<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 140.14a-1(c) or Section
240.14a-12
Tyson Foods, Inc.
(Name of Registrant as Specified in Its Charter)
Tyson Foods, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) 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:
______________________________________________________________________
( ) 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:______________________________________________________
<PAGE>
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 12, 1996
To the Shareholders of Tyson Foods, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Tyson
Foods, Inc., a Delaware corporation (the "Company"), will be held at the
Walton Arts Center, 495 West Dickson Street, Fayetteville, Arkansas, on
Friday, January 12, 1996, at 10:00 a.m., local time, for the following
purposes:
1. To fix the number of directors for the ensuing year at ten and to
elect ten directors.
2. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on November 20, 1995,
will be entitled to vote at the Annual Meeting and any adjournments
thereof. A list of shareholders entitled to vote at the Annual Meeting will
be maintained during the ten-day period preceding the meeting at the office
of the Company's General Counsel, 3422 N. College, Suite 3, Fayetteville,
Arkansas 72703.
The Company's Proxy Statement is submitted herewith. The Annual Report for
the fiscal year ended September 30, 1995, is being mailed to shareholders
together with this Notice and Proxy Statement.
By Order of the Board of Directors
Mary Rush
Secretary
Springdale, Arkansas
December 6, 1995
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO DATE, SIGN AND PROMPTLY
RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR
WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE
GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER OR VOTE
YOUR SHARES IN PERSON IN THE EVENT YOU SHOULD ATTEND THE MEETING.
<PAGE>
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
On January 12, 1996 and any Adjournments
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
Tyson Foods, Inc. (the "Company"). It is for use only at the Annual Meeting
of Shareholders to be held at the Walton Arts Center, 495 West Dickson
Street, Fayetteville, Arkansas, on Friday, January 12, 1996, at 10:00 a.m.,
local time, and any adjournments thereof.
Any shareholder executing a proxy retains the right to revoke it at any
time prior to exercise at the Annual Meeting. A proxy may be revoked by
delivery of written notice of revocation to the Secretary of the Company,
by execution and delivery of a later proxy or by voting the shares in
person at the Annual Meeting. If not revoked, all shares represented by
properly executed proxies will be voted as specified therein.
This proxy material is first being mailed to shareholders on or about
December 6, 1995.
OUTSTANDING STOCK AND VOTING RIGHTS
As of September 30, 1995, the outstanding shares of the Company's capital
stock consisted of 76,335,669 shares of Class A Common Stock and 68,454,388
shares of Class B Common Stock. The holders of record of the shares of
Class A Common Stock and Class B Common Stock outstanding on November 20,
1995, will vote together as a single class on all matters hereby submitted
to shareholders and such other matters as may properly come before the
Annual Meeting and any adjournments thereof. Each share of Class A Common
Stock will entitle the holder to one vote and each share of Class B Common
Stock will entitle the holder to ten votes on all such matters. The stock
transfer books of the Company will not be closed.
The enclosed form of proxy provides a method for shareholders to withhold
authority to vote for any one or more of the nominees for director while
granting authority to vote for the remaining nominees. The names of all
nominees are listed on the proxy card. If you wish to grant authority to
vote for all nominees, check the box marked "FOR." If you wish to withhold
authority to vote for all nominees, check the box marked "WITHHOLD." If you
wish your shares to be voted for some nominees and not for one or more of
the others, check the box marked "FOR" and indicate the name(s) of the
nominee(s) for whom you are withholding the authority to vote by listing
the name(s) of such nominee(s) in the space provided. If you checked the
box marked "WITHHOLD" your vote will be treated as an abstention and
accordingly your shares will neither be voted for nor against a director
but will be counted for quorum purposes. Broker "non-votes" are not
relevant to the determination of quorum or whether the proposal to elect
directors has been approved.
1
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of September 30,
1995, regarding the only persons known by the Company to own, directly or
indirectly, more than 5% of either of its two classes of Common Stock:
<TABLE>
<CAPTION>
===========================================================================
Name and Address of Number of Shares Percent
Beneficial Owner Title of Class Beneficially Owned of Class
==========================================================================
<S> <C> <C> <C>
Don Tyson and Class B Common Stock 68,399,040(1) 99.9
Tyson Limited Partnership
2210 W. Oaklawn Drive
Springdale, AR 72762-6999
INVESCO PLC Class A Common Stock 4,000,500(2) 5.2
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
(1) Includes 500,000 shares of Class B Common Stock owned of record by Don
Tyson, Senior Chairman of the Board of the Company, and 67,899,040 shares
of Class B Common Stock owned of record by the Tyson Limited Partnership, a
Delaware limited partnership (the "Partnership"). Don Tyson has a 54.3123
combined percentage interest as a general and limited partner in the
Partnership and the Estate of Randal Tyson has a 45.0620 percentage
interest as a limited partner in the Partnership. Barbara A. Tyson, the
widow of Randal Tyson, has limited dispositive power with respect to, and
is the principal income beneficiary of, the Estate of Randal Tyson. Don
Tyson's adult children, including John H. Tyson, are contingent
beneficiaries of such estate. The managing general partner of the
Partnership is Don Tyson. The other general partners are Leland E. Tollett,
Chairman of the Board and Chief Executive Officer of the Company; Joe F.
Starr, Director and Vice President of the Company; John H. Tyson, Director
and President of the Beef and Pork Division of the Company; James B. Blair,
General Counsel to the Company; and Harry C. Erwin, Jr. Don Tyson, as
managing general partner, has the exclusive right, subject to certain
restrictions, to do all things on behalf of the Partnership necessary to
manage, conduct, control and operate the Partnership's business, including
the right to vote all shares or other securities held by the Partnership,
as well as the right to mortgage, pledge, or grant security interests in
any assets of the Partnership. The Partnership terminates December 31,
2040. Additionally, the Partnership may be dissolved upon the occurrence of
certain events, including (i) a written determination by the managing
general partner that the projected future revenues of the Partnership will
be insufficient to enable payment of costs and expenses, or that such
future revenues will be such that continued operation of the Partnership
will not be in the best interest of the partners, (ii) an election to
dissolve the Partnership by the managing general partner that is approved
by the affirmative vote of a majority in percentage interest of all general
partners and (iii) the sale of all or substantially all of the
Partnership's assets and properties. The withdrawal of the managing general
partner or any other general partner (unless such partner is the sole
remaining general partner) will not cause a dissolution of the Partnership.
Upon dissolution of the Partnership, each partner, including all limited
partners, will receive in cash or otherwise, after payment of creditors,
2
<PAGE>
loans from any partner, and return of capital account balances, their
respective percentage interests in the Partnership assets. In addition to
the above-listed shares of Class B Common Stock, the Partnership also is
the record owner of 600,000 shares of Class A Common Stock of the Company.
(2) A report on Schedule 13G has been filed with the Securities and
Exchange Commission by INVESCO PLC ("INVESCO") indicating that INVESCO has
shared voting and dispositive power over 4,000,500 shares of Class A Common
Stock. The foregoing information has been included in reliance upon, and
without independent investigation of, the disclosures contained in
INVESCO's Schedule 13G.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
The following table sets forth information with respect to the beneficial
ownership of the Company's two classes of Common Stock, as of September 30,
1995, by its directors, nominees for election as directors, named executive
officers and by all directors and executive officers as a group:
<CAPTION>
===========================================================================
Shares of Percent of Shares of Percent of
Class A Outstanding Class B Outstanding
Common Class A Common Class B
Stock Common Stock Common
Beneficially Stock Beneficially Stock Voting
Owned(1) Owned(1) Percentage
Name of Beneficial Owner
===========================================================================
<S> <C> <C> <C> <C> <C>
Don Tyson 806,309(2) 1.1 68,399,040(3) 99.9 90.0
Leland E. Tollett(4) 2,068,545 2.7 *
Joe F. Starr(4) 1,424,119(5) 1.9 *
Neely E. Cassady 817,908 1.1 *
John H. Tyson(4)(6) 186,689(7) * *
Barbara A. Tyson(6) 102,894 * *
Fred S. Vorsanger 34,000 * *
Shelby D. Massey 3,852 * *
Lloyd V. Hackley 5,886 * *
Donald E. Wray 496,125 * *
Gerald M. Johnston 607,280(7) * *
David S. Purtle 62,076 * *
All Directors and
Executive Officers
as a group 7,027,947 9.2 68,399,040 99.9 90.8
(19 persons)
</TABLE>
*Indicates ownership or aggregate voting percentage of less than 1%.
(1) Includes beneficial ownership of shares with respect to which voting
or investment power may be deemed to be directly or indirectly controlled.
Accordingly, the shares shown in the foregoing table include shares owned
directly, shares held in such person's accounts under the Company's
employee stock purchase plan, shares owned by certain of the individual's
family members and shares held by the individual as a trustee or in a
fiduciary or other similar capacity, unless otherwise disclaimed and/or
described below. Also includes shares subject to presently exercisable
options held by certain named individuals.
3
<PAGE>
(2) Includes 600,000 shares of Class A Common Stock owned of record by the
Tyson Limited Partnership.
(3) Includes all shares of Class B Common Stock owned of record by the
Tyson Limited Partnership as described in Footnote 1 to the Principal
Shareholders table.
(4) Does not include any shares of Class A and Class B Common Stock owned
of record by the Tyson Limited Partnership of which Leland E. Tollett, Joe
F. Starr and John H. Tyson have a general partnership interest. See
Footnote 1 to the Principal Shareholders table.
(5) Does not include 628,000 shares of Class A Common Stock held by the
Tyson Foundation, a nonprofit charitable organization. Mr. Starr is a
trustee of the Foundation and disclaims beneficial ownership of all such
shares.
(6) Does not include Class B Common Stock owned of record by the Tyson
Limited Partnership nor 469,646 shares of Class A Common Stock owned by the
Estate of Randal Tyson.
(7) Does not include 1,500,000 shares of Class A Common Stock held by a
trust established for the Company's profit sharing plan for which John H.
Tyson, an executive officer and a director of the Company, and Gerald M.
Johnston, an executive officer of the Company, serve as trustees. Each
trustee disclaims beneficial ownership of such shares.
ELECTION OF DIRECTORS
The Company's Board of Directors for the ensuing year will consist of ten
members who are to be elected for a term of one year or until their
successors are duly elected and qualified. The following slate of ten
nominees has been chosen by the Board of Directors, and the Board
recommends that each be elected.
Don Tyson, Age 65; Senior Chairman of the Board of Directors of the
Company. Mr. Tyson served as Chairman of the Board until April 1995 and has
been a director of the Company since 1952. He served as Chief Executive
Officer of the Company until March 1991.
Leland E. Tollett, Age 58; Chairman and Chief Executive Officer of the
Company. Mr. Tollett was named Chairman of the Board in April 1995. He
served as Vice Chairman, President and Chief Executive Officer of the
Company since March 1991 and President and Chief Operating Officer from
1983 until 1991. He has been a director of the Company since 1984.
Joe F. Starr, Age 62; Vice President of the Company and member of the Board
of Directors of the Company. Mr. Starr was a member of the Board of
Directors of Worthen National Bank of Northwest Arkansas, Fayetteville,
Arkansas, from 1980 to 1991. Mr. Starr has served the Company as a director
since 1969.
John H. Tyson, Age 42; President, Beef and Pork Division and Director of
Governmental, Media and Public Relations. Mr. Tyson has also served the
Company as Vice President and Director of Engineering/Environmental/Capital
Spending, as Vice President, Marketing/Corporate Accounts and as Special
Projects Manager. Mr. Tyson has been a director of the Company since 1984.
4
<PAGE>
Shelby D. Massey, Age 62; farmer and private investor. Mr. Massey served as
Senior Vice Chairman of the Board of Directors of the Company from 1985 to
1988. He has been a director of the Company since 1985.
Neely E. Cassady, Age 67; Chairman of the Board and Chief Executive Officer
of Sunmark and Chairman of the Board of Cassady Associates, Inc. and it's
affiliate, H.K. Brewer Electric in Little Rock, Arkansas. Mr. Cassady is an
Arkansas State Senator serving since January 1983. Mr. Cassady has been a
director of the Company since 1974.
Fred S. Vorsanger, Age 67; private business consultant, Walton Arena
Manager and Vice President (Emeritus) of the University of Arkansas. He is
a director of McIlroy Bank & Trust Co. of Fayetteville and has served as
Mayor and director of the City of Fayetteville, Arkansas. Mr. Vorsanger
served as a Vice President of the University of Arkansas from 1968 until
1988. He has been a director of the Company since 1977.
Barbara A. Tyson, Age 46; Vice President of the Company. Ms. Tyson has
served in related capacities for the last five years and was previously a
Regional Sales Manager in the Foodservice Division. Ms. Tyson has been a
director of the Company since 1988.
Lloyd V. Hackley, Age 54; President, North Carolina Community College
System. Mr. Hackley was Chancellor and Tenured Professor of Political
Science at the Fayetteville State University, Fayetteville, North Carolina,
from 1988 to 1995. Mr. Hackley has been a director of the Company since
1992.
Donald E. Wray, 58; President and Chief Operating Officer of the Company.
Mr. Wray was named President and Chief Operating Officer in April 1995
after serving as Chief Operating Officer since 1991, Senior Vice President,
Sales and Marketing Division since 1985, Senior Vice President of
Processing, Sales and Marketing Division since 1983 and Executive Vice
President of Sales and Marketing since 1981. Mr. Wray has been a director
of the Company since January 1994.
Each of the foregoing nominees is currently serving as a director of the
Company. Each was elected at the last Annual Meeting of Shareholders. John
H. Tyson is the son of Don Tyson. Barbara A. Tyson is the widow of Randal
Tyson, who was the brother of Don Tyson and uncle of John H. Tyson. There
are no other family relationships among the foregoing nominees. By reason
of their beneficial ownership of the Company's common stock, Don Tyson and
the Tyson Limited Partnership are deemed to be controlling persons of the
Company. None of the companies or organizations listed above is a parent,
subsidiary or affiliate of the Company.
Unless otherwise designated, the enclosed proxy will be voted for the
election of the foregoing ten nominees as directors. To be elected as a
director, each nominee must receive the favorable vote of a majority of the
votes cast at the meeting. Shareholders are not entitled to cumulate voting
with respect to the election of directors. The Board of Directors does not
contemplate that any of the nominees will be unable to stand for election,
but should any nominee become unavailable for election, all proxies will be
voted for the election of a substitute nominated by the Board of Directors.
The Board of Directors (the "Board") does not have a standing nominating
committee. The Board nominates persons to be nominees for director and will
consider suggestions by shareholders for names of possible future nominees
5
<PAGE>
delivered in writing to the Secretary of the Company on or before September
30 in any year. The Board has a compensation committee whose primary
function is to oversee the administration of the Company's employee benefit
plans and establish the Company's compensation policies. See "Report of
Compensation Committee" contained herein. This committee, comprised of
Shelby D. Massey, Fred S. Vorsanger and Neely E. Cassady met two times and
held one special telephonic meeting during fiscal 1995. The Compensation
Committee has established a special subcommittee thereof comprised of Neely
E. Cassady and Fred S. Vorsanger for the purpose of administering the
Company's performance-based compensation plans. The special subcommittee
met two times during fiscal 1995. The Board has an audit committee to
assist it in fulfilling its fiduciary responsibilities for the financial
reporting of the Company. Members of the audit committee are Fred S.
Vorsanger, Neely E. Cassady and John H. Tyson. The audit committee met four
times during fiscal 1995.
The Board held four regularly scheduled meetings in fiscal 1995. All
current directors attended all of the meetings.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows all the cash compensation paid or to be paid by
the Company or any of its subsidiaries, as well as certain other
compensation paid or accrued, during the fiscal years indicated, to the
Senior Chairman, the Chairman and Chief Executive Officer, and the three
highest paid executive officers of the Company for such period in all
capacities in which they served:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
- -------------------- --------------------
Name and Other Annual All Other
Principal Compensa- Options/ Compensa-
Position Year Salary Bonus tion SARs tion(2,3,4)
===========================================================================
<S> <C> <C> <C> <C> <C> <C>
Don Tyson,
Senior Chairman
of the Board
1995 $720,000 -- $973,776(1) -- $155,562
1994 630,000 792,000 723,756(1) -- 142,147
1993 600,000 350,000 784,651(1) -- 153,202
Leland E. Tollett,
Chairman and Chief
Executive Officer
1995 $600,000 -- N/A -- $55,800
1994 513,750 660,000 N/A -- 38,776
1993 485,000 115,000 N/A 12,500 44,335
Donald E. Wray,
President and Chief
Operating Officer
1995 $379,688 -- N/A -- $31,907
1994 299,955 247,500 N/A -- 23,551
1993 267,485 112,719 N/A 12,500 22,997
6
<PAGE>
Gerald M. Johnston,
Executive V.P., Finance
1995 $278,438 -- N/A 2,500 $22,794
1994 243,830 151,250 N/A -- 19,276
1993 227,109 98,189 N/A 12,500 19,505
David S. Purtle,
Executive V.P.,
Operations, Warehousing
and Transportation
1995 $278,438 -- N/A 2,500 $22,794
1994 246,163 151,250 N/A -- 19,381
1993 230,137 95,161 N/A 12,500 19,510
</TABLE>
(1) In 1995, "Other Annual Compensation" for Mr. Tyson includes travel and
entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $566,046 and $380,245, respectively. In 1994,
"Other Annual Compensation" for Mr. Tyson includes travel and entertainment
costs and amounts reimbursed for estimated income tax liability related
thereto of $412,637 and $299,539, respectively. In 1993, "Other Annual
Compensation" for Mr. Tyson includes travel and entertainment costs and
amounts reimbursed for estimated income tax liability related thereto of
$435,233 and $339,588, respectively.
(2) In 1995, "All Other Compensation" includes the following for Messrs.
Tyson, Tollett, Wray, Johnston and Purtle: (i) Company matching
contributions to the Employee Stock Purchase Plan of $36,000; $30,000;
$18,984; $13,922 and $13,922 for each named executive, respectively, and
(ii) Company contributions to the Executive Savings Plan of $30,960;
$25,800; $12,923; $8,872 and $8,872 on behalf of each named executive,
respectively, to match a portion of 1995 pretax elective deferral
contributions (included under salary) made by each person to such plans.
Also includes $88,602, representing the dollar value benefit of premium
payments under split dollar life insurance policies on Mr. Tyson for which
the Company will be reimbursed for premiums paid.
(3) In 1994, "All Other Compensation" includes the following for Messrs.
Tyson, Tollett, Wray, Johnston and Purtle: (i) Company matching
contributions to the Employee Stock Purchase Plan of $31,500; $25,687;
$14,998; $12,192 and $12,308 for each named executive, respectively, and
(ii) Company contributions to the Executive Savings Plan of $20,230;
$13,089; $8,553; $7,084 and $7,073 on behalf of each named executive,
respectively, to match a portion of 1994 pretax elective deferral
contributions (included under salary) made by each person to such plans.
Also includes $90,417, representing the dollar value benefit of premium
payments under split dollar life insurance policies on Mr. Tyson for which
the Company will be reimbursed for premiums paid.
(4) In 1993, "All Other Compensation" includes the following for Messrs.
Tyson, Tollett, Wray, Johnston and Purtle: (i) Company matching
contributions to the Employee Stock Purchase Plan of $30,000; $24,240;
$13,374; $11,356 and $11,507 for each named executive, respectively, and
(ii) Company contributions to the Executive Savings Plan of $34,600;
$20,095; $9,497; $8,149 and $8,003 on behalf of each named executive,
respectively, to match a portion of 1993 pretax elective deferral
contributions (included under salary) made by each person to such plans.
Also includes $88,602, representing the dollar value benefit of premium
payments under split dollar life insurance policies on Mr. Tyson for which
the Company will be reimbursed for premiums paid.
7
<PAGE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
======================================
The following table shows all individual grants of stock options to the
named executives during the fiscal year ended September 30, 1995.
<CAPTION>
Potential
Realizable
Value at
Assumed
Annual
Rates of
Stock Price
Appreciation
for
Individual Grants Option Term (2)
========================== ===============
Number of
Securities
Underlying % of Total
Options/ Options/SARs Exercise
SARS Granted to or Base
Granted Employees Price Expiration
Name (1) In Fiscal Year ($/Sh) Date 5% 10%
- ---- --- -------------- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Don Tyson --- --- --- --- --- ---
Leland E. Tollett --- --- --- --- --- ---
Donald E. Wray --- --- --- --- --- ---
Gerald M. Johnston 2,500 .8% $21.75 4/26/05 $34,196 $86,660
David S. Purtle 2,500 .8% $21.75 4/26/05 $34,196 $86,660
</TABLE>
(1) These shares were granted with respect to the Company's Class A Common
Stock for a ten year period beginning as of June 1, 1995. The options do
not qualify as "incentive stock options" under the Internal Revenue Code.
The option price of $21.75 was the fair market value of the Class A Common
Stock on the date of the grant. Vesting at 20% begins on April 26, 1998,
the end of the third year, and continues at 20% for each subsequent year
until all shares are vested on April 26, 2002. Options not exercised expire
on April 26, 2005. Unvested options are forfeited upon termination of
employment.
(2) As required by Securities and Exchange Commission rules and
regulations, potential realizable values are based on the assumption that
the Class A Common Stock price appreciates at the annual rates shown
compounded annually from the date of grant until the end of the ten year
option term and is not intended to forecast appreciation in stock price.
Tyson's stock price at the end of the ten year term based on a 5%
appreciation would be $35.42 and on a 10% appreciation would be $56.41.
8
<PAGE>
<TABLE>
OPTION/SAR EXERCISES AND HOLDINGS
=================================
The following table sets forth information with respect to the named
executives concerning unexercised options and SARs held as of the end of
the fiscal year.
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
===========================================================================
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End(1)
---------------- ----------------
Shares
Acquired on Value
Name Exercise Realized Unexercisable(2) Unexercisable(2)
- ---- -------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
Don Tyson --- --- --- ---
Leland E. Tollett 27,000 $448,875 12,500 $65,625
Donald E. Wray 30,000 461,250 12,500 65,625
Gerald M. Johnston 24,000 342,000 15,000 78,437
David S. Purtle 30,000 465,000 15,000 78,437
</TABLE>
(1) Amounts represent the market value ($26.875) less the exercise or base
price for all shares underlying unexercisable options as of September 30,
1995.
(2) There were no exercisable options held by the named executives at
September 30, 1995.
Director Compensation
- ---------------------
Neely E. Cassady, Fred S. Vorsanger, Lloyd V. Hackley and Shelby D. Massey,
outside directors serving on the board, receive an annual retainer of
$25,000, while Don Tyson, Leland E. Tollett, Joe F. Starr, John H. Tyson,
Barbara A. Tyson and Donald E. Wray, directors who are also employees of
the Company, receive $2,000 per meeting. Outside directors are compensated
at the rate of $1,000 per day for time spent on board-related activities.
Arrangement Upon Termination of Employment
- ------------------------------------------
The Company has an employment contract with Don Tyson which provides for
his active employment at a minimum salary of $720,000 per annum through
December 31, 1996, which employment is automatically extended for
successive one year periods thereafter, unless terminated by either the
Company or Mr. Tyson upon proper notice. If Mr. Tyson becomes disabled
while serving as a full-time employee of the Company, he would be entitled
to an annual salary during the period of such disability in an amount equal
to the lesser of (i) one-half of his average total compensation (salary
9
<PAGE>
plus bonuses) for the three years immediately prior to the date of his
disability, or (ii) $720,000, as adjusted to reflect increases in the
Consumer Price Index. In the event of his death while serving as a full-
time employee of the Company, annual payments would be made to his heirs
for a period of ten years in an amount equal to (i) 50% of his average
annual salary for the three years immediately prior to the date of his
death, or (ii), if Mr. Tyson dies while receiving disability payments, the
amount of his annual disability benefits. The death and disability benefits
are funded by life insurance paid for by the Company of which it is also
the sole beneficiary. Upon Mr. Tyson's retirement from active employment,
he will receive for the remainder of his life annual compensation for
certain advisory services he has agreed to perform, an amount equal to his
disability benefits, calculated from the date of his retirement. The
contract provides that the Company may not merge or consolidate with any
other organization unless such organization expressly assumes the duties of
the Company set forth in the contract. Accordingly, the contract could have
the effect of deterring attempts to acquire control of the Company which
involve such transactions and are opposed by Mr. Tyson.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors was
comprised during fiscal 1995 of Messrs. Shelby D. Massey, Fred S. Vorsanger
and Neely E. Cassady. The Committee oversees the administration of the
Company's employee benefit plans and establishes policies relating to
compensation of employees. All decisions by the Committee relating to the
compensation of the Company's executive officers are reviewed by the full
Board, except for decisions relating to certain of the Company's
compensation plans which require approval and administration solely by a
committee comprised of "outside/disinterested directors." Effective
November 18, 1994, the Committee approved the formation of a special
subcommittee (the "Special Committee") comprised of Messrs. Vorsanger and
Cassady for the purpose of administering awards under the Company's
performance-based compensation plans as required by the Omnibus Budget
Reconciliation Act of 1993 ("OBRA").
The following is a report submitted by the above-listed committee members
in their capacity as the Compensation Committee of the Board of Directors,
addressing the Company's compensation policy as it related to executive
officers for fiscal 1995.
Compensation Policy
- -------------------
The goal of the Company's executive compensation policy is to ensure that
an appropriate relationship exists between executive pay and the creation
of shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation
policies integrate annual base compensation with bonuses based upon
corporate performance and individual initiatives and performance.
Measurement of corporate performance is primarily based on Company goals
and industry performance levels. Accordingly, in years in which performance
goals and industry levels are achieved or exceeded, executive compensation
tends to be higher than in years in which performance is below
expectations. Annual cash compensation, together with the payment of equity-
based, incentive and deferred compensation, is designed to attract and
retain qualified executives and to ensure that such executives have a
continuing stake in the long-term success of the Company. All executive
officers, and management in general, are eligible for and do participate in
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<PAGE>
incentive and deferred compensation plans.
In 1993, Congress enacted OBRA which, among other things, provides that
compensation paid to certain covered executive officers in excess of
$1,000,000 annually does not qualify for deduction by the Company unless
such compensation is "performance-based." For fiscal 1995, OBRA is not
expected to have an impact or result in the loss of a deduction with
respect to cash compensation paid to the Company's executives. With respect
to stock-based compensation, the Company's Amended and Restated
Nonstatutory Stock Option Plan takes advantage of an exemption from OBRA
for stock option grants.
Performance Measures
- --------------------
In evaluating annual executive compensation, the
Committee examines earnings per share, return on equity, sales growth and
total return to shareholders. These factors are compared with problems and
advantages that are unique to the industry, performance in prior years and
performance of other companies in the industry. Although the Company has a
diversified food products line, approximately 75% of the Company's revenues
in fiscal 1995 was derived from the sale of poultry and poultry products.
Accordingly, the Company believes that its performance should be compared
to that of other companies that are primarily poultry or poultry-product
oriented to evaluate management performance. Therefore, the Company
compares its performance against a peer industry group currently consisting
of Hudson Foods, Inc., WLR Foods, Inc., Pilgrim's Pride Corporation,
Sanderson Farms, Inc., Golden Poultry Company, Inc. and Cagle's, Inc.
Although there are other producers of poultry and poultry products, the
Committee believes that the percentage of poultry sales to total sales of
the foregoing group more closely represents that of the Company.
Fiscal 1995 Compensation
- ------------------------
For fiscal 1995, the Company's executive compensation program consisted of
(i) base salary, adjusted from the prior year, (ii) matching contributions
to incentive and deferred compensation plans, (iii) stock option grants
under the Company's Nonstatutory Stock Option Plan, (iv) restricted stock
grants under the Company's Restricted Stock Bonus Plan and (v)
contributions under the Company's broad-based Stock Purchase Plan which are
fixed as a percentage of employee participant contributions. No cash
bonuses were paid to executive officers in fiscal 1995.
Base Salary
- -----------
Executives' base salaries are reviewed annually to determine if such
salaries fall within the range of those persons holding comparably
responsible positions at other companies. In reviewing base salaries,
national surveys prepared by third-party consultants are utilized. The
surveys are not limited to the Company's peer industry group but rather are
comprised of regional and national companies of similar size and
complexity. Individual salaries are also based upon an evaluation of other
factors, such as individual past performance, potential with the Company
and level and scope of responsibility. The Committee believes that the base
salaries of the Company's executive officers as a whole approximate the
median level derived from comparative survey data.
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<PAGE>
Cash Bonuses
- ------------
Cash bonuses are awarded to executives from a bonus pool determined
annually by the Committee upon the recommendation of management. The amount
of the bonus pool is based upon a subjective determination after
considering a number of factors including attainment of performance goals,
prior year's performance, performance of the peer industry group, general
economic conditions, and the relative mix between cash and long-term
compensation. Individual bonuses are subjectively determined from the
bonus pool based upon individual performance and responsibility. The
Company's objective is to obtain financial performance that achieves
several goals over time -- including a return on equity above 15% and sales
and earnings-per-share growth of 10% or more. Additionally, the Company
examines total return to shareholders in relation to total return provided
in prior years and industry performance.
A number of events occurred in fiscal 1995 that affected achievement of the
Company's performance goals including (i) excess supply of competing meats,
(ii) increasing grain costs, (iii) the Mexican peso devaluation, and (iv)
margin pressures from the Company's partially integrated pork operations.
Fiscal 1995 earnings per share increased by 10.2% over 1994 (excluding the
1994 writedown of assets), with a total increase over five years of 67.8%,
or a compounded annual growth rate of 10.9%. Further, sales increased 7.8%
during 1995 with a total increase over five years of approximately 44.1% or
7.6% compounded annually. Return on average quarterly shareholders' equity
for 1995 was approximately 16.0% compared to 14.1% in 1994. Total return to
shareholders (total stock price plus reinvested dividends) for 1995 was
12.3%, compared to 12.5% in 1994, with a total return over the past five
years of 108.9%.
Despite the challenges posed by the other factors described above, the
dedicated efforts of its executives allowed the Company to achieve positive
financial performance. However, because the Company did not achieve all of
its performance objectives and because of the operating environment
currently present in the industry, the Committee did not approve bonuses
for executive officers and markedly reduced the overall bonus pool.
Stock Based Compensation
- ------------------------
The Committee approves long-term compensation from time to time in the form
of stock-based compensation with a view towards more closely aligning the
interests of executives and other managers with the interests of
shareholders. The Committee believes that stock options are an effective
incentive for executives and managers to create value for shareholders
since the value of an option bears a direct relationship to appreciation in
the Company's stock price. The determination of whether to grant stock
options, whether on an aggregate or individual basis, is in the discretion
of the Committee. In making such determination, the Committee reviews the
Company's performance as determined by the price of its stock, the relation
of long-term compensation to cash compensation, the perceived need of
providing additional incentives to executives and managers to increase
shareholder value, the number and frequency of option grants in prior years
and individual performance and potential contribution to the Company. Based
upon these factors, the Committee, during fiscal 1995, granted options to
purchase a total of 297,800 shares of Class A Common Stock to executive
officers and managers at an exercise price of $21.75 per share, which
equaled the fair market value of the stock on the date of grant. (Such
options were not Incentive Stock Options under the Internal Revenue Code
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<PAGE>
which means that the officers will have to pay taxes upon the exercise of
the options and the Company will receive a corresponding tax deduction.) In
light of previous grants and existing compensation levels, the Committee
did not deem it appropriate to grant options to the Company's three most
senior executive officers as described in the Summary Compensation Table.
In addition to the foregoing, the Committee awarded an aggregate of 6,500
restricted shares of Class A Common Stock to certain executives under the
Company's Restricted Stock Bonus Plan.
Senior Chairman and CEO Compensation
- ------------------------------------
The general approach used in setting the base compensation for Don Tyson,
the Company's Senior Chairman, and Leland E. Tollett, Chairman and Chief
Executive Officer, is to provide compensation which is competitive with
that of other companies of similar size, while encouraging and rewarding
corporate performance in line with the interests of shareholders. While Mr.
Tyson's base salary is set by contract, the Committee believes that Mr.
Tollett's base salary is below the median level of compensation for similar
positions in similar sized companies.
Effective for fiscal 1995, the Special Committee (with the approval of the
Shareholders of the Company) adopted the Executive Bonus Plan for Messrs.
Tyson and Tollett in order to comply with the provisions of OBRA. The
performance-based plan provided that Messrs. Tyson and Tollett were
entitled to receive a pro-rata percentage of a "bonus pool" to be funded up
to an annual aggregate maximum amount in any fiscal year equal to 1% of the
Company's pre-tax income (as defined in the plan) for the fiscal year plus
.5% of the increase in pre-tax income over the previous fiscal year. The
Special Committee retained full discretion to reduce or eliminate bonus
payments otherwise payable under the Executive Bonus Plan.
Based upon Messrs. Tyson's and Tollett's pro-rata percentage of the bonus
pool, the Special Committee has determined that they would have been
eligible for a cash bonus in fiscal 1995 of $2,444,284 and $1,047,551,
respectively. However, because (i) no bonuses were being granted to other
executives and (ii) Messrs. Tyson and Tollett made it clear that they would
not accept any bonuses if granted, the Special Committee did not award any
bonuses to either Mr. Tyson or Mr. Tollett.
Summary
- -------
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate
goals and shareholder interest. As performance goals are met or exceeded,
resulting in increased value to shareholders, executives are rewarded
commensurately. The Committee believes that compensation levels during
fiscal 1995 adequately reflect the Company's compensation goals and
policies.
Shelby D. Massey
Fred S. Vorsanger
Neely E. Cassady
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<PAGE>
COMPANY PERFORMANCE
-------------------
The following graph shows a five year comparison of cumulative total
returns for the Company, the S&P 500 composite index and an index of peer
companies selected by the Company.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(Tyson Foods, S&P 500, Peer Group)
===============================================
Base Return Return Return Return Return
Sept. Sept. Sept. Sept. Sept. Sept.
1990 1991 1992 1993 1994 1995
===== ====== ====== ====== ====== ======
<S> <C> <C> <C> <C> <C> <C>
Tyson Foods 100 150.23 172.75 165.32 186.19 209.19
S&P 500 100 131.07 145.54 164.47 170.55 221.28
Peer Group
Weighted 100 109.63 118.78 150.71 202.29 184.40
Average
===================================
Source S&P Compustat Services, Inc.
</TABLE>
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company,
the peer group and the S&P 500 Composite is based on the stock price or
composite index at the end of fiscal 1990.
The above graph compares the performance of the Company with that of the
S&P 500 Composite, and a group of peer companies with the investment
weighted on market capitalization. Companies in the peer group are as
follows: Hudson Foods, Inc., WLR Foods, Inc., Pilgrim's Pride Corp.,
Sanderson Farms, Inc., Golden Poultry Company, Inc. and Cagle's, Inc.
These companies were approved by the Compensation Committee.
CERTAIN TRANSACTIONS
====================
The Company has historically engaged in loans, lease agreements and other
transactions with various of its officers, directors and their affiliates.
The following summarizes such transactions in excess of $60,000 to which
the Company was a party during fiscal 1995. The Company anticipates that it
will continue to engage in similar transactions with such persons in the
future.
Loans
- -----
During fiscal 1995, other than for ordinary travel and expense payments,
the Company has made no loans or advances to any of its officers, directors
or affiliates.
Other Transactions
- ------------------
The following list is a summary of transactions between the Company and its
executive officers, directors, nominees, principal shareholders and other
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<PAGE>
related parties. Most of the farm leases are for specialized swine
farrowing and rearing facilities. Because of the specialized nature of the
Company's business, certain investors, some of whom are directors and
officers, have agreed to build swine or poultry facilities designed to meet
the Company's particular requirements. These facilities are generally
leased for between three and ten year terms with renewal options in favor
of the Company. The Company anticipates that it will continue such leases
under terms of the respective renewal options.
1. During fiscal 1995, the Company leased certain farms from the following
with aggregate lease payments as follows: (i) Don Tyson, $759,000; (ii) a
partnership, of which John H. Tyson and the Estate of Randal Tyson are
partners, $336,000; (iii) a partnership in which Joe F. Starr and the
children of Don Tyson, including John H. Tyson, are partners, $1,313,080;
(iv) the Tyson Children Partnership of which John H. Tyson is a partner
$678,000; (v) Estate of Randal Tyson, $133,333; (vi) Estates of John and
Helen Tyson, of which Don Tyson is executor, $27,960; (vii) Leland E.
Tollett, $248,841; (viii) certain entities controlled by Joe F. Starr,
$105,500; (ix) Gerald M. Johnston, $467,105; (x) a partnership in which
Gerald M. Johnston and Donald E. Wray are among the partners, $98,880; and
(xi) entities of which L. Wayne Britt, Senior Vice President, International
Division, is affiliated, $600,148.
2. The Company has an aircraft operation agreement with the Estates of John
and Helen Tyson, on a month-to-month basis with aggregate obligations of
$230,592 for fiscal 1995. Additionally, the Company has a lease arrangement
with Don Tyson for the use of a boat with aggregate payments of $73,880.
3. The Company is leasing various properties including four hatcheries, a
cold storage distribution facility and the Company's administrative offices
from the Tyson Foods, Inc. Employee Profit Sharing Trust for terms ending
November 1998 with aggregate lease payments of $3,621,727 during fiscal
1995.
4. A subsidiary of the Company, Cobb-Vantress, Inc., has a contract for a
breeder hen Research and Development farm with Leland E. Tollett with
aggregate payments of $633,808 during fiscal 1995.
5. Certain persons, including some officers and directors, are engaged in
poultry and swine growout operations whereby these persons purchase from
the Company baby chicks, feeder pigs, feed, veterinary and technical
services, supplies and other related items necessary to grow these
livestock to market age, at which time they are sold either to the Company
or to unrelated parties. For fiscal 1995, the purchases from the Company of
the above-enumerated items, which were at fair market value, by such
persons were: Don Tyson, $6,286,018; Joe F. Starr, $1,632,964; Barbara A.
Tyson, $1,460,291; John H. Tyson, $1,458,742; and a partnership with which
L. Wayne Britt was affiliated, $273,469.
6. The Company has a contract for poultry growout services with an entity
in which Donald E. Wray and Gerald M. Johnston are partners with aggregate
payments of $182,690 during fiscal 1995.
7. The Company has entered into an agreement with entities of which Don
Tyson is a principal, with respect to the operation of a waste water
treatment plant which is located adjacent to and services the Company's
chicken processing facility in Nashville, Arkansas, with aggregate payments
by the Company of $2,651,752 for fiscal 1995 pursuant to such agreement.
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<PAGE>
Additionally, the Company has entered into an agreement with the Tyson
Limited Partnership and another entity in which Don Tyson is a principal,
with respect to the operation of a wastewater treatment plant which is
located adjacent to and services a processing facility in Springdale,
Arkansas, with aggregate payments by the Company of $1,867,078 for fiscal
1995 pursuant to such agreement.
COMPLIANCE WITH SECTION 16(a) of the SECURITIES EXCHANGE ACT of 1934
=====================================================================
The Company's directors and executive officers are required to file under
the Securities Exchange Act of 1934 reports of ownership and changes of
ownership with the Securities and Exchange Commission.
Based solely on information provided to the Company by individual directors
and executive officers, the Company believes that during the preceding year
all filing requirements applicable to directors and executive officers have
been complied with.
AUDITORS TO BE PRESENT
======================
A representative of Ernst & Young LLP, the Company's auditors for fiscal
1995 and the current year, is expected to be in attendance at the Annual
Meeting and will be afforded the opportunity to make a statement. The
representative will also be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
=====================
Proposals of shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company on or before August
10, 1996, in order to be eligible for inclusion in the Company's proxy
statement and form of proxy. To be so included, a proposal must also comply
with all applicable provisions of Rule 14a-8 under the Securities Exchange
Act of 1934.
EXPENSES OF SOLICITATION
========================
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by officers, directors and employees of the Company personally
or by mail, telephone, telegraph or other similar means of communication.
Solicitation by such persons will be made on a part-time basis and no
special compensation other than reimbursement of actual expenses incurred
in connection with such solicitation will be paid.
ADDITIONAL INFORMATION AVAILABLE
================================
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, THE COMPANY WILL FURNISH A COPY OF
THE COMPANY'S 1995 ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. THE WRITTEN REQUEST SHOULD BE SENT TO THE
SECRETARY, AT THE COMPANY'S EXECUTIVE OFFICE. THE WRITTEN REQUEST MUST
STATE THAT AS OF NOVEMBER 20, 1995, THE PERSON MAKING THE REQUEST WAS A
BENEFICIAL OWNER OF CAPITAL STOCK OF THE COMPANY.
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<PAGE>
OTHER MATTERS
=============
So far as is now known, there is no business other than that described
above to be presented to the shareholders for action at the Annual Meeting.
Should other business come before the Annual Meeting, votes may be cast
pursuant to proxies in respect to any such business in the best judgment of
the persons acting under the proxies.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO ADDITIONAL POSTAGE, IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Mary Rush
Secretary
December 6, 1995
17
