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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
Tyson Foods, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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:
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Notes:
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Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 14, 2000
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 14, 2000, at 10:00 a.m., local time, for the following
purposes:
1. To elect thirteen members to the Board of Directors.
2. To consider and act upon a shareholder proposal recommending that the
Board of Directors take all steps necessary to recapitalize the
Company's equity structure to result in one share, one vote for all
outstanding stock of the Company.
3. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on November 30, 1999,
will be entitled to attend or vote at the Annual Meeting and any adjournments
or postponements thereof. A list of shareholders entitled to attend or vote at
the Annual Meeting will be maintained during the ten-day period preceding the
meeting at One East Center Street, Suite 204, Fayetteville, AR 72701.
To make it easier for you to vote, this year we are introducing Internet and
telephone voting. The instructions attached to your proxy card describe how to
use these convenient new services. Of course, if you prefer, you can vote by
mail by completing your proxy card and returning it in the enclosed postage-
paid envelope.
The Company's Proxy Statement is submitted herewith. The Annual Report for
the fiscal year ended October 2, 1999, is being mailed to shareholders
together with this Notice and Proxy Statement.
By Order of the Board of Directors
R. Read Hudson
Secretary
Springdale, Arkansas
December 15, 1999
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO VOTE AS SOON AS POSSIBLE
BY INTERNET, TELEPHONE OR MAIL SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE
WITH YOUR WISHES. 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 14, 2000
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Tyson Foods, Inc., a Delaware corporation (the "Company"). It is
for use only at the Annual Meeting of Shareholders ("Annual Meeting") to be
held at the Walton Arts Center, 495 West Dickson Street, Fayetteville,
Arkansas, on Friday, January 14, 2000, at 10:00 a.m., local time, and any
adjournments or postponements 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 15, 1999.
OUTSTANDING STOCK AND VOTING RIGHTS
As of October 2, 1999, the outstanding shares of the Company's capital stock
consisted of 125,933,717 shares of Class A Common Stock, $.10 par value
("Class A Common Stock"), and 102,645,423 shares of Class B Common Stock, $.10
par value ("Class B Common Stock"). The holders of record of the shares of
Class A Common Stock and Class B Common Stock outstanding on November 30,
1999, 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 or postponements 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.
The enclosed form of proxy also provides a method for shareholders to
abstain from voting with respect to the proposal to approve the recommendation
that the Board of Directors recapitalize the Company's equity structure (the
"Shareholder Proposal"). By abstaining, shares would not be voted either for
or against the Shareholder Proposal, but would be counted for quorum purposes.
While there may be instances in which a shareholder will wish to abstain, the
Board of Directors encourages all shareholders to vote their shares in their
best judgement and to participate in the voting process to the fullest extent
possible. Broker "non-votes" with respect to the Shareholder Proposal will be
treated in the same manner as abstentions for voting and quorum purposes.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of October 2, 1999
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>
Number of Shares Percent of
Name and Address of Beneficial Owner Title of Class Beneficially Owned Class
------------------------------------ -------------- ------------------ ----------
<S> <C> <C> <C>
Don Tyson and Tyson Limited Partnership Class B Common Stock 102,598,560(1) 99.9
2210 West Oaklawn Drive
Springdale, AR 72762-6999
Sanford C. Bernstein & Co. Class A Common Stock 10,157,159(2) 8.1
1 North Lexington Ave.
White Plains, NY 10601
Brinson Partners, Inc. Class A Common Stock 7,709,090(3) 6.1
209 South LaSalle
Chicago, IL 60604-1295
</TABLE>
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(1) Includes 750,000 shares of Class B Common Stock owned of record by Don
Tyson, Senior Chairman of the Board of the Company, and 101,848,560 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 45.062 percentage
interest as a limited partner in the Partnership. Barbara A. Tyson, the
widow of Randal Tyson and a Director of the Company, 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, Chairman of the Board of the Company, are contingent
beneficiaries of such estate. The managing general partner of the
Partnership is Don Tyson. The other general partners are Leland E.
Tollett, a Director of the Company; Barbara Tyson; John H. Tyson; James B.
Blair, General Counsel to the Company; and Harry C. Erwin, III. 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, 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 200,000 shares of Class A Common
Stock of the Company.
(2) Based solely on information obtained from a Form 13F filed by Sanford C.
Bernstein & Co. ("Bernstein") with the Securities and Exchange Commission
on or about October 13, 1999. The foregoing information has
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been included solely in reliance upon, and without independent
investigation of, the disclosures contained in Bernstein's Form 13F.
(3) Based solely on information obtained from a Form 13F filed by Brinson
Partners, Inc. ("Brinson") with the Securities and Exchange Commission on
or about November 12, 1999. The foregoing information has been included
solely in reliance upon, and without independent investigation of, the
disclosures contained in Brinson's Form 13F.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Company's two classes of Common Stock, as of October 2, 1999,
by its directors, nominees for election as directors, named executive officers
and by all directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares of Class A Percent of Shares of Class B Percent of
Common Stock Outstanding Common Stock Outstanding Aggregate
Beneficially Class A Beneficially Class B Voting
Name of Beneficial Owner Owned(1) Common Stock Owned(1) Common Stock Percentage
------------------------ ----------------- ------------ ----------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Don Tyson(2)(3)..................... 344,293 * 102,598,560 99.9 89.1
Leland E. Tollett(4)................ 3,114,034 2.5 *
Joe F. Starr(5)..................... 1,975,033 1.6 *
Neely E. Cassady.................... 1,234,162 * *
Gerald M. Johnston.................. 724,282 * *
Donald E. Wray...................... 744,459 * *
John H. Tyson(4)(5)................. 550,756 * *
Wayne Britt......................... 266,748 * *
Barbara A. Tyson(4)................. 158,728 * *
Greg W. Lee......................... 138,333 * *
Jim Kever........................... 0 * *
Fred S. Vorsanger................... 32,000 * *
Shelby D. Massey.................... 25,778 * *
Lloyd V. Hackley.................... 10,899 * *
All Directors and Executive
Officers as a Group (28 persons).. 9,597,141 7.6 102,598,560(3) 99.9 89.9
</TABLE>
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* 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 and Retirement Savings 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.
(2) Includes 200,000 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 Common Stock and Class B Common
Stock owned of record by the Tyson Limited Partnership of which Leland E.
Tollett, Barbara Tyson and John H. Tyson have a general partnership
interest. See Footnote 1 to the Principal Shareholders table.
(5) Does not include 535,900 shares of Class A Common Stock held by the Tyson
Foundation, a nonprofit charitable organization. Joe F. Starr and John H.
Tyson are a trustees of the Foundation and disclaim beneficial ownership
of all such shares.
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ELECTION OF DIRECTORS
The Board for the ensuing year is currently set at thirteen members and may
be fixed from time to time by or in the manner provided in the Company's
Amended and Restated Bylaws. Directors are elected for a term of one year or
until their successors are duly elected and qualified. The following slate of
thirteen nominees has been chosen by the Board, and the Board recommends that
each be elected.
Don Tyson, 69, Senior Chairman of the Board, served as Chairman of the
Board until April 1995 when he was named Senior Chairman. Mr. Tyson served
as Chief Executive Officer until March 1991 and has been a member of the
Board since 1952.
John H. Tyson, 46, is Chairman of the Board and has held his current
title since October 1, 1998. He previously served as Vice Chairman since
1997 and President of the Beef and Pork Division since 1993. He also has
served as Director of Governmental, Media and Public Relations, as Vice
President and Director of Engineering/Environmental/Capital Spending, as
Vice President of Marketing/Corporate Accounts and as Special Projects
Manager. Mr. Tyson has been a member of the Board since 1984.
Joe F. Starr, 66, a private investor, served as a Vice President of the
Company until 1996. Mr. Starr has been a member of the Board since 1969.
Neely E. Cassady, 71, is Chairman of the Board and President of Cassady
Investments, Inc. and served as a Senator in the Arkansas General Assembly
from 1983 to 1996. Mr. Cassady has been a member of the Board since 1974.
Fred Vorsanger, 71, is a private business consultant, manager of Bud
Walton Arena and Vice President Emeritus of Finance and Administration at
the University of Arkansas. He is a director of McIlroy Bank & Trust of
Fayetteville, Arkansas. Mr. Vorsanger was a city director and mayor of
Fayetteville and was a vice president at the University of Arkansas from
1968 until 1988. Mr. Vorsanger has been a member of the Board since 1977.
Leland E. Tollett, 62, retired as Chairman and Chief Executive Officer
October 1, 1998. He had served as Chairman of the Board since April 1995,
as Vice Chairman, President and Chief Executive Officer since March 1991
and as President and Chief Operating Officer from 1983 until 1991. Mr.
Tollett has been a member of the Board since 1984.
Shelby Massey, 66, is a farmer and a private investor. He served as
Senior Vice Chairman of the Board from 1985 to 1988 and has been a member
of the Board since 1985.
Barbara A. Tyson, 50, is a Vice President of the Company. Ms. Tyson has
served in related capacities since 1988 and was previously a Regional Sales
Manager in the Foodservice Division. Ms. Tyson has been a member of the
Board since 1988.
Lloyd V. Hackley, 59, is President and Chief Executive Officer of Lloyd
V. Hackley and Associates, Inc. He is a director of Branch Banking and
Trust Corporation headquartered in Winston-Salem, North Carolina. He was
president of the North Carolina Community College System from 1995 to 1997
and was Chancellor and Tenured Professor of Political Science at
Fayetteville State University, Fayetteville, North Carolina, from 1988 to
1995. Mr. Hackley has been a member of the Board since 1992.
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Donald E. Wray, 62, is President of the Company and has held his current
title since September 1999 after serving as President and Chief Operating
Officer since April 1995, as Chief Operating Officer since 1991 and as
Senior Vice President of the Sales and Marketing Division since 1985. Mr.
Wray has been a member of the Board since 1994.
Gerald M. Johnston, 57, a private investor, was Executive Vice President
of Finance for the Company from 1981 to 1996 when he stepped down and
became a consultant to the Company. He is a director of Fairfield
Communities, Inc. Mr. Johnston has been a member of the Board since 1996.
Wayne Britt, 50, is Chief Executive Officer of the Company and has held
his current title since October 1, 1998. Mr. Britt previously served as
Executive Vice President and Chief Financial Officer from 1996 to 1998;
Senior Vice President, International Division from 1994 to 1996; Vice
President, Wholesale Club Sales and Marketing from 1992 to 1994; and as
Secretary-Treasurer; Controller; Cost and Budget Manager; and Complex
Controller prior to 1992. Mr. Britt has been a member of the Board since
1998.
Jim Kever, 47, has served as a director of Quintiles Transnational
("Quintiles") since May 6, 1999 and has served as Chief Executive Officer
of Envoy Corporation ("Envoy"), a subsidiary of Quintiles, since Envoy was
acquired by Quintiles in March 1999. Mr. Kever served as President and Co-
Chief Executive Officer of Envoy from August 1995 until March 1999 and as a
director from Envoy's incorporation in August 1994 until March 1999. Mr.
Kever also is a director of Transaction System Architects, Inc., a supplier
of electronic payment software products and network integration solutions,
and 3D Systems Corporation, a manufacturer of technologically advanced
solid imaging systems and prototype models. Mr. Kever has been a member of
the Board since May 1999.
Each of the foregoing nominees is currently serving as a director of the
Company and, with the exception of Mr. Kever, was elected at the last Annual
Meeting of Shareholders. Mr. Kever was elected by the Board in May 1999. 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.
On August 22, 1996, Don Tyson entered into a Stipulation and Consent with
the Securities and Exchange Commission ("SEC") pursuant to which Mr. Tyson,
without admitting or denying any wrongdoing, consented and agreed to the entry
of a Final Judgment permanently enjoining him from violating Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and requiring
the payment of a civil money penalty of $46,125. The Stipulation and Consent
was entered as a Final Judgment on October 8, 1996, by the United States
District Court for the Western District of Arkansas. The Stipulation and
Consent arose as a result of the SEC's investigation of certain purchases and
sales of common stock of Arctic Alaska Fisheries Corporation by Fred Cameron,
an acquaintance of Mr. Tyson, in June 1992.
Unless otherwise designated, the enclosed proxy will be voted for the
election of the foregoing thirteen 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 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.
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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 delivered in writing to the
Secretary of the Company on or before September 30 in any year. The Board has
a compensation committee (the "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. The Compensation Committee, comprised of Fred S.
Vorsanger, Shelby D. Massey and Neely E. Cassady, held four meetings during
fiscal 1999. The Compensation Committee has established a special subcommittee
(the "Compensation Subcommittee") thereof comprised of Fred S. Vorsanger and
Neely E. Cassady for the purpose of administering the Company's performance-
based compensation plans. The Compensation Subcommittee held three meetings
during fiscal 1999.
The Board has an audit committee (the "Audit Committee") to assist it in
fulfilling its fiduciary responsibilities for the financial reporting of the
Company. Members of the Audit Committee during fiscal 1999 were Fred
S. Vorsanger, Neely E. Cassady and Lloyd V. Hackley. The Audit Committee held
four meetings during fiscal 1999. Subsequent to its last meeting Jim Kever was
elected to the Audit Committee.
The Board has a special committee (the "Special Committee") for the purpose
of overseeing and reviewing related party and other special transactions
between the Company and its directors, executive officers or their affiliates.
The Special Committee is comprised of Fred S. Vorsanger, Lloyd V. Hackley,
Shelby D. Massey and Neely E. Cassady. The Special Committee held one meeting
during fiscal 1999.
The Board held four regularly scheduled meetings, one special meeting and
one special telephonic meeting in fiscal 1999. All current directors attended
at least 75% of the meetings held during fiscal year 1999 with the exception
of Jim Kever who was elected in May 1999.
SHAREHOLDER PROPOSAL
The following Shareholder Proposal was submitted by the California Public
Employee's Retirement System ("CalPERS"), Lincoln Plaza, 400 P Street,
Sacramento, California 95814 (who has notified the Company that it was the
beneficial owner of 2,269,570 shares of the Company's Class A Common Stock as
of August 4, 1999) for consideration by the shareholders of the Company:
"Resolved, that the shareholders recommend that the board of Tyson Foods
(the Company) take all steps necessary to recapitalize the Company's equity
structure to result in one share, one vote for all outstanding stock of the
Company."
SUPPORTING STATEMENT
"In the American public financial marketplace, companies seek out capital
from investors to grow their companies. The company's owners trade a stake in
the company for capital. For their money, shareholders get a slice of the
potential profits the company might create but also a slice of the power to
make decisions about the company. In our view, if someone wants to control a
company, they should buy 51 percent of the company's stock. That's the way the
system works. According to the Investor Responsibility Research Center,
approximately ninety percent of the nation's 1800 largest companies have just
one class of shares with each share having one vote."
"A few companies, including Tyson Foods, use dual class stock. They take the
shareholders' money but do not let shareholders have a voice in the company's
management that is proportional to the money invested. Why do we care and why
should you? Because without a voice, shareholders cannot hold management
accountable."
7
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"We are disturbed by what appears to us to be increasing attempts by
companies to implement dual class structures that, in our view, disenfranchise
shareholders. Recent high profile examples include Marriott last year and now
Charter Communications. Both companies wanted to raise equity from the public
without giving up any control to the prospective shareholders."
"Send a message to Tyson and other companies thinking about using dual class
stock--no thanks! Support one share, one vote and you support the idea that
everybody gets out of the company in proportion to what they put in. Please
VOTE FOR THIS PROPOSAL."
The foregoing is the verbatim submission of CalPERS. All statements therein
are the sole responsibility of CalPERS, and neither the management of the
Company nor the Board of Directors have verified their accuracy.
BOARD OF DIRECTORS' STATEMENT
IN OPPOSITION TO SHAREHOLDER PROPOSAL
REASONS FOR THE RETENTION OF THE DUAL CLASS CAPITAL STRUCTURE
The Board believes that retaining two classes of common stock with different
voting rights is in the best interest of the Company and its shareholders. The
Board believes that the current dual class capitalization: (a) promotes
stability and continuity in the leadership and management of the Company,
which allows the Company to focus on long-term objectives, (b) provides the
Company with greater flexibility in financing its growth, (c) enhances the
Company's ability to attract, retain and motivate highly qualified key
employees and (d) preserves certain favorable tax treatment resulting from the
Company's classification as a family-owned farming business. The Board's
reasons for its position are described in more detail below.
Continuity and Stability
The Board believes that the Company's history of growth and financial
strength is due in large part to the ability of its leadership to focus on
long-term growth. The need for this stability is heightened in the Company's
industry due to the negative impact that temporary market conditions can have
on short-term performance. In the face of difficult challenges, management of
single class companies can become singularly focused on maximizing short-term
value and performance at the expense of long-range planning in an effort to
justify its business plans. The Tyson family has always been committed to the
long-term viability of the Company. As such, the Board believes that the dual
class capital structure reduces the risk of disruption in the continuity of
the Company's current operational policies and long-range strategy by allowing
management to pursue strategies that they believe will enhance the long-term
profitability of the Company.
Financing Flexibility
The dual class capital structure provides the Company with greater
flexibility to pursue a long-term emphasis on shareholder value through growth
and financial strength.
The Board believes that the Company's ability to issue Class A Common Stock,
for which there is already a sizeable and liquid market, better positions the
Company to finance growth opportunities without significantly diluting the
voting interest of the Tyson family. The Board believes that a founding family
controlled company with a single class of stock may run the risk of foregoing
stock issuances (thereby foregoing strategic transactions
8
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that potentially could be of great benefit to shareholders) simply out of
concerns over dilution of control. The Company, however, has historically
issued its Class A Common Stock for a variety of corporate purposes that have
enhanced the value and financial strength of the Company. Such transactions
include the financing of significant mergers and acquisitions and the raising
of needed capital to fund growth. The Company's ability to issue Class A
Common Stock mitigates any reluctance the Tyson family and senior management
might otherwise have to support the issuances of significant additional common
stock of the Company because of the voting dilution of such issuances. In
fact, because the issue of control is removed from the mix of considerations,
the decision by the Company to issue stock in acquisitions or capital raising
transactions are based solely on the perceived economic benefits of the
transaction to the Company and its shareholders.
Retention of Key Employees
The Board believes that the dual class capital structure enhances the
Company's ability to attract and retain highly qualified key employees. The
Company's ability to issue Class A Common Stock increases its flexibility in
structuring compensation plans so that management and key employees can
participate in the growth of the Company without materially diluting the
voting power of the Class B Common shareholders.
Adverse Tax Consequences
The Omnibus Budget Reconciliation Act of 1987 required family-owned farming
businesses, like the Company, to begin using the accrual method of accounting
for tax purposes. Internal Revenue Code Section 447(i) provides that if any
family corporation is required to change its method of accounting for any
taxable year, such corporation shall establish a suspense account in lieu of
recognizing a current tax liability. The suspense account represents the
initial catch-up adjustment to change from the cash to accrual method of
accounting. As a result of the creation of the suspense account, the Company
had an estimated deferred tax liability of $127.6 million as of October 2,
1999, which is being paid ratably by the Company (commencing in fiscal 1998)
over a period of 20 years. In the event the Company's dual class structure
were discontinued, the Company would no longer qualify as a family corporation
for purposes of Section 447 and the entire amount of the $127.6 million
deferred tax liability would be due and payable for the current tax year.
Board Recommendation
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE
AGAINST THIS SHAREHOLDER PROPOSAL.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
PROPOSAL UNLESS SHAREHOLDERS SPECIFY A CONTRARY VOTE.
VOTE REQUIRED
Approval of the Shareholder Proposal requires the affirmative vote of a
majority of the votes cast at the meeting, with the holders of shares of Class
A Common Stock and Class B Common Stock voting as a single class.
9
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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, the Chief Executive Officer and the two next highest paid
executive officers of the Company for such period in all capacities in which
they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
---------------------- --------------------
Name and All Other
Principal Other Annual Compensation
Position Year Salary Bonus Compensation Options (3,4,5)
--------- ---- -------- -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Don Tyson, 1999 $600,000 $310,000 $350,266(1) -0- $143,400
Senior Chairman of the 1998 600,000 $ 86,656 437,444(1) -0- 170,875
Board 1997 700,000 -0- 721,671(1) -0- 163,520
John H. Tyson, 1999 $650,000 $375,000 $124,587(2) 150,000 $102,786
Chairman of the Board 1998 250,832 170,000 75,389(2) -0- 83,139
1997 223,595 55,000 160,164(2) 37,500 74,796
Wayne Britt, 1999 $550,000 $350,000 N/A 125,000 $ 53,200
Chief Executive Officer 1998 331,090 200,000 N/A -0- 36,687
1997 309,793 81,250 N/A 60,000 24,145
Donald E. Wray, 1999 $455,000 $200,000 N/A -0- $ 51,377
President 1998 439,285 200,000 N/A -0- 41,934
1997 419,018 -0- N/A 150,000 34,855
Greg W. Lee, 1999 $379,167 $150,000 N/A 80,000 $ 37,063
Chief Operating Officer 1998 331,089 120,000 N/A -0- 34,847
1997 309,793 81,250 N/A 52,500 25,763
</TABLE>
- --------
(1) In 1999, "Other Annual Compensation" for Mr. Don Tyson includes travel and
entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $193,082 and $134,453, respectively. In 1998,
"Other Annual Compensation" for Mr. Don Tyson includes travel and
entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $235,800 and $164,200, respectively. In 1997,
"Other Annual Compensation" for Mr. Don Tyson includes travel and
entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $414,817 and $288,859, respectively.
(2) In 1999, "Other Annual Compensation" for Mr. John H. Tyson includes travel
and entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $58,701 and $54,294, respectively. In 1998,
"Other Annual Compensation" for Mr. John H. Tyson includes travel and
entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $33,453 and $30,942, respectively. In 1997,
"Other Annual Compensation" for Mr. John H. Tyson includes travel and
entertainment costs and amounts reimbursed for estimated income tax
liability related thereto of $76,970 and $71,192, respectively.
(3) In 1999, "All Other Compensation" includes the following for Messrs. Don
Tyson, John H. Tyson, Britt, Wray and Lee: (i) Company matching
contributions to the Employee Stock Purchase Plan of $30,000; $32,500;
$27,500; $22,750 and $18,958 for each named executive, respectively; (ii)
Company contributions to the Executive Savings Plan of $8,400; $7,825;
$19,300; $22,227 and $11,705 on behalf of each named
10
<PAGE>
executive, respectively; and (iii) Company contributions to the Retirement
Savings Plan of $-0-; $6,400; $6,400; $6,400 and $6,400 on behalf of each
named executive, respectively, to match a portion of 1999 pretax elective
deferral contributions (included under salary) made by each person to such
plans. Also includes the following for Mr. Don Tyson and Mr. John H. Tyson,
$105,000 and $56,061 respectively, which represents the dollar value
benefit of premium payments under split dollar life insurance policies on
Mr. Don Tyson and Mr. John H. Tyson for which the Company will be
reimbursed for premiums paid.
(4) In 1998, "All Other Compensation" includes the following for Messrs. Don
Tyson, John H. Tyson, Britt, Wray and Lee: (i) Company matching
contributions to the Employee Stock Purchase Plan of $30,000; $12,542;
$17,554; $21,964 and $16,554 for each named executive, respectively; (ii)
Company contributions to the Executive Savings Plan of $29,475; $8,136;
$12,733; $13,570 and $11,893 on behalf of each named executive,
respectively; and (iii) Company contributions to the Retirement Savings
Plan of $6,400; $6,400; $6,400; $6,400 and $6,400 on behalf of each named
executive, respectively, to match a portion of 1998 pretax elective
deferral contributions (included under salary) made by each person to such
plans. Also includes the following for Mr. Don Tyson and Mr. John H.
Tyson, $105,000 and $56,061 respectively, which represents the dollar
value benefit of premium payments under split dollar life insurance
policies on Mr. Don Tyson and Mr. John H. Tyson for which the Company will
be reimbursed for premiums paid.
(5) In 1997, "All Other Compensation" includes the following for Messrs. Don
Tyson, John H. Tyson, Britt, Wray and Lee: (i) Company matching
contributions to the Employee Stock Purchase Plan of $35,000; $11,180;
$14,539; $20,951 and $15,490 for each named executive, respectively; (ii)
Company contributions to the Executive Savings Plan of $17,120; $1,155;
$3,205; $7,504 and $3,873 on behalf of each named executive, respectively;
and (iii) Company contributions to the Retirement Savings Plan of $6,400;
$6,400; $6,400; $6,400 and $6,400 on behalf of each named executive,
respectively, to match a portion of 1997 pretax elective deferral
contributions (included under salary) made by each person to such plans.
Also includes the following for Mr. Don Tyson and Mr. John H. Tyson,
$105,000 and $56,061 respectively, which represents the value benefit of
premium payments under split dollar life insurance policies on Mr. Don
Tyson and Mr. John H. Tyson for which the Company will be reimbursed for
premiums paid.
11
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following tables show all individual grants of stock options to the
named executives during the fiscal year ended October 2, 1999.
<TABLE>
<CAPTION>
Individual Grants
----------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price
Appreciation for
Option Term (2)
---------------------
% of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options In Fiscal Price Expiration
Name Granted (1) Year ($/SH) Date 5% 10%
---- ---------- ---------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Don Tyson............... -- -- -- -- -- --
John H. Tyson........... 150,000 3.2% $15.00 9/28/06 $ 915,500 $ 2,134,500
Wayne Britt............. 125,000 2.6% $15.00 9/28/06 $ 763,750 $ 1,778,750
Donald E. Wray.......... -- -- -- -- -- --
Greg W. Lee............. 80,000 1.7% $15.00 9/28/06 $ 488,800 $ 1,138,400
</TABLE>
- --------
(1) These shares were granted with respect to the Company's Class A Common
Stock for a seven-year period beginning as of September 28, 1999. The
options do not qualify as "incentive stock options" under the Internal
Revenue Code. The exercise price of $15.00 was the fair market value of
the Class A Common Stock on the date of the grant. Vesting at 33 1/3%
begins on September 28, 2002, the end of the third year, and continues at
33 1/3% for each subsequent year until all shares are vested on September
28, 2004. Options not exercised expire on September 28, 2006. 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 rate shown compounded
annually from the date of grant until the end of the seven year option
term and is not intended to forecast appreciation in stock price. Tyson's
stock price at the end of the seven year term based on a 5% annual
appreciation would be $21.11; and on a 10% annual appreciation would be
$29.23.
12
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executives concerning unexercised options held as of the end of the fiscal
year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number
of Securities Underlying
Unexercised Options Value of Unexercised
at FY-end In-the-Money Options
Unexercised at FY-end(1)
------------------------- -------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Don Tyson............... -- -- -- -- -- --
John H. Tyson........... -- -- 23,250 220,500 $42,926 $260,955
Wayne Britt............. -- -- 26,250 230,000 $48,311 $248,120
Donald E. Wray.......... -- -- 22,500 183,750 $42,788 $ 61,181
Greg W. Lee............. -- -- 22,500 177,500 $40,980 $186,245
</TABLE>
- --------
(1) Amounts represent the market value $16.375 less the exercise or base price
for all shares underlying unexercised options as of October 2, 1999.
Director Compensation
Neely E. Cassady, Fred S. Vorsanger, Lloyd V. Hackley, Shelby D. Massey, Joe
F. Starr and Jim Kever, outside directors serving on the Board, receive an
annual retainer of $30,000, while Don Tyson, Wayne Britt, John H. Tyson,
Leland E. Tollett, Barbara A. Tyson, Donald E. Wray and Gerald M. Johnston,
directors who are also employees or consultants of the Company, receive $2,500
per regular quarterly meeting. Outside directors are compensated at the rate
of $1,000 per day for time spent on board-related activities.
Arrangements Upon Termination of Employment
The Company and Don Tyson executed an employment contract on August 1, 1997,
providing for his active employment through December 31, 1999, which
employment is automatically extended for successive one year periods
thereafter, unless terminated by either the Company or Mr. Tyson upon proper
notice. The annual salary under this contract is a minimum of $600,000 per
annum, a reduction from a minimum of $720,000 per annum under a prior
employment contract. If Mr. Tyson becomes disabled while serving as an
employee of the Company, he would be entitled to an annual salary during the
period of such disability in an amount equal to one-half of his average total
compensation (salary, bonuses and payments relating to travel and
entertainment) (the "Average Annual Compensation") for the three years
immediately prior to the date of his disability. In the event of his death
while serving as an 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 Compensation 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 in 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
13
<PAGE>
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.
The Company and Donald E. Wray have entered into a contract which provides
that he will continue to furnish advisory services to the Company for a period
of up to ten years following the date of his retirement from full-time
employment. In consideration for his advisory services, following Mr. Wray's
retirement, Mr. Wray will receive $200,000 for the first five years and
$100,000 for the next five years. The contract also provides for continued
vesting of outstanding stock options and continuation of health benefits. In
the event of Mr. Wray's death, (i) the above described benefits will be paid
to his surviving spouse until her death at which time all benefits shall cease
and (ii) all unexercised stock options issued to Mr. Wray will be purchased by
the Company based upon the value of such options on the business day
immediately succeeding his death. No benefits will be payable under the
contract in the event he accepts employment with any competitor of the
Company. Mr. Wray has announced his intention to retire in March 2000.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee was comprised during fiscal 1999 of Messrs.
Shelby D. Massey, Fred S. Vorsanger and Neely E. Cassady. The Compensation
Committee oversees the administration of the Company's employee benefit plans
and establishes policies relating to compensation of employees. All decisions
by the Compensation 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 the Compensation Subcommittee, comprised of Messrs. Vorsanger and Cassady,
for the purpose of administering awards under the Company's performance-based
compensation plans as required by Section 162(m) of 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, addressing the
Company's compensation policy as it related to executive officers for fiscal
1999.
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 (i) bonuses based upon corporate
performance and individual initiatives and performance, (ii) equity-based
compensation and (iii) incentive and deferred compensation.
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 incentive and deferred compensation plans.
14
<PAGE>
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." 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 during the last fiscal year. 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 Compensation Committee
subjectively considers a number of factors including earnings, return on
assets, return on invested capital, sales growth and total return to
shareholders. These factors are compared with problems and advantages (both
external and internal) that are unique to the industry, performance in prior
years and performance of other companies in the industry. In fiscal 1999,
approximately 88% of the Company's revenues were 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 Cagle's, Inc., Pilgrim's Pride Corporation, Sanderson
Farms, Inc., and WLR Foods, Inc. Although there are other producers of poultry
and poultry products, the Compensation Committee believes that the percentage
of poultry sales to total sales of the foregoing group more closely represents
that of the Company.
Fiscal 1999 Compensation
For fiscal 1999, the Company's executive compensation program consisted of
(i) base salary, adjusted from the prior year, (ii) cash bonuses, (iii)
matching contributions to incentive and deferred compensation plans, (iv)
stock option grants under the Company's Nonstatutory Stock Option Plan, and
(v) contributions under the Company's broad-based Employee Stock Purchase Plan
and Retirement Savings Plan which are fixed as a percentage of employee
participant contributions.
Base Salary
Executives' base salaries are reviewed periodically to determine if such
salaries fall within the range of those persons holding comparably responsible
positions at other companies. 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 Compensation
Committee believes that the base salaries of the Company's executive officers
as a whole are comparable with the base salaries of other persons similarly
situated.
Cash Bonuses
Cash bonuses have historically been awarded to executive officers and other
members of management from a bonus pool determined annually by management and
approved by the Compensation Committee. The amount of the bonus pool has been
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, the
relative mix between cash and long-term compensation, and the desire to reward
and retain a sound management team.
Fiscal 1999 was a year of reorganization as the Company attempted to better
identify, develop and execute strategic objectives around its markets. The
Company continued to divest non-core businesses which is expected to have
positive impacts on future results; however, certain events occurring during
fiscal 1999 adversely affected the ability of the Company to achieve its
performance goals. Oversupply in the domestic chicken market in the
15
<PAGE>
latter part of the fiscal year, adverse market conditions for the Company's
swine business, and instability in the international marketplace presented
significant challenges for management and adversely affected financial
results. After balancing the Company's performance, challenges and
achievements in fiscal 1999 with the importance of rewarding and retaining a
sound management team for the future, the Compensation Committee, upon the
advice and recommendation of the Chairman and the Chief Executive Officer,
subjectively determined to award cash bonuses to management.
The Company has instituted a new bonus plan for fiscal year 2000. The new
bonus plan is based upon a "balanced scorecard" management approach. Under
this approach, division scorecards, which relate to the specific operations
and goals of each division, and a corporate scorecard, which better reflects
corporate targets and key business objectives, have been developed. The
primary objective of this new bonus plan is to provide management a clearer
connection between business results and individual rewards. In fiscal 2000
management will be rewarded on a scale of targeted bonuses based upon
corporate and divisional achievement of goals together with an additional
discretionary component.
Stock-Based Compensation
The Compensation 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 Compensation 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, has been
delegated to and is in the discretion of the Compensation Subcommittee. In
making such determination, the Compensation Subcommittee 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, individual performance
and potential contribution to the Company. Based upon these factors and the
recommendation of the Chairman and the Chief Executive Officer, the
Compensation Subcommittee, during fiscal 1999, granted options to purchase a
total of 4,722,500 shares of Class A Common Stock to executive officers and
managers at an exercise price of $15.00 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 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 Mr. Don Tyson and Mr. Donald E. Wray as
described in the Summary Compensation Table. The Committee did not award any
restricted shares of Class A Common Stock under the Company's Restricted Stock
Bonus Plan.
Senior Chairman, Chairman and CEO Compensation
The general approach used in setting the base compensation for Don Tyson,
the Company's Senior Chairman, John H. Tyson, the Company's Chairman, and
Wayne Britt, the Company's Chief Executive Officer, has been to provide
compensation which is comparable and competitive with that of other companies
of similar size, while encouraging and rewarding corporate performance in line
with the interests of shareholders.
Effective fiscal 1995, the Compensation Subcommittee (with the approval of
the shareholders of the Company) adopted the Senior Executive Performance
Bonus Plan to comply with the provisions of OBRA. The performance-based plan
provides that participants thereunder are entitled to receive a pro-rata
percentage of a
16
<PAGE>
"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 0.5% of the increase in pre-tax income over the
previous fiscal year. The Compensation Subcommittee retains full discretion to
reduce or eliminate bonus payments otherwise payable under the Senior
Executive Performance Bonus Plan.
The only participants under the Senior Executive Performance Bonus Plan
during fiscal year 1999 were Don Tyson, John H. Tyson and Wayne Britt. Based
upon Messrs. Tyson's, Tyson's and Britt's pro-rata percentage of the bonus
pool, the Compensation Subcommittee has determined that they would have been
eligible for a cash bonus in fiscal 1999 of $2,908,843, $1,586,641 and
$793,321, respectively. Based in part on such eligibility, the Compensation
Subcommittee awarded Messrs. Tyson, Tyson and Britt bonuses of $310,000,
$375,000 and $350,000, respectively.
Summary
The Compensation 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 Compensation Committee believes that compensation
levels during fiscal 1999 adequately reflect the Company's compensation goals
and policies.
Fred S. Vorsanger*
Neely E. Cassady*
Shelby D. Massey
*Members of Compensation Subcommittee
17
<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>
Base Years Ending
Period
Company Name /Index Sep 94 Sep 95 Sep 96 Sep 97 Sep 98 Sep 99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TYSON FOODS INC -CLA 100 112.36 112.13 148.39 126.51 105.27
S&P 500 INDEX 100 129.74 156.12 219.27 239.11 305.59
PEER GROUP 100 91.23 93.50 129.84 146.38 105.49
</TABLE>
----------------
Source: S&P Compustat Services, Inc.
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 1994.
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: Cagle's,
Inc., Golden Poultry Company, Inc., Hudson Foods, Inc., Pilgrim's Pride
Corporation, Sanderson Farms, Inc., and WLR Foods, Inc.; however, 1998 and
1999 do not include Golden Poultry Company, Inc. which was acquired by Gold
Kist, Inc. in October 1997, and Hudson Foods, Inc., which was acquired by the
Company in January 1998. These companies were approved by the Compensation
Committee.
18
<PAGE>
CERTAIN TRANSACTIONS
The Company has historically engaged in lease agreements and other
transactions with various of its executive officers, directors and their
affiliates. The following summarizes such transactions in excess of $60,000 to
which the Company was a party during fiscal 1999. The Company anticipates that
it will continue to engage in similar transactions with such persons in the
future. All new and any renewed related party transactions are reviewed by the
Special Committee.
Loans
During fiscal 1999, other than for ordinary travel and expense payments, the
Company has made no loans or advances to any of its executive 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
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 executive
officers, have agreed to build swine or poultry facilities designed to meet
the Company's particular requirements. These facilities are generally leased
for terms not exceeding five years 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 1999, the Company leased certain farms from the following
with aggregate lease payments as follows: (i) Don Tyson, $675,950; (ii) a
partnership of which John H. Tyson and the Estate of Randal Tyson are
partners, $336,000; (iii) entities in which Joe F. Starr and the children of
Don Tyson, including John H. Tyson, are partners or owners, $1,127,080; (iv)
the Tyson Children Partnership, of which John H. Tyson is a partner, $540,000;
(v) Estate of Randal Tyson, $120,000; (vi) Estates of John and Helen Tyson, of
which Don Tyson is executor, $30,000; (vii) Leland E. Tollett, $224,135;
(viii) certain entities controlled by Joe F. Starr, $105,500; (ix) Gerald M.
Johnston, $394,628; and (x) an entity owned in part by Wayne Britt, $504,000.
2. The Company has an aircraft operation agreement with the Estates of John
and Helen Tyson on a month-to-month basis with aggregate payments of $230,592
for fiscal 1999.
3. During fiscal 1999, the Company had a contract for swine growout services
with a partnership in which Gerald M. Johnston and Donald E. Wray are among
the partners with aggregate payments of $148,320.
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 $624,077 during fiscal 1999.
5. Certain persons, including some executive 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 1999, the purchases from the Company of the
above-enumerated items, which were at fair market value, by such persons were:
Don Tyson, $6,311,080; Joe F. Starr, $1,591,210; Barbara A. Tyson, $949,737;
and John H. Tyson, $1,577,922.
19
<PAGE>
6. During fiscal 1999, the Company had contracts for poultry growout
services with (i) a partnership in which Gerald M. Johnston and Donald E. Wray
are among the partners with aggregate payments of $159,532; and (ii) an entity
owned by Gerald M. Johnston with aggregate payments of $74,657.
7. The Company previously entered into an agreement, which was amended
effective October 1, 1997, 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 $3,061,924 for
fiscal 1999 pursuant to such agreement. 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
$2,184,508 for fiscal 1999 pursuant to such agreement.
8. During fiscal 1999, the Company leased office and warehouse space from
entities in which Joe F. Starr and the children of Don Tyson, including John
H. Tyson, are partners or owners, with aggregate lease payments of $186,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
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 SEC.
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
1999 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 2001 Annual
Meeting of Shareholders (the "2001 Annual Meeting") must be received by the
Company on or before August 16, 2000, 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.
Additionally, the Company's bylaws provide that for a shareholder proposal
to be brought before and considered at an annual meeting by a shareholder
proponent (the "Proponent"), such Proponent must provide, deliver or mail
notice thereof to the Secretary of the Company at the principal executive
office of the Company (and such Secretary must receive such notice) not less
than 75 days nor more than 100 days prior to the date of such annual meeting.
For such provision to be effective, the Company must have provided notice to
shareholders, or otherwise publicly disclose, the date of the annual meeting
at least 85 days in advance thereof. If no notice or public disclosure is made
by the Company within that time frame, the Proponent's notice to be timely
received
20
<PAGE>
must be received not later than the close of business on the 10th day
following the day on which notice of the meeting is actually mailed to
shareholders or public disclosure of the meeting date is actually made. The
actual date of the Company's 2001 Annual Meeting has not yet been determined.
The Company anticipates that public disclosure of the date of the 2001 Annual
Meeting will be made in the Company's Quarterly Report on Form 10-Q for the
third quarter of fiscal 2000, which report will be filed with the Securities
and Exchange Commission in August 2000.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by executive 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 1999 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
30, 1999, THE PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER OF CAPITAL
STOCK OF THE COMPANY.
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 VOTE BY
INTERNET, TELEPHONE OR MAIL. TO VOTE BY MAIL, 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
R. Read Hudson
Secretary
December 15, 1999
21
<PAGE>
TYSON FOODS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, JANUARY 14, 2000
The undersigned shareholder(s) of TYSON FOODS, INC. hereby appoint(s)
Don Tyson and Joe F. Starr, and each or either of them, the true and lawful
agents and attorneys-in-fact for the undersigned, with power of substitution, to
attend the meeting and to vote the stock owned by or registered in the name of
the undersigned, as instructed below, at the Annual Meeting of Shareholders to
be held at the Walton Arts Center, 495 West Dickson Street, Fayetteville,
Arkansas, on January 14, 2000, at 10:00 a.m. local time, and at any adjournments
or postponements thereof, for the transaction of the following business:
1. To fix the number of directors for the ensuing year at thirteen (13)
and to elect thirteen (13) directors:
01-Don Tyson, 02-John H. Tyson, 03-Wayne Britt, 04-Joe F. Starr,
05-Neely E. Cassady, 06-Fred S. Vorsanger, 07-Leland E. Tollett,
08-Shelby D. Massey, 09-Jim Kever, 10-Barbara A. Tyson,
11-Lloyd V. Hackley, 12-Donald E. Wray, 13-Gerald M. Johnston
2. To consider and act upon a shareholder proposal recommending that the
Board of Directors take all steps necessary to recapitalize the Company's equity
structure to result in one share, one vote for all outstanding stock of the
Company.
3. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournments or postponements thereof.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
(Continued on reverse side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
[X] Please mark your
votes as in this |__ 2534
example.
UNLESS OTHERWISE INSTRUCTED HEREON, IT IS INTENDED THAT THE PROXIES WILL VOTE THESE SHARES FOR THE ELECTION OF THE NAMED
NOMINEES.
FOR WITHHOLD FOR AGAINST ABSTAIN
1. Election of 2. A shareholder proposal recommending that the Board of Directors [ ] [ ] [ ]
Directors [ ] [ ] take all steps necessary to recapitalize the Company's equity
structure to result in one share, one vote for all outstanding
stock of the Company.
If you wish to withhold authority 3. To consider and act upon such other business as may properly come
to vote for any nominee(s), list before the Annual Meeting and any adjournments or postponements
such nominee(s) name(s) below. thereof.
- ---------------------------------
I PLAN TO ATTEND THE MEETING. [ ]
(The signature(s) should be exactly as the name appears at left.
If stock is in the name of (i) two or more persons, each should sign;
(ii) a corporation, the president or other authorized officer should sign;
(iii) a partnership, an authorized person should sign in the partnership
name. Persons signing as attorney, executor, administrator, trustee,
guardian or other fiduciary should state their full title.)
Please sign, date and return this proxy as soon as possible.
-------------------------------------------------------------------------
SIGNATURE DATE
-------------------------------------------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
<PAGE>
TYSON FOODS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, JANUARY 14, 2000
The undersigned shareholder(s) of TYSON FOODS, INC. hereby appoint(s)
Don Tyson and Joe F. Starr, and each or either of them, the true and lawful
agents and attorneys-in-fact for the undersigned, with power of substitution, to
attend the meeting and to vote the stock owned by or registered in the name of
the undersigned, as instructed below, at the Annual Meeting of Shareholders to
be held at the Walton Arts Center, 495 West Dickson Street, Fayetteville,
Arkansas, on January 14, 2000, at 10:00 a.m. local time, and at any adjournments
or postponements thereof, for the transaction of the following business:
1. To fix the number of directors for the ensuing year at thirteen (13)
and to elect thirteen (13) directors:
01-Don Tyson, 02-John H. Tyson, 03-Wayne Britt, 04-Joe F. Starr,
05-Neely E. Cassady, 06-Fred S. Vorsanger, 07-Leland E. Tollett,
08-Shelby D. Massey, 09-Jim Kever, 10-Barbara A. Tyson,
11-Lloyd V. Hackley, 12-Donald E. Wray, 13-Gerald M. Johnston
2. To consider and act upon a shareholder proposal recommending that the
Board of Directors take all steps necessary to recapitalize the Company's equity
structure to result in one share, one vote for all outstanding stock of the
Company.
3. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournments or postponements thereof.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
(Continued on reverse side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
[X] Please mark your
votes as in this |__ 2535
example.
UNLESS OTHERWISE INSTRUCTED HEREON, IT IS INTENDED THAT THE PROXIES WILL VOTE THESE SHARES FOR THE ELECTION OF THE NAMED
NOMINEES.
FOR WITHHOLD FOR AGAINST ABSTAIN
1. Election of 2. A shareholder proposal recommending that the Board of Directors [ ] [ ] [ ]
Directors [ ] [ ] take all steps necessary to recapitalize the Company's equity
structure to result in one share, one vote for all outstanding
stock of the Company.
If you wish to withhold authority 3. To consider and act upon such other business as may properly come
to vote for any nominee(s), list before the Annual Meeting and any adjournments or postponements
such nominee(s) name(s) below. thereof.
- ---------------------------------
I PLAN TO ATTEND THE MEETING. [ ]
(The signature(s) should be exactly as the name appears at left.
If stock is in the name of (i) two or more persons, each should sign;
(ii) a corporation, the president or other authorized officer should sign;
(iii) a partnership, an authorized person should sign in the partnership
name. Persons signing as attorney, executor, administrator, trustee,
guardian or other fiduciary should state their full title.)
Please sign, date and return this proxy as soon as possible.
-------------------------------------------------------------------------
SIGNATURE DATE
-------------------------------------------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
