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|
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Check the appropriate box:
|_| Preliminary Proxy Statement |_| Soliciting Material Under Rule
|_| Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
SUNOPTA INC.
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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|_| Fee paid previously with preliminary materials:
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|_| 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:
________________________________________________________________________________
SUNOPTA INC.
2838 Bovaird Drive West
Norval, Ontario, Canada
L0P 1K0
INFORMATION CIRCULAR and PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
THIS INFORMATION CIRCULAR AND PROXY STATEMENT ("Information Circular") IS
FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF SUNOPTA INC.
("the Company") OF PROXIES FOR USE at the Annual and Special Meeting ("the
Meeting") of Shareholders to be held on May 13, 2004 at 4:00 p.m. local time, in
the "Windsor Ballroom" at Le Royal Meridien King Edward Hotel, 37 King Street
East, Toronto, Ontario, Canada and at any adjournment thereof, for the purposes
set forth in the accompanying Notice of Annual and Special Meeting of
Shareholders.
The Company expects to mail this Information Circular and the accompanying form
of Proxy on or about April 16, 2004.
Any shareholder giving a Proxy may revoke it at any time before it is exercised.
A Proxy given pursuant to this solicitation may be revoked by instrument in
writing executed by the shareholder or his or her attorney duly authorized in
writing and deposited either at the corporate office of the Company at 2838
Bovaird Drive West, Norval, Ontario, Canada L0P 1K0, at any time prior to the
date of the meeting at which the proxy is to be used, or by delivering it prior
to a vote to the Chairman of the meeting on the day of the meeting or any
adjournment thereof.
The persons named in the form of Proxy are Directors and Officers of the Company
and will vote the shares in respect of which they are appointed Proxy holders in
accordance with the directions of the shareholder appointing them. IN THE
ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS AUDITORS, FOR THE
ADDITION OF THE CHANGE OF CONTROL PROVISION TO THE COMPANY'S STOCK OPTION PLANS
AND FOR THE ADDITION OF 1,500,000 SHARES TO THE 2002 STOCK OPTION PLAN.
If a shareholder appoints some person other than the persons named in the form
of Proxy to represent him or her, such person will vote the shares in respect of
which he or she is appointed proxy holder in accordance with the directions of
the shareholder appointing him or her. In the absence of such direction, such
person may vote such shares at his or her discretion.
The enclosed form of Proxy confers discretionary authority upon the persons
named therein with respect to amendments or variations to matters identified in
the Notice of Meeting, or other matters, which may properly come before the
Meeting. At the time of printing this Information Circular, the management of
the Company knows of no such amendments, variations or other matters to come
before the Meeting.
The Company will bear the cost of preparing, assembling and mailing all proxy
materials that may be sent to the Shareholders in connection with this
solicitation. In addition to the solicitation of proxies by use of the mails,
officers and regular employees of the Company may solicit proxies without
additional compensation, by telephone, fax or e-mail. The Company does not
expect to pay any additional compensation for the solicitation of proxies.
The Annual Report of the Company, which contains the Audited Consolidated
Financial Statements for the fiscal year ended December 31, 2003, accompanies
this Information Circular. Receipt at the Meeting of the Audited Consolidated
Financial Statements of the Company for the year ended December 31, 2003 and the
auditors' report thereon will not constitute approval or disapproval of any of
the matters referred to in such reports and statements.
Unless otherwise indicated, all dollar amounts herein are expressed in US
dollars.
VOTING SECURITIES
The Board of Directors has fixed March 31, 2004 as the record date for
determining shareholders entitled to Notice of the Meeting.
Shareholders of Common Shares of record on March 31, 2004 are entitled to one
vote for each share registered in the name of the shareholder on each matter
properly brought before the Meeting. As of March 31, 2004 there were 53,406,603
common shares issued and outstanding.
Item 1 - ELECTION OF DIRECTORS
Ten directors will be elected to serve until the next Annual Meeting or until
their successors are elected. There are no family relationships among the
Directors. The accompanying form of proxy will be voted for the election as
Director of the nominees listed below, unless the proxy contains contrary
instructions. Each of the nominees has consented to be named herein and to serve
as a Director. Management has no reason to believe that any of the nominees will
not be a candidate or will be unable to serve as a Director. However, in the
event that any of the nominees should become unable to serve as a Director, the
persons named in the accompanying form of proxy reserve the right to vote for
another person at their discretion. The Board of Directors of the Company has
been established at a minimum of five and a maximum of fifteen and presently
consists of ten directors. The following are Management's nominees:
a) Identification of Directors:
The following table shows certain information as of March 31, 2004 with respect
to the Company's nominees as Directors, all of whom are currently Directors:
===========================================================================================================
Year First
Elected
Name Director Position with
Directors: Age /Officer Company
-----------------------------------------------------------------------------------------------------------
Jeremy N. Kendall 64 1978 Chairman of the Board, CEO & Director
===========================================================================================================
Cyril A. Ing 71 1984 Secretary and Director
===========================================================================================================
Joseph Riz 56 1986 Director
===========================================================================================================
James Rifenbergh 73 1996 Director
===========================================================================================================
Allan Routh 53 1999 Director and President of the Grains & Soy Products Group
===========================================================================================================
Dennis Anderson 59 2000 Director
===========================================================================================================
Katrina Houde 44 2000 Director
===========================================================================================================
Camillo Lisio 50 2001 Director
===========================================================================================================
Stephen Bronfman (A) 40 2001 Director
===========================================================================================================
Robert Fetherstonhaugh (A) 48 2001 Director
===========================================================================================================
(A) Pursuant to a subscription agreement between the Company and Claridge and
the Claridge Group dated September 28, 2001, so long as a member of the Claridge
Group remains the beneficial owner of at least five percent (5%) of the
Company's issued and outstanding common shares, the Company will nominate for
election and recommend to its shareholders a person designated by Claridge to
serve on the Company's Board of Directors. For so long as the beneficial
holdings of Claridge shall be at least fifteen percent (15%) of the Company's
issued and outstanding common shares, the Company shall nominate a second
designee of Claridge. Claridge currently beneficially owns more than five
percent (5%) of the Company's issued and outstanding common shares. Messrs.
Bronfman and Fetherstonhaugh presently serve on the Company's Board of Directors
pursuant to this agreement.
b) Committees of the Board:
The Company presently has two Committees (1) Audit Committee; and (2) Corporate
Governance Committee (which also acts as the Compensation Committee, and in
effect, the Nominating Committee). The Company is not required to have an
Executive Committee. The Board has appointed individuals from its members to
serve on these Committees. The membership of these two Committees is composed
entirely of independent directors.
(c) Set forth below is a biographical description of each Director of the
Company:
Jeremy Kendall has served as a Director of the Company since September 1978. In
June 1983, he was elected Chairman of the Board and Chief Executive Officer of
the Company. He is Chairman of the Board of all of the Company's subsidiaries
except 1108176 Ontario Limited. He is also Chairman of Jemtec Inc. (6/91 to
present) and Easton Minerals Ltd. (1/95 to present). In the past 5 years, Mr.
Kendall has served on the following Boards of Directors: BI Inc. (9/81 to
11/00), and Wisper Inc. (6/95 to 3/02). Mr. Kendall is also a Director of a
number of private and charitable organizations.
2
Cyril Ing is a retired Professional Engineer and was elected a Director in
January 1984 and became an employee in August 1985. He was an independent
consultant specializing in engineering projects involving the combustion of
biomass from May of 1982 to August 1985. Mr. Ing retired from full time
employment in March 1990. For the 10 years prior to retirement he was President
of the Conat Group, a holding company, whose major subsidiary, Westair Systems
Inc., is a distributor and manufacturer of industrial dehumidification
equipment. In the past 5 years, Mr. Ing has served on the following Boards of
Directors: Wisper Inc. (11/99 to present), Jemtec Inc. (11/99 to present) and
Easton Minerals Ltd. (11/99 to present).
Joseph Riz was elected a Director of the Company in July 1986 and currently
serves as Chairman of the Company's Audit Committee and as a member of the
Corporate Governance Committee. From 1985 to present Mr. Riz has served as
Managing Director of Tricapital Management Ltd., a merchant banking and
financial advisory firm., Since 1989 Mr. Riz has served on the Board of
Directors of Telepanel Systems Inc, a manufacturer of electronic pricing
equipment for retail stores.
James Rifenbergh was elected to the Board of Directors in April 1996 and
currently serves on the Audit Committee. Mr. Rifenbergh is Past President and
Chairman and CEO of Brown Printing Company of Waseca, Minnesota, a large
printing company with plants throughout the United States. He is also a Past
Director of a number of other private companies and organizations. In the past 5
years, Mr. Rifenbergh has not served on any other reporting issuers.
Allan Routh was elected to the Board of Directors in September 1999. Mr. Routh
is President of the Company's Grains and Soy Products Group and prior to March
2003 was President and Chief Executive Officer of the SunRich Food Group, Inc.,
a wholly-owned subsidiary of the Company. Mr. Routh has been involved in the soy
industry and soy industry organizations since 1984. He is also a Director of
other private companies. In the past 5 years, Mr. Routh has not served on any
other reporting issuers Board of Directors.
Dennis Anderson was elected to the Board of Directors in September 2000. Mr.
Anderson was the Executive Vice President of the SunRich Food Group, Inc., a
wholly owned subsidiary of the Company prior to stepping down from day to day
operations in June 2002. Mr. Anderson was the owner of Northern Food and Dairy,
Inc. for five years prior to its acquisition by the Company. In the past 5
years, Mr. Anderson has not served on any other reporting issuers Board of
Directors.
Katrina Houde was elected to the Board of Directors in December 2000 and also
serves as a member of the Audit Committee. Ms. Houde has been an independent
consultant since March 2000. From January 1999 to March 2000, Ms. Houde was
President of Cuddy Food Products, a division of Cuddy International Corp., a
large international poultry company with 2,200 employees worldwide. Ms. Houde
was Chief Operating Officer of Cuddy International Corp. from January 1996 to
January 1999 and held progressively more senior positions with Cuddy since
joining them in September 1991. In the past 5 years, Ms. Houde has not served on
any other reporting issuers Board of Directors.
Camillo Lisio was elected to the Board of Directors in August 2001 and serves on
the Corporate Governance Committee as Chairman. Mr. Lisio is an independent
consultant and spent 18 years with Saputo Inc., a food company operating in the
dairy and grocery products sector, until his decision to pursue other business
and personal interests in April 2001. Mr. Lisio was President and Chief
Operating Officer of Saputo Inc. from April 1998 to April 2001. In the past 5
years Mr. Lisio served on reporting issuers Board of Directors of Saputo Inc.,
(March 1998 to April 2001) and Uniforet Inc, an integrated Forest products
company, (October 1998 to April 2001). Mr. Lisio has also served as a director
of Santa Cabrini Hospital, the International Dairy Foods Association and the
National Dairy Council of Canada.
Stephen Bronfman was elected to the Board of Director in October 2001. Mr.
Bronfman is Chairman of Claridge Inc., a privately held company with worldwide
investments. In the past five years Mr. Bronfman served on the Board of
Directors of The Seagram Company, Ltd. from November 1999 to December 2000 and
was Co-Chairman of the Executive Committee of the Montreal Expos Baseball Club,
a non reporting issuer. Mr. Bronfman also sits on the Board of Directors of The
David Suzuki Foundation; The Saidye Bronfman Centre for the Arts; The Samuel and
Saidye Bronfman Family Foundation; and The Summit School Foundation.
Robert Fetherstonhaugh was elected to the Board of Directors in December 2001
and serves on the Corporate Governance Committee. Mr. Fetherstonhaugh is a
Chartered Accountant and has been the President of Claridge Inc. since December
2002. Mr. Fetherstonhaugh joined Claridge Inc. in May 2001 as Executive Vice
President. Mr. Fetherstonhaugh has a broad business background both in North
America and internationally, previously serving as Deputy Chairman of Trader
Classified Media, an international publishing company from 1998 to 2001 and as a
partner at KPMG. He is also currently a Director of Trader Classified Media.
3
SECURITY OWNERSHIP OF CERTAIN OWNERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning share ownership of
all persons as known by the Company to own beneficially 5% or more of the
Company's outstanding Common Shares and all directors and officers of the
Company as a group as of March 31, 2004.
================================================================================
Name and Address Class of Amount of Percent
of Holder Share Ownership Ownership (1)
--------------------------------------------------------------------------------
Stephen R. Bronfman
c/o Johnny Thomas
Claridge Inc.
1170 Peel Street
Suite 800
Montreal, QC
H2B 2T5 (2) Common 4,250,906 8.0%
================================================================================
Charles Bronfman Trust
c/o Mr. John Harrison
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001 Common 4,240,906 7.8%
================================================================================
Fidelity Investments
One Federal Street E14B
Boston, MA
02109 Common 6,465,000 12.1%
================================================================================
All Directors and Executive Officers
As a group (thirteen) Common (3) 8,329,472 15.6%
================================================================================
(1) Percentage ownership is calculated based on total Common Shares
outstanding at March 31, 2004 of 53,406,603. This total does not include
warrants or options that have vested or have not yet vested.
(2) Record and beneficial holder. Mr. Bronfman as Chairman of Claridge Inc.
has voting and investment decision power.
(3) For details of shares owned by Executive Officers and Directors see Share
Ownership of Directors and Executive Officers below.
4
Share Ownership of Directors and Executive Officers as at March 31, 2004 is set
forth below:
========================================================================================================
Number of Shares Beneficially
Name Class of Owned/Number of Vested Options Percentage of
Directors: Shares (2) Class (1)
--------------------------------------------------------------------------------------------------------
Jeremy N. Kendall Common 732,817 / 16,000 1.38%
--------------------------------------------------------------------------------------------------------
Cyril A. Ing Common 65,085 / 27,500 0.17%
--------------------------------------------------------------------------------------------------------
Joseph Riz Common 33,600 /25,250 0.11%
--------------------------------------------------------------------------------------------------------
James Rifenbergh Common 382,948 / 1,750 0.71%
--------------------------------------------------------------------------------------------------------
Allan Routh Common 603,781 / 74,000 1.25%
--------------------------------------------------------------------------------------------------------
Dennis Anderson Common 2,181,335 / 8,000 4.04%
--------------------------------------------------------------------------------------------------------
Katrina Houde Common 6,000 / 17,760 0.04%
--------------------------------------------------------------------------------------------------------
Camillo Lisio Common 6,000 / 17,760 0.04%
--------------------------------------------------------------------------------------------------------
Stephen Bronfman Common 4,250,906 / 7,750 0.03%
--------------------------------------------------------------------------------------------------------
Robert Fetherstonhaugh Common 10,000 / 7,750 0.03%
--------------------------------------------------------------------------------------------------------
All Directors and Executive Officers as a Common 8,329,472 / 283,510 15.9%
group (thirteen)
========================================================================================================
(1) Percentage ownership is calculated based on 53,406,603 total common shares
outstanding at March 31, 2004, plus all common shares subject to options
currently exercisable, which at March 31, 2004 totaled 740,550 and of
which 203,500 are related to Directors and Officers noted above. The
remaining 537,050 are options vested to other officers and employees of
the Company. This calculation does not include options that have not
vested or warrants or underwriter options/warrants currently outstanding.
Therefore, the "Percentage of Class" column is based on 54,147,153 common
shares.
(2) The exercise price of vested options range from $1.06 to $9.90
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our Directors and
Executive Officers to file reports of holdings and transactions in the Company's
shares with the SEC and NASDAQ. Based on our records and other information, we
believe that in 2003 our Directors and Executive Officers met, on a timely
basis, all applicable SEC filing requirements.
EXECUTIVE COMPENSATION
The following tables set forth all remuneration paid by the Company and its
subsidiaries during the last three years ended December 31, 2003, 2002, and 2001
to its CEO and top four Executive Officers/Divisional Presidents earning in
excess of US$100,000:
5
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
==================================================================================================================================
Other Annual Restricted
Compensation Stock Option LTIP All Other
Name and Principal Occupation Year Salary Bonus (1) Awards SARs Pay-outs Compensation (2)
----------------------------------------------------------------------------------------------------------------------------------
Jeremy N. Kendall - CEO 2003 $254,516 $115,675 $13,829 -- -- -- $835,748
----------------------------------------------------------------------------------------------------------------------------------
2002 $176,391 $18,149 $11,173 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
2001 $167,332 $13,347 $14,001 -- -- -- $269,123
----------------------------------------------------------------------------------------------------------------------------------
Steven R. Bromley - Executive
Vice President & COO (3) 2003 $188,894 $50,061 $18,741 -- -- -- $87,140
----------------------------------------------------------------------------------------------------------------------------------
2002 $118,926 $6,992 $18,056 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
2001 $60,282 $6,236 $10,425 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
John Dietrich - Vice President &
CFO (4) 2003 $111,693 $22,542 $10,553 -- -- -- $37,592
----------------------------------------------------------------------------------------------------------------------------------
Allan Routh - Director and
President Grains & Soy Products
Group 2003 $149,538 $26,000 $2,408 -- -- -- $891,700
----------------------------------------------------------------------------------------------------------------------------------
2002 $130,000 - $2,906 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
2001 $116,923 $40,000 $5,370 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Arthur J. McEvily - President,
SunOpta Ingredients Group (5) 2003 $225,000 $85,600 $138 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
2002 $17,833 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
(1) Other Annual Compensation represents taxable benefits for automobile
personal use or reimbursement of costs, life insurance, retirement savings
contributions, and interest on short-term loans.
(2) All Other Compensation is the value received over exercise price of stock
options exercised.
(3) Mr. Steven Bromley joined the Company in June 2001 and therefore had no
remuneration from the Company in 2000.
(4) Mr. John Dietrich became an Executive Officer of the Company in 2003 on
his appointment to CFO.
(5) Mr. Arthur McEvily joined the Company in December 2002; therefore his
compensation for 2002 reflects only one month of compensation.
6
The following table contains information concerning individual grants of stock
options made during the last completed fiscal year, to the following Executive
Officers:
OPTION GRANTS IN PAST FISCAL YEAR TO EXECUTIVE OFFICERS
==========================================================================================================================
Potential Realizable Value at
% of Total Options Exercise on Assumed Annual rates of Stock
Options Granted to Employees base price Expiration Price Appreciation for Option
Name Granted (1) in Fiscal Year (US$/Share) Date term (2)
--------------------------------------------------------------------------------------------------------------------------
5% 10%
--------------------------------------------------------------------------------------------------------------------------
Steven R. Bromley 25,000 2.2% $9.11 09/29/08 $62,346 $139,043
-Executive Vice President
& COO
--------------------------------------------------------------------------------------------------------------------------
John Dietrich -Vice
President & CFO 15,000 1.3% $9.11 09/29/08 $37,408 $83,426
==========================================================================================================================
(1) 20% of options granted are exercisable immediately with the remainder
exercisable equally over the next four years on the anniversary of the
grant date.
(2) The potential realizable value is calculated based upon the term of the
option at its time of grant. It is calculated assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option, and that the option
is exercised and sold on the last day of its term for the appreciated
stock price.
Aggregate Option Exercises in 2003 and Year-End Option Values
The following table details certain information concerning exercises of stock
options by the named Executive Officers during fiscal year ended December 31,
2003 and the value of unexercised options at December 31, 2003:
DECEMBER 31, 2003 OPTION VALUES
========================================================================================================================
(a) (b) (c)
------------------------------------------------------------------------------------------------------------------------
Number of Unexercised Options at Value of Unexercised in the Money Options at
Name 12/31/03 Vested/Not Yet Vested 12/31/03 Vested/Not Yet Vested (1)
------------------------------------------------------------------------------------------------------------------------
Jeremy N. Kendall - CEO 16,000 / 24,000 $99,680 / $149,520
========================================================================================================================
Steven R. Bromley - Executive Vice
President & COO 51,000 / 79,000 $316,620 / $408,730
========================================================================================================================
John Dietrich - Vice President & CFO 29,000 / 41,000 $179,340 / $199,110
========================================================================================================================
Allan Routh - Director and President
of the Grains & Soy Products Group 74,000 / 46,000 $578,930 / $274,061
========================================================================================================================
========================================================================================================================
(1) These amounts represent the difference between the exercise price of the
stock options and the closing price of the Company's common shares on the
last trading day of the year on the NASDAQ Small Cap Market. On December
31, 2003, the closing price was U.S. $ 9.23.
7
Executive employment contracts
Mr. Jeremy Kendall, Chairman & CEO, entered into an employment contract with the
Company in October 2001 for a period through February 26, 2020. The contract
anticipates that on February 26, 2005, his 65th birthday, Mr. Kendall may elect
to relinquish the role of CEO and maintain being the Chairman of the Board,
subject to shareholder and Board approval, at a reduced level of compensation.
The contract provides for consulting fees to be paid on a sliding scale over
time until February 20, 2020 to Mr. Kendall or his spouse. These consulting fees
are to be paid even if Mr. Kendall retires fully, the Company no longer requires
his services or if Mr. Kendall passes away before February 26, 2020.
Mr Allan Routh, President of the Grains & Soy Products Group has an annual
employment contract of a minimum base salary of $100,000, renewable on a mutual
basis between Mr. Routh and the Company each August 1st.
Mr. Arthur McEvily, President of the Specialty Food Ingredients Group has an
employment contract including provisions for termination with or without cause.
None of the other executives listed in the Summary Compensation Table above have
employment contacts.
INDEBTEDNESS OF DIRECTORS/OFFICERS
Mr. Kendall, Chairman & CEO is indebted to the Company for $24,838 as at
December 31, 2003 and as at March 31, 2004. The original loan proceeds were
provided to Mr. Kendall for the purchase of a vehicle used by Mr. Kendall to
conduct the Company's business. The interest rate on this loan is 5%. The
highest balance during the year was $38,542.
COMPENSATION OF DIRECTORS
In addition to annual grants of options, Directors who are not Company employees
receive an annual retainer of CDN $7,500, a directors fee of CDN $1,500 for each
board meeting attended in person as well as CDN $500 for participating in
Committee meetings and telephone meetings. In addition, all Directors are
reimbursed for travel and administrative expenses to attend meetings and manage
their Board responsibilities. Each Committee Chairman also receives $2,500 per
year for their additional responsibilities.
DIRECTORS' AND OFFICERS LIABILITY INSURANCE
The Company's comprehensive insurance policies include coverage, which
indemnifies the directors and officers of the Company. The approximate annual
cost of this coverage is $85,000 and the policy contains a deductible of $72,000
for Canadian claims and $179,000 for U.S. claims and does not cover liability
for failure to act honestly and in good faith.
The Company has also provided run-off insurance to the Board of Directors of
Opta Food Ingredients, Inc. for actions taken prior to the acquisition by the
Company. This insurance provides coverage for a period of six years from the
date of the acquisition for any undisclosed claims that may still arise during
the former Boards tenure.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
On December 4, 2002, SunOpta issued to Claridge Israel LLC (Claridge), at the
time, the Company's largest shareholder, a $5 million convertible debenture.
Interest was payable quarterly at an annual rate of 5.5%. In addition, the
Company issued Claridge 250,000 warrants exercisable into an equivalent number
of common shares of the Company at a price of $3.25 per common share. These
warrants expire November 30, 2004. On August 29, 2003, the Company redeemed the
convertible debenture at the face value of $5,000,000.
8
ATTENDANCE AND COMMITTEES OF THE BOARD
Board Meetings and Attendance
During 2003 the Board of Directors held five regularly scheduled meetings and
six special telephonic meetings. All board members attended 75% of the meetings
of the Board and Committees in which they served, with the exception of Mr.
Dennis Anderson and Mr. Stephen Bronfman.
Corporate Governance Committee
The following three independent Directors are members of the Corporate
Governance Committee: Camillo Lisio (Chairman), Joseph Riz and Robert
Fetherstonhaugh. This Committee also acts as the Company's Compensation
Committee and performs similar functions to that of a Nominating Committee.
The Company and the Corporate Governance Committee have developed a set of
formal Corporate Governance Policies that are monitored on an ongoing basis to
ensure that the Company is in compliance with its Corporate Governance Policies
(See "Corporate Governance Disclosure").
The function of the Corporate Governance Committee, in its capacity as the
Compensation Committee, is to determine the compensation of the CEO as well as
to review and approve the compensation recommended by the CEO for all other
Senior Officers and employees of the Company. In addition, this Committee
oversees the Option Plan and Employee Stock Purchase Plans of the Company.
The Committee, in its capacity as the Nominating Committee, concerns itself with
the composition of the Board with respect to depth of experience, balance of
professional interests, required expertise and other factors. The Committee
evaluates prospective nominees identified on its own initiative or referred to
it by other Board members, management, stockholders or external sources and all
self-nominated candidates. The Committee uses the same criteria for evaluating
candidates nominated by stockholders and self-nominated candidates as it does
for those proposed by other Board members, management and search companies. To
be considered for membership on the Board, the Committee will consider certain
necessary criteria, that a candidate should meet, which would include the
following: (a) be of proven integrity with a record of substantial achievement,
(b) have demonstrated ability and sound judgment that usually will be based on
broad experience but, particularly, industry experience; (c) be able and willing
to devote the required amount of time to the Company's affairs, including
attendance at Board meeting, Board Committee meetings and annual stockholder
meetings; (d) possess a judicious and critical temperament that will enable
objective appraisal of management's plans and programs; and (e) be committed to
building sound, long-term Company growth. Evaluation of candidates occurs on the
basis of materials submitted by or on behalf of the candidate. If a candidate
continues to be of interest, additional information about her/him is obtained
through inquiries to various sources and, if warranted, interviews.
A stockholder may recommend a person as a nominee for director by writing to the
Secretary of the Company. Recommendations must be received by November 1, 2004
in order for a candidate to be considered for election at the 2005 Annual
Meeting. Each notice of nomination should contain the following information: (a)
the name and address of the stockholder who intends to make the nomination and
of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had each nominee been nominated,
or intended to be nominated, by the Board of Directors; and (e) the consent of
each nominee to serve as a director of the Company if so elected. All the
director nominees named in this proxy statement met the Board's criteria for
membership and were recommended by the Corporate Governance Committee for
election by the stockholders at this Annual Meeting.
All nominees for election at this Annual Meeting were previously elected by
stockholders.
The Governance Committee met formally five times during 2003. In addition,
several telephonic meetings were held during the year for administrative matters
connected to the responsibilities of this Committee.
9
Audit Committee
The following three independent Directors are members of the Audit Committee:
Joseph Riz (Chairman), James Rifenbergh and Katrina Houde.
The Audit Committee's duties and responsibilities are documented in a formal
Audit Committee Charter. These duties include (a) providing oversight of the
financial reporting process and management's responsibility for the integrity,
accuracy and objectivity of financial reports and related financial reporting
practices; (b) recommending to the Board of Directors the appointment of the
Company's auditors; (c) providing oversight of the adequacy of the Company's
system of internal and related disclosure controls; and (d) providing oversight
of management practices relating to ethical considerations and business conduct,
including compliance with laws and regulations. A copy of the Audit Committee
Charter, adopted in November, 2001, is attached as Exhibit A.
The Audit Committee meets formally four times a year, once to review the Form
10-K and annual Audited Consolidated Financial Statements and before each
quarter's earnings are filed to review interim financial statements and Form
10-Q which is filed with the Securities and Exchange Commission in the U.S. and
the Ontario Securities Commission in Canada. Other meetings may be held as at
the discretion of the Chair of the Audit Committee. During 2003, the Audit
Committee met four times. The Audit Committee has free and unfettered access to
PricewaterhouseCoopers LLP, the Company's auditors.
During 2003 the Audit Committee maintained a company wide policy related to
reporting of concerns in accounting or internal controls. This policy gives all
employees of the Company direct access to the Audit Committee for concerns
dealing with accounting practices, internal controls or other matters affecting
the Company's well being.
CORPORATE GOVERNANCE DISCLOSURE
Statement of SunOpta Inc.'s Corporate Governance Practices
Guidelines Practices
---------- ---------
1. The Board of the Directors is responsible In accordance with the Canada Business Corporations Act, the business
for the stewardship of the Company, and of the Company is managed under the direction of its Board of
specifically for Directors. The Chairman and Chief Executive Officer makes
recommendations to the Board of Directors with respect to matters of
corporate policy after discussion, when appropriate, with the members
of Senior Management. The Board of Directors then takes the decisions
which it deems appropriate and supervises the execution of such
decisions and reviews the results obtained.
a. adoption of a strategic planning process The duties of the Board of Directors includes the review on an annual
basis of the three-year strategic plan for each operating group of the
Company.
b. identification of principal risks, and The Board of Directors' duties includes the review of overall business
implementing risk managing systems risks and of the Company's practices and policies for dealing with
these risks.
In addition, the Audit Committee assesses principal risks which the
Company faces and, where appropriate, proposes the implementation of
risk management systems.
c. succession planning and monitoring senior The Corporate Governance Committee reviews, reports, and where
management appropriate, provides recommendations to the Board of Directors on
succession planning matters and, with the Audit Committee and the Board
of Directors, monitors the performance of senior management.
10
d. communications policy Each of the Board of Directors and the Audit Committee reviews, and
where required, approves statutory disclosure documents prior to their
distribution to shareholders.
In addition, the Company has a shareholder relations process to respond
to shareholder questions and concerns. All communications from
shareholders are referred to the Chairman or the appropriate Corporate
Officer for response. Management promptly advises the Board of
Directors if any significant issues are raised by shareholders. In
addition, the Company communicates with its shareholders, securities
analysts and the media regularly on developments in its business and
results, through the annual report, interim financial statements and
reports to shareholders, press releases and material change reports, as
per the Communications Policy.
e. integrity of internal control and The Board of Directors' duties includes the assessment of the integrity
management information systems of the Company's internal controls and information systems. In
addition, the Audit Committee has oversight responsibility of internal
controls and management information systems.
2. Majority of Directors should be The Board of Directors is composed of ten persons. Of the ten
"unrelated" (independent of management Directors, eight are "unrelated" under the Guidelines and two are
and free from conflicting interest) to Senior Officers. The composition of the Board of Directors fairly
the Company and the Company's significant reflects, therefore, the investment in the Company by the shareholders.
shareholders, if any.
3. Disclose for each Director whether he is Jeremy N. Kendall Related Chairman and Chief Executive
related, and how that conclusion was Officer
reached
Allan Routh Related Director and President of
the Grains and Soy Products
Group
Robert Fetherstonhaugh Unrelated
Stephen Bronfman Unrelated
Dennis Anderson Unrelated
Cyril A. Ing Unrelated
Joseph Riz Unrelated
James Rifenbergh Unrelated
Katrina Houde Unrelated
Camillo Lisio Unrelated
4. Propose to the full Board of Directors The Corporate Governance Committee acts as the Nominating Committee and
new nominees to the Board and assess assesses candidates for the Board as described on page 9. If the
Directors on an ongoing basis candidacy is endorsed by the Corporate Governance Committee, it is then
submitted to the approval of the Board of Directors. New Directors are
then included in an orientation and education program (see Item 6).
5. The Corporate Governance Committee is The Corporate Governance Committee is composed of three outside
composed exclusively of unrelated Directors.
Directors
6. Implement a process for assessing the An annual review of Board members is undertaken by the Corporate
effectiveness of the Board of Directors, Governance Committee with advice from the Chairman and CEO.
its Committees and individual Directors
in accordance with overall Governance
Policy
11
7. Provide orientation and education New Directors participate in an initial information session on the
programs for new Directors Company in the presence of Management representatives. In addition,
they are furnished with appropriate documentation relating to the
commercial activities of the Company and the internal organization of
the Company. Monthly reports detailing the commercial activities of
the Company and the internal organization of the Company are supplied
to all Directors. The meetings in which new Directors participate
(including annual strategic planning sessions) as well as discussions
with other Directors and with management permit new Directors to
familiarize themselves rapidly with the operations of the Company.
Facility visits can also be arranged for new Directors.
8. Consider the size of the Board of The Board of Directors is of the view that its size and composition is
Directors, with a view to continually somewhat larger than ideal and intends to reduce its size from 10 to 9
improving effectiveness in time.
9. The Board of Directors should review The Corporate Governance Committee, which also acts as the Compensation
compensation of Directors in light of Committee of the Board of Directors periodically reviews compensation
risks and responsibilities policies in light of market conditions and practices and in light of
risks and responsibilities.
10. Committees of the Board of Directors The Corporate Governance Committee is composed of three outside
should be composed of a majority of Directors, all unrelated. This Committee also acts as the Compensation
unrelated (non-management) Directors Committee and the Nominating Committee. The Corporate Governance
Committee has the responsibility, upon the recommendation of the
Chairman and Chief Executive Officer, for defining salary classes and
levels and extent of participation in incentive programs. In addition,
this Committee determines, based on the proposal of the Chairman of the
Board, the persons eligible to benefit from the stock option plan and
in which proportion, according to their position. The Corporate
Governance Committee also assesses the performance of the Chairman and
Chief Executive Officer and the Committee's recommendations in this
regard are then presented to the Board of Directors. When a vacancy on
the Board of Directors needs to be filled, the Committee considers
candidates from a variety of sources, including without limitation,
management, stockholders and other Board members. The Corporate
Governance Committee can then endorse such recommendations, which, if
endorsed, are presented to the Board of Directors.
11. The Board of Directors should expressly The Corporate Governance Committee is responsible for developing and
assume responsibility for, or assign to a monitoring the Company's approach to governance issues, the Company's
Committee the general responsibility for, response to the required Guidelines and recommending these policies to
approach to corporate governance issues the Board of Directors.
12.a. Define limits to Management's
responsibilities by developing mandates
for:
(i) the Board of Directors The Board of Directors is, by law, responsible for managing the
business and affairs of the Company. Any responsibility which is not
delegated to either Management or a Committee remains with the Board of
Directors. In general, all matters of policy and all actions proposed
to be taken which are not in the ordinary course of business require
the prior approval of the Board of Directors or of a Board Committee to
which approval authority has been delegated.
12
(ii) the CEO The corporate objectives which the Chairman and Chief Executive Officer
is responsible for meeting, with the rest of Management placed under
his supervision, are determined by the strategic plans and the budget
as they are approved each year by the Board of Directors. Performance
of the Chairman and Chief Executive Officer and Management is assessed
against the achievement of the strategic plans and the annual budget.
b. the Board of Directors should approve The Board of Directors governs the strategic plan and budgets for the
CEO's corporate objectives Company.
12. Establish procedures to enable the Board While there are no formal structures in place to ensure that the Board
of Directors to function independently of of Directors can function independently of Management, the Board of
management Directors of the Company is free to ask one or more members of
Management to withdraw during certain discussions. The independent
Directors of the Company would meet without the presence of the members
of Management who are also Directors, including the Chairman and Chief
Executive Officer on a regular basis.
13.a. establish an Audit Committee with a The roles and responsibilities of the Audit Committee have been
specifically defined mandate specifically defined and approved by the Board of Directors and include
the review of the annual and interim financial statements and related
statutory filings of the Company. The Audit Committee has direct
communication channels with both the internal financial management and
external auditors to discuss and review specific issues, as appropriate.
b. all members should be non-management The Audit Committee is composed of three outside Directors, all of whom
Directors are "unrelated" and are advised by the Vice President and Chief
Financial Officer.
14. Implement a system to enable individual Individual Directors may, if required, retain outside advisors at the
Directors to engage outside advisors, at Company's expense.
the Company's expense
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company has reviewed and discussed with Senior
Management the Audited Consolidated Financial Statements of the Company for the
fiscal year ended December 31, 2003. The Audit Committee has discussed with
PricewaterhouseCoopers LLP, the independent auditors of the Company, the matters
required to be discussed by the Statement on Auditing Standards (SAS) No.61
(Communication with Audit Committee), amended by SAS No. 89 (Audit Adjustments)
and SAS No. 90 (Audit Committee Communication). The Audit Committee has also
received the written disclosures and the letter from PricewaterhouseCoopers LLP
required by Independence Standards Board Standard No. 1 (which relates to the
auditor's independence from the Company and its related entities) and the Audit
Committee has discussed with PricewaterhouseCoopers LLP their independence as
auditor of the Company. Based on the review and discussions, the Audit Committee
of the Company has recommended to the Board of Directors and the Board has
approved that the Audited Consolidated Financial Statements of the Company be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003.
This report is dated as of March 31, 2003 and has been submitted by Joseph Riz
(Chairman), James Rifenbergh, and Katrina Houde, all of the members of the Audit
Committee.
The information contained in this Audit Committee report to the Board of
Directors shall not be deemed to be "soliciting material" or to be "filed" with
the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the 1934 Securities Exchange Act, as amended, except to the
extent that the Company specifically incorporates it by reference in such
filing.
13
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the common shares of the Company to the cumulative
total return of the TSE300 Total Return Index and the NASDAQ Industrial Index
for the period which commenced December 31, 1997 and ended on December 31, 2003.
Comparison of the five-year cumulative total shareholder return
[LINE GRAPH]
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
Nasdaq Industrial Index $100.00 $172.04 $114.00 $106.42 $ 78.70 $106.61
TSE 300 Index $100.00 $129.72 $137.74 $118.54 $101.98 $121.91
SunOpta Inc. $100.00 $137.29 $244.07 $367.80 $533.90 $885.59
Assumes that $100.00 was invested in common shares of the Company and in each of
the indices on December 31, 1998.
Item 2 - APPOINTMENT OF AUDITORS
The Board of Directors has reappointed PricewaterhouseCoopers LLP ("PwC") as
independent auditors for the year 2004. The shareholders are being asked to
ratify the appointment of PwC for the year 2004 and to authorize the Board of
Directors to fix their remuneration.
The Board of Directors recommend that the shareholders vote for the appointment
of PwC, Chartered Accountants, who have been the Company's auditors since 1975.
In the event that the Shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection.
A representative of PwC will attend the Annual Meeting and will have the
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions from shareholders in attendance.
During the Company's fiscal year ended December 31, 2003, the Company was billed
the following aggregate fees by PwC.
Audit Fees
The total fees billed by PwC for professional services rendered for the audit of
the Company's Consolidated Financial Statements for the fiscal year ended
December 31, 2003 and the reviews of the financial statements included in the
Company's Forms 10-Q for that fiscal year was $498,000.
14
Financial Information Systems Design and Implementation Fees
No fees were billed by PwC to the Company for professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X (financial information
systems design and implementation services).
All Other Fees
PwC billed the Company $243,000 for services related to compliance and advice on
tax matters.
The Audit Committee did consider and conclude that the provision of the
non-audit services is compatible with maintaining PwC's independence.
Item 3 - AMENDMENT OF THE COMPANY'S STOCK OPTION PLANS TO ADD A CHANGE OF
CONTROL PROVISION
The Company's shareholders previously approved the adoption of the Company's
1996 Employee/Director Stock Option Plan; 1998 Stock Option Plan; 1999 Stock
Option Plan; 2001 Stock Option Plan; and 2002 Stock Option Plan (the "Option
Plans"). The purpose of all of the Option Plans is to be able to grant stock
options to employees, directors and consultants to help ensure the long-term
motivation and retention of the Company's employees, directors and consultants
and to develop the interest and incentive of these people by providing them with
an opportunity to purchase common shares of the Company.
The Company's Board of Directors has determined that it is in the best interests
of the Company to amend each of the Options Plans by adding to each of the Plans
a new section relating to a Change of Control of the Company. The proposed
Change of Control section to be added is attached as Exhibit CD to this Proxy
Statement.
The Board of Directors believes that this amendment to each of the Option Plans
is another tool in our change of control policies to help keep employees focused
on their jobs during the uncertainty that accompanies a change in control, to
preserve benefits after a change of control transaction and to help us attract
and retain key talent. If approved, stock option awards that we have made or
will make under the Option Plans will immediately vest upon a Change of Control
as defined in the amendment. At present, options vest 20% on the grant of an
option and thereafter 20% on each anniversary of the grant date until fully
vested, except the options under the 2002 Plan, granted to all Directors (other
than Messrs. Jeremy Kendall, Allan Routh and Dennis Anderson), which vest at 25%
on each anniversary of the grant date until fully vested.
Brief Description of Option Plans
All of the Option Plans are administered by the Compensation Committee of the
Board of Directors, which consists exclusively of non-employee directors. The
Compensation Committee has been delegated the authority by the Board of
Directors to designate those employees, consultants and directors who may be
granted options under the Plans, the number of options to be granted to each
such person and the vesting schedule therefore, and to otherwise administer and
interpret the Option Plans and the option granted thereunder.
Awards under the Option Plans
All Options granted under the Plans will be non-qualified stock options, except
in the case of the 2002 Plan, under which either non-qualified stock options or
incentive stock options may be granted. The purchase price for options granted
under all of the Plans is equal to 100% of the fair market value of our common
shares, based on the closing price of such shares on the trading day immediately
prior to the date of grant of the option. An option may not be exercised more
than ten-years from the date of grant unless otherwise provided by the Board of
Directors and approved by regulators, if required. All options exercised must be
paid for in full, at the time of exercise.
Certain US Federal Income Tax Consequences
Set forth are certain of the United States tax consequences of options granted
to participants set forth in the following summary.
All employees to whom an incentive option which qualifies under Section 422 of
the U.S. Internal Revenue Code is granted will not recognize income at the time
of grant or exercise of such option. No federal income tax deduction will be
allowable to the employee's employer upon the grant or exercise of such option.
However, upon the exercise of an
15
incentive option, special alternative minimum tax rules apply for the employee.
When the employee sells such shares more than one year after the date of
transfer of such shares and more than two years after the date of grant of such
option (the Minimum ISO Period), the employee will normally recognize a capital
gain or loss equal to the difference, if any between the sales price of such
shares and the option price paid. The tax rate applicable to such capital gains
will depend in part on the length of time the employee has held such shares in
excess of one year before sale. If the employee does not hold such shares for
the Minimum ISO Period, when the employee sells such shares, the employee will
recognize ordinary compensation income and possibly capital gain or loss as well
in such amounts as are prescribed by the Internal Revenue code (the "Code") and
regulations thereunder. Subject to applicable provisions of the Code and
regulations thereunder, including Section 162(m) of the Code, the employee's
employer will generally be entitled to a federal income tax deduction in the
amount of such ordinary compensation income.
An individual to whom a non-qualified option is granted will not recognize
income at the time of grant of such option. When such optionee exercises such
non-qualified option, the optionee will recognize ordinary compensation income
equal to the difference, if any, between the Option price paid and the fair
market value, as of the date of option exercise, of the shares the optionee
receives. The tax basis of such shares to such optionee will be equal to the
option price paid plus the amount includable in the optionee's gross income, and
the optionee's holding period for such shares will commence on the day on which
the optionee recognizes taxable income in respect to such shares. Subject to
applicable provisions of the Code and regulations thereunder, including those
under Section 162(m) of the Code, the employer of such optionee will generally
be entitled to a federal income tax deduction in respect of non-qualified
Options in an amount equal to the ordinary compensation income recognized by the
optionee. Any compensation includable in the gross income of an employee in
respect of a non-qualified Option will be subject to appropriate federal income
and employment taxes.
The discussion set forth above does not purport to be a complete analysis of all
potential tax consequences relevant to recipients of options or their employers,
or to describe tax consequences based on particular circumstances. It is based
on federal income tax law and interpretational authorities as of the date of
this proxy statement, which are subject to change at any time.
Item 4 - AMENDMENT TO THE 2002 STOCK OPTION PLAN TO AUTHORIZE AN INCREASE IN THE
NUMBER OF SHARES AUTHORIZED
In June 2002, the Company's shareholders approved the 2002 Stock Option Plan
(the "2002 Plan") and authorized 1,500,000 common shares for issuance under the
2002 Plan. As of March 31, 2004, no shares remained available for issuance in
connection with future grants of options under the 2002 Plan.
On March 11, 2004 the Board of Directors amended the 2002 Plan, subject to
shareholder approval, to authorize 1,500,000 additional common shares for awards
of options under the 2002 Plan. These 1,500,000 additional shares, represent
approximately 2.8% of the Company's outstanding common shares as of the date of
this Proxy Statement. The Board of Directors believes that this additional share
reserve is necessary to continue to provide competitive option awards to key
employees in the future which is linked to the creation of shareholder value.
The amendment will not become effective until shareholder approval is obtained.
SHAREHOLDERS' PROPOSALS
All proposals of Shareholders intended to be presented at the Company's Annual
Meeting of Shareholders in 2004, must be received at the Company's Executive
Office no later than November 1, 2004 for inclusion in the Information Circular
and Form of Proxy related to that meeting. The Company's next Annual Meeting of
Shareholders is planned for May 2005.
16
OTHER MATTERS
NASDAQ corporate governance rules state that the required quorum for the Annual
Meeting of Shareholders cannot be represented by less than 33 1/3% of the
outstanding common shares as at March 31, 2004. Therefore shareholders of at
least 17,802,201 common shares must participate directly or be present by proxy
to validate the quorum requirements.
The Company encourages all of its shareholders to participate in the Annual and
Special Meeting.
The Management of the Company does not know of any matters other than those
stated in this Information Circular, which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, proxies
will be voted on the other matters in accordance with the best judgement of the
persons voting the proxies.
The Directors of the Company have approved the contents and the sending of this
Information Circular.
Dated this 31st day of March, 2004.
By Order of the Board of Directors
\s\Jeremy N. Kendall
Jeremy N. Kendall
Chairman of the Board and Chief Executive Officer
FORM 10-K
The Company will provide without charge to beneficial owners of common shares of
the Company, upon written request, a copy of the Company's Annual Report on Form
10-K for the year ended December 31, 2003 including financial statements and
schedules thereto, as filed with the Securities and Exchange Commission,
Washington, D.C. and the Ontario Securities Commission, Toronto, Ontario.
Written requests should be directed to Susan Wiekenkamp, Information Officer of
the Company, 2838 Bovaird Drive West, Norval, Ontario, Canada, L0P 1K0, or by
fax at (905) 455-2529 or by e-mail at swiekenkamp@staketech.com.
Shareholders should note that the Form 10-K, as well as Form 10-Q and press
releases can be directly downloaded from www.sedar.com, www.edgar.com or from
the Company's web site at www.sunopta.com,
17
Exhibit A
SUNOPTA INC.
AUDIT COMMITTEE CHARTER
--------------------------------------------------------------------------------
1. Overall Purpose / Objectives
The Audit Committee will assist the board in fulfilling its oversight
responsibilities. The Audit Committee will review the financial reporting
process, the system of internal and disclosure control and management of
financial risks, the audit process, and the company's process for monitoring
compliance with laws and regulations and its own code of business conduct. In
performing its duties, the Audit Committee will maintain effective working
relationships with the Board of Directors, management, and the internal and
external auditors.
2. Authority
The Board authorizes the Audit Committee, within the scope of its
responsibilities, to:
o Seek any information it requires from:
- Any employee (and all employees are directed to co-operate
with any request made by the Audit Committee).
- External parties.
o Obtain outside legal or other professional advisers.
o Ensure the attendance of company officers at meetings as appropriate.
3. Organization
Membership
3.1 The Audit Committee will comprise three (3) members all of which will be
non-executive directors.
3.2 Each member should be capable of making a valuable contribution to the
Committee.
3.3 All members should be independent of management.
3.4 The Chairman of the Audit Committee will be nominated by the Board from
time to time.
3.5 Members will be appointed annually.
3.6 A quorum for any meeting will be two (2) members.
3.7 The Secretary of the Audit Committee will be the Company Secretary, or
such other person as nominated by the Board.
Attendance at Meetings
3.8 The Audit Committee may invite such other persons (e.g. the CEO, CFO) to
its meetings, as it deems necessary.
3.9 The internal and external auditors should be invited to make presentations
to the Audit Committee as appropriate.
3.10 Meetings shall be held not less that four (4) times a year. Special
meetings may be convened as required. Internal audit or the external
auditors may convene a meeting if they consider that it is necessary.
3.11 The proceedings of all meetings will be recorded in minutes for approval
and signature.
18
4. Roles and Responsibilities
The Audit Committee will:
Internal Control
4.1 Evaluate whether management is setting the appropriate "control culture"
by communicating the importance of internal control and the management of
risk and ensuring that all employees have an understanding of their roles
and responsibilities.
4.2 Consider how management is held to account for the security of computer
systems and applications, and the contingency plans for processing
financial information in the event of a systems breakdown.
4.3 Gain an understanding of whether internal control recommendations made by
internal and external auditors have been implemented by management.
Financial Reporting
a) General
4.4 Gain an understanding of the current areas of greatest financial risk and
how management is managing these effectively.
4.5 Consider with the internal and external auditors any fraud, illegal acts,
deficiencies in internal control or other similar issues
4.6 Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements, and understand their impact on
the financial statements.
4.7 Ask management and the internal and external auditors about significant
risks and exposures and the plans to minimize such risks.
4.8 Review any legal matters which could significantly impact the Consolidated
Financial Statements.
b) Financial Statements
4.9 Review the annual and quarterly Consolidated Financial Statements and
determine whether they are complete and consistent with the information
known to Committee members; assess whether the Consolidated Financial
Statements reflect appropriate accounting principles.
4.10 Pay particular attention to complex and/or unusual transactions such as
restructuring charges and derivative disclosures.
4.11 Focus on judgmental areas, for example those involving valuation of assets
and liabilities; warranty, product or environmental liability; litigation
reserves; and other commitments and contingencies.
4.12 Meet with management and the external auditors to review the Consolidated
Financial Statements and the results of the audit.
4.13 Review the other sections of the Annual Report before its release and
consider whether the information is understandable and consistent with
members' knowledge about the company and its operations.
c) Preliminary Announcements, Interim Financial Statements and Analysts
Briefings
4.14 Be briefed on how management develops preliminary announcements, interim
financial information and analysts briefings; the extent of internal audit
involvement; and the extent to which the external auditors review such
information.
4.15 Assess the fairness of the preliminary and interim statements and
disclosures, and obtain explanations from management and internal and
external auditors on whether:
19
- Actual financial results for the interim period varied significantly
from budgeted or projected results.
- Changes in financial ratios and relationships in the interim
financial statements are consistent with changes. in the Company's
operations and financing practices.
- Generally accepted accounting principles have been consistently
applied.
- There are any actual or proposed changes in accounting or financial
reporting practices.
- There are any significant or unusual events or transactions.
- The company's financial and operating controls are functioning
effectively.
- The preliminary announcements and interim financial statements
contain adequate and appropriate disclosures.
Internal Audit
4.16 Review the activities and organizational structure of the internal audit
function and ensure no unjustified restrictions or limitations are made.
4.17 Review the qualifications of internal audit personnel and concur in the
appointment, replacement, reassignment or dismissal of the director of
internal audit.
4.18 Review the effectiveness of the internal audit function.
4.19 Meet separately with the director of internal audit to discuss any matters
that the Committee or auditors believe should be discussed privately.
4.20 Ensure that significant findings and recommendations made by the internal
auditors are received and discussed on a timely basis.
4.21 Ensure that management responds to recommendations by the internal
auditors.
External Audit
4.22 Review the external auditors' proposed audit scope and approach and ensure
no unjustified restrictions or limitations have been placed on the scope.
4.23 Review the performance of the external auditors.
4.24 Consider the independence of the external auditor, including reviewing the
range of services provided in the context of all consulting services
bought by the Company.
4.25 Make recommendations to the Board regarding the reappointment of the
external auditors.
4.26 Meet separately with the external auditors to discuss any matters that the
Committee or auditors believe should be discussed privately.
4.27 Ensure that significant finds and recommendations made by the external
auditors are received and discussed on a timely basis.
4.28 Ensure that management responds to recommendations by the external
auditors.
Compliance with Laws and Regulations
4.29 Review the effectiveness of the system for monitoring compliance with laws
and regulations and the results of management's investigation and
follow-up (including disciplinary action) of any fraudulent acts or
non-compliance.
4.30 Obtain regular updates from management and company's legal counsel
regarding compliance matters.
4.31 Be satisfied that all regulatory compliance matters have been considered
in the preparation of the financial statements.
4.32 Review the findings of any examinations by regulatory agencies.
20
Compliance with the Company's Code of Conduct
4.33 Ensure that the code of conduct is in writing and that arrangements are
made for all employees to be aware of it.
4.34 Evaluate whether management is setting the appropriate "tone at the top"
by communicating the importance of the code of conduct and the guidelines
for acceptable behavior.
4.35 Review the process for monitoring compliance with the code of conduct.
4.36 Obtain regular updates from management regarding compliance.
Reporting Responsibilities
4.37 Regularly update the Board about Committee activities and make appropriate
recommendations.
4.38 Ensure the Board is aware of matters which may significantly impact the
financial condition or affairs of the business.
Other Responsibilities
4.39 Perform other oversight functions as requested by the full Board.
4.40 If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist.
4.41 Review and update the Audit Committee Charter; receive approval of changes
from the Board.
4.42 Evaluate the Committee's own performance on a regular basis.
21
Exhibit B
RESOLUTION
RESOLVED THAT:
The amendment to all of the Company's Stock Option Plans which is set forth as
Exhibit C and described in the Company Proxy Statement dated March 31, 2004 is
hereby approved and adopted.
Passage of this resolution requires the vote of a majority of the shares vested
at the Meeting.
22
Exhibit C
6. (a) Exercise of Option
(b) Vesting on Change of Control
In the event of a Change of Control, all options which have not yet
vested will vest immediately. For the purposes of this provision a
Change of Control will be deemed to have occurred when:
(i) a person (which includes a partnership or corporation) acting
alone or jointly or in concert with others, acquires
beneficial ownership of voting securities of the Company
which, together with voting securities of the Company already
owned by such person or persons, constitutes in the aggregate
50% or more of the outstanding voting securities of the
Company;
A person who is principally engaged in the business of
managing investment funds for unaffiliated securities
investors and, as a part of such person's duties for fully
managed accounts, holds or exercises voting power over voting
securities of the Company, will not, solely by reason thereof,
be considered to be a beneficial owner of such voting
securities;
(ii) the Company agrees to amalgamate, consolidate or merge with
another body corporate;
(iii) any resolution is passed or any action or proceeding is taken
with respect to the liquidation, dissolution or winding up of
the Company;
(iv) the Company decides to sell, lease, or otherwise dispose of
all, or substantially all, of its assets.
23
Exhibit D
RESOLUTION
RESOLVED THAT:
That 1,500,000 additional common shares be authorized and reserved for the
issuance of stock options under and pursuant to the terms of the Company's 2002
Stock Option Plan.
Passage of this resolution requires the vote of a majority of the shares vested
at the Meeting.
24
SunOpta FORM OF PROXY
Annual and Special Meeting of Shareholders of SunOpta Inc.
================================================================================
This proxy is solicited by the Management of SunOpta Inc. for use at the Annual
and Special Meeting of Shareholders to be held at the "Windsor Ballroom" at Le
Royal Meridien King Edward Hotel, 37 King Street East, Toronto, Ontario, Canada
on Thursday, May 13, 2004 at 4:00 p.m. EDT, or any adjournment thereof, in the
same manner, to the same extent and with the same powers as if the undersigned
were personally present at the said meeting or any adjournment thereof.
APPOINTMENT OF PROXY
We, being shareholder(s) of SunOpta Inc., hereby appoint(s): Jeremy Kendall, or
failing him Cyril Ing, both officers of the Company OR print the name of the
person you are appointing as your proxyholder if this person is someone other
than Jeremy Kendall or Cyril Ing. _____________________________________________,
as my/our proxy with full power of substitution and to vote in accordance with
the following direction (or if no directions have been given, as the proxyholder
sees fit) and in their discretion on all other matters that may properly come
before the Annual and Special Meeting of Shareholders of SunOpta Inc.
(1) ELECTION OF DIRECTORS
01 Dennis Anderson FOR |_| WITHHOLD |_|
02 Stephen Bronfman FOR |_| WITHHOLD |_|
03 Robert Fetherstonhaugh FOR |_| WITHHOLD |_|
04 Katrina Houde FOR |_| WITHHOLD |_|
05 Cyril Ing FOR |_| WITHHOLD |_|
06 Jeremy Kendall FOR |_| WITHHOLD |_|
07 Camillo Lisio FOR |_| WITHHOLD |_|
08 James Rifenbergh FOR |_| WITHHOLD |_|
09 Joseph Riz FOR |_| WITHHOLD |_|
10 Allan Routh FOR |_| WITHHOLD |_|
(2) APPOINTMENT OF AUDITORS
The Board of Directors recommends a vote FOR the Appointment of the
Auditors
Appointment of PricewaterhouseCoopers as Auditors of the Company for 2004
and to authorize the Directors to fix their remuneration.
FOR |_| AGAINST |_| ABSTAIN |_|
(3) AMENDMENT OF COMPANY'S STOCK OPTION PLANS
The Board of Directors recommends a vote FOR the passage of the
resolution, set forth in Exhibit B, amending the Company's Stock Option
Plans to add a Change of Control provision, set forth in Exhibit C, and as
described in the Proxy Statement.
Approving amendment of the Company's Stock Option Plans.
FOR |_| AGAINST |_| ABSTAIN |_|
(4) AMENDMENT TO THE COMPANY'S 2002 STOCK OPTION PLAN
The Board of Directors recommends a vote FOR the passage of the
resolution, set forth in Exhibit D, to authorize an increase in the number
of shares authorized, as described in the Proxy Statement.
Approving amendment to the Company's 2002 Stock Option Plan.
FOR |_| AGAINST |_| ABSTAIN |_|
(5) TO CONSIDER AND TAKE ACTION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING, OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder.
If the officers named in this proxy are appointed by the undersigned and
no direction is made, such officers will vote and vote for proposals 1, 2,
3 and 4. If a person other than the officers named is appointed and no
direction is made, such person may vote such shares at his/her discretion.
If any amendment or variation to the matters identified above are proposed
at the meeting, discretionary authority is hereby conferred with respect
thereto. Management is not aware of any other matter to come before the
meeting not disclosed above.
AUTHORIZED SIGNATURE(S) - SIGN HERE
THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
I/We authorize you to act in accordance with my/our instructions set out above.
I/We here by revoke any proxy previously given with respect to the Meeting. If
no voting preferences are indicated above, this form of proxy will be voted as
recommended by Management.
------------------------------------------------------------
Signature of Shareholder / Authorized Officer
------------------------------------------------------------
Name of Shareholder (Please PRINT clearly)
Dated this ___________ day of _______________________, 2004.
NOTES OF PROXY
1. You have the right to appoint a different person or company (with
appropriate documentation) of your choice, who need not be a shareholder,
to attend and act on your behalf at the Annual and Special Meeting of
SunOpta Inc. If you wish to appoint a person other than the persons whose
names are printed herein, please insert the name of your chosen
proxyholder in the space provided (see reverse). The common shares
represented by this form of proxy may be voted in the discretion of the
proxyholder with respect to amendments or variations to the matters
identified in the notice of meeting and with respect to other matters that
may properly be brought before the meeting.
2. If the common shares are registered in the name of more than one owner
(for example, joint ownership, trustees, executors, etc.), then all those
registered should sign this form of proxy. If you are voting on behalf of
a corporation or another individual, documentation evidencing your power
to sign this form of proxy with signing capacity stated may be required.
3. This instrument of proxy will not be valid and not be acted upon or voted
unless it is completed as outlined herein and delivered to the attention
of ADP Investor Communications, Proxy Department, 5970 Chedworth Way,
Mississauga, ON, L5R 4G5, by 4:00 p.m. E.D.T., on Tuesday, May 11, 2004 or
by delivering it to the Chairman of the meeting on the day of the meeting
or any adjournment thereof prior to the time of voting.
4. In order to expedite your vote, you may use a touch-tone telephone or the
Internet. To vote by telephone, call toll free 1-800-474-7493 (English) or
1-800-474-7501 (French). You will be prompted to provide your 12 digit
number located below on this form. The telephone or Internet voting
service is not available on the day of the meeting and the telephone
system cannot be used if you plan to attend the meeting or designate
another person to attend on your behalf.
To vote via the Internet, go to www.proxyvotecanada.com and follow the
simple instructions.
You may send your completed and signed proxy by facsimile to 905-507-7793
or 514-281-8911.
5. The form of proxy should be signed in the exact manner as the name appears
on the form of proxy.
6. If the form of proxy is not dated, it will be deemed to bear the date on
which it was mailed to the holder.
7. Proxy will be voted as directed.