SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
Golden Enterprises, Inc.
--------------------------------------------------------------------------------
(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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GOLDEN ENTERPRISES, INC.
One Golden Flake Drive
Birmingham, Alabama 35205
NOTICE OF ANNUAL MEETING
Notice Is Hereby Given that the Annual Meeting of the Stockholders of
Golden Enterprises, Inc., (the "Company") a Delaware Corporation, will be held
at the general offices of the Company, at One Golden Flake Drive, Birmingham,
Alabama on September 21, 2006, at 11:00 A.M., Birmingham time, for the following
purposes:
1. To elect a Board of Directors.
2. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on August 4, 2006, are
entitled to notice of and to vote at the meeting. All Stockholders are cordially
invited to attend the meeting.
By Order of the Board of Directors
John S. Stein
Chairman
Birmingham, Alabama
September 1, 2006
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES MUST BE PRESENT EITHER IN
PERSON OR BY PROXY IN ORDER TO HOLD THE MEETING. TO INSURE YOUR REPRESENTATION
AT THE MEETING, YOU ARE REQUESTED TO SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ACCOMPANYING ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING, YOU MAY REVOKE
THE PROXY AND VOTE YOUR SHARES PERSONALLY AT ANY TIME BEFORE THE PROXY IS
EXERCISED.
PROXY STATEMENT
GENERAL
The annual meeting of the stockholders of Golden Enterprises, Inc. (the
"Company") will be held at the general offices of the Company, at One Golden
Flake Drive, Birmingham, Alabama on September 21, 2006, at 11:00 A.M. All
holders of record of common stock as of August 4, 2006, will be entitled to vote
at the meeting and any adjournment thereof.
The purpose of this proxy solicitation is to enable those stockholders who
will be unable to personally attend the meeting to vote their stock.
PERSONS MAKING THE SOLICITATION
This proxy is solicited on behalf of the Board of Directors of Golden
Enterprises, Inc. The cost of solicitation will be paid by the Company and will
include reimbursement paid to brokerage firms and others for their expenses in
forwarding solicitation material regarding the meeting to beneficial owners. In
addition to solicitation by mail, officers and regular employees of the Company
may solicit proxies by telephone, telegram, or personal interview at no
additional compensation.
SECURITY HOLDERS ENTITLED TO VOTE
Holders of shares of common stock of the Company of record at the close of
business on August 4, 2006, will be entitled to vote at the Annual Meeting and
at any and all adjournments thereof. Each share of common stock entitles its
owner to one vote. The number of shares of common stock of the Company
(exclusive of treasury shares) outstanding at the close of business on August 4,
2006 was 11,835,330 shares.
Stockholders who execute proxies retain the right to revoke them at any
time before they are voted. If the enclosed proxy is properly signed and
returned to the Company and not so revoked, the shares represented thereby will
be voted in accordance with its terms.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At August 4, 2006, SYB, Inc., the Estate of Sloan Y. Bashinsky, Sr.,
deceased, and Compass Bank, as Trustee of the Golden Enterprises, Inc., and
subsidiaries Employee Stock Ownership Plan, were the only persons who
beneficially owned more than 5% of the outstanding voting securities of the
Company. The following table sets forth the number of shares of common stock of
the Company beneficially owned by these persons.
Amount and Nature of
Beneficial Ownership (1)
Name and Address of ------------------------ Percent of
Beneficial Owner Direct Indirect Class
---------------- ------ -------- -----
SYB, Inc. 5,283,128 -0- 44.6%
3432 Briarcliff Road East
Birmingham, Alabama 35223
2
Amount and Nature of
Beneficial Ownership (1)
Name and Address of ------------------------ Percent of
Beneficial Owner Direct Indirect Class
---------------- ------ -------- -----
The Estate of Sloan Y. Bashinsky, Sr. 1,014,500 -0- 8.5%
2117 Second Avenue N.
Birmingham, Alabama 35203
Compass Bank, as Trustee -0- 843,639 (2) 7.1%
of the Golden Enterprises, Inc.
and subsidiaries Employee
Stock Ownership Plan
701 South 32nd Street
Birmingham, Alabama 35233 (a)
-----------------
(1) An indirect beneficial owner as this term is interpreted by the Securities
and Exchange Commission (SEC) includes any person who has or shares the (1)
voting power which includes the power to vote or to direct the voting of
such security, and/or (2) investment power which includes the power to
dispose, or to direct the disposition of such security.
(2) The Employee Stock Ownership Plan provides that the shares held by the
Trustee are voted by an administrative committee made up of 3 members. The
Board of Directors of the Company determines the members of the committee.
Present members of the administrative committee are: John S. Stein,
Chairman of the Board, Mark W. McCutcheon, Chief Executive Officer and
President of the Company and President of Golden Flake Snack Foods, Inc.,
and Patty Townsend, Chief Financial Officer, Vice President and Secretary
of the Company.
(a) The Employee Stock ownership Plan is an employee benefit plan qualified
under ss.401(a) of the Internal Revenue Code and subject to the Employee
Retirement Income Security Act of 1974.
Security Ownership Of Management
The following table shows the shares of common stock of Golden Enterprises,
Inc., beneficially owned, directly or indirectly, by each Director and Nominee
for Director and all Directors and Officers of the Company as a group at August
4, 2006:
Amount and Nature of
Beneficial Ownership (1)
------------------------ Percent of
Name Direct Indirect Class
---- ------ -------- -----
John S. Stein (a)(b)(c) 288,854 -0- (2)(4) 2.4%
J. Wallace Nall, Jr. -0- 196,000 (2)(5) 1.7%
F. Wayne Pate 138,017 32 (2)(6) 1.2%
Edward R. Pascoe 60,000 -0- *
John P. McKleroy, Jr. (d)(e)(f) 34,000 (3) -0- (2) *
James I. Rotenstreich 9,533 -0- *
John S. P. Samford 1,666 -0- *
Joann F. Bashinsky (g) (h) 11,405 -0- (2) *
Mark W. McCutcheon 4,455 -0- (2)(4) *
Randy Bates 3,893 -0- *
David Jones 330 -0- *
Patty Townsend -0- -0- (4) *
All Directors and
Officers as a group 552,153 196,032 6.3%
------------------
*Less than one percent of class
3
(1) An indirect beneficial owner as this term is interpreted by the Securities
and Exchange Commission (SEC) includes any person who has or shares the (1)
voting power which includes the power to vote or to direct the voting of
such security, and/or (2) investment power which includes the power to
dispose of, or to direct the disposition of, such security.
(2) Each designated director is a member of the Voting Committee created under
the Will and under the SYB, Inc. Common Stock Trust of Sloan Y. Bashinsky,
Sr. ("Bashinsky"). As a member of the Voting Committee, each designated
director participates in the vote of the shares of common stock of the
Company owed by SYB, Inc. (5,283,128 shares) and by the Estate/Testamentary
Trust of Bashinsky (1,014,500 shares). Thomas L. Davis, a retired employee
and officer of Golden Flake Snack Foods, Inc., is also a member of the
Voting Committee. The decision of the majority of the members of the Voting
Committee govern how the stock is voted. The Directors do not possess and
specifically disclaim any beneficial ownership of the shares owned by SYB,
Inc. and the Estate/Testamentary Trust of Bashinsky.
(3) Includes 28,480 shares held by a self-employed pension plan and personal
IRA account for the benefit of John P. McKleroy, Jr.
(4) Does not include any portion of the 843,639 shares of common stock of the
Company which are owned by Compass Bank, as Trustee of the Golden
Enterprises, Inc. and subsidiaries Employee Stock Ownership Plan. John S.
Stein, Mark W. McCutcheon and Patty Townsend are members of the plan's
administrative committee and exercise the voting power of the shares and
each disclaims any beneficial ownership of such shares with the exception
of the following shares which are vested in their respective accounts as an
employee-participant under the Plan: Stein 52,765, McCutcheon 3,193 and
Townsend 730.
(5) Shares owned by Nall Development Corporation, a corporation of which J.
Wallace Nall, Jr. is a Director and President. For SEC reporting purposes,
Mr. Nall is deemed the beneficial owner of such shares. Except for SEC
reporting purposes, Mr. Nall disclaims beneficial ownership of such shares.
(6) Includes 32 shares owned by the wife of F. Wayne Pate.
(a) Mr. Stein is a Director and President of SYB, Inc. which owns 5,283,128
shares of the Company's stock. Mr. Stein does not possess and specifically
disclaims any beneficial ownership of these shares.
(b) Mr. Stein is a Director and officer of the Bashinsky Foundation, Inc.,
which owns 400,544 shares of the Company's stock. Mr. Stein does not
possess and specifically disclaims any beneficial ownership of these
shares.
(c) Mr. Stein is designated under the Will of Sloan Y. Bashinsky, Sr.,
deceased, as a Co-Personal Representative/Co-Trustee of his Estate and
Testamentary Trust. The Estate and Trust own 1,014,500 shares of the
Company stock. Mr. Stein does not possess and specifically disclaims any
beneficial ownership of these shares.
(d) Mr. McKleroy is a Director and Secretary of SYB, Inc. which owns 5,283,128
shares of the Company's stock. Mr. McKleroy does not possess and
specifically disclaims any beneficial ownership of these shares.
(e) Mr. McKleroy is a Director and officer of the Bashinsky Foundation, Inc.,
which owns 400,544 shares of the Company's stock. Mr. McKleroy does not
possess and specifically disclaims any beneficial ownership of these
shares.
(f) Mr. McKleroy is designated under the Will of Sloan Y. Bashinsky, Sr.,
deceased, as a Co-Personal Representative/Co-Trustee of his Estate and
Testamentary Trust. The Estate and Trust own 1,014,500 shares of the
Company stock. Mr. McKleroy does not possess and specifically disclaims any
beneficial ownership of these shares.
(g) Mrs. Bashinsky is a Director, Chairman and CEO of SYB, Inc., which owns
5,283,128 shares of the Company's stock. Mrs. Bashinsky does not possess
and specifically disclaims any beneficial ownership of these shares.
(h) Mrs. Bashinsky is a Director, Chairman and CEO of the Bashinsky Foundation,
Inc., which owns 400,544 shares of the Company's stock. Mrs. Bashinsky does
not possess and specifically disclaims any beneficial ownership of these
shares.
Each Director has the sole voting and investment power of the shares directly
owned by him/her.
4
Change in Voting Control
------------------------
Sloan Y. Bashinsky, Sr. died on August 2, 2005. At the time of Mr.
Bashinsky's death, he beneficially owned 6,698,172 shares of common stock of the
Company which constitutes voting control of the Company. The stock beneficially
owned by Mr. Bashinsky was registered in and held by the following entities:
SYB, Inc. 5,283,128 shares
SYB, Inc. as Trustee 1,000,000 shares
of the Sloan Y. Bashinsky,
Sr. Trust dated February 16,
1982
Bashinsky Foundation, Inc. 400,544 shares
Sloan Y. Bashinsky, Sr. 14,500 shares
As a result of Mr. Bashinsky's death, and the probate of his will on August
12, 2005, the 1,000,000 shares held in the SYB, Inc.Trust and the 14,500 shares
held in his name passed to his Estate/Testamentary Trust created under his Will.
SYB, Inc. continues to own the 5,283,128 shares and the Bashinsky Foundation,
Inc. continues to own the 400,544 shares.
John S. Stein, Joann F. Bashinsky and John P. McKleroy, Jr., Directors of
the Company, each serves as a Director and officer of Bashinsky Foundation, Inc.
The stock of the Company owned by Bashinsky Foundation, Inc. is voted by its
board of directors and is not subject to the Voting Committee, as described
below.
John S. Stein, Joann F. Bashinsky and John P. McKleroy, Jr., Directors of
the Company, each serves as a director and officer of SYB, Inc. The voting stock
of SYB, Inc. is vested in the SYB, Inc. Common Stock Trust and John P. McKleroy,
Jr. serves as a Co-Trustee of this Trust.
John S. Stein and John P. McKleroy, Jr. are designated under Mr.
Bashinsky's Will as Co-Personal Representatives of his Estate and as Co-Trustees
of his Testamentary Trust.
Mr. Bashinsky's Will and the SYB, Inc. Common Stock Trust provide that
shares of the Company held by SYB, Inc. and his Estate/Testamentary Trust, along
with the voting shares of SYB, Inc. shall be voted by a committee made up of
members of the Board of Directors of Golden Enterprises, Inc. and one member
designated by his Estate Personal Representatives/Trustees ("Voting Committee").
Consequently, the 5,283,128 shares of the Company stock held by SYB, Inc. and
the 1,014,500 shares of the Company stock held by Mr. Bashinsky's
Estate/Testamentary Trust, all of which constitute a majority of the stock of
the Company, are voted by the Voting Committee. The Voting Committee consists of
John S. Stein, J. Wallace Nall Jr., F. Wayne Pate, John P. McKleroy, Jr., Joann
F. Bashinsky and Mark W. McCutcheon, all directors of the Company, along with
Thomas L. Davis, a retired employee and officer of Golden Flake Snack Foods,
Inc. James I. Rotenstreich, John S.P. Samford and Edward R. Pascoe resigned from
the Voting Committee on December 9, 2005 in order to retain their status as
Independent Directors of the Company. The decision of a majority of the members
of the Voting Committee govern how the stock is voted.
5
ELECTION OF DIRECTORS
At the Annual Meeting, nine Directors are to be elected, each to hold
office until the next Annual Meeting of Stockholders, or until a successor has
been elected and qualified. All nominees are presently members of the Board of
Directors and were elected to the Board by vote of the stockholders at the last
annual meeting. Proxies can not be voted for a greater number of persons than
the number of nominees named.
Shares represented by your proxy will be voted in accordance with your
direction as to the election as directors of the persons hereinafter listed as
nominees. In the absence of direction, the shares represented by your proxy will
be voted FOR such election. Should any of the persons listed as nominees become
unavailable as a nominee for election, it is intended that the shares
represented by your proxy will be voted for the balance of those named and for a
substitute nominee or nominees proposed by the Board of Directors unless the
Board reduces the number of directors, but the Board knows of no reason to
anticipate that this will occur.
The following table shows the names of the nominees for election as
directors, their respective ages as of August 4, 2006, the principal occupation,
business experience and other directorships held by such nominees, and the
period during which such nominees have served as directors of the Company.
Principal Occupation
Business Experiences Director
Name and Age and Other Directorships Since
------------ ----------------------- -----
John S. Stein, 69 Mr. Stein is Chairman of the Board. He was elected 1971
Chairman on June 1, 1996. He served as Chief
Executive Officer from 1991 to April 4, 2001, and as
President from 1985 to 1998 and from June 1, 2000 to
April 4, 2001. Mr. Stein also served as President of
Golden Flake Snack Foods, Inc. from 1976 to 1991. Mr.
Stein retired as an employee with the Company on May
31, 2002. Mr. Stein is a Director of Compass
Bancshares, Inc.
Edward R. Pascoe, 69 Mr. Pascoe is retired Chairman of the Board of Steel 1971
City Bolt & Screw, Inc. (formerly Coosa Acquisition,
Inc.) which, in 1995, acquired the bolt and special
fastener business owned by the Company. He served as
President of Steel City Bolt & Screw, Inc. and Nall &
Associates, Inc., which were wholly-owned subsidiaries
of the Company, from 1972 and 1973, respectively,
until 1995.
John P. McKleroy, Jr., 62 Mr. McKleroy is an attorney and member with Spain & 1976
Gillon, L.L.C., general counsel for the Company. He
has practiced law with this firm since 1968.
6
Principal Occupation
Business Experiences Director
Name and Age and Other Directorships Since
------------ ----------------------- -----
James I. Rotenstreich, 68 Mr. Rotenstreich is Chairman and Chief Executive 1984
Officer of JHF Holdings, Inc. ("JHF"), a company
formerly doing business under the name of Jefferson
Home Furniture Company, Inc. He has served as Chief
Executive Officer since 1967 and as Chairman since
1992. In May of 1994, JHF sold its retail home
furniture interest and is presently engaged in real
estate and investment holdings.
John S. P. Samford, 56 Mr. Samford is President and sole owner of Samford 1984
Capital Corporation, an investment holding
company which he formed in 1989.
J. Wallace Nall, Jr., 66 Mr. Nall is President of Nall Development Corporation 1991
and a General Partner of Nall Partnership, Ltd. He has
held these positions since 1981. Nall Development
Corporation is an investment holding company and Nall
Partnership, Ltd. is a real estate investment and
development company.
F. Wayne Pate, 71 Mr. Pate retired as President of the Company on May 1992
31, 2000. He served as President from November 1,
1998 until retirement. He also served as President of
Golden Flake Snack Foods, Inc., a wholly-owned sub-
sidiary of the Company from September 20, 1991, to
November 1, 1998.
Joann F. Bashinsky, 74 Mrs. Bashinsky is Chairman and CEO of SYB, Inc., an 1996
investment holding company, which is a principal
owner of the Company. Mrs. Bashinsky served as Vice
President of SYB, Inc. from 1981 until August 8, 2005,
at which time she was elected Chairman and CEO. Mrs.
Bashinsky also serves as Chairman and CEO of Bashinsky
Foundation, Inc., a private charitable foundation.
Mark W. McCutcheon, 51 Mr. McCutcheon is Chief Executive Officer and 1999
President of the Company and President of Golden Flake
Snack Foods, Inc., a wholly-owned subsidiary of the
Company. He has served as President and Chief
Executive Officer of the Company since April 4, 2001
and as President of Golden Flake since November 1,
1998. He has been employed by Golden Flake since
1980.
7
Additional Information Concerning the Board of Directors
Director Independence
The Board has determined that Edward R. Pascoe, James I. Rotenstreich and
John S.P. Samford, are qualified as "Independent Directors" under the
requirements of the NASDAQ Stock Market, Inc. ("NASDAQ")
Meetings of Independent Directors
The Independent Directors meet in executive session (with no management
directors or officers present) at least twice each year. The Lead Independent
Director chairs all executive sessions.
Lead Independent Director
Each of the Chairs of the Audit and Compensation Committees of the Board
shall act as the Chair of the Independent Directors, with the Chair of each
meeting of the Independent Directors selected on a rotating basis.
Committees Of The Board Of Directors
The Board of Directors has a Compensation Committee, a Stock Option
Committee and an Audit Committee. The Board of Directors has no standing
Nominating Committee.
The Compensation Committee reviews the performance of the Executive
Officers of the Company and the top executive officer of Golden Flake Snack
Foods, Inc., a wholly-owned subsidiary, and recommends to the Board of Directors
of the Company the appropriate compensation level and compensation and benefit
programs of such officers. The Compensation Committee consists of John S. Stein,
John S.P. Samford, James I. Rotenstreich, J.Wallace Nall, Jr., Joann F.
Bashinsky and F. Wayne Pate. The Compensation Committee met once during fiscal
year 2006.
The Stock Option Committee determines the key employees of the Company and
its subsidiary to whom stock options and stock appreciation rights will be
granted under the Company's Long Term Incentive Plan. The Stock Option Committee
consists of John S. Stein, John S.P. Samford, James I. Rotenstreich, J. Wallace
Nall, Jr., Joann F. Bashinsky and F. Wayne Pate. The Stock Option Committee met
once during fiscal year 2006.
The Audit Committee reviews the results of the annual audit and quarterly
financial statements, selects and engages the independent accountants, assesses
the adequacy of the Company's procedures in connection with financial controls
and receives and considers the independent accountants' comments as to internal
controls. The Audit Committee acts pursuant to a written charter, which is
reviewed annually by the Board of Directors. James I. Rotenstreich, Chairman,
John S.P. Samford and Edward R. Pascoe constitute the standing Audit Committee
of the Board of Directors. The Board of Directors has determined that all of the
members of this committee qualify as independent directors under the current
requirements of NASDAQ. The Board of Directors has further determined that all
of the members of this committee qualify as an "audit committee financial
expert" under the rules and regulations of the Securities and Exchange
Commission ("SEC"). The Audit Committee met four times during fiscal year 2006.
See "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS".
8
Meetings Of The Board Of Directors and Committees
During the fiscal year ended June 2, 2006, there were four regular meetings
of the Board of Directors. The Compensation Committee and the Stock Option
Committee met once and the Audit Committee met four times during the fiscal year
2006. All directors attended all of the meetings of the Board and the Committees
on which they served.
Compensation of Directors
During the fiscal year ended June 2, 2006, the Company paid each of its
non-employee Directors a retainer of $300 per month and a fee of $2,000 for each
regular Board meeting attended. The members of the Compensation Committee were
each paid $2,000 for attending the Compensation Committee meeting and the
members of the Audit Committee were paid $1,000 for each meeting attended.
Board Member Attendance at Annual Meetings
It is the policy of Golden Enterprises that each member of the Board shall
make a reasonable effort to attend all meetings of the Board, applicable
committee meetings and the Company's annual meeting of shareholders. All
Directors attended the Annual Stockholders Meeting held last year.
Nomination of Directors
During the fiscal year ended June 2, 2006, the Company did not have a
standing nominating committee. The NASDAQ rules do not require the Company to
have a nominating committee since the Company was a "controlled company" in that
more than 50% of the voting common stock of the Company was held by Sloan Y.
Bashinsky, Sr., SYB, Inc. and the Estate of Sloan Y. Bashinsky, Sr., all of
which were affiliated, and such shares are voted by a Voting Committee created
under the Will of Sloan Y. Bashinksy, Sr. and under the SYB, Inc. Common Stock
Trust. The Voting Committee is comprised of John S. Stein, J. Wallace Nall, Jr.,
F. Wayne Pate, John P. McKleroy., Joann F. Bashinsky and Mark W. McCutcheon, all
directors of the Company and Thomas L. Davis, a retired employee and officer of
Golden Flake Snack Foods, Inc. The Board believes that it is not necessary to
have a separate nominating committee in view of the size of the Company, and the
fact that the Company was a "controlled company". Nominees for election as a
director are determined by the entire Board. The Board will make all decisions
regarding Board nominees based upon the best interest of the Company and its
shareholders.
Communications with the Board
Shareholders interested in communicating directly with the Board of
Directors may do so by writing the Secretary of the Company, at the following
address:
Board of Directors of Golden Enterprises, Inc.
C/O Corporate Secretary
One Golden Flake Drive
Birmingham, Alabama 35205
9
All such letters must identify the author as a shareholder. The Secretary
of Golden Enterprises will review all such communications and forward all
appropriate communications to the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
Directors, certain Executive Officers and beneficial owners of more than ten
percent of the stock of the Company file reports of stock ownership and changes
in ownership with the Securities and Exchange Commission. These reports consist
of Forms 3, Initial Statement of Ownership, 4, Monthly Reports, and 5, Annual
Reports. Based upon a review of copies of such reports, or representations that
no reports were due to be filed by Directors, Executive Officers or beneficial
owners of more than ten percent of the stock of the Company, the Company
believes that Section 16(a) filing requirements applicable to its Directors,
Executive Officers and beneficial owners of more than ten percent of the stock
of the Company were complied with during the fiscal year 2006.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table summarizes the compensation paid or accrued by the
Company and its subsidiary during the fiscal years 2004, 2005 and 2006 to the
Company's Chief Executive Officer and to the executive officers, other than the
Chief Executive Officer, whose compensation exceed $100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Name and Year Salary Bonus Other Annual Securities All Other
Principal Position ---- ($) ($) Compensation Underlying Compensation
------------------ --- --- ($) Options/SARs ($)
--- (#) (1) ---
-------
Mark W. McCutcheon (a) 2006 $221,000 $2064 ---- ---- $39,738(2)(3)
President and 2005 $215,000 ---- ---- ---- $35,818
Chief Executive Officer 2004 $210,000 ---- ---- ---- $32,176
and President
of Golden Flake
Snack Foods, Inc.
Randy Bates (b) 2006 $153,000 $1548 ---- ---- $l,230(2)
Executive Vice 2005 $148,000 ---- ---- ---- $1,197
President of Sales, 2004 $145,000 ---- ---- ---- $1,160
Marketing and
Transportation
David Jones (c) 2006 $150,000 $1548 ---- ---- $1,223(2)
Executive Vice 2005 $145,000 ---- ---- ---- $1,165
President of 2004 $135,000 ---- ---- ---- $1,094
Operations,
Human Resources
and Quality Control
10
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Name and Year Salary Bonus Other Annual Securities All Other
Principal Position ---- ($) ($) Compensation Underlying Compensation
------------------ --- --- ($) Options/SARs ($)
--- (#) (1) ---
-------
Patty Townsend (d) 2006 $104,000 $1032 ---- ---- $832(2)
Chief Financial Officer, 2005 $ 99,000 ---- ---- ---- $743
Vice President, 2004 $ 94,000 ---- ---- ---- $390
Secretary
and Controller
------------------------------
(1) During the 2006 fiscal year, no incentive stock options were granted under
the Long Term Incentive Plan.
(2) Includes contributions to the Company's and subsidiary's Profit Sharing
Plan and Employee Stock Ownership Plan as follows: Mr. McCutcheon, $1,680;
Mr. Bates, $1,230; Mr. Jones $1,223, Ms. Townsend $832.
(3) Includes amounts accrued of $38,058, but not paid, to provide for future
payments under a Salary Continuation Plan for Mr. McCutcheon. The plan
provides for payments of up to $120,000 per year, as adjusted for
inflation, for 15 years following death or retirement at age 65, and a
reduced benefit in the event of disability prior to retirement. The Plan is
funded in part with life insurance on the life of Mr. McCutcheon, and
during fiscal year 2006, insurance premiums of $46,910 were paid.
(a) Mark W. McCutcheon has served as President and Chief Executive Officer of
the Company since April 4, 2001. He has served as President of Golden Flake
Snack Foods, Inc. since November 1, 1998.
(b) Randy Bates has served as Executive Vice President of Sales, Marketing and
Transportation of Golden Flake Snack Foods, Inc. since October 26, 1998.
(c) David Jones has served as Executive Vice President of Operations, Human
Resources and Quality Control of Golden Flake Snack Foods, Inc. since May
20, 2002. He was Vice President of Manufacturing from 1998 to 2002 and Vice
President of Operations from 2000 to 2002.
(d) Patty Townsend has served as Chief Financial Officer, Vice-President and
Secretary of the Company since March 1, 2004. She has served as Controller
of Golden Flake Snack Foods, since March 15, 1997.
401 (k) Profit Sharing Plan And Employee Stock Ownership Plan
The Company and its subsidiary each maintain a 401 (k) Profit Sharing Plan
and Employee Stock Ownership Plan for the benefit of their employees. Annual
contributions are made to the Plans in amounts as determined by the Board of
Directors of each company. Contributions to the Employee Stock Ownership Plan
are invested in stock of the Company which is held for the account of the
participating employees and is distributed to the employees upon their
retirement or termination of employment. All contributions to the Profit Sharing
Plan and Employee Stock Ownership Plan are allocated to the accounts of the
participating employees based upon their annual compensation and each employee
11
account vests 100% in the employee after three years of service. The
contribution to the plans for the fiscal year ended June 2, 2006 was $122,641,
with the following amounts being credited to the accounts of the following
persons named in the Summary Compensation Table: Mark McCutcheon $1,680; Randy
Bates $1,230; David Jones $1,223 and Patty Townsend $832. (See Summary
Compensation Table on page 10 - These amounts are included within compensation
shown in table.)
The Employee Stock Ownership Plan provides that the shares held by the
Trustee are voted by an administrative committee made up of 3 members. The Board
of Directors of the Company determines the members of the committee. Present
members of the administrative committee are: John S. Stein, Chairman of the
Board, Mark W. McCutcheon, Chief Executive Officer and President of the Company
and President of Golden Flake Snack Foods, Inc.; and Patty Townsend, Chief
Financial Officer, Vice President and Secretary of the Company.
Long Term Incentive Plan
Shareholders have approved the Golden Enterprises, Inc. 1996 Long Term
Incentive Plan (the "Plan"). The purpose of the Plan is to further the growth in
earnings and market appreciation of the Company by providing long term
incentives to those officers and key employees of the Company or its
subsidiaries who make substantial contributions to the Company through their
ability, loyalty, industry and invention.
The Plan is administered by the Stock Option Committee of the Board of
Directors.
The Plan authorizes the Stock Option Committee to grant to officers and key
employees in the Plan (i) stock options (which may be non-qualified options or
incentive stock options for tax purposes), (ii) stock appreciation rights
("SARs") (which may be issued in tandem with stock options), (iii) restricted
stock awards, (iv) performance units (which may be in stock, cash or a
combination thereof), and (v) supplemental cash payments. Persons eligible to
participate in the Plan shall be those officers and key employees of the Company
and its subsidiaries who are in positions in which their decisions, actions and
counsel significantly impact the performance of the Company or its subsidiaries.
Participants are chosen from this group by the Stock Option Committee.
Shares Reserved for Issuance. The aggregate number of shares of the
Company's common stock which may be issued under the Plan may not exceed
500,000. Shares subject to options granted under the Plan which expire
unexercised, or shares subject to awards which are otherwise forfeited or
canceled, will not count against this limit. The maximum number of shares with
respect to which awards may be granted to any individual in any one year under
the Plan is 100,000.
Stock Options. The Stock Option Committee is authorized to determine the
terms and conditions of all option grants, subject to certain specific
limitations as set forth in the Plan. In general, no option may be granted with
an exercise price of less than the fair market value of a share of the Company's
common stock on the date of grant (110% if the grantee beneficially owns more
than 10% of such stock), the term of an option may not be longer than ten (10)
years, and any option shall be subject to certain restrictions on
transferability. Payment of the option price may be in cash, check or other
instrument acceptable to the Stock Option Committee, or, in the discretion of
the Stock Option Committee, in the form of unrestricted common stock of the
Company owned by the optionee.
12
Stock Appreciation Rights. The Stock Option Committee is authorized to
grant SARs either independent of or in connection with stock options granted
under the Plan. The exercise of SARs will entitle the holder thereof to an
amount (the "appreciation") equal to the difference between the fair market
value of the common stock on the date the SAR was issued (or, in the case of
SARs issued in connection with options, the exercise price under the related
option agreement) and the fair market value of a share of common stock of the
Company on the date the SAR is exercised. The appreciation will be payable in
cash or common stock of the Company at the discretion of the Stock Option
Committee. The exercise of SARs granted in connection with options will
terminate those options.
The exercise of SARs which are paid in common stock will be treated as the
issuance of the shares of common stock to which the SARs relate for purposes of
calculating the maximum number of shares which have been issued under the Plan.
Restricted Stock. The Stock Option Committee is authorized to award
restricted stock under the Plan subject to such terms and conditions as the
Stock Option Committee may determine. The Stock Option Committee will have
authority to determine the number of shares of restricted stock to be awarded,
the price, if any, to be paid by the recipient of the restricted stock, and the
date on which the restricted stock will vest. The vesting of restricted stock
may be conditioned upon the completion of a specified period of service with the
Company, upon the attainment of specified performance goals, or upon such other
criteria as the Stock Option Committee may determine. The Stock Option Committee
has the discretion to make loans to the recipients for the purchase price of the
restricted stock and to accelerate the vesting of the restricted stock on a case
by case basis at any time.
Performance Units. The Stock Option Committee may grant performance units
under which payment may be made to the participant upon the attainment of
specific performance goals. Such performance goals will be established by the
Stock Option Committee and will relate to the performance of the Company (or any
segment thereof) over a specified performance period, as judged under any
business criteria deemed appropriate by the Stock Option Committee, including,
without limitation, growth in earnings, the ratio of earnings to shareholder's
equity or the ratio of earnings to total capital.
The Stock Option Committee shall determine the extent to which the
performance targets have been attained, and what, if any, payment is due the
participant on the performance unit. Such payment may be made, at the Stock
Option Committee's discretion, in cash or common stock of the Company (based on
the then current fair market value of such stock).
Supplemental Cash Payments. A stock option, SAR, restricted stock or
performance unit award may provide for the Company to make a supplemental cash
payment to a participant. Payments may be made for the purpose of, but not
limited to, assisting the employee in paying income taxes resulting from an
award under the Plan. In no event shall the amount of cash payment exceed the
value of the award to which it relates.
During the fiscal year ended June 2, 2006, no incentive stock options or
other rights were granted under the Plan to officers and key employees of the
Company or its subsidiary. No executive officer exercised options during fiscal
year 2006. Information concerning outstanding options is set forth in the
following table.
13
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Secur- Value of
ties Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End (#) at FY-End ($)
---------- -------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- --------------- ------------------ ------------- -------------
Mark W. McCutcheon 0 0 60,000/0 $0/0
CEO
Randy Bates 0 0 29,000/0 $0/0
David Jones 0 0 30,000/0 $0/0
Patty Townsend 0 0 20,000/0 $0/0
Compensation Committee Interlocks and Insider Participation
During fiscal year 2006, the Compensation Committee of the Board of
Directors (the "Compensation Committee") was comprised of John S. Stein, John
S.P. Samford, James I. Rotenstreich, J. Wallace Nall, Jr., Joann F. Bashinsky
and F. Wayne Pate. None of the members, with the exception of John S. Stein who
is Chairman of the Board, are officers or employees of the Company or its
subsidiary. F. Wayne Pate retired as President of the Company on May 31, 2000.
Compensation Committee Report On Executive Compensation
The Compensation Committee reviews the compensation structure of the
Executive Officers of the Company and the top executive officer of Golden Flake
Snack Foods, Inc. ("Golden Flake"), a wholly- owned subsidiary, and recommends
to the Board the appropriate base and incentive bonus compensa- tion of such
officers.
The Stock Option Committee during fiscal 2006 was made up of James I.
Rotenstreich, John S. P. Samford, John S. Stein, J. Wallace Nall, Jr., Joann F.
Bashinsky and F. Wayne Pate. The Stock Option Committee determines the key
employees of the Company and Golden Flake to whom stock options and stock
appreciation rights are granted under the Company's Long Term Incentive Plan.
The Company's executive compensation program consists of three primary
components: base salary, annual incentive bonus, and grants of stock options and
stock appreciation rights.
Base salary is the foundation of executive compensation. Base salaries are
reviewed annually and adjusted, if deemed appropriate, based upon
recommendations of the Compensation Committee after its review of
recommendations received from the Chairman of the Board ("Chairman").
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Annual incentive bonus formulas are established for the Chief Executive
Officer (CEO), President, Chief Financial Officer (CFO) and the top executive
officer of Golden Flake. The CEO, President, CFO and the top executive officer
of Golden Flake are paid a percentage of the company's pre-tax operating
earnings that exceed a targeted return on equity.
The base salaries and incentive bonus formulas for fiscal 2006 reported in
this Proxy Statement were recommended by the Compensation Committee in April,
2005 to the Board. The Compensation Committee received and reviewed
recommendations from the Chairman, which recommendations were based upon a
number of factors, including overall earnings of the Company and Golden Flake,
pre-tax earnings from operations, return on equity, the financial performance of
the Company and its subsidiary, the complexities of the job, and individual
performance and achievements of each of the executive officers.
In reviewing the recommendations of the Chairman and in making its
recommendations to the Board, the Compensation Committee undertook a subjective
consideration of the executive officers' base salaries and incentive bonus
formulas that was not related to any specific qualitative or quantitative
criteria.
The Board's approval of such recommendations of the Compensation Committee
have generally been based on its subjective analysis of what it considers to be
a reasonable and appropriate base salary and incentive bonus formula for the CEO
and other executive officers taking into consideration their individual job
responsibilities and the financial performance of the Company during the prior
fiscal year.
The Company has used stock options and stock appreciation rights to reward
the performance of executives. These are granted under the Long Term Incentive
Plan. Grant of stock options and stock appreciation rights are made by the Stock
Option Committee to key employees after considering the recommendations of the
Chairman.
The Compensation Committee believes that the incentive bonus formulas and
stock options/stock appreciation rights assure that a significant portion of the
CEO's compensation relate to the Company's performance.
The base salary and incentive bonus formula for Mark W. McCutcheon, the
Company's CEO, during fiscal year 2006 were determined based upon his
responsibilities and contributions to the Company and the performance of the
Company. During fiscal 2006, Mr. McCutcheon received a base salary of $221,000
which was an increase of $6,000 from the prior year. Mr. McCutcheon's incentive
bonus formula which was based upon a pre-determined percentage of the Company's
pre-tax operating earnings that exceeded a target of return on equity, produced
a bonus of $2,064 for fiscal 2006. Mr. McCutcheon did not receive any stock
options during fiscal 2006.
In April of 2006, the Compensation Committee held its regular meeting to
consider and recommend compensation for the fiscal year beginning June 1, 2006.
At that meeting, the Compensation Committee, upon recommendation of John S.
Stein, Chairman, and employing the factors and criteria set out above,
recommended that the base salary for Mark W. McCutcheon as President and CEO be
increased 3% from $221,000 to $227,000 and that the base salary of Patty
Townsend, as CFO, Vice President and Secretary, be set at $110,000. The
recommendations of the Compensation Committee were approved by the Board of
Directors.
15
Compensation Committee: J. Wallace Nall, Jr., John S. P. Samford, James I.
Rotenstreich, John S. Stein, Joann F. Bashinsky, and F. Wayne Pate.
Shareholder Return Performance Graph
The following graph illustrates, for the period commencing May 31, 2001,
and ending June 2, 2006, the yearly percentage change in the cumulative total
shareholder return on the Company's common stock as compared with the cumulative
total returns of other companies included within the NASDAQ Stock Market (U.S.
Companies) Index and the Company's Peer Group.
The Company has selected a Peer Group consisting of the four
publicly-traded companies named below which are in the snack food industry. Most
of the Company's direct competitors and peers are privately-held companies or
subsidiaries or divisions of larger publicly-held companies so that the
available members of the Peer Group are limited.
[GRAPHIC OMITTED. SEE SUPPLEMENTAL PDF]
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This graph assumes that $100 was invested in the Company's common stock on
May 31, 2001, in the NASDAQ Stock Market (U.S. Companies) Index and in the Peer
Group, which consisted of Lance, Inc., J & J Snack Foods Corp., Tasty Baking Co.
and Ralcorp Holdings, Inc. and that dividends were re-invested.
CERTAIN TRANSACTIONS
During the fiscal year ended June 2, 2006, the law firm of Spain & Gillon,
L.L.C., of which John P. McKleroy, Jr. is a member, served as General Counsel
and performed various legal services for the Company and its subsidiary. The
firm will continue to perform legal services for the current fiscal year.
Golden Flake owns a Cessna Citation II Airplane for business use. Sloan Y.
Bashinsky, Sr., who died on August 2, 2005, leased the plane for personal use of
up to 100 flight hours per year. The lease required monthly payments of $20,000.
This lease with Mr. Bashinsky expired on January 31, 2006. On February 1, 2006,
Joann F. Bashinsky, the wife of Sloan Y. Bashinsky, Sr., executed a new lease
with Golden Flake to lease the airplane for personal use of up to 100 flight
hours per year. This lease also requires monthly payments of $20,000. During
fiscal year 2006, Mr. Bashinsky, his estate and Mrs. Bashinsky paid lease
payments to Golden Flake of $240,000, and also paid all flight crew expenses for
flights used under the leases. Both leases were structured so that the costs of
ownership, maintenance, and operation of the plane to Golden Flake are offset by
the lease payments and payment of the flight crew expenses on flights used under
the leases. The lease with Mrs. Bashinsky is for a term of one year and
automatically renews annually on each February 1, unless Golden Flake or Mrs.
Bashinsky elects to terminate the same. The current lease term will expire on
January 31, 2007. The use of the plane under the lease is coordinated with
Golden Flake so as not to interfere with Golden Flake's business use.
The Company believes that these transactions were on terms equal to or
better than those available from unaffiliated third parties.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee reviews with the independent auditors, the Company's
Chief Financial Officer and the Company's general counsel the results of the
independent auditor's annual report on the Company's financial statements. The
Audit Committee selects and engages the Company's independent auditors and
performs such additional functions as are necessary or prudent to fulfill the
Committee's duties and responsibilities and reports its recommendations and
findings to the full Board of Directors.
The Board of Directors has adopted a written charter for the Audit
Committee, which is reviewed and reassessed for adequacy on an annual basis.
17
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended June 2, 2006 with management. The Audit Committee
has also discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 ("SAS 61 "). The Audit
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No.1 and
has discussed with the independent auditors their independence. The Audit
Committee has also discussed with the management of the Company and the
independent auditors, such other matters and received such assurances from them
as deemed appropriate by the Audit Committee.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements
referred to above be included in the Company's Annual Report on form 10-K for
filing with the Securities and Exchange Commission.
The Audit Committee has considered whether the provision of the non-audit
services performed by Dudley, Hopton-Jones, Sims and Freeman PLLP, as described
on Page 18 hereof is compatible with maintaining Dudley, Hopton-Jones, Sims and
Freeman PLLP's independence.
Members of the Audit Committee: James I. Rotenstreich, John S. P. Samford
and Edward R. Pascoe.
INDEPENDENT ACCOUNTANTS
Dudley, Hopton-Jones, Sims & Freeman PLLP, Certified Public Accountants
("Dudley, Hopton-Jones") were selected by the Audit Committee and ratified by
the Board of Directors as the independent accountants to audit the Company's
financial statements for the fiscal year ended June 2, 2006. Dudley,
Hopton-Jones has served as independent auditors to the Company since 1977.
Representatives of Dudley, Hopton-Jones will be present at the annual meeting
and will have the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions from stockholders.
During the fiscal years ended 2006 and 2005, Dudley, Hopton-Jones provided
various audit and non-audit services to the Company and its subsidiary. As part
of their services as the Company's auditors, they audited the consolidated
financial statements of the Company and its subsidiary, the individual financial
statements of the Company and Golden Flake Snack Foods, Inc. and its subsidiary
and also reviewed the Company's Annual Report (Form 10-K) for filing with the
Securities and Exchange Commission.
Fees billed by Dudley, Hopton-Jones:
The following table shows information about fees billed to the Company by
Dudley, Hopton-Jones.
FYE 2006 FYE 2005
-------- --------
Audit Fees (1) $162,375 $223,515
Audit Related Fees (2) 46,000 47,500
Tax Fees (3) 23,650 22,000
All Other Fees (4) -0- -0-
-----------------------
(1) Current FYE 2006 audit fees consist of the aggregate fees billed for
professional services rendered for the audit of the Company's annual financial
statements and for the timely reviews of quarterly financial statements and
assistance with the review of documents filed with the SEC. Prior FYE 2005 audit
fees in addition to audit of the Company's annual financial statements include
the audit of the restated previously issued financial statements and the reviews
of the amendments to previously issued quarterly filings.
18
(2) Audit related fees consist of the aggregate fees billed for audit of the
Company's and the Company's subsidiary employee benefit plans.
(3) Tax fees consist of the aggregate fees billed for professional services
rendered for tax compliance including tax planning, tax advice and the
preparation of tax returns and claims for refunds.
(4) All other fees: Dudley, Hopton-Jones did not provide any other services to
the Company than those described above nor were there any other fees billed to
the Company than those described above.
---------------------
The Audit Committee is required by its policy to pre-approve all services
to be rendered by the Company's Independent Auditors prior to performance of
such services. Pre-approval of services may be done in one of two ways, specific
pre-approval or general pre-approval. With the use of specific pre-approval, the
Audit Committee must specifically pre-approve the services that are to be
rendered by the Independent Auditors prior to their engagement to render such
services. The Audit Committee has elected to implement the specific pre-approved
policy and procedure. As a result, all services provided by the Independent
Auditors must be specifically pre-approved by the Audit Committee.
The services of the Independent Auditors described above were specifically
pre-approved by the Audit Committee prior to the engagement of the Independent
Auditors to render such services.
The Company has not selected the principal accountants to audit its
financial statements for the current fiscal year. It is the Company's policy to
select its principal accountants after the preceding year's audit has been
completed and the Company has had time to consider the selection.
FINANCIAL STATEMENTS
Consolidated Financial Statements of the Company and its subsidiary for the
fiscal year ended June 2, 2006, are contained in the 2006 Annual Report to
Stockholders which accompanies this Proxy Statement. However, such Report and
Financial Statements contained therein are not to be considered a part of this
solicitation material since they are not deemed material to the matters to be
acted upon at the meeting.
STOCKHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
Any stockholder desiring to submit a proposal to be considered by the Board
of Directors for inclusion in the proxy statement and form of proxy relating to
next year's Annual Meeting of Stockholders must do so in writing received by the
Company on or before May 31, 2007. Any other stockholder proposals for the
Company's 2007 Annual Meeting of Stockholders must be received no later than
July 27, 2007. The proposals must comply with all applicable statues and
regulations. Any such proposals should be submitted to Golden Enterprises, Inc.,
Attention: Patty Townsend, CFO, Vice President & Secretary, One Golden Flake
Drive , Birmingham, Alabama 35205.
CODE OF CONDUCT AND ETHICS
Golden Enterprises has adopted a code of Conduct and Ethics that applies to
its directors, officers and employees and to all employees of Golden Flake Snack
Foods, Inc. The Code of Conduct and Ethics and any amendments thereto, are
available on Golden Flake's website at www.goldenflake.com. Any waiver from the
Code of Conduct and Ethics for Directors and Officers also will be made
available on Golden Flake's website at www.goldenflake.com.
19
OTHER BUSINESS
It is not anticipated that there will be presented to the meeting any
business other than the matters set forth herein and the management was not
aware, a reasonable time before this solicitation of proxies, of any other
matter which may properly be presented for action at the meeting. If any other
business should come before the meeting, the persons named on the enclosed proxy
will have discretionary authority to vote all proxies in accordance with their
best judgment.
By Order of the Board of Directors
John S. Stein
Chairman
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