SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
April 28, 2006 (April 27, 2006)
Dean Foods Company
(Exact name of registrant as specified in charter)
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| Delaware
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1-12755
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75-2559681 |
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.) |
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2515 McKinney Avenue, Suite 1200
Dallas, TX
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75201 |
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(Zip Code) |
Registrant’s telephone number, including area code: (214) 303-3400
Not Applicable.
(Former name or former address, if changed since last report)
TABLE OF CONTENTS
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers.
On
April 27, 2006, we announced that Jack F. Callahan, will join Dean
Foods as Executive Vice President and Chief Financial Officer. Mr. Callahan was previously the
Senior Vice President of Corporate Strategy and Development at PepsiCo, Inc. He will
report directly to Gregg Engles, our Chairman of the Board and Chief Executive Officer.
Over the course of his 10 year tenure at PepsiCo, Mr. Callahan served in various
capacities including Senior Vice President of Investor Relations for PepsiCo, Chief
Financial Officer of Frito Lay International, and Vice President of Strategy and Planning
at Frito Lay North America. Mr. Callahan’s prior experience also includes key roles at
General Electric and McKinsey & Company.
We entered into an agreement with Mr. Callahan pursuant to which we will pay him a
pro-rated 2006 salary of $460,000, subject to annual increases beginning in 2007 at the
discretion of the Compensation Committee of our Board of Directors. He will receive a
one-time signing bonus of $100,000. Pursuant to our Executive Incentive Compensation
Plan, a copy of which was filed as Exhibit 10.6 to our 2005 Annual Report on Form 10-K, he will be eligible to earn an annual bonus with a target amount equal to 70% of his
base annual salary, subject to the achievement of certain earnings per share targets and
individual performance goals. His 2006 bonus will be pro-rated based on the period of
time he is employed at Dean Foods. Pursuant to the Executive Incentive Compensation
Plan, he will be eligible to earn up to 200% of his target bonus if the earnings per share
targets are exceeded.
At
or shortly after the beginning of his tenure he will be granted options to purchase
approximately 110,000 shares of our common stock at an exercise price equal to the
closing price of our common stock on the date preceding the grant. The options will vest
in equal installments over a period of three years, beginning on the first anniversary of
the date of grant, and will expire on the tenth anniversary of the date of grant. In addition,
Mr. Callahan will be granted approximately 17,000 restricted stock which will vest in
equal installments over a period of five years, beginning on the first anniversary of the
date of grant, or earlier if certain share performance targets are met, as well as
approximately 22,500 restricted stock which will vest in equal installments over a period
of three years, beginning on the first anniversary of the date of grant. The options and restricted shares will be granted without shareholder approval as an
“inducement grant,” as such term is defined by the New York Stock Exchange. He will be
eligible for certain other benefits provided to other executives at his level, such as
participation in our Deferred Compensation Plan, medical insurance plans, 401(K) plan
and Employee Stock Purchase Plan. He will receive certain relocation benefits related to
his move to Dallas and COBRA reimbursement until he becomes eligible to participate in
our health plans.
The agreement with Mr. Callahan also provides for certain severance benefits.
Specifically, in the event that his employment is terminated for any reason (other than by
us “for cause” or by him without “good reason” as
such terms are defined in the
agreement), he will be entitled to receive cash in an amount equal to two times the sum of
his base annual salary plus his target bonus for the year of termination.
We intend to enter into a Change in Control Agreement with Mr. Callahan, in
substantially the form that we filed as Exhibit 10.24 to our 2005 Annual Report on Form
10-K. Pursuant to that agreement, we will agree to provide Mr. Callahan with certain
benefits if, in connection with or within two years after a change in control of Dean
Foods Company, he is terminated by us without “cause” or he resigns
for “good reason”
as such terms are defined in the agreement. Such benefits would include a lump sum
of cash equal to three times his base annual salary plus his target bonus for the year of
termination. He also would be entitled to a pro-rated bonus for the portion of the year
served prior to his termination, plus the unvested balance of his 401(K) account, plus
three times the amount of the most recent company match into his 401(K) account. He
would be entitled to a gross-up for any applicable excise taxes. We also would continue
his health insurance benefits for two years after his termination and provide him certain
outplacement services. In addition, Mr. Callahan would have the right, at any time during
the 13th month after a change in control, to voluntarily terminate his or her employment
for any reason and receive the same benefits as if he had been
terminated by the Company
during the two years after a change in control as described above. All of his unvested
stock options and restricted shares, if any, would automatically vest upon a
change in control.
We also intend to enter into a Proprietary Information, Inventions and Non-Compete
Agreement with Mr. Callahan pursuant to which Mr. Callahan will acknowledge that
Dean Foods owns all intellectual property related to its business. Mr. Callahan also will
agree not to disclose any of our confidential information or compete with Dean Foods at
any time during his employment and for a period of two years following termination of
his employment.