UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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/X/ Definitive Proxy Statement
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/ / Soliciting Material Pursuant toss.240.14a-11(c) orss. 240.14a-12
The Hain Celestial Group, Inc.
(formerly known as The Hain Food Group, Inc.)
(Name of Registrant as Specified In Its Charter)
-------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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4) Date Filed:
THE HAIN CELESTIAL GROUP, INC.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
November 3, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Hain Celestial Group, Inc., scheduled to be held on Tuesday, December 5,
2000 at the conference center, located in the lower lobby, at 50 Charles
Lindbergh Boulevard, Uniondale, New York 11553, commencing at 11:00 A.M.,
Eastern Standard Time. Your board of directors and management look forward to
greeting personally those stockholders able to attend.
Details of business to be conducted at the annual meeting are provided in
the enclosed Notice of Annual Meeting of Stockholders and Proxy Statement. Also
enclosed for your information is a copy of our Annual Report for 2000.
It is important that your shares are represented at the meeting whether or
not you plan to attend. Accordingly, we request your cooperation by promptly
signing, dating and mailing the enclosed proxy in the envelope provided for your
convenience.
Sincerely,
Irwin D. Simon
President, Chief Executive
Officer and Chairman of the Board
THE HAIN CELESTIAL GROUP, INC.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
--------------------------
To the Stockholders of THE HAIN CELESTIAL GROUP, INC.:
The Annual Meeting of Stockholders of The Hain Celestial Group, Inc. will
be held on Tuesday, December 5, 2000 at 11:00 A.M., Eastern Standard Time, at
the conference center, located in the lower lobby, at 50 Charles Lindbergh
Boulevard, Uniondale, New York 11553, for the following purposes:
1. To elect a board of directors to serve until the next Annual Meeting
of Stockholders and until their successors are duly elected and
qualified;
2. To ratify the appointment of Ernst & Young LLP as our independent
auditors for fiscal 2001;
3. To consider and act upon a stockholder proposal, if presented at the
meeting by its proponents, requesting the board of directors to adopt
a policy of removing genetically engineered foods from our brand name
or private label products, which proposal is opposed by our board of
directors; and
4. To transact such other business as may properly come before the
meeting.
Your vote is important. If you do not expect to be present at the meeting
and wish your stock to be voted, please sign and date the enclosed Proxy and
mail it promptly in the enclosed reply envelope addressed to Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.
SOLICITATION AND REVOCATION OF PROXIES
Proxies are being solicited on behalf of our board of directors, and we
will bear the cost of such solicitation. We expect that the solicitation of
proxies will be primarily by mail. Proxies may also be solicited by our officers
and employees at no additional cost to us, in person or by telephone, telegram
or other means of communication. We may reimburse custodians, nominees and
fiduciaries holding our common stock for their reasonable expenses in sending
proxy material to principals and obtaining their proxy. Any stockholder giving a
proxy may revoke it at any time before it is exercised by written notice to our
secretary or by voting in person at the meeting.
It is expected that this Notice of Annual Meeting of Stockholders and Proxy
Statement will first be mailed to stockholders on or about November 3, 2000.
STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on October 31, 2000
will be entitled to vote at the annual meeting. On that date, there were
33,086,919 shares of our common stock outstanding and entitled to be voted at
the annual meeting. Each such share is entitled to one vote. Proxies marked as
abstaining (including proxies containing broker non-votes) on any matter to be
acted upon by stockholders will be treated as present at the meeting for
purposes of determining a quorum but will not be counted as votes cast on such
matters.
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of October 31, 2000 for (1) each of
our directors, (2) each of our executive officers, (3) each person who is known
by us to beneficially own more than five percent of the outstanding shares of
our common stock and (4) all of our directors and executive officers as a group.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 and does not necessarily bear on the economic
incidents of ownership or the right to transfer the shares described below.
---------------- --------------
Number of Percentage of
Shares Common Stock
---------------- --------------
Irwin D. Simon (1)................................... 2,680,378 7.6%
Morris J. Siegel (2)................................. 611,657 1.8%
Andrew R. Heyer (3) (4).............................. 326,185 *
Beth L. Bronner (4) (5).............................. 84,667 *
Jack Futterman (4) (6)............................... 41,500 *
James S. Gold (4) (7)................................ 39,000 *
Joseph Jimenez (4) (8) (9)........................... 25,500 *
Marina Hahn (4) (10)................................. 41,108 *
Gregg A. Ostrander (4) (10).......................... 38,696 *
Nigel Clare (4) (9) (11)............................. 15,000 *
Benjamin Brecher (12)................................ 208,000 *
Ellen B. Deutsch (12)................................ 18,200 *
Gary M. Jacobs (12).................................. 170,015 *
Andrew Jacobson (12)................................. 40,000 *
Boulder, Inc. (9).................................... 6,090,351 18.4%
H.J. Heinz Company (9)............................... 6,090,351 18.4%
White Rock Capital Management, L.P. (13)............. 1,778,100 5.4%
White Rock Capital, Inc. (13)........................ 1,778,100 5.4%
Thomas U. Barton (13)................................ 1,808,100 5.5%
Joseph U. Barton (13)................................ 1,803,100 5.4%
All directors and executive officers as a
group (fourteen persons)(14)....................... 4,339,906 12.0%
- ---------------------
* Indicates less than 1%.
-3-
(1) Includes 600,000 shares of common stock issuable upon the exercise of
options granted under our 1993 Executive Stock Option Plan and 1,435,000
shares of common stock issuable upon the exercise of options granted under
our 1994 Long Term Incentive and Stock Award Plan (the "1994 Plan"),
including options exercisable for 600,000 shares granted in fiscal 2001 in
accordance with the terms of Mr. Simon's employment agreement. Mr. Simon is
our President, Chief Executive Officer and Chairman of the Board of
Directors.
(2) Includes 15,000 shares of common stock issuable upon exercise of options
granted under our 1996 Directors Stock Option Plan (the "Directors Plan")
and 288,342 shares of common stock issuable upon exercise of options
assumed upon consummation of the merger of Celestial Seasonings, Inc.
("Celestial") with and into our wholly owned subsidiary on May 30, 2000
(the "Merger"), following which we changed our name to The Hain Celestial
Group, Inc. Mr. Siegel is Vice-Chairman of the Board of Directors. In
addition, Mr. Siegel is an officer of Celestial and under an employment
agreement with Celestial is entitled to an annual salary of $250,000 and
severance equal to two times his annual salary if we terminate him without
cause.
(3) Includes 48,000 shares of common stock issuable upon the exercise of
options granted under the Directors Plan and 168,499 shares issuable upon
the exercise of warrants received by Mr. Heyer upon distributions from
Argosy-Hain Warrant Holdings, L.P. and Argosy Investment Corp.
(4) Director of Hain.
(5) Includes 48,000 shares of common stock issuable upon the exercise of
options granted under the Directors Plan.
(6) Includes 40,500 shares of common stock issuable upon the exercise of
options granted under the Directors Plan.
(7) Includes 33,000 shares of common stock issuable upon the exercise of
options granted under the Directors Plan.
(8) Consists of 25,500 shares of common stock issuable upon the exercise of
options granted under the Directors Plan.
(9) According to Amendment No. 1 to Schedule 13D dated June 19, 2000, Boulder,
Inc. ("Boulder") (formerly Earth's Best, Inc.), a wholly owned subsidiary
of H.J. Heinz Company, holds 6,090,351 shares of common stock. Mr. Jimenez
is President and Chief Executive Officer of Heinz North America, a division
of H.J. Heinz Company. Mr. Clare is Managing Director, Grocery, Europe for
H.J. Heinz Company. Share amounts presented for Mr. Jimenez and Mr. Clare
do not include the shares of common stock held by Boulder.
(10) Includes for each of Ms. Hahn and Mr. Ostrander 15,000 shares of common
stock issuable upon exercise of options granted under the Directors Plan
and 22,770 shares of common stock issuable upon the exercise of Celestial
options assumed upon consummation of the Merger.
(11) Consists of 15,000 shares of common stock issuable upon exercise of options
granted under the Directors Plan.
(12) Includes 195,000 shares for Mr. Brecher, 13,200 shares for Ms. Deutsch,
170,000 shares for Mr. Jacobs and 40,000 shares for Mr. Jacobson of common
stock issuable upon exercise of options granted under the 1994 Plan. In the
case of Mr. Jacobs, includes 15 shares held by his son. Mr. Brecher, Ms.
Deutsch, Mr. Jacobs and Mr. Jacobson are executive officers.
(13) According to a Schedule 13G, as amended as of March 30, 2000: (1) White
Rock Capital Management, L.P., a Texas limited partnership, White Rock
Capital, Inc., a Texas corporation, Thomas U. Barton and Joseph U. Barton
may be deemed beneficial owners of an aggregate of 1,778,100 shares of
common stock consisting of 1,360,600 shares of common stock acquired by the
White Rock entities on behalf of certain institutional clients, 394,500
shares of common stock held for the account of White Rock Capital Partners,
L.P. and 23,000 shares of common stock held for the account of White Rock
Capital Management, L.P., a Texas limited partnership; (2) Joseph U. Barton
beneficially owns an additional 25,000 shares of common stock acquired for
his personal account; and (3) Thomas U. Barton beneficially owns an
additional 30,000 shares of common stock pursuant to an arrangement
providing for the trading of options to acquire such shares. Thomas U.
Barton and Joseph U. Barton are shareholders of White Rock Capital, Inc.
(14) Includes 600,000 shares issuable upon the exercise of options granted under
the 1993 Plan, 1,853,200 shares issuable upon the exercise of options
granted under the 1994 Plan, 333,882 shares issuable upon the exercise of
options granted under Celestial plans assumed in connection with the
Merger, 255,000 shares issuable upon
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the exercise of options granted under the Directors Plan and 168,499 shares
issuable upon the exercise of warrants. See notes 1 through 12.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The size of our board of directors is currently set at eleven members. Ten
of our nominated directors are standing for re-election and one is standing for
election for the first time.
Each director will hold office until the next Annual Meeting of
Stockholders and until his or her successor is elected and qualified. The
persons named as proxies in the accompanying proxy, who have been designated by
the board of directors, intend to vote, unless otherwise instructed in such
proxy, FOR the election of all of the nominees listed below.
The following information describes the backgrounds and business experience
of the nominees for director:
Irwin D. Simon(3), President, Chief Executive Officer and Chairman of the Board,
Age 42
Mr. Simon has been our President and Chief Executive Officer and a director
since our inception and is our founder. Mr. Simon was appointed Chairman of the
Board of Directors in April 2000. Mr. Simon is also the chairperson of our
acquisition/strategy committee. From December 1990 through December 1992, Mr.
Simon was employed in various marketing capacities with Slim-Fast Foods Company
("Slim Fast"), a national marketer of meal replacement and weight loss food
supplements with annual revenues in excess of $500 million. His duties initially
involved sales and marketing for the frozen and dairy divisions of Slim Fast,
which included establishing and implementing marketing strategies and
establishing a distribution system throughout the United States. In March 1992,
Mr. Simon became Vice President of Marketing for Slim Fast. From 1986 through
1990, Mr. Simon was employed by The Haagen-Dazs Company, a division of Grand
Metropolitan, plc. Haagen-Dazs is a manufacturer and distributor of premium ice
cream and related products. Mr. Simon held a number of sales and marketing
positions, including Eastern Regional Director of Haagen-Dazs Shops, the entity
managing a majority of the franchisee system and all company-owned retail shops.
Morris J. Siegel(3), Vice Chairman of the Board, Age 50
Mr. Siegel has been a director and Vice Chairman of the Board of Directors
since May 2000. Prior to the Merger, Mr. Siegel had served as a director of
Celestial Seasonings, Inc. since 1988, and Mr. Siegel has served as Chairman of
the Celestial Board of Directors since 1991. Mr. Siegel founded Celestial in
1970 and was President and Chairman of the Board of Directors until 1986. From
1986 until 1990, Mr. Siegel was involved in private investments and
not-for-profit activities, and from 1990 until 1991, was a founder and chief
executive officer of Earth Wise, Inc., a marketer of environmentally friendly
products. He served as Chief Executive Officer of Celestial from 1991 to 1997.
Mr. Siegel also serves as a director of Wild Oats Markets, Inc., and several
privately-held companies and foundations.
Andrew R. Heyer(1)(3), Age 43
Mr. Heyer has been a director since November 1993. Mr. Heyer served as the
Chairman of the Board of Directors from November 1993 through April 2000. Mr.
Heyer has been a Managing Director of CIBC World Markets Corp. (formerly CIBC
Oppenheimer Corp.), an affiliate of the Canadian Imperial Bank of Commerce and
the successor to the Argosy Group, L.P. since August 1995.
-6-
From February 1990 until August 1995, Mr. Heyer was a Managing Director of the
Argosy Group, L.P., an investment banking firm that specialized in merger,
acquisition, divestiture, financing, refinancing and restructuring transactions.
Mr. Heyer also serves as a director of Fairfield Corporation, Hayes Lemmerz
International, Inc., Lancer Industries, Inc., Niagara Corporation, Spectrasite
Holdings, Inc., NSP Holdings, L.L.C. and Millennium Digital Media Holdings,
L.L.C. (as a member of the management committee).
Beth L. Bronner(1), Age 49
Ms. Bronner has been a director since November 1993 and is the chairperson
of our compensation committee. Ms. Bronner joined Advo, Inc. as President and
Chief Operating Officer in August 2000. Prior to that, Ms. Bronner was at
Sunbeam Inc. from November 1998 as President-Health Division. Prior to that, she
was with Citibank, N.A. from September 1996 as Senior Vice President and
Director of Marketing for the United States and Europe. From July 1994 to August
1996, Ms. Bronner was Vice President - Emerging Markets of American Telephone &
Telegraph Company Consumer Communications Services business. Ms. Bronner was
President of the Professional Products Division of Revlon, Inc. from May 1993
until June 1994. From February 1992 to May 1993 she was Executive Vice President
of the Beauty Care and Professional Products Division of Revlon, Inc. Ms.
Bronner also serves as a director of Fortis, Inc.
Jack Futterman(2), Age 67
Mr. Futterman has been a director since December 1996. Mr. Futterman served
as Chairman and Chief Executive Officer of Party City Stores, Inc. from June
1999 through December 1999. Mr. Futterman retired as Chairman and Chief
Executive Officer of the Pathmark Supermarket chain in March 1996. He joined
Pathmark in 1973 as Vice President of its drugstore and general merchandise
divisions and occupied a number of positions before becoming Chairman and Chief
Executive Officer. Mr. Futterman is a registered pharmacist and former Chairman
of the National Association of Chain Drugstores. He is a director of Party City,
Inc., as well as several not-for-profit organizations.
James S. Gold(2)(3), Age 49
Mr. Gold has been a director since March 1998 and is the chairperson of our
audit committee. Mr. Gold is a Managing Director in the Banking Group of Lazard
Freres & Co LLC. Since joining Lazard Freres & Co LLC in 1977, Mr. Gold has been
involved in a broad range of investment banking activities, particularly
relating to the consumer products and food industries. Mr. Gold is also a
director of Smart & Final Inc.
Joseph Jimenez(3), Age 40
Joseph Jimenez has been a director since September 1999. Mr. Jimenez has
served as President and Chief Executive Officer of Heinz North America since
November 1998. Prior to that, Mr. Jimenez served as president of Wesson/Peter
Pan Food Co. and Orville Redenbacher/Swiss Miss Food Co. from March 1997 to
November 1998. From 1995 to March 1997, Mr. Jimenez served as Senior Vice
President - Marketing of Orville Redenbacher/Swiss Miss Food Co. Mr. Jimenez
served as Vice President Marketing of LaChoy/Rosarita Food Co. from 1994 to
1995. Mr. Jimenez serves on our board of directors as a designee of Boulder,
Inc. (formerly Earth's Best, Inc.)
-7-
Marina Hahn(1), Age 41
Ms. Hahn has been a director since May 2000. Prior to that, she had served
as a director of Celestial since 1994. Currently, Ms. Hahn is Executive Vice
President of J. Walter Thompson Company, an advertising agency. From 1996 to
1998, Ms. Hahn was Head of the Corporate Advisory Group for the William Morris
Agency, Inc. From 1993 to 1995, Ms. Hahn was Vice President, Advertising for
Sony Electronics, Inc., a consumer electronics manufacturer. From 1989 until
joining Sony, she was the Director of Advertising for the Pepsi-Cola Company, a
beverage company. From 1979 to 1989, she was employed by DDB Needham Worldwide,
Inc., an advertising agency.
Gregg A. Ostrander(2), Age 47
Mr. Ostrander has been a director since May 2000. Prior to that, he had
served as a director of Celestial since 1998. Mr. Ostrander is Chairman,
President and Chief Executive Officer of Michael Foods, Inc., a food processor,
a position he has held since 1994. During 1993, he was Chief Operating Officer
of Michael Foods. Mr. Ostrander was President of Swift-Eckrich Prepared Foods, a
division of Con-Agra, Inc., a diversified food products company, from 1990 to
1993. From 1985 to 1990, Mr. Ostrander held the positions of Vice
President--Marketing and Senior Vice President--Marketing at Armour
Swift-Eckrich, Inc. Mr. Ostrander is a director of Arctic Cat, Inc. and Michael
Foods, Inc.
Nigel Clare, Age 44
Mr. Clare has been a director since August 2000. Since 1995, Mr. Clare has
served as Managing Director, Grocery, Europe for H.J. Heinz Company where he
oversees 5,000 employees in 25 countries and sales of $1.0 billion. Mr. Clare
serves on our board of directors as our joint designee with Boulder.
Roger Meltzer, Age 49
Mr. Meltzer is nominated as a director for the first time. Mr. Meltzer is a
partner and a member of the executive committee of the law firm Cahill Gordon &
Reindel, New York, New York, where he practices corporate law. Cahill Gordon &
Reindel has represented us in various matters since 1994.
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(1) Compensation committee member.
(2) Audit committee member.
(3) Acquisition/strategy committee member.
Directors' Compensation, Committees and Meeting Attendance
During the last fiscal year, the board of directors held 10 meetings.
During the last fiscal year, we did not pay any direct compensation to
directors, other than reimbursement of out-of-pocket expenses incurred in
connection with attendance at meetings of the board of directors. Under our 1996
Directors Stock Option Plan, which we refer to in this notice of annual meeting
as the Directors Plan, independent directors receive a grant of options to
purchase
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15,000 shares of our common stock upon election to the board of directors and
options to purchase a minimum of 7,500 shares of common stock upon re-election
at each subsequent annual meeting of stockholders, at exercise prices which are
not less than the fair market value of the common stock at the time of grant.
Directors who were re-elected at our stockholders meeting held December 7, 1999
received options to purchase 10,500 shares of our common stock in recognition
for their services as director. In addition, the Directors Plan allows for
discretionary grants of options by the compensation committee, at exercise
prices which are not less than the fair market value of our common stock at the
time of grant.
The board of directors has three standing committees: the compensation
committee, the audit committee and the acquisition/strategy committee.
Compensation Committee. Our compensation committee is currently comprised
of Ms. Bronner, Mr. Heyer and Ms. Hahn, with Ms. Bronner acting as chairperson.
The compensation committee administers our employee stock option plans,
determines the compensation policies for our officers and recommends to the
entire board of directors the salaries of our executive officers. During fiscal
2000, the compensation committee held two meetings.
Audit Committee. Our audit committee is currently comprised of Messrs.
Gold, Futterman and Ostrander, with Mr. Gold acting as chairperson. The audit
committee's principal duties include recommending to our board of directors the
selection, retention and termination of our independent auditors, evaluating the
independence of the auditors, including whether the auditors provide any
consulting services to us, reviewing with the independent auditors their report
as well as making any recommendations with respect to our financial statements,
accounting policies, procedures and internal controls. In addition, the audit
committee is charged with reviewing the independent auditor's fees for audit and
non-audit services, determining independent auditor's fees for audit and
non-audit services, and determining whether there are any conflicts of interest
in financial or business matters between us and any of our officers or
employees. A copy of the audit committee charter fully describing the purpose,
duties and powers of the audit committee is attached hereto as Annex A. During
fiscal 2000, our audit committee held one meeting.
Acquisition/Strategy Committee. Our acquisition/strategy committee is
comprised of Messrs. Simon, Siegel, Heyer, Jiminez and Gold, with Mr. Simon
acting as chairperson. Our acquisition/strategy committee assists us in
evaluating potential acquisition candidates, structuring acquisitions and
integrating newly acquired businesses into our existing structure. We anticipate
that this newly-formed committee will begin holding meetings in fiscal 2001.
During fiscal 2000, each of our incumbent directors (except for Mr.
Jimenez, who attended five of eight meetings) attended at least 75% of the
aggregate of the meetings of the board of directors and committees on which they
served.
Executive Officers
The following information describes the backgrounds and business experience
of our current executive officers who are not also directors:
Benjamin Brecher, Senior Vice President __ Operations and President - Health
Valley Company, Age 49
-9-
Mr. Brecher has served as Senior Vice President - Operations since
September 1998 and President - Health Valley Company since October 1999. Prior
to this appointment, Mr. Brecher had been our Vice President - Operations since
November 1993. Mr. Brecher was an officer and director of Kineret Kosher Foods
from 1974 until its acquisition by Hain in November 1993.
Ellen B. Deutsch, Senior Vice President __ Strategic Planning and Food Service,
Age 39
Ms. Deutsch has served as Senior Vice President - Strategic Planning and
Food Service since June 2000. Prior to that, Ms. Deutsch served as Executive
Vice President - Grocery/Mass-Market Division from November 1998 and Senior Vice
President - Sales and Marketing from April 1997 to November 1998. Prior to May
1996, Ms. Deutsch was an executive of F&D Advertising Agency of Westbury, New
York.
Gary M. Jacobs, Executive Vice President - Finance, Chief Financial Officer,
Treasurer and Secretary, Age 43
Mr. Jacobs has served as Executive Vice President - Finance, Chief
Financial since July 2000, Secretary since December 1998 and Treasurer and Chief
Financial Officer since September 1998. Prior to his appointment as Executive
Vice President - Finance, Mr. Jacobs served as Senior Vice President - Finance
since September 1998. Prior to his employment with us, Mr. Jacobs was the Chief
Financial Officer of Graham Field Health Products, Inc., a manufacturing and
distribution company. In December 1999, Graham Field filed for bankruptcy
protection under Chapter 11 of the Bankruptcy Code. Mr. Jacobs is a certified
public accountant and served as Senior Manager at Ernst & Young LLP for 13
years.
Andrew Jacobson, President __ Natural Foods Division, Age 39
Mr. Jacobson has served as President of our Natural Foods Division
following the consummation of the Westbrae acquisition in October 1997. From
November 1992 until October 1977, Mr. Jacobson was President of Westbrae Natural
Foods, Inc. and Little Bear Organic Foods, Inc. Prior to November 1992, Mr.
Jacobson spent eight years in various divisional and corporate positions with
Tree of Life, Inc., a major natural and specialty foods distributor. Mr.
Jacobson serves on the board of the National Natural Foods Association.
-10-
Executive Compensation
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation paid us for services
rendered during the three fiscal years ended June 30, 2000 to or for the
accounts of our Chief Executive Officer and our other four most highly
compensated executive officers.
Summary Compensation Table
--------------------------
Annual Compensation Long-Term Compensation
------------------------------------------ ----------------------
Awards
----------------------
Securities
Name and Fiscal Other Annual Underlying
Principal Position Year Salary Bonus Compensation Options
- ------------------------------------------- ------ -------- -------- ------------ ----------------------
Irwin D. Simon 2000 $375,000 $165,000 $5,400 0
President, Chief 1999 $300,000 $105,000 $5,400 700,000
Executive Officer and Chairman of the Board 1998 $225,000 $60,000 $5,400 125,000(1)
Benjamin Brecher 2000 $204,332 $99,500 $5,400 0
Senior Vice President - Operations and 1999 $167,700 $70,000 $5,400 50,000
President - Health Valley Company 1998 $140,000 $37,500 $5,400 250,000(2)
Ellen B. Deutsch 2000 $160,000 $0 $5,400 0
Senior Vice President - 1999 $158,000 $22,000 $5,400 8,000(3)
Strategic Planning and Food Services 1998 $148,000 $22,000 $5,400 0
Gary M. Jacobs (4) 2000 $216,000 $99,500 $5,400 0
Executive Vice President - Finance, Chief 1999 $150,000 $0 $4,500 175,000
Financial Officer, Treasurer and 1998 $ -- $ -- $ -- --
Secretary
Andrew Jacobson 2000 $233,333 $77,000 $5,400 50,000(3)
President - Natural Foods Division 1999 $216,700 $70,000 $46,793(5) 20,000(3)
1998 $129,329 $0 $4,050 60,000
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(1) Represents options for 125,000 shares conditionally granted to Mr. Simon on
June 30,1997 at an exercise price of $4.8125 per share pending an increase
to shares eligible for grant under the 1994 Plan that was approved by
stockholders at a meeting held December 9, 1997. We will incur a
straight-line non-cash compensation charge ($46,000 for fiscal 2000 and
1999 and $27,000 for fiscal 1998) over the 10-year vesting period based on
the excess (approximately $461,000) of the market value of the shares of
common stock underlying the options ($8.50 per share) on December 9, 1997
compared to $4.8125 per share on the date of grant.
(2) 20% became exercisable on each of December 31, 1996, 1997, 1998 and 1999
and an additional 20% becomes exercisable on December 31 of this year,
provided Mr. Brecher remains employed by us.
(3) 50% becomes exercisable one year from the date of grant and 50% becomes
exercisable two years from the date of grant.
(4) Mr. Jacobs commenced employment on September 8, 1998.
(5) Includes $41,393 in relocation expenses and related fees.
-11-
Employment Agreements
Irwin D. Simon
We have entered into an employment agreement with Mr. Simon. The term of
the agreement is for three years and can be extended for one additional year by
mutual consent. Mr. Simon's employment agreement provides for a minimum annual
base salary of $460,000 for the fiscal year ending June 30, 2001, $520,000 for
the fiscal year ending June 30, 2002 and $600,000 for the fiscal year ending
June 30, 2003. Mr. Simon's employment agreement also provides for an annual
bonus ranging from 0% to 200% of his annual compensation upon the achievement of
sales and profitability objectives to be determined by our compensation
committee. Under the agreement, Mr. Simon will also receive an annual grant
during each year of the term of his agreement of options under our 1994 Plan
exercisable for 300,000 shares of our common stock at an exercise price equal to
the market price on the date of the grant, and a one-time grant of options to
purchase an additional 300,000 shares of our common stock which were provided
for in his previous employment arrangement but were not granted as of June 30,
2000. In the event that Mr. Simon is terminated without cause or he resigns for
good reason, which will include resignation upon a change of control, he will be
entitled to, among other things, two years annual salary and two years average
annual bonus plus compensation in lieu of his granted and ungranted options
(based on a black-scholes value) as of the date of his termination, together
with options to purchase an additional 300,000 shares of our common stock. Mr.
Simon has also agreed not to compete with us during his employment term or for a
period of two years thereafter and has agreed to customary provisions regarding
confidentiality and proprietary rights.
Change of Control Agreements
We have entered into change of control agreements with Messrs. Brecher,
Jacobs and Jacobson that provide that, in the event that, following a change of
control of Hain, the surviving corporation takes certain actions, including a
termination without cause, diminution in duties or forced relocation, such
executive officer will be entitled to terminate his employment and receive two
times annual base salary and annual bonus, two years benefits continuation and
immediate vesting of all outstanding options.
-12-
Stock Option Grants and Exercises
The tables below set forth information with respect to grants of options
to, and exercise of options by, our Chief Executive Officer and our other four
named executive officers during our fiscal year ended June 30, 2000.
Option Grants in Last Fiscal Year
Individual Grants Potential Realizable
% of Total Value at Assumed
Options Number of Annual Rates of Stock
Granted to Securities Exercise Price Appreciation
Employees Underlying or Base for Option Term
in Fiscal Options Price Expiration
Name Year Granted ($/Sh)(1) Date 5% 10%
- ---- ----------- ----------- --------- ---------- ---- ---
Andrew Jacobson 50,000 7.9% $22.125 Jan. 3, 2010 $305,636 $675,377
- --------------------
(1) Options were granted at exercise prices which were not less than the fair
market value of the common stock at the time of grant.
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value Held at June 30, 2000 at June 30, 2000(1)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- ---------- ------------ ------------- ------------ -------------
Irwin D. Simon 10,000 $201,750 1,435,000 0 $36,928,288 --
Benjamin Brecher 20,000 $463,813 195,000 50,000 $ 5,860,938 $1,671,875
Ellen B. Deutsch 18,300 $390,546 13,200 4,000 $ 375,635 $ 82,500
Gary M. Jacobs 5,000 $ 82,200 170,000 0 $ 3,567,500 --
Andrew Jacobson 5,000 $ 93,594 40,000 60,000 $ 845,625 $ 934,375
- -----------------------
(1) Based on a price of $36.6875 per share, the closing bid price for our
common stock on The Nasdaq National Market on June 30, 2000.
-13-
1993 Executive Stock Option Plan
In July 1993, we adopted the 1993 Executive Stock Option Plan, which we
refer to in this notice of annual meeting as the 1993 Plan, under which we
granted to Irwin D. Simon, our founder, president and chief executive officer,
options to purchase 600,000 shares of our common stock. The exercise price of
options designed to qualify as incentive options is $3.58 per share and the
exercise price of non-qualified options is $3.25 per share. The options expire
in 2003.
1994 Long Term Incentive and Stock Award Plan
In December 1994, we adopted the 1994 Long Term Incentive and Stock Award
Plan, which we refer to in this notice of annual meeting as the 1994 Plan. The
1994 Plan, as amended, provides for the granting of incentive stock options to
employees and directors to purchase up to an aggregate of 6,400,000 shares of
our common stock with a maximum individual limit of 1,000,000 shares in any
calendar year. The 1994 Plan is administered by the compensation committee of
the board of directors. All of the options granted to date under the 1994 Plan
have been incentive or non-qualified stock options providing for exercise prices
not less than the fair market price at the date of grant, and expire 10 years
after date of grant. At the discretion of the compensation committee, options
are exercisable upon grant or over an extended vesting period. During fiscal
year 1998, options to purchase 298,600 shares were granted at prices from $4.50
to $14.13 per share, options to purchase 274,400 shares were exercised and
options to purchase 47,800 shares were canceled. During fiscal year 1999,
options to purchase 1,175,600 shares were granted at prices from $12.125 to
$21.50 per share, options to purchase 322,950 shares were exercised and options
to purchase 23,750 shares were canceled. During fiscal year 2000, options to
purchase 372,550 shares were granted at prices ranging from $21.188 to $33.50
per share, options to purchase 127,900 shares were exercised and options to
purchase 14,750 shares were canceled. At June 30, 2000, 3,658,950 options were
available for grant under the 1994 Plan.
1996 Directors Stock Option Plan
In December 1995, we adopted the 1996 Directors Stock Option Plan, which we
refer to in this notice of annual meeting as the Directors Plan. The Directors
Plan provides for the granting of stock options to non-employee directors to
purchase up to an aggregate of 750,000 shares of our common stock. During fiscal
year 1998, options for an aggregate of 67,500 shares were granted at prices of
$8.50 and $19.68 per share, no options were exercised and no options were
canceled. During fiscal year 1999, options for an aggregate of 95,000 shares
were granted at a price of $17.625 per share, options to purchase 90,000 shares
were exercised and no options were canceled. During fiscal year 2000, options
for an aggregate of 103,500 shares were granted at prices of $23.25 and $26.063
per share, options to purchase 80,000 shares were exercised and no options were
canceled. At June 30, 2000, 326,500 options are available for grant under the
Directors Plan. The options expire in 2001. No options may be granted under the
Directors Plan after December 2000.
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2000 Directors Stock Option Plan
In May 2000, we adopted a new 2000 Directors Stock Option Plan, which we
refer to in this notice of annual meeting as the 2000 Directors Plan. The 2000
Directors Plan provides for granting of stock options to non-employee directors
to purchase up to an aggregate of 750,000 shares of our common stock. At June
30, 2000, no options were granted under the 2000 Directors Plan.
Celestial Plans
In connection with the Merger, we assumed Celestial's 1993 Long-Term
Incentive Plan and 1994 Non-Employee Director Compensation Plan, which we refer
to in this notice of annual meeting collectively as the Celestial Plans.
Following the consummation of the Merger, no options to purchase shares of
common stock will be granted under the Celestial Plans. As of June 30, 2000
options to purchase 1,267,806 shares of common stock were outstanding under the
Celestial Plans.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Committee. Our compensation committee is responsible for
determining the compensation of our executive officers. The compensation
committee also administers the 1994 Plan and discretionary grants under our
Directors Plan and 2000 Directors Plan.
The compensation committee is currently comprised of Ms. Bronner, Mr. Heyer
and Ms. Hahn, with Ms. Bronner acting as chairperson. Decisions and
recommendations by the compensation committee are made on the basis of an
assessment of corporate performance and a review of supporting data, including
historical compensation data of other companies within the industry. Although
actions with respect to various programs are taken at different times,
consideration of each is made in the context of our overall compensation
package.
Section 162(m) of the Internal Revenue Code generally limits the deductible
amount of annual compensation paid to certain individual executive officers
(i.e., the chief executive officer and our four other most highly compensated
executive officers) to no more than $1 million. Considering the current
structure of executive officer compensation, the compensation committee believes
that we will not be denied any significant tax deductions for fiscal 2000. The
compensation committee will continue to review tax consequences as well as other
relevant considerations in connection with compensation decisions.
Compensation Philosophy. Our executive compensation program is designed to
provide competitive levels of remuneration and assist us in attracting and
retaining qualified executives. The compensation committee is committed to the
objectives of linking executive compensation to corporate performance and
providing incentives which align the interests of our executives with the
interests of our stockholders. This philosophy underlies executive compensation
policies designed to integrate rewards with the attainment of annual and
long-term performance goals, reward significant corporate performance and
recognize individual initiatives and achievements. It is performance which most
significantly influences an individual executive's compensation level. As a
result, actual compensation levels in any particular year may be above or below
those of our competitors, depending upon our performance. The executive
compensation program is comprised of salary, annual cash incentives and
long-term, stock-based incentives. The following is a discussion of each of the
elements of the executive compen-
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sation program along with a description of the decisions and actions taken by
the compensation committee with regard to fiscal 2000 compensation:
Base Salary. We establish salary ranges for each of our executive
positions based on appropriate external comparisons, internal
responsibilities and relationships to other corporate positions. Existing
base salaries and annual escalations for the named executives were
established based on the foregoing factors and in negotiation with each of
the executives in connection with their employment by us.
Annual Incentive. We may pay annual cash bonuses in any year to reward
significant corporate accomplishments and individual initiatives which
contributed to the attainment of targeted goals relating to product sales,
product margins, return on capital employed, earnings per share and
stockholder return. If the compensation committee determines that corporate
results are such that a bonus program is warranted, then each executive's
accomplishments are assessed as to their impact on corporate results.
Contributions must be above and beyond normal expectations. The chief
executive officer meets with the compensation committee to review corporate
results, the individual executive's contributions and his recommendations
as to annual incentive payments.
Long-Term Incentives. The 1994 Plan and the 1993 Plan were approved by
stockholders for the purpose of promoting the interests and our
stockholders by: (1) attracting and retaining executives and other key
employees of outstanding ability; (2) strengthening our capability to
develop, maintain and direct a competent management team; (3) motivating
executives and other key employees, by means of performance-related
incentives, to achieve longer-range performance goals; (4) providing
incentive compensation opportunities which are competitive with those of
other comparably situated corporations; and (5) enabling such employees to
participate in our long-term growth and financial success.
Chief Executive Officer Compensation. The compensation committee is
responsible for determining the appropriate compensation for our chief
executive officer based on a variety of criteria, including our performance
and the chief executive officer's performance, the compensation of the
chief executive officers of comparable companies and other market factors.
In fiscal 2000, the compensation committee worked with Mr. Simon in the
preparation of his employment agreement described above, then recommended
the adoption of the employment agreement to our board of directors, which
adopted it unanimously.
Compensation Committee: Beth L. Bronner, Chairperson
Andrew R. Heyer
Marina Hahn
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PERFORMANCE GRAPH
The following graph compares the performance of our common stock to the S&P
500 Index and to the Standard & Poor's food group index for the period from June
30, 1995 through June 30, 2000. The comparison assumes $100 invested on June 30,
1995.
Year Ended June 30, Hain S&P 500 Index S&P Food Index
------------------- ---- ------------- --------------
1995 100 100 100
1996 77 123 114
1997 110 163 155
1998 591 208 195
1999 471 252 171
2000 837 267 148
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
It is the practice of the board of directors to designate the accounting
firm that will serve as our independent auditors. The audit committee has
recommended that Ernst & Young LLP be selected to audit our financial statements
for the fiscal year ending June 30, 2001 and the board of directors has approved
the selection of Ernst & Young LLP. Ernst & Young LLP audited our financial
statements for the fiscal years ended June 30, 1995 through June 30, 2000.
Unless a contrary vote is indicated, the proxies solicited hereby will be voted
FOR the ratification of the selection of Ernst & Young LLP as independent
auditors for the fiscal year ending June 30, 2001.
The audit committee reviews and approves the audit and non-audit services
to be provided by our independent auditors during the year, considers the effect
that performing those services might have on audit independence and approves
management's engagement of our independent auditors to perform those services.
Ernst & Young LLP expects to have a representative at our 2000 annual
meeting of stockholders who will have the opportunity to make a statement and
will be available to respond to appropriate questions.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL
Jill Ratner, the holder of 706 shares of our common stock, who can be
contacted c/o Harrington Investments, Inc., 1001 Second Street, Suite 325, Napa,
CA 94559, has informed us that she intends to present the following proposal at
the Annual Meeting of Stockholders.
Adoption of the following proposal will require the affirmative vote of
holders of a majority of the shares of common stock represented in person or by
proxy at the meeting. Securities and Exchange Commission rules require that we
reprint the proposal and supporting statement as they were submitted to us.
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Stockholder Proposal
"WHEREAS, International markets for genetically engineered (GE) foods are
threatened by extensive resistance: o Europe's large food retailers, including
Tesco, Sainsbury Group, Carrefour, and Rewe, have committed to removing GE
ingredients from their store-brand products, as have U.S. retailers Whole Foods
Market and Wild Oats Markets, and Genuardi's Family Markets;
o In the UK, three fast-food giants--McDonald's, Burger King, and
Kentucky Fried Chicken--are eliminating GE soya and corn ingredients
from their menus;
o McCain Foods of Canada, the world's largest potato and frozen french
fry processor, announced it would no longer accept genetically
engineered Bt potatoes for their brand name products (11/99);
o Gerber Products Co. announced in July 1999 that they would not allow
GE corn or soybeans in any of their baby foods;
o Frito-Lay, a division of PepsiCo, asked farmers that supply corn for
Frito-Lay chips to provide only non-genetically engineered corn
(1/2000);
o once in effect, the Biosafety Protocol, approved by representatives of
more than 130 countries (1/2000), will require that genetically
engineered organisms (GEOs) intended for food, feed and processing
must be labeled "may contain" GEOs and countries can decide whether to
import those commodities based on a scientific risk assessment.
There is scientific concern that genetically engineered agricultural
products may be harmful to humans, animals, or the environment:
o The USDA has acknowledged (7/13/1999) the need to develop a
comprehensive approach to evaluating long-term and secondary effects
of GE products;
o Some GE crops have been engineered to have higher levels of toxins,
such as Bacillus thuringiensis (Bt), to make them insect-resistant;
o In 1998, research showed that Bt crops are building up Bt toxins in
the soil, thereby harming soil ecology and beneficial organisms and
insects;
o The National Academy of Sciences report Genetically Modified
Pest-Protected Plants recommends development of improved methods for
identifying potential allergens in genetically engineered
pest-protected plants. The report found the potential for gaps in
regulatory coverage (4/2000).
In the U.S., we have a long tradition of citizens' "right to know" as
expressed in laws requiring nutritional labeling of foods:
o A January 1999 Time/CNN poll indicated that 81% of Americans said that
GE food should be labeled as such;
o GE crops may incorporate genes from animal species. Individuals
wishing to avoid them for religious or ethical reasons cannot unless
they are labeled;
o The European Union requires labeling of GE foods, and labeling has
been proposed by governmental authorities in Japan, New Zealand, South
Korea and Australia.
RESOLVED: Shareholders request the Board of Directors to adopt a policy to phase
out genetically engineered crops, organisms, or products thereof from all
products sold under the Company's brand names or private labels as quickly as
feasible, until long-term safety testing shows that they are not harmful to
humans, animals, and the environment; and provide the interim step of labeling
and identifying products that may contain these ingredients, and reporting to
the shareholders by August 2001."
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Supporting Statement
We feel that it is important for Hain Celestial Food Group to adopt a
policy to phase out the purchase of genetically altered substances in its
production of consumer food products. At the very least, we urge the Company to
adopt a policy of properly labeling all of its products that contain genetically
altered substances. We believe that failure to do so could leave our company
financially liable should detrimental effects to public health appear due to
this new and untested technology.
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HAIN'S RESPONSE
The Board of Directors and Management Oppose the Foregoing Proposal and
Recommend a Vote AGAINST it for the following reasons:
We have provided high quality, natural and specialty food products to
consumers since our inception. We have, and always will have, the greatest
concern for food safety. Although we recognize that the issues of biotechnology
and genetically engineered foods raise concerns with certain consumers, our
management and board of directors believe that the stockholder proposal set
forth above should be rejected.
The proposal does not allow us the flexibility we need to meet consumers'
changing demands.
We need the flexibility to quickly adjust our product and ingredient mix,
depending on consumer needs and preferences. Our best interest is not served by
a complete prohibition on certain products. The proposal seeks to phase out
"genetically engineered crops, organisms, or products thereof" from all products
sold under our brand names or private labels and to label and identify all
products that contain these ingredients. The decision to "phase out" or label
products should be a business decision based on the considerations of financial
costs, consumer acceptance, and product safety. A hard and fast rule of
prohibition is inappropriate. Because it would not allow us to sell such
products and respond to consumer preferences, adopting the proposal could place
us at a competitive disadvantage.
The proposal is not scientifically sound.
Based upon all of the scientific data available to date, we firmly believe
that all of the products that we sell, including those that contain ingredients
that may developed through biotechnology, are safe. The food industry is highly
regulated on a world-wide basis, and our products meet or exceed the consumer
safety and quality requirements in every country in which they are sold. The
United States Department of Agriculture, or USDA, is one of three federal
agencies, along with the Environmental Protection Agency and the U.S. Food and
Drug Administration, or FDA, primarily responsible for regulating biotechnology
in the United States. Under a policy statement, the FDA has said genetically
modified foods were generally recognizable as safe and that it would not mandate
labeling. In September 2000, a federal judge granted summary judgment to the FDA
upholding its policy against requiring labeling for these types of foods.
Adopting the proposal would not aid in consumer understanding of the issue.
Government leaders, scientists, religious leaders, and a wide range of
individuals around the world believe that the use of biotechnology in foods
could give us great benefits, including the ability to save and improve human
lives by increasing food production; providing increased nutrients and possibly
vaccines in food; and allowing for the reduced use of pesticides, helping to
better preserve our environment for future generations. The proponent do not
address these considerations.
The proponent also does not address the great progress made by farmers and
scientists who have been improving products through cross-pollination and other
breeding techniques for well over 100 years. This has led to an ever-improving
food supply, producing crops that are larger, more resistant to insects and
diseases, and more plentiful. We believe that our stockholders will be better
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served if this progress continues while we remain sensitive to consumer concerns
and product acceptance.
CERTAIN RELATIONSHIPS
On September 27, 1999, we announced an agreement with H.J. Heinz Company to
form a strategic alliance for the global production and marketing of natural and
organic foods and soy-based beverages. In connection with the alliance, we
issued 2,837,343 investment shares of our common stock to Boulder, Inc.
(formerly known as, Earth's Best), a wholly owned subsidiary of Heinz, for an
aggregate purchase price of $82,383,843. In addition, in a separate transaction,
we announced on September 27, 1999 that we had purchased the Earth's Best
trademarks. In consideration for the trademarks, we paid $4,620,000 in cash and
issued 670,234 shares of our common stock to Boulder, valued at $17,380,000. In
connection with the issuance of these shares, Hain and Boulder entered into an
investor's agreement that provides for the appointment to our board of directors
of one member nominated by Boulder, Inc., currently Mr. Jimenez, and one member
jointly nominated by Boulder and Hain, currently Mr. Clare. Mr. Jimenez is
President and Chief Executive Officer of Heinz North America, a division of H.J.
Heinz Company, and Mr. Clare is Managing Director, Grocery, Europe for H.J.
Heinz Company.
In accordance with the provisions of the investor's agreement relating to
Boulder's right to maintain its ownership percentage following certain issuances
by us of our common stock, on June 19, 2000, we issued an additional 2,582,744
shares of common stock to Boulder at an aggregate purchase price of $79,743,147
in connection with the Merger. Under the investor's agreement described above,
Boulder has agreed to vote its shares in favor of nominees for directors listed
in Proposal No. 1.
In fiscal 2000, we paid to H.J. Heinz Company approximately $14.0 million
in purchases, royalties and profit sharing fees relating to these lines of
business.
Mr. Meltzer, who is nominated as a director, is a partner at the law firm
Cahill Gordon & Reindel. Cahill Gordon & Reindel provides legal services to us
from time to time.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors and persons who own more than 10% of a registered class
of our equity securities to file initial reports of beneficial ownership and
changes in such with the SEC. Such officers, directors and stockholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to us
and written representations from our executive officers and directors, all
persons subject to the reporting requirements of Section 16(a) filed the
required reports on a timely basis, except for one late filing on behalf of each
of Mr. Jacobs and Mr. Jacobson.
OTHER MATTERS
Management does not know of any other matters that will come before the
meeting, but should any other matters requiring a vote of stockholders arise,
including any question as to an adjournment of the meeting, the persons named on
the enclosed proxy will vote thereon according to their best judgment in our
interests.
-21-
STOCKHOLDER PROPOSALS
We will not consider including a stockholder's proposal for action at our
2001 Annual Meeting of Stockholders in the proxy material to be mailed to our
stockholders in connection with such meeting unless such proposal is received at
our principal office no later than July 8, 2001.
By order of the board of directors,
Gary M. Jacobs
Corporate Secretary
Dated: November 3, 2000
Your vote is important. Stockholders who do not expect to be present at the
Annual Meeting and who wish to have their stock voted are requested to sign and
date the enclosed proxy and return it in the enclosed envelope. No postage is
required if mailed in the United States.
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Annex A
THE HAIN CELESTIAL GROUP, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Audit Committee") of the Board of Directors (the
"Board") of The Hain Celestial Group, Inc. (the "Company") has adopted the
following Audit Committee Charter (the "Charter"):
1. Designation of Audit Committee. The Audit Committee has heretofore been
designated by the Board and serves as the Audit Committee of the Board. The
Audit Committee shall continue to function in accordance with the prior
determinations of the Board, the Company's certificate of incorporation and
by-laws and the rules and regulations of the Board and this Charter, as approved
by the Board at a meeting of the Board held December 7, 1999 and as adopted by
the Audit Committee at a meeting held December 7, 1999.
2. Policy Confirmation. The operation and function of the Audit Committee
is based on the recognition that the outside auditor for the Company is
ultimately accountable to the stockholders of the Company, to the Board, and to
the Audit Committee of the Company, that the Audit Committee and Board have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditor or to nominate the outside auditor to
be proposed for stockholder approval in any proxy statement.
3. Membership. The Audit Committee shall consist of not less than three (3)
members of the Board and shall be subject to the following limitations:
(a) The Audit Committee shall be composed entirely of independent
members of the Board and no person who is employed by the Company or any of
its subsidiaries shall be a member of the Audit Committee. No member of the
Audit Committee shall have any relationship to the Company or any of its
subsidiaries that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment in carrying out his or her
responsibilities as a member of the Audit Committee;
(b) Each member of the Audit Committee shall be financially literate,
as such qualification is interpreted by the Board in their business
judgment, or must become financially literate within a reasonable period of
time after his or her appointment to the Audit Committee;
(c) At least one member of the Audit Committee must have accounting or
related financial management expertise, as the Board interpret such
qualification in their business judgment;
(d) In setting the qualifications for the members of the Audit
Committee and in electing members to the Audit Committee, the Board may
take into consideration academic background or training in financial
analysis or business management, business experience throughout the career
of the individual which involved or required financial management analysis
and understanding, service as director and membership on the Audit
Committee and such other factors as the Board may deem appropriate; and
A-1
(e) The composition and membership of the Audit Committee shall
otherwise comply with the rules and regulations of the Securities and
Exchange Commission (the "SEC") and the rules and regulations of The Nasdaq
Stock Market, Inc. ("Nasdaq").
4. Purposes. The purposes of the Audit Committee are:
(a) to oversee the accounting and financial reporting policies and
practices of the Company and its subsidiaries, their internal controls and,
as appropriate, the internal controls of certain third parties with which
the Company and its subsidiaries do business;
(b) to oversee the quality and objectivity of the consolidated
financial statements of the Company and the independent audit thereof; and
(c) to act as a liaison between the Company's independent auditors and
the Board.
In general, the function of the Audit Committee is oversight; it is
management's responsibility to maintain appropriate systems for accounting and
internal control, and the auditor's responsibility to plan and carry out a
proper audit.
5. Duties and Powers. To carry out its purposes, the Audit Committee shall
have the following duties and powers:
(a) to recommend the selection, retention or termination of auditors
and, in connection therewith, to evaluate the independence of the auditors,
including whether the auditors provide any consulting services to the
Company;
(b) to meet with the independent auditors of the Company, including
private meetings, as necessary (i) to review the arrangements for and scope
of the annual audit, timely quarterly reviews, and any special audits; (ii)
to discuss any matters of concern relating to the consolidated financial
statements of the Company, including any adjustments to such statements
recommended by the auditors, or other results of said audit(s); (iii) to
consider the auditors' comments with respect to the financial policies,
procedures and internal accounting controls of the Company and its
subsidiaries, and management's responses thereto;
(c) to consider the effect upon the Company of any changes in
accounting principles or practices and its subsidiaries proposed by
management or the auditors;
(d) to review with management and the independent auditors the
financial statements prior to the filing of the Company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgment about the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the financial
statements; and discuss the results of the annual audit and any other
matters required to be communicated to the Audit Committee by the
independent auditors under generally accepted auditing standards;
(e) to review the Company's quarterly financial statements with
management and the independent auditors prior to filing on the Form 10-Q
(prior to the press release of such results, if possible) to determine that
the independent auditors do not make an exception to the disclosure and
content of the financial statements;
A-2
(f) to review the fees charged by the auditors for audit and non-audit
services;
(g) on an annual basis, to obtain from the independent auditors a
written communication delineating all their relationships and professional
services as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. In addition, review with
the independent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that the
Board take, appropriate action to ensure the continuing independence of the
auditors;
(h) to review the Company's disclosure in the proxy statement for its
annual meeting of stockholders that describes that the Audit Committee has
satisfied its responsibilities under this Charter for the prior year. In
addition, include a copy of this Charter in the annual report to
stockholders or the proxy statement at least triennially or the year after
any significant amendment to the Charter;
(i) to inquire of management, the internal auditors, and the
independent auditors about significant risks or exposures and assess the
steps management has taken to minimize such risks or exposures to the
Company; and
(j) to report its activities to all of the Board on a regular basis
and to make such recommendations with respect to the above and other
matters as the Audit Committee may deem necessary or appropriate.
6. Meetings and Communications. The Audit Committee shall meet on a regular
basis and is empowered to hold special meetings as circumstances require. In
addition, the chairperson of the Audit Committee shall make suitable provision
for ongoing communication between the outside auditors and himself or herself
concerning matters arising between such meetings of the Audit Committee,
including without limitation, consideration of changes in accounting policies or
practices, unusual events which may require auditor comment or disclosure, or
preparation and publication of interim financial statements by the Company.
7. Authority. The Audit Committee shall have the resources and authority
appropriate to discharge its responsibilities, including the authority to retain
special counsel and other experts or consultants at the expense of the Company.
8. Annual Charter Review. The Audit Committee shall review this Charter at
least annually and recommend any changes to be made to the Board.
9. Written Affirmation. If and when required by the rules and regulations
of the SEC or Nasdaq, the Audit Committee shall provide in writing to the SEC or
Nasdaq, as the case may be, any information required to fulfill the Company's
disclosure obligations regarding the composition and operation of the Audit
Committee.
10. Audit Committee Report in the Company's Proxy Statement. A report from
the Audit Committee will be included in the Company's annual Proxy Statement and
must disclose the following items:
(a) Whether the Audit Committee has reviewed and discussed the audited
financial statements with management;
A-3
(b) Whether the Audit Committee discussed the matters required by SAS
No. 61, as may be modified or supplemented, with the independent auditors;
(c) Whether the Audit Committee has received the written disclosures
and the letter from the independent auditors required by ISB Standard No.
1, as may be modified or supplemented, and has discussed with the auditors
the auditor's independence; and
(d) Whether, based on the review and discussions listed above, it
recommended to the Board that the financial statements be included in the
Annual Report on Form 10-K for the last fiscal year for filing with the
SEC.
A-4
Annex B
THE HAIN CELESTIAL GROUP, INC.
This Proxy is solicited on Behalf of the Board of Directors of The Hain
Celestial Group, Inc. (the "Company"). The undersigned hereby appoints Irwin D.
Simon and Gary M. Jacobs, or either of them, proxies, each with full power of
substitution, to vote the shares of the undersigned at the Annual Meeting of
Stockholders of the Company on December 5, 2000, and any adjournments thereof,
upon all matters as may properly come before the meeting. Without otherwise
limiting the foregoing general authorization, the proxies are instructed to vote
as indicated herein. If no instruction is given the shares will be voted "FOR"
items 1 and 2 and "AGAINST" item 3 below, each of said items being more fully
described in the Notice of such meeting and the accompanying Proxy Statement,
receipt of which are hereby acknowledged.
The Board of Directors Recommends You Vote "FOR" items 1 and 2 Below
1. Election of Directors
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary to vote for all nominees
below) listed below
(Instructions: to withhold authority to vote for an individual nominee,
strike a line through the nominee's name listed below.)
Irwin D. Simon, Morris J. Siegel, Andrew R. Heyer, Beth L. Bronner,
Jack Futterman, James S. Gold, Joseph Jimenez, Marina Hahn, Gregg A.
Ostrander, Nigel Clare, Roger Meltzer
2. To ratify the appointment of Ernst & Young LLP, to act as independent
auditors of the Company for the fiscal year ending June 30, 2001.
For [ ] Against [ ] Abstain [ ]
The Board of Directors Recommends You Vote "AGAINST" item 3 Below
3. To consider and act upon a stockholder proposal, if presented at the
meeting by its proponents, requesting the Board of Directors to adopt a policy
of removing genetically engineered foods from the Company's brand name or
private label products.
For [ ] Against [ ] Abstain [ ]
B-1
Please Complete All Information Below
Signature: _____________________________________
Signature: _____________________________________
Dated: ___________________________________ 2000
Please sign exactly as names appear
hereon, indicating official position or
representative capacity, if any. If
shares are held jointly, both owners
should sign.
B-2