2014 Proxy Statement and 2013 Annual Report
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Letters to Stockholders The Hershey Company Proxy Statement and Notice of 2014 2013 Annual Report Annual Meeting to Stockholders and Proxy March 18, 2014 Statement To Our Stockholders: It is my pleasure to invite you to attend the 2014 Annual Meeting of Stockholders of The Hershey Company to be held at 10:00 a.m. Eastern Daylight Time on Tuesday, April 29, 2014. Business scheduled to be considered at the meeting includes (1) the election of eleven directors, (2) ratification of the appointment of KPMG LLP as the Company’s independent auditors for 2014, and (3) a non-binding advisory vote on approval of the Company’s executive compensation (say-on-pay). Management will review the Company’s 2013 performance and will be 2013 Annual available to respond to questions during the meeting. Report to The meeting will be held at GIANT Center, 550 West Hersheypark Drive, Stockholders Hershey, Pennsylvania. Directions to GIANT Center are included with these materials. The doors to GIANT Center will open at 8:30 a.m. Many of you may recall that we agreed to look into a different venue for this year’s meeting. We assessed all the local possibilities and determined that none of them could accommodate our needs. Therefore, we will return to GIANT Center but will use floor seating to eliminate the need to maneuver any stairs to access the seating. Please note the only entrance to the meeting will be at the rear entrance of GIANT Center and transportation from the parking area will be available. There will be designated seating for those using wheelchairs or requiring special assistance. If you plan to attend the meeting, you will need an ADMISSION TICKET and a government-issued PHOTO IDENTIFICATION to gain admission. Any of the following items will serve as your ADMISSION TICKET: • The Notice of Internet Availability of Proxy Materials you received by mail, directing you to the website where proxy materials could be accessed; • The top half of your Proxy Card, if you received your proxy materials in paper form; •AnAdmission Ticket supplied by our Investor Relations Department upon your request if your proxy materials were delivered by email; or •Aletter from your broker, bank or other holder of record, or your most recent account statement, indicating that you were the beneficial owner of Hershey stock as of the record date, if your shares are held in street name. Please remember that, if you are a street-name holder and want to vote your shares at the meeting, you also will need to bring a legal proxy from your broker, bank or other holder of record. As in prior years, security measures will be in place at the Annual Meeting. We highly recommend you do not carry items such as handbags and packages to the meeting as all such items will be inspected. Weapons and sharp objects (such as pocketknives and scissors), cell phones, pagers, cameras and recording devices will not be permitted inside the meeting room. Please note that we will not distribute voting ballots during the meeting. If you plan to vote at the meeting, pick up a ballot at the Voting Booth upon your arrival and place it in one of the ballot boxes located near the Security Booth area or inside the meeting room, or submit your ballot to a meeting usher at the time designated during the meeting. We also invite you to visit HERSHEY’S CHOCOLATE WORLD visitor’s center on the day of the Annual Meeting. Please note that this year the visitor’s center will be open from 9:00 a.m. to 6:00 p.m. Once again, we are offering stockholders a special 25% discount on selected items. You will need to show your ADMISSION TICKET (in any of the forms described above) at HERSHEY’S CHOCOLATE WORLD to receive the special discount. To assure proper representation of your shares at the meeting, we encourage you to submit your voting instructions to the Company in advance by Internet, phone or mail. Please refer to our proxy materials for more information on how to vote your shares. I look forward to seeing you at the meeting. Regards, James E. Nevels Chairman of the Board of Directors John P. Bilbrey President and Chief Executive Officer March 18, 2014 Dear Stockholder, The Hershey Company delivered another good year of financial and marketplace results in 2013. Confectionery is an advantaged category and Hershey continues to perform strongly as a category leader. Our results put us in a solid position and show that our responses to changing market conditions are driving overall category growth. Hershey’s net sales increased 7.6 percent in 2013 versus a year ago, giving us another year of record net sales at $7,146,079,000. This was our fourth consecutive year of at least 7 percent sales growth. Our 2013 adjusted earnings per share-diluted growth was 14.8 percent, our fifth consecutive year of double-digit percentage EPS increases. Our 2013 performance demonstrates that our business model is working. We recognize, however, that consumer needs and behavior continuously evolve. This is why we’ve been building our proprietary Insights Driven Performance platform and our capabilities as a “knowledge” company. In 2014, we will use our consumer data and insights to understand consumer shopping patterns, purchasing decisions and consumption so we can go to market with the right products in the right places, merchandised to meet the everyday needs of our consumers. Our initial work in this area has already contributed to accelerated profitable organic sales growth and enabled Hershey to reclaim its candy, mint and gum category leadership position in 2013 in the United States with a 31.1 percent share of the market. We believe the investments we’re making in our businesses around the world position us for further growth. Our focus on our key global brands is fueling company growth, with Hershey’s, Reese’s, Kisses, Jolly Rancher and Ice Breakers combined sales in 2013 up about 9 percent compared to the prior year. In the United States, our core brands such as Reese’s, Kit Kat and Rolo, as well as Brookside, all gained market share. I’m pleased with the continued success of our international businesses. For the full year, our international net sales increased about 16 percent, including the impact of foreign currency exchange rates. This puts us on track to achieve close to $1 billion in sales in these markets by the end of 2014. A highlight of our international progress last year was our announcement to acquire the well-known Chinese confectionery company Shanghai Golden Monkey. The strength of Shanghai Golden Monkey‘s complementary product portfolio, manufacturing expertise and overall distribution capabilities gives us the opportunity to make the iconic brands of both companies even more powerful in our fastest-growing market. In 2013, Hershey was the fastest growing chocolate company in China, reflecting consumers’ response to innovation such as Hershey’s Drops and Hershey’s Kisses Deluxe Chocolates and effective advertising support of our brands. As a result, China was our best performing international market with full-year retail takeaway up about 45 percent. Importantly, in November we crossed a major milestone, achieving a 10.2 percent share of the China chocolate market. Our momentum gives us confidence that the investments we’ve made, and will continue to make, in consumer insights and route-to-market, will benefit our business in the near and long term. Throughout 2013, Hershey continued to demonstrate its leadership as a corporate citizen. Our efforts resulted in achieving a number of milestones and receiving recognition from important stakeholders: • Dow Jones Sustainability World Index ranked Hershey’s sustainability performance in the top 10 percent of all companies in the global food, beverage & tobacco industry. • Bloomberg Civic 50 List named Hershey as the only confectionary company on its list and awarded us with three Gold Medals in the six categories ranked. • Our CocoaLink technology program for cocoa farmers surpassed 40,000 users in Ghana. The program improves livelihoods for cocoa farmers and their communities. Since 2011, cocoa farmers in 1,700 communities have received more than 850,000 free SMS texts. • Hershey exceeded several 2015 environmental targets years ahead of schedule: —Converted six manufacturing facilities to ZWL (Zero-Waste-to-Landfill) status by 2013, surpassing our 2015 goal of five. —Achieved a recycling rate of 86.6 percent, beating our 2015 goal of 85 percent by the end of 2013. —Reduced water consumption per pound of product by 58 percent by the end of 2012, far exceeding our 2015 goal of 10 percent. Our United Way employee campaigns in the U.S., Canada, Mexico, Brazil, India and China raised more than $2.95 million, a record amount for Hershey. These results show our Hershey values in action and build upon our great reputation among our loyal consumers around the world. Looking ahead to 2014, we have solid consumer-driven plans focused on core brand growth and innovation. We’re excited about the potential of our newest products, including York Minis, Hershey’s Spreads, Lancaster Caramel Soft Crèmes and Brookside Crunchy Clusters in the United States, and Hershey’s Kisses Deluxe Chocolates in China as well as the continued rollout of our global brands in key international markets. We are confident of the plans we have in place and believe they will result in another year of solid net sales and earnings growth. I believe that our solid plans, disciplined execution and key initiatives, including our acquisition of Shanghai Golden Monkey, which we expect to complete in the second half of 2014, will enable us to achieve our goals in 2014 and continue to deliver value for all of our stockholders.