DEFA14A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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Dean Foods Company

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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FOCUS
Annual Meeting Voting Considerations

Compensation Related Matters
•
Dean Foods is soliciting your advisory vote on our executive compensation program
•
ISS recommends voting “FOR”
approval of our executive compensation program while Glass
Lewis recommends “AGAINST”
approval of our program
•
Dean Foods is committed to a pay-for-performance philosophy
•
The Company provided significant stockholder value during 2012 and 2013
–
Completed the initial public offering of WhiteWave in October 2012
–
Entered into an agreement relating to the sale of the Morningstar division and completed the sale in January
2013
–
Strong performance across all segments of the Company’s business
–
Generated free cash flow of approximately $156 million in 2012
–
Repaid approximately $1.4 billion of debt in 2012
–
DF
stock
price
increased
approximately
47.4%
during
2012
and
has
increased
approximately
15.4%
in
2013
(as 
of May 9, 2013)
•
2012
Increase
(47.4%)
-
Closing
Price
on12/30/11:
$11.20;
Closing
Price
on
12/31/2012:
$16.51
•
2013 Increase (15.4%) –
Closing Price on 12/31/12: $16.51; Closing Price on 5/9/13: $19.06
–
Announced
spin-off
of
a
portion
of
remaining
interest
in
WhiteWave
effective
as
of
May
23,
2013

Compensation Related Matters
•
Dean Foods has implemented corporate governance best practices
–
Change in Control Agreements (“CIC Agreements”)
•
Eliminated tax gross-ups from future CIC agreements in 2011
•
Eliminated
the
“modified
single
trigger”
provision
in
CIC
agreements
in
May
2013
so
all
CIC
agreements have “double triggers”
•
Gregg Tanner, Chief Executive Officer, and other executive officers agreed to amend
existing CIC agreements to eliminate tax gross-ups and to move to “double triggers”
–
Gregg
Tanner
voluntarily
removed
himself
as
a
participant
in
the
Company’s
executive retention plan for the performance period ended December 31, 2013
–
The Board has adopted stock ownership guidelines for executive officers
–
Tom Davis was appointed as an independent Chairman of the Board in May
2013

Compensation Related Matters
•
ISS recommends voting “FOR”
approval of our executive compensation program
–
ISS originally recommended voting against approval of our executive compensation program but
reversed its recommendation after the Company eliminated the “modified single trigger”
provisions
from
its
CIC
agreements
and
Mr.
Tanner
entered
into
a
new
CIC
agreement
–
ISS notes that pay-for-performance is a “low”
concern
•
Glass Lewis recommends voting “AGAINST”
approval of our executive
compensation
program
and
the
election
of
Tom
Davis
as
a
director
because
he
serves on the Compensation Committee
–
We
strongly
disagree
with
Glass
Lewis’
analysis,
which
criticizes
the
Company’s
pay-for-
performance
–
Glass
Lewis
states
that
the
Company
“performed
worse
than
its
peers”
despite
an
approximate
47.4% increase in the Company’s stock price during 2012.  The Company believes that any
“pay-for-performance”
analysis
that
criticizes an approximate 47.4% increase in stock price and
associated increase in TSR (Total Shareholder Return) is fundamentally flawed.

Accelerated Vesting of Equity Awards
•
A stockholder proposal urges the Board to adopt a policy prohibiting the full
acceleration of equity awards upon a change in control of the Company
•
ISS
and
Glass
Lewis
each
recommend
voting
“FOR”
this
proposal
•
We strongly disagree with ISS’
and Glass Lewis’
recommendations and the Board
recommends voting “AGAINST”
this proposal
–
Accelerated vesting allows the management team to remain objective and focused on protecting
stockholder value in a change in control transaction, removes some of the uncertainty for
executives, including potential job loss, from such a transaction, and helps management avoid
potential conflicts of interest and distractions that could exist in a change in control transaction
–
None of the companies in our peer groups have adopted the proposed policy so we would be at
a significant disadvantage in recruiting and retaining key executives
–
The proposed policy disproportionately punishes senior executives as they may not have the
opportunity to realize value from their outstanding incentive equity awards

Equity Retention Guidelines
•
A stockholder proposal seeks to urge the Compensation Committee to adopt a
policy requiring the retention by senior executives of at least 75% of shares
received through compensation programs until retirement or termination
•
Glass
Lewis
recommends
voting
“AGAINST”
this
proposal
noting
that
such
a
policy “may hinder the ability of the compensation committee to attract and retain
executive talent”
and that the Company’s stock ownership guidelines “sufficiently
address the requests of this proposal”
•
ISS recommends voting “FOR”
this proposal
•
We strongly disagree with ISS recommendation and the Board recommends
voting “AGAINST”
this proposal
–
The Board has adopted minimum stock ownership guidelines for executive officers
–
Current compensation programs provide balance between ensuring that management’s efforts
are consistent with long-term objectives of stockholders while permitting executives to prudently
manage their own financial affairs
–
The
proposed
policy
is
uncommon
among
our
peers
and
would
impair
our
ability
to
recruit
and
retain key executives

Independent Chair
•
A
stockholder
proposal
seeks
to
urge
the
Board
to
adopt
a
policy
requiring
an
independent Chairman of the Board
•
On May 1, 2013, Mr. Tom Davis, an independent director, was appointed as the
Chairman of the Board
•
ISS recommends voting “AGAINST”
this proposal
–
Originally,
ISS
recommended
voting
“FOR”
such
proposal
but
reversed
the
recommendation
after the Board appointed an independent chairman on May 1st
•
Glass
Lewis
recommends
voting
“FOR”
this
proposal
and
has
not
updated
their
analysis of this proposal to account for the appointment of Mr. Davis as the
independent Chairman of the Board on May 1st