SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential; for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMCON Distributing Company
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
/1/ Title of each class of securities to which transaction applies:
/2/ Aggregate number of securities to which transaction applies:
/3/ Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
/4/ Proposed maximum aggregate value of transaction:
/5/ Total fee paid:
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2)and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number or
the Form or Schedule and the date of its filing.
/1/ Amount Previously Paid:
/2/ Form, Schedule or Registration Statement No.:
/3/ Filing Party:
/4/ Date Filed:
AMCON DISTRIBUTING COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 13, 2003
The Annual Meeting of Stockholders of AMCON Distributing Company (the
"Company") will be held at LaSalle Bank, 135 South LaSalle Street, 43rd
Floor, Chicago, IL 60603 on Thursday, March 13, 2003, at 10:00 a.m., Central
Standard Time, for the following purposes:
(1) To elect two directors for terms ending in 2006.
(2) To ratify the appointment of Deloitte & Touche LLP as independent
auditor for the Company for the fiscal year ending September 26,
2003.
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Enclosed herewith is a Proxy Statement setting forth information with respect
to the election of directors and the ratification of the appointment of the
independent auditors of the Company.
Only stockholders holding shares of Common Stock of record at the close of
business on January 20, 2003 will be entitled to notice of, and to vote at,
the meeting.
Stockholders, whether or not they expect to be present at the meeting, are
requested to sign and date the enclosed proxy which is solicited on behalf of
the Board of Directors and return it promptly in the envelope enclosed for
that purpose. Any person giving a proxy has the power to revoke it at any
time, and stockholders who are present at the meeting may withdraw their
proxies and vote in person.
By Order of the Board of Directors
/s/ Michael D. James
-----------------------------------
Michael D. James, Secretary
Omaha, Nebraska
January 24, 2003
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER SOLICITATION FOR PROXIES TO ENSURE A QUORUM AT THE ANNUAL MEETING.
AMCON Distributing Company
7405 Irvington Road
Omaha, Nebraska 68122
---------------------------
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
of
COMMON STOCK
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders of AMCON Distributing
Company (the "Company") to be held on March 13, 2003 at the time and place
and for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. The principal executive offices of the Company are at 7405
Irvington Road, Omaha, Nebraska 68122. This Proxy Statement and the proxy
cards are first being mailed to stockholders on or about February 10, 2003.
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company and is revocable at any time before it is exercised by written
notice of termination given to the Secretary of the Company or by filing a
later-dated proxy with him. Furthermore, stockholders who are present at the
Annual Meeting may withdraw their proxies and vote in person. All shares of
the Company's Common Stock represented by properly executed and unrevoked
proxies will be voted by the Board of Directors of the Company in accordance
with the directions given therein. Where no instructions are indicated,
proxies will be voted "FOR" each of the proposals set forth in this Proxy
Statement for consideration at the Annual Meeting. In addition, the
directors believe outstanding shares held by executive officers and directors
of the Company will be voted "FOR" each such proposal. Such shares represent
approximately 37.9% of the total shares outstanding as of January 20, 2003.
Shares of Common Stock entitled to vote and represented by properly executed,
returned and unrevoked proxies will be considered present at the meeting for
purposes of determining a quorum, including shares with respect to which
votes are withheld, abstentions are cast, or there are broker nonvotes.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
THEREOF BY PRINCIPAL STOCKHOLDERS,
DIRECTORS AND OFFICERS
Only holders of Common Stock of record at the close of business on January
20, 2003 (the "Record Date") will be entitled to vote at the Annual Meeting.
At the Record Date, there were 3,168,961 shares of Common Stock which were
issued and outstanding. Each share of Common Stock is entitled to one vote
upon each matter to be voted on at the Annual Meeting. Stockholders do not
have the right to cumulate votes in the election of directors.
The following table sets forth, as of the Record Date, the beneficial
ownership of the Company's Common Stock by each director and each nominee for
director, by each of the executive officers named in the Summary Compensation
Table, by all present executive officers and directors of the Company as a
group and by each other person believed by the Company to beneficially own
more than 5% of the Company's Common Stock as of January 20, 2003.
Number of
Shares Percent
Beneficially of
Name Owned Class
------------------------ ------------ -------
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
William F. Wright, Director, Chairman of the Board 571,758 /1/ 18.00
Kathleen M. Evans, Director, President 185,036 /2/ 5.78
Michael D. James, Chief Financial Officer,
Secretary and Treasurer 16,760 /3/ *
Eric J. Hinkefent, President of Health Food
Associates, Inc. and Chamberlin Natural Foods, Inc. 3,300 /4/ *
J. Tony Howard, Director 177,446 /5/ 5.65
Allen D. Petersen, Director 259,238 /6/ 8.28
Timothy R. Pestotnik, Director 240,298 /7/ 7.70
William R. Hoppner, Director 101,265 /8/ 3.24
Stanley Mayer, Director 5,000 /9/ *
Raymond F. Bentele, Director 5,000 /10/ *
All executive officers and directors
as a group (10 persons) 1,338,003 40.49
2
OTHER STOCKHOLDERS
------------------
Wendy M. Wright /11/ 328,252 10.36
Ane Patterson /12/ 160,784 5.07
-------------------------------
* Less than 1% of class.
/1/ Includes 61,750 shares of Common Stock held by AMCON Corporation, over
which Mr. Wright has voting and dispositive powers. Also includes options to
purchase 6,600 shares of Common Stock at an exercise price of $9.00 per share
which may be exercised currently.
/2/ Includes options to purchase 38,500 shares of Common Stock at an average
exercise price of $3.41 per share which may be exercised currently.
/3/ Includes options to purchase 13,460 shares of Common Stock at an average
exercise price of $4.77 per share which may be exercised currently. Mr.
James also holds unvested options to acquire 6,340 shares of common stock at
an average exercise price of $6.75 per share.
/4/ Consists of options to purchase 3,300 shares of Common Stock at an
exercise price of $7.61 per share which may be exercised currently. Mr.
Hinkefent also holds unvested options to acquire 2,200 shares of common stock
at an exercise price of $7.61 per share.
/5/ Includes options to purchase 29,700 shares of Common Stock at an average
exercise price of $3.68 per share which may be exercised currently.
/6/ Includes 227,098 shares of Common Stock held by the Lifeboat Foundation,
over which Mr. Petersen shares voting power as a director, 11,440 shares held
by the Draupnir Trust, over which Mr. Petersen has sole voting power as sole
trustee. Also includes options to purchase 18,700 shares of Common Stock at
an average exercise price of $4.30 per share which may be exercised
currently.
/7/ Includes 227,098 shares of Common Sock held by the Lifeboat Foundation,
over which Mr. Pestotnik shares voting power as a director, and options to
purchase 7,700 shares of Common Stock at an average exercise price of $6.72
per share which may be exercised currently.
/8/ Includes options to purchase 7,700 shares of Common Stock at an average
exercise price of $6.72 per share which may be exercised currently.
/9/ Consists of options to purchase 5,000 shares of Common Stock at an
exercise price of $4.48 per share which may be exercised currently.
/10/ Consists of options to purchase 5,000 shares of Common Stock at an
exercise price of $4.50 per share which may be exercised currently.
/11/ 3535 Lebon Drive, San Diego, California 92122.
/12/ 3055 St. Thomas Drive, Missoula, Montana 59803.
3
ELECTION OF DIRECTORS
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has nominated Kathleen M. Evans and Timothy R.
Pestotnik to serve three-year terms as directors. Ms. Evans and Mr.
Pestotnik have each expressed an intention to serve, if elected, and the
Board of Directors knows of no reason why either of them might be unavailable
to serve. If Ms. Evans or Mr. Pestotnik is unable to serve, the shares
represented by all valid proxies will be voted for the election of such
substitute nominee as the Board of Directors may recommend. There are no
arrangements or understandings between Ms. Evans or Mr. Pestotnik and any
other person pursuant to which they were selected as nominees. The election
of a director requires the affirmative vote of a plurality of the shares
present in person or represented by proxy at the Annual Meeting and entitled
to vote. Consequently, votes withheld and broker nonvotes with respect to
the election of directors will have no impact on the election of directors.
Proxies submitted pursuant to this solicitation will be voted, unless
specified otherwise, for the election of Ms. Evans and Mr. Pestotnik. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
OF MS. EVANS AND MR. PESTOTNIK.
The table below sets forth certain information regarding the directors of the
Company. All members of, and nominees to, the Board of Directors have held
the positions with the companies (or their predecessors) set forth under
"Principal Occupation" for at least five years, unless otherwise indicated.
Principal Director Term To
Name Age Occupation Since Expire
------------------ --- ------------------------- -------- -------
NOMINEES
Kathleen M. Evans 55 President of the Company 1986 2003
Timothy R. Pestotnik 42 Attorney, Partner in the law
firm Luce, Forward, Hamilton
& Scripps, LLP 1998 2003
DIRECTORS CONTINUING IN OFFICE
William F. Wright 60 Chairman of the Board /1/ 1986 2004
William R. Hoppner 52 Attorney, Of Counsel to the
law firm Rehm and Bennett
P.C., Consultant 1994 /2/ 2004
Stanley Mayer 57 Consultant 2002 /3/ 2004
J. Tony Howard 58 President of Nebraska
Distributing Company 1986 2005
Allen D. Petersen 61 Chairman of Draupnir LLP,
Former Chairman and Chief
Executive Officer of American
Tool Companies, Inc. /4/ 1993 2005
4
Raymond F. Bentele 66 Retired, Former President
and Chief Executive Officer
of Mallincrodt, Inc. 2002 /5/ 2005
Information regarding other executive officers of the Company is found in the
Company's Form 10-K, which is available upon request.
---------------------------
/1/ Mr. Wright is also a director of Gold Banc Corporation, Inc., a public
bank holding company.
/2/ Mr. Hoppner resigned from the Board of Directors in October 1997 to
pursue political office and was reappointed to the Board of Directors in
December 1998.
/3/ Mr. Mayer was appointed to the Board of Directors in March 2002. He is
currently a financial, growth and strategic consultant. Mr. Mayer served as
Chief Financial Officer for Donruss Playoff from 2001 to 2002 and as Vice
President of Southern Union Company from 1998 through 2001.
/4/ Mr. Petersen became Chairman of Draupnir LLC in June 2002. For over 10
years prior to that time, Mr. Petersen was Chairman and Chief Executive
Officer of American Tool Companies, Inc. Mr. Petersen is also a director of
Gold Banc Corporation, Inc., a public bank holding company.
/5/ Mr. Bentele was appointed to the Board of Directors in May 2002. He
served as President and Chief Executive Officer of Mallincrodt, Inc. from
1981 until his retirement in 1992. He also serves as a director of Kellwood
Company, IMC Global, Inc. and Leggett & Platt, Inc.
The Board of Directors conducts its business through meetings of the Board
and actions taken by written consent in lieu of meetings and by the actions
of its committees. During the fiscal year ended September 27, 2002, the
Board of Directors held 6 meetings. All directors attended at least 75% of
the meetings of the Board of Directors and of the committees of the Board of
Directors on which they served during fiscal 2002.
The Board of Directors has established and assigned certain responsibilities
to an Audit Committee and a Compensation Committee. The Company does not
have a standing nominating committee. Nominations for directors are made by
the entire Board of Directors.
AUDIT COMMITTEE. The functions performed by the Audit Committee include
reviewing periodically with independent auditors the performance of the
services for which they are engaged, including reviewing the scope of the
annual audit and its results, reviewing with management and the auditors the
adequacy of the Company's internal accounting controls, reviewing with
management and the auditors the financial results prior to the filing of
quarterly and annual reports, and reviewing fees charged by the Company's
independent auditors. The Audit Committee is composed of Directors Mayer,
Pestotnik and Petersen. The Audit Committee held 9 meetings during fiscal
2002.
5
COMPENSATION COMMITTEE. The Compensation Committee reviews and approves
compensation policy, changes in salary levels, bonus payments and awards
pursuant to the Company's management incentive plans for executive officers
and outside directors. The Compensation Committee also administers the
Company's 1994 Stock Option Plan. The Compensation Committee consists of
Directors Hoppner and Howard. The Compensation Committee held no meetings
during fiscal 2002, but held 3 meetings subsequent to fiscal year end.
COMPENSATION OF DIRECTORS
Prior to January 1, 2003, directors who were not employees of the Company
were paid a fee of $20,000 per year plus $500 for each board meeting
(including committee meetings) attended in person or by teleconference.
Beginning January 1, 2003, directors who are not employees of the Company
will be paid according to the following annual scale with no payment of
meeting fees:
Audit Committee - Chair $40,000
Audit Committee - Member $35,000
Outside Director Committee - Chair $35,000
All Other Outside Directors $30,000
In addition, all directors are reimbursed for out-of-pocket expenses related
to attending board and committee meetings. These non-employee directors
generally receive awards of nonqualified stock options which entitle them to
purchase shares of the Company's common stock at an exercise price equal to
the fair market value of the stock on the date of grant. Option grants to
non-employee directors are not issued under the Company's 1994 Stock Option
Plan. Such grants are recommended on an annual basis by the Chairman and
President, subject to approval by the Board of Directors. During fiscal
2002, stock options to purchase 5,000 shares of common stock were granted to
each of Mr. Mayer and Mr. Bentele, respectively.
6
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information regarding the annual and long-term
compensation awarded to, earned by or paid by the Company to its Chairman and
the other three highest paid executive officers of the Company ("Named
Officers") for services rendered during fiscal 2002, 2001, and 2000. No
other executive officers of the Company earned salary and bonus in fiscal
2002 in excess of the disclosure threshold established by federal securities
laws.
Summary Compensation Table
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
/1/ /2/ /3/ /4/
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
------------ ---- ------- ------- ------------ ---------- ------------ ------- -------------
William F. Wright, 2002 393,700 40,000 - - - - 9,935
Chairman 2001 378,560 113,568 - - - - 9,048
2000 364,000 - - - - - 12,371
Kathleen M. Evans, 2002 309,340 155,000 - - - - 8.463
President 2001 297,440 90,000 - - - - 10,657
2000 286,000 286,000 - - - - 9,491
Michael D. James, 2002 155,000 25,000 - - - - 7,333
Secretary, 2001 145,000 25,000 - - - - 6,612
Treasurer and 2000 130,000 30,000 - - - - 6,538
Chief Financial
Officer
Eric J. Hinkefent, 2002 102,700 16,000 - - - - 4,045
President of Health 2001 100,000 - - - - - 2,240
Food Associates, 2000 100,000 - - - - - 1,923
Inc. and Chamberlin
Natural Foods, Inc.
--------------------------
/1/ No disclosure is required in this column pursuant to applicable
Securities and Exchange Commission Regulations, as the aggregate value of
items covered by this column does not exceed the lesser of $50,000 or 10% of
the annual salary and bonus shown for each respective executive officer
named.
/2/ The Company does not have a long-term incentive plan as defined in Item
402 of Regulation S-K under the Securities Exchange Act of 1934, as amended.
/3/ The amount for fiscal 2002 consists of contributions to the Company's
Profit Sharing Plan of $7,333, $7,333, $7,333 and $4,045 for Mr. Wright, Ms.
Evans, Mr. James and Mr. Hinkefent, respectively, and the value of life
insurance of $2,602 and $1,130 for Mr. Wright and Ms. Evans respectively.
7
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No options were granted during fiscal 2002 to the Named Officers listed in
the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
During fiscal 2002, Mr. Wright exercised 44,000 stock options at an exercise
price of $2.88 per share. The following table sets forth certain information
concerning the number of unexercised options and the value of unexercised
options at the end of fiscal 2002 for the Named Officers. All options have
been adjusted to reflect the special 10% stock dividend paid in February
2000.
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs at
Shares Options/SARs at Fiscal Year
Acquired Fiscal Year End(#) End($) /1/
On Value Exercisable/ Exercisable/
Name Exercise(#) Realized ($) Unexercisable Unexercisable
----------------- ----------- ------------ ------------------ ---------------
William F. Wright 44,000 126,500 6,600/ 0 0/ 0
Kathleen M. Evans -0- -0- 38,500/ 0 86,670/ 0
Michael D. James -0- -0- 14,120/ 6,880 24,456/ 4,045
Eric J. Hinkefent -0- -0- 3,300/ 2,200 0/ 0
---------------------
/1/ Based on the difference between the closing sale price of the Company's
common stock on September 27, 2002 and the exercise price of the options.
8
EQUITY COMPENSATION PLAN INFORMATION
The following equity compensation plan information summarizes plans and
securities approved and not approved by security holders as of September 27,
2002:
(a) (b) (c)
Number of securities
Number of securities remaining available
to be issued upon Weighted-average for future issuance
exercise of outstanding exercise price of under equity compensation
options, warrants outstanding options, plans (excluding securities
and rights warrants and rights reflected in column (a)
----------------------- -------------------- -----------------------------
Equity compensation plans
approved by security
holders /1/ 215,950 $ 5.09 273,880
Equity compensation plans
not approved by security
holders /2/ 78,800 $ 4.54 -
----------------------- -------------------- -----------------------------
Total.................. 294,750 $ 5.07 273,880
======================= ==================== =============================
/1/ The Company's 1994 Stock Option Plan.
/2/ Represents stock options to purchase 73,800 shares of common stock issued
to non-employee directors as described in "Compensation of Directors" and
stock options to purchase 5,000 shares of common stock issued to an employee
pursuant to an individual compensation arrangement.
LONG-TERM INCENTIVE PLANS AND OTHER MATTERS
The Company does not maintain a long-term incentive plan or pension plan (as
defined in Item 402 of SEC Regulation S-K) for the Named Officers and has not
repriced any options or SARs for any Named Officer during the last fiscal
year.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with William F. Wright,
the Chairman of the Board, and Kathleen M. Evans, President of the Company.
Each such agreement has a term expiring on December 31, 2003 and is
automatically extended each December 31 for one additional year unless either
the Company or the executive delivers a notice of non-extension at least 90
days prior to the scheduled automatic renewal date. Each agreement provides
for the payment of a base salary in each year during the term thereof and
provides that the executive shall be eligible to receive a bonus based upon
performance in an amount determined by the Compensation Committee of the
Board. Should the Board elect to terminate the agreements upon such
executive's disability or death, such executive or his or her personal
representative shall be entitled to receive the executive's base salary for a
period of six months following the termination. Should the Board elect to
terminate the agreements for a reason other than serious misconduct (as
9
defined in the agreements), such executive shall be entitled to receive a
severance package equal to such executive's current base salary plus his or
her previous year's bonus. Each executive will also be eligible to
participate in the Company's 1994 Stock Option Plan and in other employee
benefit plans maintained by the Company, including health and life insurance
plans. Each agreement contains provisions under which the executive has
agreed to maintain the confidentiality of information concerning the Company
and its affairs and a covenant not to compete with the Company for a period
of one year after such executive's employment with the Company terminates.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
THIS REPORT IS NOT DEEMED TO BE "SOLICITING MATERIAL" OR TO BE "FILED" WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR SUBJECT TO THE SEC'S
PROXY RULES OR TO THE LIABILITIES OF SECTION 18 OF THE SECURITIES EXCHANGE
ACT OF 1934 (THE "1934 ACT"), AND THIS REPORT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY PRIOR OR SUBSEQUENT FILINGS BY THE COMPANY
UNDER THE SECURITIES ACT OF 1933 OR THE 1934 ACT.
EXECUTIVE OFFICER COMPENSATION. The Company's Compensation Committee (the
"Committee") consists only of directors who are not officers or employees of
the Company. The Committee endeavors to establish total compensation packages
for each executive officer that fairly reflects the value of that executive
officer's services to the Company and that will permit the Company to attract
and retain high quality individuals in its key executive positions, taking
into consideration both the prevailing competitive job market and the current
size and expected growth of the Company.
Executive officer compensation contains three principal components: (i) a
base salary, (ii) a cash bonus and (iii) grants of options to purchase Common
Stock under the Company's 1994 Stock Option Plan. Mr. Wright's and Ms.
Evans' base salaries are set forth in their employment agreements and are
subject to annual increases as recommended by the Committee. The base
salaries of other officers are determined as a function of their prior base
salaries and the Committee's view of base salary levels for executive
officers with comparable positions and responsibilities in other companies
and are not a function of any specific performance criteria. The Committee
periodically compares base salaries paid to the Company's executive officers
with those paid by other public companies engaged in similar industries and
that generate revenues in the same range as the Company. These companies are
not necessarily the same companies that are included in the peer group index
(Standard & Poors 600 Food Distributors Index) used in the Performance Graph
included in this Proxy Statement. In general, the Committee determined that
the base salaries paid to the Company's executive officers fell within the
median range of base salaries paid by such comparable companies.
The Committee has adopted an executive compensation plan which established
performance goals and criteria relating to the amounts of cash bonuses paid
to its executive officers in future years. Stock option awards will
continue to be determined on an annual basis. The bonus portion of Mr.
Wright's, Ms. Evans' and Mr. Hinkefent's compensation is paid based upon the
performance goals established by the Compensation Committee and approved by
10
the Board of Directors. In addition to bonuses paid in accordance with the
executive compensation plan, the Compensation Committee may award additional
bonus amounts on a discretionary basis if the Committee deems it to be
appropriate.
The bonus portion of other executive officer's compensation is paid on a
discretionary basis based upon the Committee's assessment of the executive's
individual performance and the overall performance of the Company during the
most recently completed fiscal year with respect to stockholder value, stock
price, sales growth and net income. In general, it has been the Company's
practice to award cash bonuses to the executive officers with respect to a
particular fiscal year in amounts consistent with cash bonuses awarded in
prior fiscal years as long as the Company achieves stock price, sales and net
income levels specified in the Company's budget for such fiscal year.
Because ownership of the Company's Common Stock serves to align the economic
interests of its executive officers with those of its stockholders, executive
officers who, in the opinion of the Committee, contribute to the growth,
development and financial success of the Company may be awarded options to
purchase Common Stock. Any grant of options to purchase Common Stock must be
made with an exercise price no less than the closing sale price of the Common
Stock on the date of grant. Therefore, the compensation value of these stock
options is directly related to the long-term performance of the Company as
measured by its future return to stockholders. The amount of stock option
awards granted to executive officers are also determined on a discretionary
basis by the Committee considering the same criteria used to award cash
bonuses.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE. The current tax
law imposes an annual, individual limit of $1 million on the deductibility of
the Company's compensation payments to the Chairman and to the four most
highly compensated executive officers other than the Chairman. Specified
compensation is excluded for this purpose, including performance-based
compensation, provided that certain conditions are satisfied. The Committee
has determined to preserve, to the maximum extent practicable, the
deductibility of all compensation payments to the Company's executive
officers.
COMPENSATION OF CHAIRMAN. Mr. Wright's base salary is set by his employment
agreement and is subject to annual increases as recommended by the Committee.
It is the view of the Committee, based upon its periodic review of base
salaries paid to chief executive officers of similarly situated companies,
that Mr. Wright's base salary is reasonable and within the median range paid
by such other companies. Based on the performance criteria set forth in the
executive compensation plan, Mr. Wright was awarded a cash bonus equal to 10%
of his base salary (or $40,000) for fiscal 2002. No stock option grants were
awarded.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. There are no
compensation committee interlocks and no insider participation in
compensation decisions that are required to be reported under the rules and
regulations of the Securities Exchange Act of 1934.
William R. Hoppner
J. Tony Howard
11
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Prior to February 25, 1994, the Company was a subsidiary of AMCON
Corporation, which owned 87.5% of the issued and outstanding shares of the
Company's Common Stock. AMCON Corporation's principal asset is a subsidiary
corporation that is engaged in the beer distribution business in eastern
Nebraska. William F. Wright, Kathleen M. Evans, J. Tony Howard and Allen D.
Petersen are officers, directors or stockholders of AMCON Corporation. AMCON
Corporation engages in certain transactions with the Company, including the
provision of offices and administrative services to the Company. The cost of
the shared facilities are apportioned between them based upon their
respective usages thereof and on terms no less favorable than would otherwise
be available from unaffiliated parties. The Company was charged $60,000,
$60,000, and $60,000 by AMCON Corporation during fiscal 2002, 2001, and 2000,
respectively, as consideration for such services, which is included in the
Company's selling, general and administrative expenses for those years.
The Company contracted with William R. Hoppner, one of its outside directors,
for consulting services in connection with its retail health food operations
during fiscal year 2002. The amount paid for consulting services during
fiscal 2002 was $90,000, plus reimbursement of expenses. Mr. Hoppner is
currently providing consulting services to the Company on a month-by-month
basis and receives a fee of $7,500 per month.
Effective October 1, 2001, the president of the Company's former wholesale
health food distribution business was terminated and the Company entered into
a four-year consulting agreement with him at the rate of $104,000 per year.
The total amount to be paid under the consulting agreement approximates the
amount of the Company's obligation under its employment agreement with the
former president. The amount paid for consulting services during fiscal 2002
was $104,000.
REPORT OF THE AUDIT COMMITTEE
THIS REPORT IS NOT DEEMED TO BE "SOLICITING MATERIAL" OR TO BE "FILED" WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR SUBJECT TO THE SEC'S
PROXY RULES OR TO THE LIABILITIES OF SECTION 18 OF THE SECURITIES EXCHANGE
ACT OF 1934 (THE "1934 ACT"), AND THIS REPORT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY PRIOR OR SUBSEQUENT FILINGS BY THE COMPANY
UNDER THE SECURITIES ACT OF 1933 OR THE 1934 ACT.
The Audit Committee operates under a written charter and is comprised of
Timothy R. Pestotnik, Allen D. Petersen and Stanley Mayer, each of whom was
an independent director of the Company under the rules adopted by the
American Stock Exchange (the "AMEX Rules") during fiscal 2002.
The Company's management is responsible for the preparation of the Company's
financial statements and for maintaining an adequate system of internal
controls and processes for that purpose. Deloitte & Touche LLP ("D&T") acts
as the Company's independent auditors and they are responsible for conducting
an independent audit of the Company's annual financial statements in
accordance with auditing standards generally accepted in the United States of
America and issuing a report on the results of their audit. The Audit
Committee is responsible for providing independent, objective oversight of
both of these processes.
12
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended September 27, 2002 with management of the
Company and with representatives of D&T. As a result of these discussions,
the Audit Committee believes that the Company maintains an effective system
of accounting controls that allows it to prepare financial statements that
fairly present the Company's financial position and results of its
operations. Our discussions with D&T also included the matters required by
the Statement on Auditing Standards No. 61 (Communications with Audit
Committees).
In addition, the Audit Committee reviewed the independence of D&T. We
received disclosures and a letter from D&T regarding its independence as
required by Independence Standard Board Standard No. 1 and discussed this
information with D&T.
Based on the foregoing, the Audit Committee recommended to the full Board of
Directors that the audited financial statements of the Company for the year
ended September 27, 2002 be included in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission.
Stanley Mayer
Timothy R. Pestotnik
Allen D. Petersen
COMPANY PERFORMANCE
THE GRAPH IS NOT DEEMED TO BE "SOLICITING MATERIAL" OR TO BE "FILED" WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR SUBJECT TO THE SEC'S PROXY
RULES OR TO THE LIABILITIES OF SECTION 18 OF THE SECURITIES EXCHANGE ACT OF
1934 (THE "1934 ACT"), AND THE GRAPH SHALL NOT BE DEEMED TO BE INCORPORATED
BY REFERENCE INTO ANY PRIOR OR SUBSEQUENT FILING BY THE COMPANY UNDER THE
SECURITIES ACT OF 1933 OR THE 1934 ACT.
The following graph and table set forth certain information comparing the
cumulative total return from a $100 investment in the Company and in the
stocks making up the American Stock Exchange Composite Total Return Index and
the Standard & Poors 600 Food Distributors Index on September 26, 1997
through September 27, 2002 (the end of the Company's fiscal 2002). The
Company changed its comparative industry index from the S&P Distributors
(Food and Health) 500 Index used in the prior year to the S&P 600 Food
Distributors Index used this year. No comparative information is contained
for the S&P Distributors (Food and Health) 500 Index because it was
discontinued by Standard & Poor's.
[GRAPH OMITTED]
13
9/26/97 9/25/98 9/24/99 9/29/00 9/28/01 9/27/02
------- ------- ------- ------- ------- -------
AMCON Distributing Company 100 188.46 240.38 165.54 136.00 161.23
American Stock Exchange
Total Return Index 100 93.74 120.92 148.97 108.19 100.88
S&P 600 Food Distributors Index 100 67.23 57.26 75.06 142.18 94.47
RATIFICATION OF APPOINTMENT OF AUDITOR
Deloitte & Touche LLP ("D&T") has been appointed by the Board of Directors as
auditors for the Company and its subsidiaries for fiscal 2003. This
appointment is being presented to the stockholders for ratification. The
ratification of the appointment of auditor requires the affirmative vote of
the holders of a majority of the shares present in person or represented by
proxy at the Annual Meeting and entitled to vote. Abstentions and broker
nonvotes will not be considered shares entitled to vote with respect to
ratification of the appointment and will not be counted as votes for or
against the ratification.
On September 4, 2001, the Company's Board of Directors, upon recommendation
from the Company's Audit Committee, approved a change in the Company's
independent accountants for the fiscal year ended September 28, 2001 from
PricewaterhouseCoopers LLP to D&T. The change was due to the closure of the
PricewaterhouseCoopers offices in Omaha and Lincoln, Nebraska. The reports
of PricewaterhouseCoopers for the fiscal years ended September 29, 2000 and
September 24, 1999 contained no adverse opinion, disclaimer of opinion or
qualification or modification as to uncertainty, audit scope or accounting
principles. During the fiscal years ended September 29, 2000 and September
24, 1999, and the interim period from September 30, 2000 through September 4,
2001, there were no disagreements between the Company and
PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers,
would have caused it to make reference to the subject matter of the
disagreement in connection with its reports on the financial statements for
such years. No reportable event as described in paragraph (a) (1) (v) of
Item 304 of Regulation S-K has occurred within the Company's fiscal years
ended September 29, 2000 and September 24, 1999, or the period from September
30, 2000 through September 4, 2001.
The Company did not consult with D&T during the fiscal years ended September
29, 2000 and September 24, 1999, or during the interim period from September
30, 2000 through September 4, 2001, on any matter which was the subject of
any disagreement or any reportable event as defined in Regulation S-K Item
304 (a) (1) (iv) and Regulation S-K Item 304 (a) (1) (v), respectively, or on
the application of accounting principles to a specified transaction, either
14
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, relating to which either a written report
was provided to the Company or oral advice was provided that D&T concluded
was an important factor considered by the Company in reaching a decision as
to any accounting, auditing, or financial reporting issue.
AUDIT FEES
D&T billed the Company a total $110,000 in fees for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended September 27, 2002 and to review the Company's financial
statements included in the Company's Quarterly Reports on Form 10-Q filed
with the SEC during that year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
D&T did not perform any professional services for the Company during the
fiscal year ended September 27, 2002, either directly or indirectly, in
connection with the operation, or supervising the operation, of the Company's
information system or managing the Company's local area network, or designing
or implementing a hardware or software system that aggregates source date
underlying the Company's financial statements or that generates information
that is significant to the Company's financial statements taken as a whole.
Accordingly, no fees were paid by the Company to D&T during fiscal 2002 for
these types of services.
ALL OTHER FEES
D&T billed the Company $42,185 for services rendered to the Company, other
than the services described above under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees," for the fiscal year
ended September 27, 2002, including audit related services of $12,680 and
non-audit services of $29,505. Audit related services generally include fees
for the audits of the Company's employee benefit plans and fees incurred in
connection with acquisitions and compliance with the Sarbanes-Oxley Act.
The Audit Committee has determined that the provision of non-audit services
listed above by D&T does not adversely affect their independence in providing
audit services.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
AUDITORS FOR FISCAL 2003.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will be provided an opportunity to make a statement and to
respond to appropriate inquiries from stockholders.
SUBMISSION OF STOCKHOLDER PROPOSALS
Pursuant to the Company's Bylaws, stockholder proposals submitted for
presentation at the Annual Meeting must be received by the Secretary of the
Company at its home office no later than February 17, 2003. Such proposals
should set forth (i) a brief description of the business desired to be
15
brought before the annual meeting and the reason for conducting such business
at the annual meeting, (ii) the name and address of the stockholder proposing
such business, (iii) the number of shares of the Company's Common Stock
beneficially owned by such stockholder and (iv) any material interest of such
stockholder in such business. Pursuant to the Company's Bylaws, nominations
for directors may be submitted by stockholders by delivery of such
nominations in writing to the Secretary of the Company by February 17, 2003.
Only stockholders of record as of the Record Date are entitled to bring
business before the Annual Meeting or make nominations for directors.
In order to be included in the Company's proxy statement relating to its next
annual meeting (i.e. 2004), stockholder proposals must be submitted by
October 13, 2003 to the Secretary of the Company at its home office. The
inclusion of any such proposal in such proxy material shall be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of
1934, as amended.
OTHER MATTERS
Management does not intend to bring before the Annual Meeting any matters
other than those disclosed in the Notice of Annual Meeting of Stockholders,
and it does not know of any business which persons, other than the
management, intend to present at the meeting. The enclosed proxy for the
Annual Meeting confers discretionary authority on the Board of Directors to
vote on any matter proposed by shareholders for consideration at the Annual
Meeting if the Company did not receive written notice of the matter on or
before December 31, 2002.
The Company will bear the cost of soliciting proxies. To the extent
necessary, proxies may be solicited by directors, officers and employees of
the Company in person, by telephone or through other forms of communication,
but such persons will not receive any additional compensation for such
solicitation. The Company will reimburse brokerage firms, banks and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of the Company's shares.
In addition to solicitation by mail, the Company will supply banks, brokers,
dealers and other custodian nominees and fiduciaries with proxy materials to
enable them to send a copy of such materials by mail to each beneficial owner
of shares of the Company's Common Stock which they hold of record and will,
upon request, reimburse them for their reasonable expenses in so doing.
The Company's Annual Report, including financial statements, is being mailed,
together with this Proxy Statement, to all stockholders entitled to vote at
the Annual Meeting. However, such Annual Report is not to be considered part
of this proxy solicitation material. IN ADDITION, ANY STOCKHOLDER WHO WISHES
TO RECEIVE A COPY OF THE FORM 10-K FILED BY THE COMPANY WITH THE SECURITIES
AND EXCHANGE COMMISSION MAY OBTAIN A COPY WITHOUT CHARGE BY WRITING TO THE
COMPANY. Requests should be directed to Mr. Michael D. James at the
Company's principal executive office.
By Order of the Board of Directors
/s/ Michael D. James
----------------------------------
Michael D. James, Secretary
Omaha, Nebraska
January 24, 2003
16
REVOCABLE PROXY
AMCON DISTRIBUTING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMCON
DISTRIBUTING COMPANY FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON THURSDAY, MARCH 13, 2003 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby authorizes the Board of Directors of AMCON
Distributing Company (the "Company"), or any successors in their respective
positions, as proxy, with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held
at LaSalle Bank, 135 South LaSalle Street, 43rd Floor, Chicago, IL 60603, on
Thursday, March 13, 2003, at 10:00 a.m., Central Standard Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes
that the undersigned would be entitled to cast, if then personally present,
in accordance with the instructions below and on the reverse hereof.
1. ELECTION OF DIRECTORS.
/ / FOR the nominees listed below for the term to expire in 2006
Kathleen M. Evans Timothy R. Pestotnik
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark "FOR" and cross out such nominee's name.)
/ / WITHHOLD AUTHORITY to vote for all nominees listed above
2. AUDITORS. Ratification of the appointment of Deloitte & Touche LLP
as independent auditors for fiscal 2003.
/ / FOR / / AGAINST / / ABSTAIN
3. To vote, in its discretion, upon any other business that may properly
come before the Annual Meeting or any adjournment thereof.
Management is not aware of any other matters which should come before
the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ELECTION OF THE BOARD OF DIRECTORS' NOMINEES FOR DIRECTORS
AND FOR THE RATIFICATION OF THE APPOINTMENT OF AUDITORS.
(continued and to be signed on the reverse hereof)
This proxy is revocable and the undersigned may revoke it at any time prior
to the Annual Meeting by giving written notice of such revocation to the
Secretary of the Company. Should the undersigned be present and want to vote
in person at the Annual Meeting, or at any adjournment thereof, the
undersigned may revoke this proxy by giving written notice of such revocation
to the Secretary of the Company on a form provided at the meeting. The
undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Stockholders of the Company called for March 13, 2003, the Proxy Statement
for the Annual Meeting and the Company's Annual Report for fiscal year 2002
prior to the signing of this proxy.
Dated: , 2003.
----------------------
--------------------------------
(Signature)
--------------------------------
(Signature if held jointly)
Please sign exactly as name appears on
this proxy. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give your full title. If a
corporation, please sign in full
corporate name by authorized officer.
If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.