SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Golden Enterprises, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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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 20, 2007, 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 3, 2007, 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, 2007
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.
1
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 20, 2007, at 11:00 A.M. All
holders of record of common stock as of August 3, 2007, 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 3, 2007, 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 3,
2007 was 11,835,234 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 3, 2007, 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- 766,929 (2) 6.5%
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 3, 2007:
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 139,007 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) 12,704 -0- (2) *
Mark W. McCutcheon 4,455 -0- (2) (4) *
Randy Bates 4,048 -0- *
David Jones 344 -0- *
Patty Townsend -0- -0- (4) *
All Directors and
Officers as a group 554,611 196,032 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 766,929 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 49,250, McCutcheon 3,151 and
Townsend 732.
(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 ("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 presently
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. The decision of a majority of the members of the Voting Committee
govern how the stock is voted.
The Voting Committee will continue to vote the Company stock owned by
SYB, Inc. (5,283,128 shares) and by the Testamentary Trust (1,014,500 shares),
respectively, until the SYB, Inc. Common Stock Trust and the Testamentary Trust
terminate. The Testamentary Trust will terminate upon the death of Joann F.
Bashinsky and the SYB, Inc. Common Stock Trust will terminate upon the earliest
to occur of the following dates: (i) in the event the Company should be sold,
five (5) years from the date of the sale of the Company, or (ii) December 31,
2020.
5
Upon termination of the SYB, Inc. Common Stock Trust, the assets of the
Trust will be distributed to Sloan Y. Bashinsky, Sr.'s descendants and control
of the Company stock held by SYB, Inc. (5,283,128 shares) will transfer to these
descendants and the Voting Committee will cease to vote these shares. Upon
termination of the Testamentary Trust, the Company stock held by the
Testamentary Trust (1,014,500 shares) will transfer to various charitable
organizations and the Voting Committee will cease to vote these shares.
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 3, 2007, 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, 70 Mr. Stein is Chairman of the Board. 1971
He was elected 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, 70 Mr. Pascoe is retired Chairman of the Board 1971
of Steel 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.
6
John P. McKleroy, Jr., 63 Mr. McKleroy is an attorney and member with 1976
Spain & Gillon, L.L.C., general counsel for
the Company. He has practiced law with this
firm since 1968.
James I. Rotenstreich, 69 Mr. Rotenstreich is Chairman and Chief 1984
Executive 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, 57 Mr. Samford is President and sole owner of 1984
Samford Capital Corporation, an investment
holding company which he formed in 1989.
J. Wallace Nall, Jr., 67 Mr. Nall is President of Nall Development 1991
Corporation 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, 72 Mr. Pate retired as President of the Company 1992
on May 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 subsidiary of the Company from
September 20, 1991, to November 1, 1998.
Joann F. Bashinsky, 75 Mrs. Bashinsky is Chairman and CEO of SYB, 1996
Inc., an 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, 52 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" within the
meaning of the director independence standards of the NASDAQ Stock Market, Inc.
("NASDAQ") and the Securities and Exchange Commission ("SEC") under the Exchange
Act of 1934. All other directors serve on the Voting Committee described in
"Security Ownership of Management" and would not qualify as Independent
Directors.
Meetings of Independent Directors
The Independent Directors meet in executive session (with no management
directors or officers present) at least twice each year.
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 2007.
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 2007.
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 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 2007.
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 1, 2007, 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 2007. 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 1, 2007, 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 1, 2007, 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"
pursuant to Rule 4350(c)(5), in that more than 50% of the voting common stock of
the Company was held by 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/Testamentary Trust of Sloan Y. Bashinsky, 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
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.
9
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 2007.
CORPORATE GOVERNANCE
Board of Directors and Committees
Directors are expected to devote sufficient time to carrying out their
duties and responsibilities effectively. The Board of Directors meets regularly
four times each fiscal year to review matters affecting the Company and to act
on matters requiring the Board's approval. It also holds special meetings
whenever circumstances require and may act by unanimous written consent without
a meeting.
The Company's Board of Directors currently consists of nine directors.
John S. Stein serves as the Chairman of the Board. The Board of Directors met
four times during the fiscal year ended June 1, 2007, all of which were
regularly scheduled meetings. In the last fiscal year, the Independent Directors
met twice in executive session. All directors attended 100% of the meetings of
the Board and the meetings of the committees on which they served during the
fiscal year ended June 1, 2007. The Board has a policy expecting director
attendance at all Board and committee meetings and the Company's annual meeting
of stockholders.
The Company's Board has established an Audit Committee and Compensation
Committee. The Charter for the Audit Committee is available from the Company.
The Compensation Committee has no Charter, but its duties and responsibilities
were/are set forth in corporate minutes adopted by the Board. In addition, the
Board may from time to time establish special purpose committees. There were no
special purpose committees existing in the last fiscal year.
Corporate Governance Documents
Certain documents relating to corporate governance matters are
available on the Company website at www.goldenflake.com. These corporate
governance documents include, among others, the following:
o Charter for the Audit Committee of the Board;
o Code of Business Conduct and Ethics;
o Complaint Procedures for Accounting and Accounting Matters; and
o Disclosure Controls and Procedures.
Stockholders may also obtain a copy of these documents free of charge
by contacting Patty Townsend, Chief Financial Officer, by email at
ptownsend@goldenflake.com or by telephone at (205) 323-6161.
10
Director Independence
Of the nine directors currently serving on the Board of Directors, the
Board has determined that Messrs Rotenstreich, Pascoe and Samford are
"Independent Directors" as defined in the rules of the NASDAQ Stock Market, Inc.
(NASDAQ). As a Controlled Company, the Company is exempt from certain
independence requirements of the NASDAQ rules, including the requirement to
maintain a majority of Independent Directors on the Board of Directors, an
Independent Compensation Committee or a Standing Nominating/Corporate Governance
Committee or committees performing similar function.
All members of the Audit Committee must be Independent Directors as
defined by NASDAQ Policies and Practices and U.S. Securities and Exchange
Commission. The Company's three Independent Directors serve on the Audit
Committee, with Mr. Rotenstreich serving as Chairman.
Policies and Practices
The Company's policies and practices reflect corporate governance
initiatives that are compliant with the listing requirements of NASDAQ and the
corporate governance requirements of the Sarbanes-Oxley Act of 2002, including
the following:
o All members of the Audit Committee are independent;
o The Charter of the Audit Committee establishes the Committee's
duties and responsibilities;
o The independent members of the Company's Board of Directors meet
regularly ("executive sessions") without the presence of
management;
o The Company has a policy for attendance of Board members at both
regular Board and committee meetings and shareholder meetings;
o The Company has adopted a Code of Conduct and Ethics;
o The Company has adopted Disclosure Controls and Procedures which
establishes a committee for regular evaluation of internal company
disclosure control and procedures;
o The Company has procedures in place for the anonymous submission to
the Audit Committee of employee and third party complaints on
accounting, internal accounting controls or auditing matters;
o The Company has policies and procedures for stockholders to
communicate directly with the Board of Directors; and
o The Audit Committee must review, approve and/or ratify all related
party transactions.
11
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
The Company provides what it believes is a competitive total
compensation package to its executive management team through a combination of
base salary, cash and equity incentives and the right to participate in the
Company's broad-based benefits program. Any incentive compensation is directly
related to the Company's financial performance.
This Compensation Discussion and Analysis explains the Company's
compensation philosophy, policies and practices with respect to the Company's
Chief Executive Officer and Chief Financial Officer and Executive Vice President
of Sales, Marketing and Transportation and Executive Vice President of
Operations, Human Resources and Quality Control of the Company's subsidiary, all
of whom are referred to as the "Executive Officers".
Compensation Committee Membership and Organization
The Compensation Committee is appointed by and serves at the discretion
of the Board. The Compensation Committee presently consists of six members.
Since the Company qualifies under NASDAQ Stock Market Rules as a Controlled
Company, the Compensation Committee is not required to meet the independence
requirements of the listing standards of NASDAQ and the non-employee director
definition of Rule 16b-3 promulgated under Section 16 of the Exchange Act,
however, at least two members of the Committee meet the outside director
definition of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code").
The Objectives of the Executive Compensation Program
The Compensation Committee is responsible for establishing and
administering the Company's policies governing the compensation for the
Executive Officers. All actions of the Compensation Committee must be approved
by the Board of Directors. Because the Company qualifies as a Controlled Company
pursuant to the exception of NASDAQ Stock Market Rule 4350(c)(5), the
Compensation Committee is composed of both independent and non-independent
directors. See "Committees of the Board of Directors" above.
The purpose of the Company's executive compensation program is to
attract, retain and motivate qualified executives to manage the business so as
to maximize profits and stockholder value. Executive compensation in the
aggregate is made up principally of the executive's annual base salary, a bonus
based upon operating earnings and Company perquisites or benefits. Awards of
stock or stock options may be made under the Long Term Incentive Plan. The
Compensation Committee annually considers and makes recommendations to the Board
as to executive compensation including changes in base salary and cash incentive
bonuses. Stock options and awards of stock under the Long Term Incentive Plan
are granted by the Stock Option Committee, which is composed of the same members
as the Compensation Committee.
Consistent with the above-noted purpose of the executive compensation
program, in recommending the aggregate annual compensation of Executive
Officers, the Compensation Committee considers the individual contribution and
performance of the executive, the Company's overall performance and the total
return to stockholders. The Company's executive compensation program focuses on
strategic plans, corporate performance measures, and specific corporate goals.
The corporate performance measures which the Compensation Committee considers
include sales, earnings, return on equity and comparisons of sales and earnings
with prior years and with budgets.
12
The Compensation Committee does not rely on any fixed formulae or
specific numerical criteria in determining an executive's aggregate
compensation. It considers corporate and personal performance criteria and the
economic environment, changes in the cost of living, competitive compensation
levels and the recommendations of management. The Compensation Committee
exercises business judgment based on all of these criteria and the purposes of
the executive compensation program.
The Elements of the Executive Compensation Program
Overall, the Company's executive compensation programs are designed to
be consistent with the objectives and principles set forth above. The basic
elements of the Company's executive compensation programs are summarized in the
table below, followed by a more detailed discussion of each element of
compensation.
Type of
Compensation Characteristics Goals
------------------ --------------------------------------- ---------------------
Base salary Fixed annual cash compensation. All
executives Keep the executive's
are eligible for periodic increases in
base annual compensation
salary based on performance and cost of competitive with the
living. market for skills and
experience necessary
to meet the job
requirements of such
executive.
Incentive bonus Performance-based annual cash bonuses Motivate and reward
and awards and equity awards. Cash bonuses are for the achievement
based on company performance against of financial goals.
target
performance levels. Equity awards are Potential for greater
granted in the discretion of the Stock amounts are intended
Option Committee. to motivate executives
and to not reward them
if goals are not met.
Health, welfare and Fixed component. The same/comparable Provide benefits to
health, meet
retirement benefits welfare and qualified retirement the health, welfare
benefits and
(medical, dental, disability insurance, retirement needs of
life
insurance, 401(k) Profit Sharing Plan employees, to the
and Employee Stock Ownership Plan extent possible.
are available for all full-time
employees).
Base Salary
To attract and retain executives with the ability and the experience
necessary to lead the Company and enhance stockholder value, the Company
provides what the Compensation Committee believes to be a competitive total
compensation package. Base salaries are established considering individual
performance and experience, to ensure that each executive is appropriately
compensated.
13
The Compensation Committee reviews salary ranges and individual
salaries for Executive Officers and establishes the base salary for each
Executive Officer based on the following:
o internal factors, such as, the individual's performance and
experience, and the pay of others on the executive team;
o the Company's overall performance and the individual contribution and
performance of the executive;
o consideration of the Company's strategic plans, corporate performance
measures, and specific corporate goals including sales, earnings,
return on equity and comparisons of sales and earnings with prior
years and with budgets;
o consideration of pay levels among individuals in comparable positions
with transferable skills within the snack food industry and comparable
companies in general industry; and
o recommendations of management.
The base salaries paid to the named Executive Officers are set forth
below in the Summary Compensation Table. The Company believes that the base
salary paid to its Executive Officers during the fiscal year ended June 1, 2007
is consistent with executive compensation objectives of providing a competitive
base salary.
Incentive Bonus Awards
Cash Bonuses
Cash incentive bonus awards are solely based on established and
pre-approved percentages of pre-tax profit levels.
Long Term Incentive Plan
Shareholders have previously 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 which is composed of the same persons as the Compensation Committee.
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.
14
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.
Stock Appreciation Rights ("SARs"). 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.
15
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 1, 2007, 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 2007. Information concerning outstanding options is set forth in the table
entitled "Outstanding Equity Awards".
Health, Welfare, Retirement and Other Benefits
Health and Welfare Benefits
All full-time employees, including the named Executive Officers, may
participate in the Company's health and welfare benefit programs, including
medical and dental care coverage, disability insurance and life insurance.
Additionally, Mr. McCutcheon is reimbursed each year for health costs which are
not paid by medical insurance.
Other Perquisites
Mr. McCutcheon is allowed the use of a Company car as part of his
employment. Some of this use includes personal use. The value of this personal
use is included in "All Other Compensation" in the Summary Compensation Table on
page 18. The Company also provides Mr. McCutcheon a yearly allowance for legal
and accounting fees.
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. All
Company employees who qualify pursuant to plan rules (which are generally rules
required by the Internal Revenue Code of 1986, as amended) may participate in
these plans. 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 account vests 100% in the employee after three years of service. The
contribution to the plans for the fiscal year ended June 1, 2007 was $121,583,
with the following amounts being credited to the accounts of the following
persons named in the Summary Compensation Table: Mark McCutcheon $1,760; Randy
Bates $1,325; David Jones $1,325 and Patty Townsend $880. (See Summary
Compensation Table on page 18. These amounts are included within "All Other
Compensation" shown in this table.)
16
The Employee Stock Ownership Plan provides that the shares held by the
Trustee of this plan 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.
Overview of Fiscal Year Compensation
The Company believes that the total compensation paid to its Executive
Officers for the fiscal year ended June 1, 2007 is consistent and in accordance
with the overall objectives of the executive compensation program and achieves
the goal of a competitive compensation package for the Executive Officers.
Employment Agreements, Severance Benefits and Change in Control Provisions
The Company has a non-qualified Salary Continuation Plan established
for the benefit of the Company's Chief Executive Officer, Mark W. McCutcheon.
The Company entered into this Salary Continuation Plan, on May 15, 2002, to
ensure the performance of his role in the Company for an extended period of
time. In addition, the Company also considered the critical nature of the
position and the Company's need to retain him when it committed to establish
this plan. The Salary Continuation 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. In the event of disability prior to retirement, the yearly benefit of
$120,000 is reduced by any payments of social security disability benefits and
long term disability benefits which were funded or provided by the Company. The
Salary Continuation Plan may be amended or terminated by the Company's Board of
Directors, except that in the event of a change of control in the Company, the
Salary Continuation Plan becomes irrevocable. The Plan is funded in part with
life insurance on the life of Mr. McCutcheon, and during fiscal year 2007,
insurance premiums of $46,910 were paid by the Company.
The Company has granted stock options that remain outstanding under the
Long Term Incentive Plan. The Long Term Incentive Plan contains certain
discretionary "change in control" provisions so that the Board of Directors may
provide, if needed, incentives to executives to remain with the Company through
the closing of any sale of the Company or its business.
Tax Deductibility of Executive Compensation
Section 162(m) of the Code generally disallows a tax deduction to
public companies for compensation over $1 million paid to the Chief Executive
Officer and to the four other most highly compensated Executive Officers, unless
the compensation is considered performance based. The compensation disclosed in
this report does not exceed the $1 million limit, and executive compensation for
the last fiscal year is also expected to qualify for deductibility. The Company
currently intends to structure the performance-based portion of its Executive
Officers' compensation to achieve maximum deductibility under Section 162(m) of
the Code with minimal sacrifices in flexibility and corporate objective.
Although deductibility of compensation is preferred, tax deductibility
is not a primary objective of the Company's compensation programs. It is the
Company's belief that achieving its compensation objectives set forth above is
more important than the benefit of tax deductibility and the Company reserves
the right to maintain flexibility in how it compensates its Executive Officers
that may result in limiting the deductibility of amounts of compensation from
time to time.
17
Report of the Compensation Committee
The Compensation Committee (and its members in their capacity as the
Stock Option Committee) has reviewed and discussed the Compensation Discussion
and Analysis with management and based on the review and discussion the
Compensation Committee recommended to the Board that the Compensation Discussion
and Analysis be included in this Proxy Statement.
Members of the Compensation Committee: J. Wallace Nall, Jr., John S.
P. Samford, James I. Rotenstreich, John S. Stein, Joann F. Bashinsky and F.
Wayne Pate.
Summary Compensation Table
The following table sets forth certain information with respect to
compensation for the fiscal years 2005, 2006, and 2007 earned by or paid to the
Chief Executive Officer, Chief Financial Officer and the other most highly
compensated Executive Officers whose total compensation exceeded $100,000.
Salary Bonus Awards Awards Compensation Compensation Total
Name and Principal Position Year ($) ($) ($) ($) ($)(1) ($)
----------------------------- --------- ------------- ------------- ---------- -------- --------------- ------------- ---------
Mark W. McCutcheon (a) 2007 $ 227,000 $ 20,791 C --- $ 42,951 $ 22,007 $312,749
President and 2006 $ 221,000 $ 6,253 C --- $ 38,058 $ 16,645 $281,956
Chief Executive Officer 2005 $ 215,000 --- C --- $ 34,178 $ 15,609 $264,787
and President
of Golden Flake
Snack Foods, Inc.
Randy Bates (b) 2007 $ 158,000 $ 15,594 C C --- $ 1,325 $174,919
Executive Vice President 2006 $ 153,000 $ 4,690 C C --- $ 1,230 $158,920
of Sales, Marketing 2005 $ 148,000 --- C C --- $ 1,197 $149,197
and Transportation
of Golden Flake Snack
Foods, Inc.
David Jones (c) 2007 $ 156,000 $ 15,594 C C --- $ 1,325 $172,919
Executive Vice President 2006 $ 150,000 $ 4,690 C C --- $ 1,223 $155,913
of Operations, Human 2005 $ 145,000 C C C --- $ 1,165 $146,165
Resources and Quality
Control of Golden Flake
Snack Foods, Inc.
Patty Townsend (d) 2007 $ 110,000 $ 10,396 C C --- $ 880 $121,276
Chief Financial Officer 2006 $ 104,000 $ 3,127 C C --- $ 832 $107,959
Vice President, Secretary 2005 $ 99,000 --- C C --- $ 743 $ 99,743
and Controller
(1) The compensation represented by the amounts set forth in the All Other
Compensation column is detailed in the following table, except as noted:
Company Company
Contributions Contributions Company Total
to 401(k) to Stock Plan Paid Life All Other
Name ($) ($) Prequisites Insurance Compensation
--------------------------------- ------------- ------------- ----------- --------- ------------
Mark W. McCutcheon $ 1,760 --- $ 19,610 $ 637 $ 22,007
Randy Bates $ 1,325 --- (e) $ 1,325
David Jones $ 1,325 --- (e) $ 1,325
Patty Townsend $ 880 --- (e) $ 880
18
(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.
(e) Total Perquisites for Randy Bates, David Jones and Patty Townsend were
less than $10,000 per individual.
Discussion of Summary Compensation
The Company's executive compensation policies and practices, pursuant
to which the compensation set forth in the Summary Compensation Table was paid,
are described above under "Compensation Discussion and Analysis."
Indemnification Arrangements
The Company's Certificate of Incorporation provides that the Company
indemnify and hold harmless each of its directors and officers to the fullest
extent authorized by the Delaware General Corporation Law, against all expense,
liability and loss (including attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith.
The Certificate of Incorporation also provides that a director will not
be personally liable to the Company or its stockholders for monetary damages for
breach of the fiduciary duty of care as a director. This provision does not
eliminate or limit the liability of a director:
o for breach of his or her duty of loyalty to the Company or to the
stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the Delaware General Corporation Law (relating to
unlawful payments or dividends or unlawful stock repurchases or
redemptions); or
o for any improper benefit.
The Company has executed with each Director a written Indemnification
Agreement which includes the items set forth above.
Outstanding Equity Awards
The following table sets forth certain information with respect to
outstanding equity awards at June 1, 2007 with the Executive Officers.
19
Outstanding Equity Awards at Fiscal Year-End
Option Awards
------------------------------------------------------------------------
Number of
Securities
Underlying
Unexercised Option
Options Exercise Option
Name Exercisable(1) Price(2) Expiration Date
--------------------------- ----------------- ----------- --------------------------
Mark W. McCutcheon 60,000 20,000 @ $3.50 4/8/2009
CEO 40,000 @ $3.81 10/15/2011
Randy Bates 29,000 29,000 @ $3.81 10/15/2011
David Jones 30,000 30,000 @ $3.81 10/15/2011
Patty Townsend 20,000 20,000 @ $3.81 10/15/2011
---------------------------
(1) Fully vested
(2) As of June 1, 2007, the value of the Company's Common Stock was $3.12
per share.
Compensation of Directors
During the fiscal year ended June 1, 2007, 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 $1,000 for each meeting attended.
The following table provides compensation information for the year
ended June 1, 2007 for each of the independent members of the Board.
Total Director Compensation
Name ($)
---------------------------
Edward R. Pascoe $15,600
James I. Rotenstreich $17,600
John S.P. Samford $17,600
Compensation Committee Interlocks and Insider Participation
During the last fiscal year, the Compensation Committee consisted of
John S. Stein, John S.P. Samford, James I. Rotenstreich, J. Wallace Nall, Jr.,
Joann F. Bashinsky and F. Wayne Pate, all of whom are non-employee directors. To
the Company's knowledge, none of its Executive Officers serve as a member of the
Compensation Committee, or other committee serving an equivalent function, of
any other entity that has one or more of its executive officers serving as a
member of the Company's Board or Compensation Committee. None of the persons who
are members of the Compensation Committee have been employed by the Company
within the last three fiscal years.
20
CERTAIN TRANSACTIONS
During the fiscal year ended June 1, 2007, 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
for which it was paid legal fees of $243,734. 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 2007, 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, 2008. 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.
The Audit Committee Charter requires that the Audit Committee review
and approve or ratify all related party transactions. Accordingly, the Audit
Committee reviewed, approved and ratified the above-described related party
transactions.
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. A
copy of the Charter is attached to this Proxy Statement as Appendix 1.
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended June 1, 2007 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.
21
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 22 hereof is compatible with maintaining Dudley, Hopton-Jones,
Sims and Freeman PLLP's independence.
The Audit Committee reviewed, approved and ratified the related party
transactions set forth and described in "Certain Transactions" on Page 21
hereof.
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 1, 2007. 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 2007 and 2006, 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 2007 FYE 2006
-------- --------
Audit Fees (1) $145,160 $162,375
Audit Related Fees (2) 57,000 46,000
Tax Fees (3) 25,550 23,650
All Other Fees (4)
-0- -0-
--------------------
(1) Current FYE 2007 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.
(2) Audit related fees consist of the aggregate fees billed for audit of the
Company's and the Company's subsidiary employee benefit plans.
22
(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 1, 2007 are contained in the 2007 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 2008 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, 2008. Any other stockholder
proposals for the Company's 2008 Annual Meeting of Stockholders must be received
no later than July 27, 2008. 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.
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HOUSEHOLDING
The SEC's rules permit companies and intermediaries such as brokers to
satisfy delivery requirements for Proxy Statements with respect to two or more
stockholders sharing the same address by delivering a single Proxy Statement
addressed to those stockholders. This process, which is commonly referred to as
"householding," potentially provides extra convenience for stockholders and cost
savings for companies. Some brokers household Proxy Statements, delivering a
single Proxy Statement to multiple stockholders sharing an address. Once you
have received notice from your broker that it will be householding materials to
your address, householding will continue until you are notified otherwise or
until you revoke your consent. If at any time you no longer wish to participate
in householding and would prefer to receive a separate Proxy Statement, please
notify your broker. If you would like to receive a separate copy of this Proxy
Statement from us directly, please contact us by writing or telephone as
follows:
Golden Enterprises, Inc.
One Golden Flake Drive
Birmingham, Alabama 35205
Attention: Patty Townsend, Chief Financial Officer
Telephone: (205) 323-6161
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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APPENDIX 1
Amended and Restated
Charter of the Audit Committee of the Board of Directors
of Golden Enterprises, Inc.
(1) Audit Committee Purpose.
The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities
in the following areas:
1. Monitoring the integrity of the Company's financial
reporting process and systems of internal controls
regarding finance, accounting and legal compliance
including the performance of the Company's internal
audit function.
2. Monitoring the independence, qualification and
performance of the Company's independent auditors.
3. Providing an avenue of communication among the
independent auditors, management and the Board of
Directors.
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities,
and it has direct access to the independent auditors as well
as anyone in the Company. The Audit Committee has the ability
to retain, at the Company's expense, special legal, accounting
or other consultants or experts it deems necessary in the
performance of its duties, and the Company shall provide
appropriate funding, as determined by the Audit Committee, for
the compensation of such retained persons. The Company shall
provide appropriate funding, as determined by the Audit
Committee, for the ordinary administrative expenses of the
Audit Committee that are necessary or appropriate to carry out
its duties.
(2) Audit Committee Composition and Meetings.
Audit Committee members shall meet the qualifications,
including the independence and experience requirements, of the
NASDAQ listing standards and the rules and regulations of the
SEC. The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be
independent nonexecutive directors, free from any relationship
that would interfere with the exercise of his or her
independent judgment. All members of the Committee shall have
a basic understanding of finance and accounting and be able to
read and understand fundamental financial statements, and at
least one member of the Committee shall have the necessary
accounting or related financial management expertise to meet
the requirements of a "financial expert" as defined by the
SEC.
Audit Committee members shall be appointed by the Board. If an
Audit Committee Chair is not designated by the Board, the
members of the Committee may designate a Chair by majority
vote of the Committee membership.
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The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee Chair
shall prepare and/or approve an agenda in advance of each
meeting. The Committee, at each meeting, shall meet with
management and the independent auditors to discuss any matters
that the Committee or each of these groups believe should be
discussed. The Committee should communicate with management,
the internal auditors and the independent auditors as, the
circumstances dictate, to review the Company's financial
statements and significant findings based upon the independent
auditors quarterly review procedures. In addition, the
Committee, at its discretion, shall meet, from time to time,
with the independent auditors without the presence of
management.
(3) Audit Committee Responsibilities and Duties.
Review Procedures
-----------------
(4) Review the adequacy of this Charter at least annually. Submit its
recommendations regarding changes to the Charter to the Board of
Directors for approval and have the document published at least
every three years in accordance with SEC regulations.
(5) Discuss the Company's annual audited financial statements with
management prior to filing or distribution, including significant
issues regarding accounting and auditing principles, practices
and judgments.
(6) In consultation with the management, the internal auditors and
the independent auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant
financial risk exposures and the steps management has taken to
monitor, control and report such exposures. Review significant
findings prepared by the independent auditors and the internal
auditors, together with management's responses.
(7) Discuss with management and the independent auditors significant
financial reporting issues and judgments made in connection with
the preparation of the Company's financial statements, including
any significant changes in the Company's selection or application
of accounting principles, any major issues as to the adequacy of
the Company's internal controls and any special steps adopted in
light of material control deficiencies.
(8) Discuss disclosures made to the Audit Committee by the Company's
CEO and CFO during their certification process for the Form 10-K
and Form 10-Q about any significant deficiencies in the design or
operation of internal controls or material weaknesses therein and
any fraud involving management or other employees who have a
significant role in the Company's internal controls.
Independent Auditors
--------------------
(9) The Audit Committee shall have the sole authority to appoint or
replace the independent auditors. The Committee shall be directly
responsible for the appointment, compensation, retention and
oversight of the work of the independent auditors (including
resolution of disagreements between management and the
independent auditors regarding financial reporting) for the
purpose of preparing or issuing an audit report or performing
other audit, review or attest services. The independent auditors
shall report directly to the Committee.
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(10) The Company shall provide for appropriate funding, as determined
by the Audit Committee, for payment of compensation to the
independent auditors for the purpose of rendering or issuing an
audit report or performing other audit, review or attest
services.
(11) On an annual basis, the Audit Committee should review and discuss
with the independent auditors: (a) all significant relationships
they have with the Company that could impair the auditors'
independence, (b) all critical accounting policies and practices
to be used, (c) all alternative treatments of financial
information within generally accepted accounting principles that
have been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the treatment
preferred by the independent auditor, and (d) any material
written communications between the independent auditor and
management, such as any management letter or schedule of
unadjusted differences.
(12) The Audit Committee shall ensure its receipt from the independent
auditors of a formal written statement delineating all
relationships between the auditor and the company, consistent
with Independence Standards Board Standard 1.
(13) Review the independent auditors' audit plan - discuss scope,
staffing, locations, reliance upon management and general audit
approach.
(14) Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss those matters
required to be communicated to audit committees in accordance
with AICPA SAS 61 and those matters required to be communicated
to audit committees in accordance with SEC rules and regulations.
(15) Consider the independent auditors' judgments about the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.
(16) Pre-approve all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed
by the independent auditor, subject to applicable de minimis
exceptions for non-audit services.
Internal Auditors
-----------------
(17) Review the appointment and replacement of the internal auditor.
(18) Review the significant reports to management prepared by the
internal auditor and management's responses.
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(19) Discuss with the independent auditor and management the internal
audit department responsibilities, budget and staffing and any
recommended changes in the planned scope of the internal audit
function.
Legal Compliance
----------------
(20) On at least an annual basis, review with the Company's counsel
any legal matters that could have a material impact on the
Company's financial statements and with management any reports or
inquiries received from regulators or governmental agencies.
Other Audit Committee Responsibilities
--------------------------------------
(21) Cause to be prepared the report to shareholders that is required
by the Securities and Exchange Commission. The report should be
included in the Company's annual proxy statement.
(22) Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
(23) Review and approval or ratification of transactions with related
persons.
(24) Perform any other activities consistent with this Charter, the
Company's by-laws and governing law, as the Committee or the
Board deems necessary or appropriate.
(25) Maintain minutes of meetings and periodically report to the Board
of Directors on significant results of the foregoing activities.
IV. Limitation of Audit Committee's Role.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the independent auditors.
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