UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
The Hershey Company
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 1-183 | 23-0691590 |
| (Commission File Number) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (717) 534-4200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
INFORMATION TO BE INCLUDED IN REPORT
| Item 3.01 | Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing |
On November 13, 2007, The Hershey Company (the “Company”) received a notice from NYSE Regulation, Inc. (the “NYSE Notice”) stating that the Company is deficient in meeting the requirements of the following sections of the New York Stock Exchange Listed Company Manual:
303A.01 – The Company does not have a majority of independent directors serving on the Board of Directors of the Company (the “Company Board”).
303A.04(a) – The Company does not have any independent directors serving on the Nominating Committee of the Company Board.
303A.07(a) – The Company does not have three members serving on the Audit Committee of the Company Board.
303A.07(a) – The Company does not have an audit committee member with financial management expertise.
On November 16, 2007, the Company notified the New York Stock Exchange (the “NYSE”) that it has cured all of the above deficiencies. The items listed above had arisen as the result of the November 11, 2007 changes in the composition of the Company Board discussed below in Item 5.02 of this Current Report on Form 8-K. The information regarding the independence of the members of the Company Board, the members of the Company Board serving on the committees of the Company Board and the qualifications of the members of the Company Board serving on the audit committee of the Company Board is described below and is incorporated by reference into this Item 3.01.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On November 11, 2007, the Company announced that the following directors have resigned from the Company Board: Jon A. Boscia, Robert H. Campbell, Gary P. Coughlan, Harriet Edelman, Bonnie G. Hill, Alfred F. Kelly, Jr., Mackey J. McDonald and Marie J. Toulantis (the “Resigning Directors”). In addition, the Company announced that Hershey Trust Company (the “Trust”), as trustee for the Milton Hershey School Trust, through stockholder action effected by written consent has (i) amended the By-laws of the Company to allow the Company’s stockholders to fix the number of directors to serve on the Company Board and from time to time to increase or decrease such number of directors, (ii) expanded the size of the Company Board from 11 directors to 13 directors and (iii) appointed the following individuals to the Company Board: LeRoy S. Zimmerman and James E. Nevels (together, the “Trust Directors”), Charles A. Davis, Edward J. Kelly, III, Arnold G. Langbo, Thomas J. Ridge, Charles B. Strauss and Kenneth L. Wolfe (collectively with the Trust Directors, the “New Directors”) to fill the vacancies created by the resignation of the Resigning Directors and the expansion of the Company Board. The Trust owns shares of Class B Common Stock, par value $1.00 per share (the “Class B Common Stock”), and shares of Common Stock, par value $1.00 per share (the “Common Stock”), of the Company representing more than a majority of the combined voting power of the Class B Common Stock and the Common Stock.
The Trust has advised the Company that each of the Trust Directors is an independent member of the board of directors of the Trust and the board of managers (governing body) of Milton Hershey School (the “School”); except for the Trust Directors, none of the New Directors is affiliated with the Trust or the School; and none of the New Directors receives any compensation from the Trust or the School, other than compensation he receives in the ordinary course as a board member. The Trust’s ownership interests in the Company are described in greater detail in the Company’s annual proxy statement. Under the rules of the Securities and Exchange Commission, the Trust and companies controlled by the Trust are considered affiliates of the Company. During 2006 and 2007, the Company engaged in a number of transactions with the School and companies owned by the Trust involving the purchase and sale of goods and services in the ordinary course of business. The Company also purchased shares of Common Stock from the Trust during 2006. None of the New Directors receives any compensation from the Company other than compensation he receives or may receive in the ordinary course as a board member except for Mr. Wolfe, who as a retiree of the Company receives the following benefits: (i) term life insurance, paid for by the Company; (ii) Med Plus Medicare supplement coverage for Mr. Wolfe and his wife, the cost of which is shared by Mr. Wolfe and the Company; and (iii) participation in the Company’s dental and vision coverage, paid for in full by Mr. Wolfe.
Except as described above, there are no arrangements or understandings between the New Directors and any other persons pursuant to which they were appointed directors. There are no family relationships among the New Directors and the directors or executive officers of the Company. All of the New Directors meet the independence criteria set forth in the Company’s Corporate Governance Guidelines and applicable rules of the Securities and Exchange Commission and listing standards of the NYSE.
The directors named to serve on the committees of the Company Board are as follows:
(i) the Audit Committee of the Company Board will be comprised of Mr. Kelly, as Chair, Mr. Cavanaugh, Mr. Davis and Mr. Strauss (the Board of Directors has determined that all members of the Audit Committee are financially literate and qualify as audit committee financial experts as defined by the Securities and Exchange Commission and that each has accounting or related financial management expertise);
(ii) the Compensation and Executive Organization Committee of the Company Board will be comprised of Mr. Langbo, as Chair, Mr. Cavanaugh, Mr. Nevels and Mr. Strauss;
(iii) the Governance Committee of the Company Board will be comprised of Mr. Wolfe, as Chair, Mr. Ridge and Mr. Zimmerman; and
(iv) the Executive Committee of the Company Board will be comprised of Mr. Wolfe, as Chair, Mr. Kelly, Mr. Langbo and Mr. Zimmerman.
The New Directors are not party to any transactions with the Company that require disclosure pursuant to Item 404(a) of Regulation S-K.
Compensation of the New Directors is expected to be in accordance with the Company’s Directors’ Compensation Plan.
A copy of the Company’s press release (the “Press Release”) announcing the resignation of the Resigning Directors and the election of the New Directors is filed herewith as Exhibit 99.1.
| Item 5.03 | Amendments to Articles of Incorporation or By-laws; Change in Fiscal Year |
On November 11, 2007, the Trust, acting by written consent in its capacity as the entity that has voting control of shares of Class B Common Stock and Common Stock representing more than a majority of the combined voting power of the Class B Common Stock and the Common Stock, amended the Company’s By-laws to allow the Company’s stockholders to fix the number of directors to serve on the Company Board and from time to time to increase or decrease such number of directors.
The foregoing descriptions of the amendments to the Company’s By-laws are qualified in their entirety by reference to the copy of the Amendment to the By-laws filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated by reference into this Item 5.03.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| 3.1 | Amendment to the By-laws of The Hershey Company | |
| 99.1 | Press Release dated November 11, 2007 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 16, 2007
| THE HERSHEY COMPANY |
||
| By: | /s/ Burton H. Snyder | |
|
Burton H. Snyder, Senior Vice President, General Counsel and Secretary |
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EXHIBIT INDEX
| Exhibit No. | Description |
| 3.1 | Amendment to the By-laws of The Hershey Company | |
| 99.1 | The Hershey Company Press Release dated November 11, 2007 |
Exhibit 3.1
AMENDMENT TO THE BY-LAWS OF THE HERSHEY COMPANY
Article III – Board of Directors
| Section 1. Number and Term of Office. The number of directors may be changed at any time and from time to time by vote at a meeting or by written consent of the holders of stock entitled to vote on the election of directors, or by a resolution of the Board of Directors, except that no decrease in the number of directors shall shorten the term of any director in office at the time of such decrease unless such director is specifically removed pursuant to Article Fourth, Section B.2.d. of the Company’s Restated Certificate of Incorporation. Each director shall continue in office until his or her successor shall have been elected and qualified, or until his or her earlier resignation or removal. |
Exhibit 99.1
THE HERSHEY COMPANY ANNOUNCES ELECTION OF NEW DIRECTORS
HERSHEY Pa., Nov. 11, 2007 — The Hershey Company (NYSE: HSY) today announced the election of eight new Directors to its Board, effective immediately, and the appointment of Kenneth L. Wolfe as non-executive Chairman, effective January 1, 2008, upon the previously announced retirement of current Chairman and CEO Richard H. Lenny.
The new independent Directors were elected by the Hershey Trust, the Company’s controlling shareholder. In addition to Mr. Wolfe, they are Charles A. Davis, Edward J. Kelly, III, Arnold G. Langbo, James E. Nevels, Thomas J. Ridge, Charles B. Strauss and LeRoy S. Zimmerman (see bios below).
Six independent Directors resigned from the Board at the request of the Hershey Trust. They are Jon A. Boscia, Robert H. Campbell, Gary P. Coughlan, Harriet Edelman, Mackey J. McDonald and Marie J. Toulantis. In addition, Bonnie G. Hill and Alfred F. Kelly, Jr., the two directors elected separately by the Company’s Common Stock shareholders, also resigned today. The Hershey Trust did not request their resignations. Their successors will be elected by Common Stock shareholders at the Company’s annual meeting next year.
Continuing as directors of the Company are: Lenny, through December 31, 2007; David J. West, who will become CEO on December 1, 2007; and Robert F. Cavanaugh, a member of the Hershey Trust Board.
Said Wolfe, “Our new world-class Board of Directors will start working today with Dave West and his strong management team to pursue strategies to improve the performance of the Company. Our goal is to recharge growth and take advantage of all opportunities we see in the marketplace.”
West said, “It is our overarching goal to make sure that we have a smooth and seamless transition at both the management and Board levels. I am already working with Rick to ensure that is the case with our management, and I look forward to working closely with Ken and the new Board of Directors to identify and pursue strategic growth initiatives to build foundations for the Company’s long-term prosperity.”
Said Lenny, “I want to thank the outgoing directors for their service to the Company and all of its stakeholders. On behalf of all of The Hershey Company’s constituents, thank you.”
Said LeRoy S. Zimmerman, Chairman of The Hershey Trust Board, “The Hershey Trust, which is obligated to manage its assets solely for the benefit of Milton Hershey School, a school for children in need, has made clear it has not been satisfied with the Company’s recent results.”
He continued: “After careful reflection and consideration of our responsibilities to the Trust, and the best interests of all Hershey Company shareholders – and after a due-diligence period in which we investigated and ascertained the considerable interest of best-in-class directors who were eager to work with the Trust to benefit all shareholders – we determined to elect new Directors to aggressively pursue addressing the Company’s business challenges.”
“Together and individually, these new directors are independent-minded leaders with world-class capabilities and highly relevant expertise,” said Zimmerman. “Having implemented these changes, the Trust Board will return to allowing this Company Board and Management team to do their jobs and lead the Company to new successes.”
New Director Biographies
CHARLES A. DAVIS spent 23 years with Goldman, Sachs & Co., where he was head of Investment Banking Services worldwide and served on Goldman’s International Executive Committee. He currently is Chairman and Chief Executive Officer of Stone Point Capital. Mr. Davis is a director of Media General, Inc., Merchants Bancshares, Inc., and Progressive Corporation.
EDWARD J. KELLY is Managing Director of The Carlyle Group. Prior to joining Carlyle, Mr. Kelly was Chairman, President and Chief Executive Officer of Mercantile Bankshares Corporation. He serves on the boards of The Hartford Financial Services Group and CSX Corporation.
ARNOLD G. LANGBO is the former Chairman and Chief Executive Officer of the Kellogg Company, retiring after 44 years with the company. He served as a trustee of the W.W. Kellogg Trust. Mr. Langbo is a director of the Johnson & Johnson Company, Weyerhaeuser Company, and Whirlpool Corporation.
JAMES E. NEVELS is Chairman of The Swarthmore Group, a minority-owned investment-advisory firm, which he founded in 1991. Mr. Nevels presently serves as a member of Hershey Trust Company Board and of the Board of Managers of Milton Hershey School. He is a member of the Tasty Baking Company’s Board of Directors and a Member of the Board, Pro Football Hall of Fame.
THOMAS J. RIDGE is President and Chief Executive Officer of Ridge Global LLC, a global strategic consulting company. He was the first Secretary of the U.S. Department of Homeland Security and was twice elected Governor of Pennsylvania. He was a member of the U.S. House of Representatives from 1982 to 1994. Current board memberships include Exelon Corporation and Vonage.
CHARLES B. STRAUSS is the former Chairman and Chief Executive Officer of Unilever North America and a director of Unilever N.V. Mr. Strauss is a director of The Hartford Financial Services Group and Aegis Group plc.
KENNETH L. WOLFE spent 34 years with The Hershey Company, including four years as Chief Financial Officer; eight years as President and Chief Operating Officer; and eight years as Chairman and Chief Executive Officer, retiring at the end of 2001. During his tenure, the company experienced its highest growth rates. Mr. Wolfe serves on the Board of Trustees of the Fidelity Family of Mutual Funds, the world’s largest investment company, with $1.2 trillion in managed assets. He also is a director of Revlon, Inc.
LEROY S. ZIMMERMAN was Pennsylvania’s first elected attorney general. He was Chairman of Eckert Seamans Cherin & Mellot, LLC and now serves as Senior Counsel. Mr. Zimmerman is Chairman of the Board of Hershey Trust Company; Chairman of the Board of Managers of Milton Hershey School; and Chairman of the Board of Directors of Hershey Entertainment & Resorts Company. He is the former Chairman of the Board of Governors of the Dickinson School of Law, Pennsylvania State University.
About The Hershey Company
The Hershey Company (NYSE: HSY) is the largest North American manufacturer of quality chocolate and sugar confectionery products. With revenues of nearly $5 billion and more than 13,000 employees worldwide, The Hershey Company markets such iconic brands as Hershey’s, Reese’s, Hershey’s Kisses, and Ice Breakers. Hershey is the leader in the fast-growing dark and premium chocolate segment, with such brands as Hershey’s Special Dark, Hershey’s Extra Dark and Cacao Reserve by Hershey’s. Hershey’s Ice Breakers franchise delivers refreshment across a variety of mint and gum flavors and formats. In addition, Hershey leverages its iconic brands, marketplace scale and confectionery and nut expertise to develop and deliver substantial snacks, including Hershey’s and Reese’s single-serve cookies and brownies, and value-added snack nuts, including Hershey’s Milk Chocolate Covered Almonds and Hershey’s Special Dark Chocolate Covered Almonds. Hershey also offers a range of products to address the health and well-being needs of today’s consumer. Hershey’s and Reese’s Snacksters offer consumers great-tasting snacks in portion-controlled servings, while Hershey’s dark chocolate offerings provide the benefits of flavanol antioxidants. In addition, Artisan Confections Company, a wholly owned subsidiary of The Hershey Company, markets such premium chocolate offerings as Scharffen Berger, known for its high-cacao dark chocolate products, Joseph Schmidt, recognized for its fine, handcrafted chocolate gifts, and Dagoba, known for its high-quality natural and organic chocolate bars. Visit us at www.hersheynewsroom.com.
Safe Harbor Statement
This release contains statements which are forward-looking. These statements are made based upon current expectations which are subject to risk and uncertainty. Actual results may differ materially from those contained in the forward-looking statements. Factors which could cause results to differ materially include, but are not limited to: our ability to implement and generate expected ongoing annual savings from the initiatives to transform our supply chain and advance our value-enhancing strategy; changes in raw material and other costs and selling price increases; our ability to execute our supply chain transformation within the anticipated timeframe in accordance with our cost estimates; the impact of future developments related to the product recall and temporary plant closure in Canada in the fourth quarter of 2006, including our ability to recover costs we incurred for the recall and plant closure from responsible third-parties; pension cost factors, such as actuarial assumptions, market performance and employee retirement decisions; changes in our stock price, and resulting impacts on our expenses for incentive compensation, stock options and certain employee benefits; market demand for our new and existing products; changes in our business environment, including actions of competitors and changes in consumer preferences; changes in governmental laws and regulations, including taxes; risks and uncertainties related to our international operations; and such other matters as discussed in our Annual Report on Form 10-K for 2006.
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| Media Contacts: | ||
|
Regarding: The Hershey Company Regarding: Hershey Trust |
Kirk Saville Tim Reeves |
(717) 534-7838 (717) 232-5554, x 106 |