock options to executive officers during fiscal 2002 or
fiscal 2001.
Executive officers are eligible to participate in the Company's 401(k) Plan,
including Company matching. Executive officers as a whole had $34,423,
$22,851 and $17,427 contributed as matching funds under the 401(k) Plan for
fiscal 2003, fiscal 2002 and fiscal 2001, respectively. The Company provides
certain executive officers with life insurance. The Company also maintains
split-dollar life insurance policies on the joint lives of Jasper B.
Sanfilippo and his spouse and Mathias A. Valentine and his spouse (see
"Executive Compensation - Summary Compensation Table").
The Compensation Committee and the Board of Directors believe that their
respective grants of compensation awards will produce significant long-term
compensation for periods when the Company's performance objectives are met.
13
Fiscal 2003 Chief Executive Officer Compensation
------------------------------------------------
The Chief Executive Officer's fiscal 2003 base salary increased to $512,430.
The Compensation Committee based this increase in the Chief Executive
Officer's base salary on the factors and criteria discussed above with regard
to the establishment of calendar 2001, 2002 and 2003 base salaries and salary
ranges for the Company's executive officers. The Chief Executive Officer's
fiscal 2003 base salary was at the medium range of the base salaries of chief
executive officers of the companies in the Compensation Comparison Group.
John W. A. Buyers and Timothy R. Donovan, as the only non-employee directors
on the Compensation Committee during fiscal 2003, assisted in establishing
the increase in the Chief Executive Officer's base salary for fiscal 2003 by
their broad knowledge of executive pay practices in the food industry and the
importance to the Company of the services provided by the Chief Executive
Officer. The Chief Executive Officer was awarded a bonus of $390,343,
$125,800 and $113,395 for fiscal 2003, fiscal 2002 and fiscal 2001,
respectively, pursuant to the formula established for him under the Incentive
Bonus program as described above. The Chief Executive Officer is not
eligible to participate in the 1998 Plan. In fiscal 2003, the Company also
provided the Chief Executive Officer with life insurance and split-dollar
life insurance as discussed above.
Compensation Committee Board of Directors
---------------------- ------------------
Jasper B. Sanfilippo Jasper B. Sanfilippo
Mathias A. Valentine Mathias A. Valentine
John W. A. Buyers Michael J. Valentine
Timothy R. Donovan Jeffrey T. Sanfilippo
John W. A. Buyers
Governor Jim Edgar
Timothy R. Donovan
14
PERFORMANCE GRAPH
-----------------
The following Performance Graph compares the Company's cumulative total
stockholder return on its Common Stock for the period from June 26, 1997 to
June 26, 2003 with the cumulative total return of the Standard & Poor's 500
stock index and a peer group of companies selected by the Company (the "Peer
Group") for purposes of the comparison and identified below.
Comparison of Cumulative Total Return(1)
Among the Company, S&P 500 Index and Peer Group(2)
--------------------------------------------------
TOTAL RETURN INDEX
------------------
JOHN B. SANFILIPPO
DATE & SON, INC S & P 500 PEER GROUP
----------------- ------------------ --------- ----------
June 26, 1997 100.00 100.00 100.00
June 25, 1998 78.85 130.16 139.98
June 24, 1999 60.10 159.78 133.83
June 29, 2000 48.08 171.37 121.44
June 28, 2001 78.77 145.95 137.19
June 27, 2002 107.54 119.70 156.61
June 26, 2003 253.08 120.00 133.85
(1) Assumes $100 invested on June 26, 1997 in the Company's Common
Stock, S&P 500 Index and Peer Group and dividends were reinvested.
(2) The Peer Group selected by the Company is comprised of the
following companies: J&J Snack Foods Corp., Lance, Inc.,
Sensient Technologies Corp. and Tootsie Roll Industries, Inc.
The Peer Group was selected by the Company in good faith based upon
similarities in the nature of the business of the companies, total
revenues and seasonality of business of the companies.
15
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION
AND CERTAIN TRANSACTIONS
--------------------------------------------------------
The Compensation Committee, which reviews and makes recommendations to the
Board with respect to salaries, bonuses and other compensation of officers
and other executives, is comprised of Jasper B. Sanfilippo, Mathias A.
Valentine, John W. A. Buyers and Timothy R. Donovan. Mr. Sanfilippo is the
Company's Chairman of the Board and Chief Executive Officer. Mr. Valentine
is the Company's President.
Below is a summary of certain transactions between the Company and either of
Messrs. Sanfilippo or Valentine or Donovan, or persons with whom they are
related or entities in which they have an interest. All such transactions
have been and will continue to be on terms which the Company believes to be
at least as favorable to the Company as could be obtained from unaffiliated
parties.
Lease Arrangements
------------------
The Company leases a warehousing and retail facility in Des Plaines, Illinois
(the "Des Plaines Facility") and its production and office facilities at 2299
Busse Road, Elk Grove Village, Illinois (the "Busse Road Facility") from land
trusts in which the direct and indirect beneficiaries include Jasper B.
Sanfilippo (a stockholder, director and executive officer of the Company),
Mathias A. Valentine (a stockholder, director and executive officer of the
Company), their respective spouses, Anne Karacic and Rose Laketa (sisters of
Mr. Sanfilippo) and Rosalie Sanfilippo (Mr. Sanfilippo's mother). The lease
for the Des Plaines Facility expires on October 31, 2010 and provides for
monthly rent of $24,459, subject to an increase based on increases in the
Consumer Price Index (the "CPI") on June 1, 2005. The lease for the Busse
Road Facility, as amended, expires on May 31, 2015 and provides for monthly
rent of $84,500, subject to CPI increases on each of June 1, 2007 and June 1,
2012. The leases for the Des Plaines Facility and the Busse Road Facility
also require the Company to pay the real estate taxes on, and to maintain and
insure, the Des Plaines Facility and the Busse Road Facility. During fiscal
2003, the aggregate amount of real estate taxes on and insurance premiums
paid by the Company under both leases was approximately $342,000.
The Company subleases approximately 300 square feet of the Des Plaines
facility to Plasmafuge Systems LLC (Plasmafuge). Plasmafuge is owned by John
and James Sanfilippo (both of whom are sons of Jasper B. Sanfilippo), Marian
Sanfilippo (Mr. Sanfilippo's spouse), and Jasper B. Sanfilippo, CEO of the
Company. Plasmafuge pays rent that is an amount equal to the amount paid by
the Company for such space. This arrangement is on a month to month basis.
The Company constructed an addition to the Busse Road Facility (the
"Addition") which is situated on property owned by the land trust that owns
the Busse Road Facility (the "Busse Land Trust") and on property owned by the
Company. Accordingly, (i) the Company and the Busse Land Trust entered into
a ground lease with a term beginning January 1, 1995 pursuant to which the
Company leases from the Busse Land Trust the land on which a portion of the
Addition is situated and all related improvements thereon (the "Busse
Addition Property"), and (ii) the Company, the Busse Land Trust and the sole
beneficiary of the Busse Land Trust entered into a party wall agreement
effective as of January 1, 1995, which sets forth the respective rights and
obligations of the Company and the Busse Land Trust with respect to the
common wall which separates the existing Busse Road Facility and the
Addition. The ground lease has a term which expires on May 31, 2015 (the
same date on which the Company's lease for the Busse Road Facility expires)
and requires the Company to pay the Busse Land Trust annual rent of $7,260
subject to CPI increases on each of June 1, 2005 and June 1, 2010. The
Company has an option to extend the term of the ground lease for one five-
year term, an option to purchase the Busse Addition Property at its then
appraised fair market value at any time during the term of the ground lease,
and a right of first refusal with respect to the Busse Addition Property.
The ground lease also requires the Company to pay the real estate taxes on,
and to insure the Busse Addition Property. The party wall agreement grants
the Company the right to use and the obligation to participate pro rata with
the Busse Partnership (defined below) in the maintenance of the common wall
shared by the Addition and Busse Road Facility.
The sole beneficiary of the Busse Land Trust is the Arthur/Busse Limited
Partnership (the "Busse Partnership"). The general partner of the Busse
Partnership is Arthur/Busse Properties, Inc. The shareholders of
Arthur/Busse Properties, Inc. and the limited partners of the Busse
Partnership are Jasper B. Sanfilippo, Marian Sanfilippo (Mr. Sanfilippo's
spouse), Mathias A. Valentine, Mary Valentine (Mr. Valentine's spouse), Anne
Karacic and Rose Laketa (sisters of Mr. Sanfilippo), and Rosalie Sanfilippo
(Mr. Sanfilippo's mother).
16
Supplier, Vendor, Broker and Other Arrangements
-----------------------------------------------
During fiscal 2003, the Company reimbursed Jasper B. Sanfilippo, a
stockholder, director and executive officer of the company, $31 thousand for
repairs to a calliope truck owned by the Company and restoration of the
calliope organ owned by Mr. Sanfilippo. The calliope truck and organ are
used by the Company to promote the Company at grand openings of the stores of
various customers or in civic functions such as parades.
During fiscal 2003, the Company purchased approximately $6.75 million of raw
materials and $430 thousand of supplies and services from an entity in
respect of which Jasper B. Sanfilippo, a stockholder, director and executive
officer of the Company, serves as director and owns 7.8% of the outstanding
stock. The five children of Jasper B. Sanfilippo own the balance of the
entity either directly or as equal beneficiaries of a trust. All of the
beneficiaries are directors of the entity with two of the beneficiaries being
officers of the entity. All five of the beneficiaries are stockholders of
the Company. Two of the beneficiaries of the trust are officers of the
Company and one is a director of the Company. In addition, Marian
Sanfilippo, Jasper B. Sanfilippo's spouse and a beneficial owner of more than
5% of the Company's outstanding Class A Stock, is also an officer of the
entity. The Company anticipates that it will continue to make such purchases
from this entity in fiscal 2004 and thereafter. During fiscal 2003, the
Company leased 436 square feet of its Selma, Texas facility to the entity on
a month to month basis. The entity pays a rental fee of $196.20 a month, a
rate that is comparable to that of the other tenant (a non-related party)
that leases space at the Selma, Texas facility.
During fiscal 2003, the Company purchased approximately $438 thousand of raw
materials and $35 thousand of supplies from JRC Color Corp. ("JRC"). The
Company anticipates that it will continue to purchase raw materials from JRC
in fiscal 2004. JRC is one third owned by Jerome Evon, the son-in-law of
Jasper B. Sanfilippo.
During fiscal 2003, the Company purchased approximately $443 thousand of
supplies and $29 thousand of raw materials from Barak Business Services
("Barak"). The Company anticipates that it will continue to purchase
supplies from Barak in fiscal 2003. Barak is one third owned by Jerome Evon,
the son-in-law of Jasper B. Sanfilippo.
During fiscal 2003, the Company compensated the following employees who are
related to directors or executive officers of the Company. Roseanne Karacic,
Director of Creative Services, is the sister-in-law of Timothy R. Donovan, a
director of the Company. Roseanne Karacic's total compensation for fiscal
2003 was $198,988 including $39,183 related to stock options exercised. Lisa
Evon, Industrial Sales Manager, is the daughter of Jasper B. Sanfilippo,
Chairman of the Board and Chief Executive Officer and director of the
Company, and the sister of Jasper B. Sanfilippo, Jr., an executive officer of
the Company and Jeffrey T. Sanfilippo, an executive officer and director of
the Company. Lisa Evon's total compensation for fiscal 2003 was $108,271.
Edward J. Fabsits, director of the Thrift Store operations, is the brother-
in-law of Jasper B. Sanfilippo, Chairman of the Board and Chief Executive
Officer and Director of the Company. Edward J. Fabsits' total compensation
for fiscal 2003 was $89,745 including $2,065 related to stock options
exercised.
17
RATIFY APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT AUDITORS
------------------------------------------------
The stockholders will be asked to ratify the appointment of the firm of
PricewaterhouseCoopers LLP as the Company's independent auditors for the
fiscal year ending June 24, 2004. This appointment was made by the Audit
Committee.
PricewaterhouseCoopers LLP served as independent auditors for the fiscal year
ended June 26, 2003 and it (or its predecessor by merger, Price Waterhouse
LLP) has acted as auditors for the Company since 1982. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
Audit Fees
----------
Audit fees billed to the Company by PricewaterhouseCoopers LLP for the fiscal
year 2003 audit and review of Forms 10-Q are estimated to total $178,000 of
which an aggregate amount of $50,000 has been billed through June 26, 2003.
Financial Information Systems Design and Implementation Fees
------------------------------------------------------------
PricewaterhouseCoopers LLP did not bill any fees for the professional
services described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
All Other Fees
--------------
Fees billed to the Company by PricewaterhouseCoopers LLP during the fiscal
year 2003 for all other services, (primarily tax services) rendered to the
Company totaled $95,770.
Our Audit Committee has considered whether the provision of the non-audit
services during the Company's fiscal year 2003 was compatible with
maintaining the independence of PricewaterhouseCoopers LLP.
Reports on the Company's independent auditor's projects and services are
presented to the Audit Committee on a regular basis. The Audit Committee is
responsible for the engagement of the Company's independent auditors. During
fiscal 2003, the Audit Committee established pre-approval policies and
procedures for engaging the Company's independent auditors to perform all
audit services and permitted non-audit services. The policies and procedures
allow for either general pre-approval of designated services or specific pre-
approval, depending on the type of service. All services not subject to the
general pre-approval framework contained in the policy must be specifically
pre-approved by the Audit Committee. Under the policies and procedures, the
Audit Committee may delegate pre-approval responsibilities to its chairman or
any other member or members.
The Board of Directors recommends a vote "FOR" ratification of the
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appointment of PricewaterhouseCoopers LLP as independent auditors for the
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fiscal year ending June 24, 2004.
---------------------------------
The affirmative vote of the holders of shares representing a majority of the
votes entitled to be cast by the holders of shares present and entitled to
vote at the Annual Meeting is required for ratification of this item. No
determination has been made as to what action the Board of Directors would
take if the appointment is not ratified.
ANNUAL REPORT ON FORM 10-K
--------------------------
The Company's annual report on Form 10-K for the fiscal year ended June 26,
2003 has been included in the mailing of this Proxy Statement. Stockholders
are referred to the report for financial and other information about the
Company, but such report is not incorporated in this Proxy Statement and is
not to be deemed a part of the proxy soliciting material.
18
STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
-------------------------------------------------
Any stockholder proposal to be considered for inclusion in the proxy
materials for the Company's 2004 annual meeting of stockholders must be
received at the principal executive offices of the Company no later than May
18, 2004 and must otherwise comply with the requirements of Rule 14a-8 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
With respect to the Company's 2004 annual meeting of stockholders, if the
Company is not provided notice of a stockholder proposal by July 30, 2004
(which the stockholder has not previously sought to include in the Company's
proxy statement), the management proxies will be allowed to use their
discretionary authority as outlined above.
PROXY SOLICITATION
------------------
Proxies will be solicited by mail. Proxies may also be solicited by
directors, officers and a small number of regular employees of the Company
personally or by mail, telephone or telegraph, but such persons will not be
specially compensated for such services. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the soliciting material
to the beneficial owners of stock held of record by such persons, and the
Company will reimburse them for their expenses in doing so. The entire cost
of the preparation and mailing of this Proxy Statement and accompanying
materials and the related proxy solicitation will be borne by the Company.
Stockholders are requested to complete and sign the enclosed proxy, which is
solicited by the Board of Directors, and promptly return it in the
accompanying envelope whether or not they plan to attend the Annual Meeting
in person. The proxy is revocable at any time before it is voted. Returning
the proxy will in no way limit a stockholder's right to vote at the Annual
Meeting if the stockholder attends and chooses to vote in person.
OTHER MATTERS
-------------
Management does not intend to present, and does not have any reason to
believe that others will present, any item of business at the Annual Meeting
other than those specifically set forth in the notice of the Annual Meeting.
However, if other matters are properly presented for a vote, the proxies will
be voted for such matters in accordance with the judgment of the persons
acting under the proxies.
By Order of the Board of Directors
/s/ MICHAEL J. VALENTINE
------------------------
MICHAEL J. VALENTINE
Secretary
Elk Grove Village, Illinois
September 15, 2003
APPENDIX A - COMMON STOCK PROXY CARD
JOHN B. SANFILIPPO & SON, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS OCTOBER 29, 2003
Jasper B. Sanfilippo, Mathias A. Valentine, and Michael J. Valentine or any
one or more of them, with power of substitution in each, are hereby appointed
the proxies of the undersigned to vote all shares of the Common Stock of
John B. Sanfilippo & Son, Inc. (the "Company"), that the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on
October 29, 2003 at the hour of 10:00 A.M., local time, at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143, and at
all postponements or adjournments thereof, upon such business as may properly
come before the meeting, including the items proposed by the Company that are
listed on the reverse side and more completely described in the enclosed
Notice of Annual Meeting of Stockholders and Proxy Statement.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
JOHN B. SANFILIPPO & SON, INC.
OCTOBER 29, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Election of Directors
[ ] FOR ALL NOMINEES Nominees: Governor Jim Edgar
John W. A. Buyers
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual
nominee(s) mark "FOR ALL EXCEPT" and fill in the
circle next to each nominee you wish to
witthhold, as shown here:
2. APPROVAL OF APPOINTMENT OF AUDITORS: Approval of appointment of
PricewaterhouseCoopers LLP as independent auditors for fiscal 2004.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. In
their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Annual Meeting or any
postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE DEEMED TO CONSTITUTE DIRECTION TO VOTE "FOR" EACH OF THE
ABOVE PROPOSALS.
Please mark, sign, date and return the proxy card using the enclosed
envelope.
SIGNATURE OF STOCKHOLDER DATE
------------------------------ -----------------
SIGNATURE OF STOCKHOLDER DATE
------------------------------ -----------------
NOTE: Please sign exactly as your name or names appear on this Proxy.
When shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized person.
APPENDIX B - CLASS A COMMON STOCK PROXY CARD
JOHN B. SANFILIPPO & SON, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS OCTOBER 29, 2003
Jasper B. Sanfilippo, Mathias A. Valentine, and Michael J. Valentine or any
one or more of them, with power of substitution in each, are hereby appointed
the proxies of the undersigned to vote all shares of the Class A Common Stock
of John B. Sanfilippo & Son, Inc. (the "Company"), that the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on
October 29, 2003 at the hour of 10:00 A.M., local time, at the Wyndham
Hotel Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143, and at
all postponements or adjournments thereof, upon such business as may properly
come before the meeting, including the items proposed by the Company that are
listed on the reverse side and more completely described in the enclosed
Notice of Annual Meeting of Stockholders and Proxy Statement.
(THIS PROXY IS CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[X] Please mark your votes as in this example.
1. Election of Directors by holders of Class A Common Stock
FOR [ ] WITHHELD [ ]
Nominees: Jasper B. Sanfilippo
Mathias A. Valentine
Michael J. Valentine
Jeffrey T. Sanfilippo
Timothy R. Donovan
For, except vote withheld from the following nominee(s):
--------------------------------
2. APPROVAL OF APPOINTMENT OF AUDITORS: Approval of appointment of
PricewaterhouseCoopers LLP as independent auditors for fiscal 2004.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. In
their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Annual Meeting or any
postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE DEEMED TO CONSTITUTE DIRECTION TO VOTE "FOR" EACH OF THE
ABOVE PROPOSALS.
Please mark, sign date and return the proxy card using the enclosed
envelope.
SIGNATURE(S) DATE
------------------------------ -----------------
NOTE: Please sign name exactly as name appears on this Proxy. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, guardian, corporate officer or partnership,
give full title as such. If a corporation, please sign in corporate name
by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.