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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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.
LANCASTER COLONY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(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: ...........................................................
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[LANCASTER COLONY LOGO]
37 WEST BROAD STREET
COLUMBUS, OHIO 43215
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 17, 2003
The annual meeting of shareholders of Lancaster Colony Corporation (the
"Corporation") will be held at 11:00 a.m., Eastern Standard Time, November 17,
2003, in the Executive Meeting Room of the Hyatt on Capitol Square, 75 East
State Street, Columbus, Ohio 43215.
The meeting will be held for the following purposes:
1. To elect three directors, each for a term which expires in 2006.
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
By action of the Board of Directors, only persons who are holders of record
of shares of the Corporation at the close of business on September 19, 2003 will
be entitled to notice of and to vote at the meeting.
If you do not expect to attend the meeting, please sign, date and return
the enclosed proxy. A self-addressed envelope which requires no postage is
enclosed for your convenience in returning the proxy. Its prompt return would be
appreciated. The giving of the proxy will not affect your right to vote in
person should you find it convenient to attend the meeting.
JOHN B. GERLACH, JR.
Chairman of the Board,
Chief Executive Officer
and President
October 15, 2003
LANCASTER COLONY CORPORATION
37 WEST BROAD STREET
COLUMBUS, OHIO 43215
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Lancaster Colony
Corporation (the "Corporation") in connection with the solicitation by the Board
of Directors of the Corporation of proxies to be used in voting at the annual
meeting of shareholders to be held November 17, 2003, in the Executive Meeting
Room of the Hyatt on Capitol Square, 75 East State Street, Columbus, Ohio 43215,
at 11:00 a.m., Eastern Standard Time (the "Annual Meeting"). The enclosed proxy,
if completed and forwarded to the Corporation, will be voted in accordance with
the instructions contained therein. The proposals referred to therein are
described in this Proxy Statement.
The proxy may be revoked by the person giving it any time before it is
exercised. Such revocation, to be effective, must be communicated to the
Secretary or Assistant Secretary of the Corporation. The presence of a
shareholder at the Annual Meeting will not revoke the proxy unless specific
notice thereof is given.
The Corporation will bear the cost of solicitation of proxies, including
any charges and expenses of brokerage firms and others for forwarding
solicitation material to the beneficial owners of stock. In addition to the use
of the mails, proxies may be solicited by personal interview, by telephone or
through the efforts of officers and regular employees of the Corporation.
The Board of Directors has fixed the close of business on September 19,
2003 as the record date for the determination of shareholders entitled to
receive notice and to vote at the Annual Meeting or any adjournment thereof. At
that date the Corporation had outstanding and entitled to vote 35,757,347 shares
of Common Stock, each share entitling the holder to one vote. The Corporation
has no other class of stock outstanding. Under Ohio law, except for the election
of directors, abstentions and broker non-votes will have the same effect as
votes against any proposal. Abstentions and broker non-votes will have no effect
on the election of directors since, under Ohio law, the nominees for election as
directors at the Annual Meeting who receive the greatest number of votes shall
be elected. This Proxy Statement is first being mailed to shareholders on or
about October 15, 2003.
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors of the Corporation currently consists of nine
members and is divided into three classes. The members of the three classes are
elected to serve for staggered terms of three years. Pursuant to Section 2.04 of
the Code of Regulations, the number of directors constituting each class will,
as nearly as practicable, be equal. The Board of Directors of the Corporation
currently consists of three classes of three members each.
The names and ages of the "Nominees" and the "Continuing Directors," their
principal occupations during the past five years and certain other information
together with their beneficial ownership of the Corporation's Common Stock as of
August 29, 2003, are listed below. As of August 29, 2003, the Corporation had
outstanding and entitled to vote 35,767,347 shares of Common Stock.
2
NOMINEES FOR TERM TO EXPIRE IN 2006
DIRECTOR SHARES OWNED AT PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE SINCE AUGUST 29, 2003 CLASS
----------------------------- --- -------- --------------- ----------
Kerrii B. Anderson.............................................. 46 1997 2,750 *
Executive Vice President, Chief Financial Officer
and Director of Wendy's International, Inc.;
Senior Vice President and Chief Financial Officer of
M/I Schottenstein Homes, Inc. (homebuilders)
from 1993 to 2000
James B. Bachmann; Retired...................................... 60 - - *
Managing Partner of the Columbus, Ohio office of
Ernst & Young LLP from 1992 to June 30, 2003(1)
Robert S. Hamilton; Retired..................................... 75 1985 13,223 *
Vice Chairman Emeritus of Liqui-Box Corporation
(plastic packaging manufacturer) from April 2000 to
October 2000; Vice Chairman of Liqui-Box Corporation
from 1989 to April 2000(2)
-------------
* Less than 1%
(1) Mr. Bachmann is also a director of Abercrombie & Fitch Co. and Nationwide
Mutual Insurance Company.
(2) See footnote 2 under "Continuing Directors" which explanation applies to
Mr. Hamilton.
Mr. Bachmann is standing for election to the Board seat previously held by
Morris S. Halpern, who chose not to stand for re-election after providing many
years of meritorious service to the Corporation. All the nominees have indicated
a willingness to stand for election and to serve if elected. It is intended that
the shares represented by the enclosed proxy will be voted for the election of
the above named nominees. Although it is anticipated that each nominee will be
available to serve as a director, should any nominee be unable to serve, the
proxies will be voted by the proxy holders in their discretion for another
person designated by the Board of Directors.
CONTINUING DIRECTORS
DIRECTOR TERM SHARES OWNED AT PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE SINCE EXPIRES AUGUST 29, 2003 CLASS
----------------------------- --- -------- ------- --------------- ----------
John L. Boylan.......................................... 48 1998 2004 45,741 *
Treasurer, Vice President and
Chief Financial Officer of the Corporation(1)(3)
Robert L. Fox........................................... 54 1991 2005 1,064,759 2.98%
Investment Executive for Advest, Inc.
(stock brokerage firm) since 1978(2)(4)(9)
John B. Gerlach, Jr. ................................... 49 1985 2005 8,084,299 22.59%
Chairman of the Board, Chief Executive Officer
and President of the Corporation(1)(2)(3)(4)(5)(6)(7)(8)
Edward H. Jennings...................................... 66 1990 2005 799 *
President Emeritus at The Ohio State University;
formerly Interim President of The Ohio State
University from July 1, 2002 to September 30, 2002;
Professor of Finance at The Ohio State University
from 1990 to April 2002 and President of The Ohio
State University from 1981 to 1990
3
CONTINUING DIRECTORS (CONTINUED)
DIRECTOR TERM SHARES OWNED AT PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE SINCE EXPIRES AUGUST 29, 2003 CLASS
----------------------------- --- -------- ------- --------------- ----------
Henry M. O'Neill, Jr. .................................. 68 1976 2004 19,651 *
Chairman and Chief Executive Officer
of AGT International, Inc. (voice
response systems) since 1988;
Chairman of the Board of Evergreen
Quality Catering (mobile caterer) since 1987
Zuheir Sofia............................................ 59 1998 2004 4,405 *
Chairman of Sofia & Company, Inc.
(investment-banking firm); President of the
Stanbery Group, LLC (investment advisory firm);
President, Chief Operating Officer, Treasurer and
Director of Huntington Bancshares Incorporated
from 1986 to 1998(10)
All directors and executive officers
as a group (10 Persons)(1)(3)........................ 8,687,621 24.23%
-------------
* Less than 1%
(1) Holdings include shares held by the Employee Stock Ownership Plan (the
"ESOP") allocated to the accounts of Lancaster Colony Corporation
employees. Employees have the right to direct the voting of the shares held
by the ESOP.
(2) Holdings include shares owned by spouses, minor children and shares held in
custodianship or as trustee. The following persons disclaim beneficial
ownership in such holdings with respect to the number of shares indicated:
Mr. Fox, 813,927; Mr. Gerlach, 7,207,074; and Mr. Hamilton, 4,024.
(3) Holdings include shares which could be acquired within 60 days upon the
exercise of stock options as follows: Mr. Gerlach - 25,000 shares, Mr.
Boylan - 38,800 shares, and all directors and executive officers as a group
- 82,486 shares.
(4) Mr. Gerlach, a trustee of Gerlach Foundation, Inc., and Mr. Fox, a trustee
of Fox Foundation, Inc., share voting and investment power with their
respective foundations, both of which are private charitable foundations.
Gerlach Foundation, Inc. holds 393,826 shares and Fox Foundation, Inc.
holds 62,569 shares. These shares are included in the above table. Gerlach
Foundation, Inc., Fox Foundation, Inc. and The FG Foundation, a supporting
foundation (of which Mr. Fox and Mr. Gerlach are the trustees) of a public
charitable foundation, together control an additional 620,122 shares held
by Lehrs, Inc. The shares held by Lehrs, Inc. are also included in the
total number of shares held by Mr. Gerlach and Mr. Fox. The trustees each
has disclaimed beneficial ownership of any of these shares in footnote 2.
(5) Mr. Gerlach, by virtue of his stock ownership and positions with the
Corporation, may be deemed a "control person" of the Corporation.
(6) Mr. Gerlach is trustee and his mother, Dareth A. Gerlach, is special
trustee of the John B. Gerlach Trust. This trust presently holds 5,875,032
shares of Common Stock of the Corporation. These shares are included in the
total number of shares held by Mr. Gerlach in the above table. Mr. Gerlach
has disclaimed beneficial ownership of these shares in footnote 2.
(7) Includes 348,000 shares held by a family limited partnership and 12,500
shares held by a corporation which is the general partner of the family
limited partnership. Mr. Gerlach shares indirect beneficial ownership of
these shares.
(8) Mr. Gerlach is also a director of Huntington Bancshares Incorporated.
4
(9) Includes 16,825 shares of the Common Stock of the Corporation which are
held by a trust of which Mr. Fox is the trustee. Mr. Fox has sole voting
and dispositive power with respect to these shares.
(10) Mr. Sofia is also a director of Dominion Homes, Inc.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has established an audit committee (the "Audit
Committee") currently consisting of Messrs. Hamilton, Jennings and Sofia and Ms.
Anderson. Ms. Anderson serves as Chairperson of the Audit Committee. Each member
of the Audit Committee is an independent director as required by the listing
standards of The Nasdaq Stock Market. The Audit Committee is governed by a
charter, a copy of which was included as an exhibit to the 2001 Proxy Statement,
and is charged with the responsibility of reviewing financial information (both
external and internal) about the Corporation and its subsidiaries so as to
assure (i) that the overall audit coverage of the Corporation and its
subsidiaries is satisfactory and appropriate to protect the shareholders from
undue risks and (ii) that an adequate system of internal financial control has
been implemented throughout the Corporation and is being effectively followed.
The Audit Committee held three meetings during the fiscal year ended June 30,
2003 ("fiscal 2003"). In addition to these meetings, the Audit Committee also
held teleconferences before each public release of the Corporation's earnings
during fiscal 2003.
The Board of Directors has established a compensation committee (the
"Compensation Committee") currently consisting of Messrs. Fox, Hamilton,
Jennings and O'Neill as its members. Mr. Jennings serves as Chairperson of the
Compensation Committee. The powers and duties of the Compensation Committee are
to consider and formulate recommendations to the Board of Directors with respect
to all aspects of compensation to be paid to the Chief Executive Officer of the
Corporation, to undertake such evaluations and make such reports as are required
by the applicable rules of the Securities and Exchange Commission and to perform
and exercise such other duties and powers as shall from time to time be
designated by action of the Board of Directors. The Compensation Committee held
two meetings during fiscal 2003.
The Board of Directors has established a nominating committee (the
"Nominating Committee") consisting of Messrs. Fox, O'Neill and Sofia as its
members. Mr. Sofia serves as Chairperson of the Nominating Committee. The
purpose of the Nominating Committee is to identify and make nominations to the
Board of Directors of candidates for election as director of the Corporation.
Additionally, the Nominating Committee is to review and recommend to the Board
of Directors possible revisions to the Corporation's existing Code of Ethical
Business Conduct and establish procedures for determination as to the
Corporation's enforcement of such code. The Nominating Committee held two
meetings in fiscal 2003. The Nominating Committee will consider nominees
recommended by shareholders, but because the Nominating Committee has only been
formed recently and pending the adoption by the Securities and Exchange
Commission of final disclosure rules regarding the operations of nominating
committees, it has not yet established procedures that shareholders must follow
to make such a recommendation. Section 2.03 of the Code of Regulations requires
that shareholders must give advance notice and furnish certain information to
the Corporation in order to nominate a person as a director.
In addition to the committee meetings previously mentioned, the Board of
Directors held a total of four meetings during fiscal 2003. Each director
attended at least 75% of the aggregate of all meetings of the Board of Directors
and the committees on which they served during fiscal 2003.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Corporation's knowledge, based solely on its review of copies of
forms filed with the Securities and Exchange Commission, all filing requirements
applicable to the officers, directors and beneficial owners of more than 10% of
the outstanding Common Stock under Section 16 (a) of the Securities Exchange Act
of 1934, as amended, were complied with during the fiscal year ended June 30,
2003.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Corporation or any of its
subsidiaries receive an annual retainer fee of $22,000 plus $1,500 for each
meeting of the Board or committee of the Board attended. Directors who serve as
chairpersons of the Audit Committee, Compensation Committee and Nominating
Committee receive an additional annual retainer fee of $7,500, $3,000 and
$3,000, respectively.
5
The Corporation has a consulting agreement with Mr. Halpern, a current
director who is not standing for re-election. The consulting agreement provides
that Mr. Halpern agrees to perform advisory and consulting services for an
annual fee of $50,000 per year. Mr. Halpern's compensation as a director is also
included in this annual fee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following individuals have beneficial ownership, directly or
indirectly, of more than five percent of the outstanding Common Stock of the
Corporation:
NATURE OF
BENEFICIAL AMOUNT PERCENT OF
NAME AND ADDRESS OWNERSHIP OWNED OWNERSHIP
---------------- ---------- ------ ----------
John B. Gerlach, Jr. .............................................. Direct and 8,084,299(1)(2) 22.59%
Lancaster Colony Corporation Indirect
37 West Broad Street
Columbus, Ohio 43215
Dareth A. Gerlach.................................................. Direct and 5,932,785(1) 16.59%
c/o Lancaster Colony Corporation Indirect
37 West Broad Street
Columbus, Ohio 43215
-------------
(1) Includes 5,875,032 shares of Common Stock of the Corporation which are held
by the John B. Gerlach Trust, of which Mr. Gerlach is trustee and of which
Dareth A. Gerlach is special trustee with sole voting power with respect to
the shares. See footnote 6 under "Continuing Directors."
(2) See footnotes 1, 2, 3, 4, 5 and 7 under "Continuing Directors" which
explanations apply to Mr. Gerlach.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned during the periods
indicated by those persons who were the Chief Executive Officer and the three
other most highly compensated executive officers of the Corporation whose
compensation during fiscal 2003 is required to be reported:
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
FISCAL ---------------------- ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(2)
--------------------------- ------ ---------- --------- ------------ ---------------
John B. Gerlach, Jr. ...................... 2003 $710,000 $2,840
Chairman of the Board, 2002 710,000 2,840
Chief Executive Officer and President 2001 710,000 25,000 2,640
Larry G. Noble............................. 2003 $264,000 $749,100 $2,992
Vice President(3)(5) 2002 264,000 729,000 2,992
2001 261,958 682,800 15,000 1,056
John L. Boylan............................. 2003 $265,000 $125,000 15,000 $2,490
Treasurer, Vice President 2002 250,000 115,000 2,466
and Chief Financial Officer(4) 2001 241,500 108,000 15,000 3,809
Bruce L. Rosa.............................. 2003 $265,000 $125,000 15,000 $3,440
Vice President of Development(4) 2002 250,000 115,000 1,644
2001 241,500 108,000 15,000 1,288
-------------
(1) The named executive officers received certain perquisites in 2003, 2002 and
2001, the amount of which did not exceed the reportable threshold of the
lesser of $50,000 or 10% of any such officer's salary and bonus.
(2) Approximate amounts contributed or to be contributed on behalf of such
executive officer to the 401(k) Profit Sharing Plan and Trust.
(3) Bonus amounts listed for Mr. Noble were generally determined pursuant to a
formula involving the operating performance of the Specialty Foods segment
and are paid in the following fiscal year.
6
(4) The bonus amounts listed for Messrs. Boylan and Rosa were generally
determined pursuant to a formula involving the operating performance of the
Corporation for the corresponding fiscal years and are paid in the
succeeding fiscal year.
(5) Effective July 1, 2003, Mr. Noble resigned from his position as executive
officer of the Corporation, but remains an employee of the Specialty Foods
segment.
GRANTS OF STOCK OPTIONS
The following table sets forth information concerning individual grants of
stock options made during the 2003 fiscal year to each of the executive officers
named in the Summary Compensation Table. The Corporation has never granted stock
appreciation rights.
OPTIONS GRANTED IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR OPTION
GRANTED TO TERM(2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/Sh) DATE 5% 10%
---- ------------- ------------ ----------- ---------- -------- --------
John L. Boylan............... 15,000 4.2% $37.23 3/31/08 $157,000 $348,000
Bruce L. Rosa................ 15,000 4.2% $37.23 3/31/08 $157,000 $348,000
----------------
(1) Options were granted with an exercise price equal to the market price at
the grant date pursuant to the Corporation's 1995 Key Employee Stock Option
Plan. Such options are exercisable through March 31, 2008.
(2) The amounts reflected in this table are based upon certain assumed rates of
appreciation as specified by the Securities and Exchange Commission. Actual
realized values, if any, on exercise of the option will be dependent on the
actual appreciation in the price of the Common Stock of the Corporation
over the term of the option. There can be no assurances that the Potential
Realizable Values reflected in this table will be achieved.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to stock
options exercised during fiscal 2003 by each of the executive officers named in
the Summary Compensation Table and unexercised stock options held as of June 30,
2003 by such executive officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
VALUES OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT FISCAL
UNDERLYING FISCAL YEAR-END(#) YEAR-END(1)(2)
OPTIONS VALUE ------------------------- -------------------------
NAME EXERCISED (#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
John B. Gerlach, Jr. .... 25,000 $ 229,750 $ 0
Larry G. Noble........... 4,494 $ 75,769 8,988 $ 0 $ 147,763
John L. Boylan........... 38,800 3,700 $ 261,522 $ 42,791
Bruce L. Rosa............ 18,258 $ 285,077 18,686 5,556 $ 64,529 $ 64,255
-----------
(1) All values are shown pretax and are rounded to the nearest whole dollar.
(2) Based on the 2003 fiscal year-end closing price of $38.69 per share.
7
SEVERANCE AGREEMENT
Messrs. Boylan and Rosa are parties to agreements entitling them to
severance benefits equal to (i) full salary paid through the date of their
termination plus (ii) an amount equal to the lesser of (a) 100% of the highest
annual rate of salary and highest annual bonus paid to Messrs. Boylan and Rosa
during the three-year period prior to their respective dates of termination or
(b) twice their annual compensation (salary plus bonus) paid for the full fiscal
year immediately preceding the date of their termination, in the event that
within a period of one year after a "change of control" (as defined in the
agreements) their employment is terminated by the Corporation (other than for
cause) or by Messrs. Boylan or Rosa (if there has been any material adverse
change in the terms of their employment).
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors ("the Committee")
consists of four independent non-employee directors. It is the obligation of the
Committee under its present Charter to establish the compensation to be paid to
the Chief Executive Officer of the Corporation and to consult with and advise
the Chief Executive Officer with respect to the establishment by him of the
compensation of other executive officers. The Committee also reviews matters
relating to employee benefit plans and stock options and presents its
recommendations respecting these matters to the Board of Directors.
The compensation of the Chief Executive Officer for services rendered
through June 30, 2004 has been established by the Committee and adopted by the
Board of Directors upon the Committee's recommendation. The Committee's
recommendation was based upon an evaluation of the scope of his management
responsibilities, his execution of them, his accomplishment of significant
changes in management structure and the financial results attained under his
direction. In determining his compensation, the amounts paid to chief executive
officers of companies of like size in like markets were also considered. The
determination of such compensation was subjective, with no specific weight being
given to any particular factor. His compensation for fiscal 2003 was established
by the Committee according to the application of the same evaluation standards.
The Committee was advised by the Chief Executive Officer of the base fixed
compensation levels and proposed bonus formulae to be applied in setting the
compensation of senior management. It concurred that the levels of compensation
established were reasonable and appropriate and provided incentives which, if
realized, would produce operating results of value to the Corporation's
shareholders.
Edward H. Jennings, Chairperson
Robert L. Fox
Robert S. Hamilton
Henry M. O'Neill, Jr.
8
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
OF LANCASTER COLONY CORPORATION, THE S&P MIDCAP 400 INDEX
AND THE DOW JONES U.S. FOOD INDEX
The graph set forth below compares the five-year cumulative total return
from investing $100 on June 30, 1998 in each of the Corporation's Common Stock,
the S&P Midcap 400 Index and the Dow Jones U.S. Food Index.
[PERFORMANCE GRAPH INSERTED HERE]
CUMULATIVE TOTAL RETURN
------------------------------------------------------------------------------------------------
6/98 6/99 6/00 6/01 6/02 6/03
------------------------------------------------------------------------------------------------
Lancaster Colony Corporation 100.00 92.88 53.66 92.97 102.59 113.55
------------------------------------------------------------------------------------------------
S&P Midcap 400 100.00 117.18 137.08 149.24 142.20 141.18
------------------------------------------------------------------------------------------------
Dow Jones U.S. Food 100.00 86.35 79.14 77.40 92.01 90.01
------------------------------------------------------------------------------------------------
9
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Corporation's financial reporting process
on behalf of the Board of Directors and operates under a written charter
(Exhibit A to the 2001 Proxy Statement). The Audit Committee held three meetings
during fiscal 2003. In addition to these meetings, the Audit Committee also held
teleconferences before each public release of the Corporation's earnings during
fiscal 2003. The Audit Committee has reviewed and discussed the audited
consolidated financial statements for fiscal 2003 with both management and the
Corporation's independent auditors, Deloitte & Touche LLP. The discussions with
Deloitte & Touche LLP included matters required to be discussed by the Statement
on Auditing Standards No. 61 as amended. In addition, the Audit Committee
received from Deloitte & Touche LLP written independence disclosures and the
letter required by the Independence Standards Board Standard No. 1 and discussed
with Deloitte & Touche LLP its independence. Based on the review of the audited
consolidated financial statements and the discussions described above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Corporation's Annual Report on Form 10-K
for the year ended June 30, 2003 for filing with the Securities and Exchange
Commission.
Kerrii B. Anderson, Chairperson
Robert S. Hamilton
Edward H. Jennings
Zuheir Sofia
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has acted as independent certified public accountants
of the Corporation during the fiscal year ended June 30, 2003. Deloitte & Touche
LLP is expected to have a representative present at the Annual Meeting who may
make a statement, if desired, and will be available to answer appropriate
questions.
AUDIT AND RELATED FEES
The following table recaps fees billed by Deloitte & Touche LLP for the
fiscal years ended June 30, 2003 and 2002:
2003 2002
---------- ----------
Audit Fees...................................... $ 408,500 $ 355,000
Audit-Related Fees(1)........................... 21,200 38,000
Tax Fees(2)..................................... 33,700 17,000
All Other Fees(3)............................... - 76,000
---------- ----------
Total Fees................................. $ 463,400 $ 486,000
========== ==========
-------------
(1) Audit-related fees were for employee benefit plan audits, due diligence
services and performance of agreed-upon procedures.
(2) Tax fees were for services related to tax compliance, tax planning and tax
advice.
(3) All other fees were for services related to financial information systems
design.
The Audit Committee has considered whether the provisions for non-audit
services are compatible with maintaining the independence of Deloitte & Touche
LLP.
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation contracts with John Gerlach & Company, an accounting
partnership, to provide certain internal auditing, general accounting and tax
services of a type generally available from an independent accounting firm. A
brother-in-law of the Company's chief executive officer is a minority partner in
the firm. The fee paid to John Gerlach & Company for its services is measured by
the volume of work performed and is reviewed by the Audit Committee. The fees
incurred for services rendered for the fiscal year ended June 30, 2003 were
$425,300.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be in the Proxy Statement for the 2004
Annual Meeting of Shareholders must be received by the Corporation at its
principal executive offices no later than June 17, 2004. In addition, if a
shareholder fails to provide the Corporation notice of any shareholder proposal
on or before August 31, 2004, then the Corporation may vote in its discretion as
to the proposal all of the shares for which it has received proxies for the 2004
Annual Meeting of Shareholders.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business that will come before the Annual Meeting. Should any other matter
requiring the vote of the shareholders arise, the enclosed proxy confers upon
the proxy holders discretionary authority to vote the same in respect to the
resolution of such other matters as they, in their best judgment, believe to be
in the interest of the Corporation.
By Order of the Board of Directors
JOHN B. GERLACH, JR.
Chairman of the Board,
Chief Executive Officer
and President
October 15, 2003
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LANCASTER COLONY CORPORATION
Proxy for the Annual Meeting of Shareholders November 17, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert L. Fox, Henry M. O'Neill, Jr. and
Zuheir Sofia, or any of them, proxies of the undersigned, with power of
substitution, to vote all shares of stock of the Corporation which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held November 17, 2003, or at any and all
adjournments thereof, and to exercise all of the powers which the undersigned
would be entitled to exercise as a shareholder if personally present upon the
following matters:
(Continued and to be signed on the reverse side)
14475
ANNUAL MEETING OF SHAREHOLDERS OF
LANCASTER COLONY CORPORATION
November 17, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
________________________________________________________________________________
1. Election of Directors: For term expiring 2006 2. The transaction of all other matters as may properly
come before the meeting.
NOMINEES:
[ ] FOR ALL NOMINEES ( ) Kerrii B. Anderson
( ) James B. Bachmann
[ ] WITHHOLD AUTHORITY ( ) Robert S. Hamilton
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual
------------ nominee(s), mark "FOR ALL EXCEPT" and fill in
the circle next to each nominee you wish to
withhold, as shown here: (x)
__________________________________________________________________
__________________________________________________________________
To change the address on your account, please check the box
at right and indicate your new address in the address space [ ]
above. Please note that changes to the registered name(s)
on the account may not be submitted via this method.
__________________________________________________________________
Signature of Shareholder _______________________ Date: _______ Signature of Shareholder _______________________ Date: _______
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.