SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
AGRIBRANDS INTERNATIONAL INC.
--------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
AGRIBRANDS INTERNATIONAL, INC.
9811 South Forty Drive
St. Louis, Missouri 63124
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 28, 2000
To the Holders of Common Stock of
Agribrands International, Inc.:
Please be advised that the Annual Meeting of Shareholders of Agribrands
International, Inc. will be held on Friday, January 28, 2000, at 2:00 p.m. at
Gateway Center, One Gateway Drive, Collinsville, Illinois. The purposes of the
meeting are:
1. To elect two directors to serve three-year terms expiring at the Annual
Meeting of Shareholders to be held in 2003, or until their successors
are elected and qualified; and
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS IMPORTANT THAT YOU EXECUTE,
DATE AND RETURN PROMPTLY YOUR PROXY IN THE ENCLOSED ENVELOPE. YOU MAY WITHDRAW
YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors,
/S/ Michael J. Costello
-----------------------------
Michael J. Costello
General Counsel and Secretary
November 23, 1999
<PAGE>
PROXY STATEMENT - VOTING PROCEDURES
YOUR VOTE IS VERY IMPORTANT
The Board of Directors is soliciting proxies to be used at the 2000 Annual
Meeting. This proxy statement and the form of proxy will be mailed to
shareholders beginning November 29, 1999.
Who Can Vote
Record holders of Agribrands International, Inc. Common Stock on November 22,
1999 may vote at the meeting. On November 22, 1999, there were 10,363,016 shares
of Common Stock outstanding. The shares of Common Stock held in our treasury
will not be voted.
How You Can Vote
o By Proxy - Simply mark your proxy, date and sign it, and return it in
the envelope provided.
o In Person - You can come to the Annual Meeting and cast your vote
there. If your shares are held in the name of your broker, bank or
other nominee and you wish to vote at the Annual Meeting, you must
bring an account statement or letter from the nominee indicating that
you were the beneficial owner of the shares on November 22, 1999, the
record date for voting.
How You May Revoke or Change Your Vote
If you give a proxy, you may revoke it at any time before your shares are voted.
You may revoke your proxy in one of three ways:
o Send in another proxy with a later date;
o Notify our Corporate Secretary in writing before the Annual Meeting
that you have revoked your proxy; or
o Vote in person at the Annual Meeting.
Quorum - A majority of the outstanding shares entitled to vote at this Annual
Meeting represented in person or by proxy will constitute a quorum. Abstentions
and broker non-votes are counted as present for establishing a quorum. A broker
non-vote occurs when a broker votes on some matters on the proxy card but not on
others because the broker does not have authority to do so. Shares represented
by proxies that are marked "withheld" with respect to the election of one
director will be counted as present in determining whether there is a quorum.
2
<PAGE>
Vote Required - If a quorum is present at our Annual Meeting, the following vote
is required for approval:
Election of Two Directors A majority of the shares entitled to vote and
present in person or by proxy at the meeting
must be voted "FOR" each of Mr. McCarty and Mr.
Micheletto.
Other Matters A majority of the shares entitled to vote and
present in person or by proxy at the meeting
must be voted "FOR" such other matter. However,
the Board does not know of any other matter that
will be presented at this Annual Meeting other
than the election of two directors.
Shares represented by proxies that are marked "withheld" with respect to the
election of a director or which are marked "deny" with respect to other issues
will be treated as shares present and entitled to vote. This will have the same
effect as a vote against each of Mr. McCarty and Mr. Micheletto and any such
other matters. If a broker indicates on the proxy that it lacks discretionary
authority as to certain shares to vote on a particular matter, the shares will
not be considered as present and entitled to vote with respect to that matter.
Costs of Solicitation
We will pay for preparing, printing and mailing this proxy statement. Proxies
may be solicited personally or by telephone by our regular employees without
additional compensation. We will reimburse banks, brokers and other custodians,
nominees and fiduciaries for their costs of sending the proxy materials to our
beneficial owners.
Selection of Auditors
Our Board, upon the recommendation of the Audit Committee, appointed
PricewaterhouseCoopers LLP as our independent accountant for the current fiscal
year. PricewaterhouseCoopers LLP was our independent accountant for fiscal year
1999. A representative of that firm will be present at the 2000 Annual Meeting
of Shareholders, will have an opportunity to make a statement, if desired, and
will be available to respond to appropriate questions.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors consists of seven members organized into three classes,
with one class consisting of three members and two classes consisting of two
members, and with each director elected to serve for a three-year term.
Two directors will be elected at our 2000 Annual Meeting to serve for a
three-year term expiring at our annual meeting in the year 2003. The Board has
3
<PAGE>
nominated H. Davis McCarty and Joe R. Micheletto for election as directors at
this meeting. Each nominee is currently serving as a director and has consented
to serve for a new term. Each nominee elected as a director will continue in
office until his or her successor has been elected and qualified. If any nominee
is unable to serve as a director at the time of the Annual Meeting, your proxy
may be voted for the election of another person the Board may nominate in his or
her place, unless you indicate otherwise.
Vote Required. The affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote, represented in person or by proxy, is required
for the election of each director.
The Board of Directors recommends a vote FOR the election of these nominees for
election as directors.
INFORMATION ABOUT NOMINEES AND OTHER DIRECTORS
Please review the following information about the nominees and other directors
continuing in office. The ages shown are as of August 31, 1999.
David R. Banks, Director Since 1998, Age 62 (Continuing in Office -
Term Expiring 2002.)
Chairman of the Board and Chief Executive Officer, Beverly Enterprises,
Inc. (health care services). Also a director of Nationwide Health
Properties, Inc. and Ralston Purina Company.
Jay W. Brown, Director Since 1998, Age 54 (Continuing in Office - Term
Expiring 2002.)
Principal in Westgate Group, LLC (private equity investment firm),
responsible for operational management of portfolio companies. Former
President and Chief Executive Officer, Protein Technologies
International, Inc. a subsidiary of E. I. DuPont de Nemours and Company
(soy protein products), former Vice President, Ralston Purina
Company and former Chairman and Chief Executive Officer, Continental
Baking Company (fresh bakery products). Also a director of Foodmaker,
Inc.
M. Darrell Ingram, Director Since 1998, Age 66
(Continuing in Office - Term Expiring 2002.)
Non-Executive Chairman, First Financial Planners Inc. (private
financial services company), and former Non-Executive Chairman, Red Fox
Environmental Services, Inc. (pollution control services). Also a
director of Ralston Purina Company.
4
<PAGE>
H. Davis McCarty, Director Since 1998, Age 59 (Standing for election at
this meeting for a term expiring 2003.)
Private consultant for agri business marketing and strategic planning.
Former President, Consolidated Nutrition, a subsidiary of Archer
Daniels Midland and AGP, Inc., and former Chairman and President of
Innovative Pork Concepts subsidiary of Central Soya.
Joe R. Micheletto, Director Since 1998, Age 62 (Standing for election
at this meeting for a term expiring 2003.)
Chief Executive Officer and President, Ralcorp Holdings, Inc. (food
products). Also a director of Ralcorp Holdings, Inc. and Vail Resorts,
Inc.
Martin K. Sneider, Director Since 1998, Age 56
(Continuing in Office-Term Expiring 2001.)
Adjunct Professor of Retailing, Washington University of St. Louis,
Missouri. Former President of Edison Brothers Stores, Inc. (specialty
retail). Also a director of CPI Corporation. Edison Brothers filed for
protection under Chapter 11 of the Federal Bankruptcy Code in November
1995 and emerged from those proceedings in September 1997. Mr. Sneider
had been President of Edison Brothers until April, 1995.
William P. Stiritz, Director Since 1998, Age 65
(Continuing in Office-Term Expiring 2001.)
Chairman of the Board, Chief Executive Officer and President,
Agribrands International, Inc. Chairman of the Board, and former Chief
Executive Officer and President, Ralston Purina Company. Also Chairman
of the Investment Committee of Westgate Group, LLC, (a private equity
investment firm). Also a director of American Freightways Corporation,
Angelica Corporation, Ball Corporation, The May Department Stores
Company, Ralcorp Holdings, Inc., Reinsurance Group of America,
Incorporated and Vail Resorts, Inc.
5
<PAGE>
BOARD OF DIRECTORS - COMMITTEES
Nominating &
Board Member Board Audit Compensation
- --------------------------------------------------------------------------------
David R. Banks X X* X
Jay W. Brown X X X
M. Darrell Ingram X X X*
H. Davis McCarty X X X
Joe R. Micheletto X X
Martin K. Sneider X X X
William P. Stiritz X*
Meetings held in fiscal year 1999 6 2 1
*Chairperson
Audit Committee: Reviews accounting policies and practices, financial reporting,
and internal controls. Recommends to the Board the appointment of a firm of
independent accountants to examine our financial statements. Reviews with
representatives of the independent accountants, Director of Internal Auditing
and the Chief Financial Officer the scope of the examination of our financial
statements, results of audits, audit costs, and recommendations with respect to
internal controls and financial matters. Reviews non-audit services rendered by
our independent accountants and periodically meets with or receives reports from
principal executive officers. All members are non-employee directors.
Nominating & Compensation Committee: Recommends to the Board nominees for
election as directors and executive officers. Makes recommendations to the Board
regarding election of directors to positions on committees of the Board and
compensation and benefits for directors. Sets the compensation of all corporate
officers and administers the Agribrands Non-Qualified Deferred Compensation Plan
and the Incentive Stock Plan, including the granting of awards under the latter
plan. Reviews the competitiveness of management compensation and benefit
programs, and principal employee relations policies and procedures. All members
are non-employee directors.
Director Compensation & Attendance
Employee directors receive no compensation other than their normal salary for
serving on the Board or its Committees.
Non-employee directors receive the following fees for their service on the
Board:
o Annual Retainer: $20,000
o Fee for Each Board Meeting: $1,000
o Fee for Each Committee Meeting: $1,000
6
<PAGE>
Directors can elect to have these amounts paid in cash, or defer payment until
their retirement under the terms of the Deferred Compensation Plan. Under that
Plan, any non-management director may elect to defer, with certain limitations,
all retainers and fees until retirement or other termination of his
directorship. Deferrals may be made in various investment options which mirror
the performance of the investment funds offered by our Savings Investment Plan.
We also pay the premiums on directors' and officers' liability and travel
accident insurance policies insuring directors.
Mr. McCarty performed consulting services with management on certain operational
opportunities and received consulting fees in the amount of $14,600 during the
year, of which $5,600 is reimbursement for out of pocket expenses.
During fiscal year 1999, all directors attended 75% or more of the Board and
Committee meetings on which they served.
CERTAIN TRANSACTIONS
Spin-off and Related Transactions:
Before April 1, 1998, Agribrands was a wholly-owned subsidiary of Ralston Purina
Company. On April 1, 1998, Ralston distributed the Common Stock of Agribrands to
the Ralston shareholders in a spin-off (the "Spin-off"). We entered into certain
agreements with Ralston described below providing for our orderly transition
from a Ralston subsidiary to an independent publicly held company.
Agreement and Plan of Reorganization
We entered into an Agreement and Plan of Reorganization with Ralston (the
"Reorganization Agreement") documenting the terms of the principal corporate
transactions required to effect the Spin-off.
The Reorganization Agreement
Certain Employee Benefits. Ralston retained or assumed certain employee
benefit plan liabilities associated with our U.S. employees and certain former
employees.
Indemnification. Subject to certain exceptions, Agribrands indemnified
Ralston from liabilities arising out of the agri-business, and for any violation
by us of the Spin-off agreements. Ralston indemnified Agribrands for liabilities
arising out of Ralston businesses retained by Ralston and claims by third
parties related to the Spin-off.
Notwithstanding the foregoing, neither Ralston nor Agribrands will have any
liability to the other for taxes except as provided in the Tax Sharing Agreement
described below.
7
<PAGE>
Certain Post-Spin-off Covenants. Agribrands also agreed not to take any
action during a three year period following the Spin-off which may cause the
Spin-off to be a taxable transaction, unless Agribrands obtains, in the sole
discretion of Ralston either (a) an opinion of tax counsel or (b) a supplemental
ruling from the U.S. Internal Revenue Service (the "IRS"), that an action
proposed by Agribrands would not cause the Spin-off to be a taxable transaction.
We believe that these limitations will not significantly inhibit our activities
or our ability to respond to unanticipated developments. The type of
transactions subject to this provision are:
(i) selling or transferring any of our assets, except in the
ordinary course of business;
(ii) repurchasing our capital stock, (except repurchasing in open
market transactions up to a total of 2,000,000 shares);
(iii) issuing in excess of 2,000,000 new shares of Agribrands;
(iv) liquidating or merging with any corporation; and
(v) ceasing to engage in the agri-business.
Covenants Not To Compete. Subject to certain exceptions, for a period
of five years following the Spin-off, (a) Ralston and its subsidiaries will not
compete anywhere in the world, directly or indirectly, in the international
animal feeds and agricultural products business; and (b) Agribrands and its
subsidiaries will not compete anywhere in the world, directly or indirectly, in
the pet products, battery and lighting products businesses. In addition to any
other remedies at law or equity, upon breach of the covenants not to compete,
and failure to cure such breach, by either party, the non-breaching party may
elect to cancel all or any of the agreements ancillary to the Reorganization
Agreement (such as the Trademark Agreement and/or the Technology Agreement).
Tax Sharing Agreement
Until the Spin-off, the agri-business had been included in the consolidated
Federal income tax returns of Ralston. As part of the Spin-off, we entered into
a Tax Sharing Agreement with Ralston providing, among other things, for the
allocation among the parties of United States, state, local and foreign tax
liabilities. Ralston will be liable for certain tax liabilities up to the date
of the Spin-off, including any liabilities resulting from the audit or other
adjustment to previously filed tax returns. Agribrands will be liable for
certain foreign tax liabilities attributable to the operation of the agri-
business prior to the Spin-off, and United States, state, local and foreign
taxes attributable to the agri-business after the Spin-off.
The Tax Sharing Agreement is not binding on the IRS or foreign tax authorities
and does not affect the joint and several liability of Ralston and Agribrands,
and their respective subsidiaries, to the IRS or foreign tax authorities for all
taxes of the consolidated group of which Ralston is the common parent, for
periods before the Spin-off.
Trademark Agreement
Ralston has perpetually licensed to us, on a royalty-free basis, the right to
use their trademarks, primarily "Purina"(R) and "Chow"(R), and the
"Checkerboard" logo, and certain other trademarks, with respect to animal feeds
and agricultural products, subject to the rights of Purina Mills, Inc., which
8
<PAGE>
utilizes such trademarks in the United States. We are not permitted to use such
trademarks, however, on pet products which Agribrands may produce or distribute,
unless the pet product is produced for Ralston or provided by Ralston.
Technology Agreement
We entered into a Technology Agreement with Ralston pursuant to which Ralston
has licensed to Agribrands the perpetual right to utilize Ralston's technology
for animal feed and other agricultural products on a royalty-free basis, subject
to the rights of Purina Mills, Inc. which utilizes such technology in the United
States, and to certain rights of DuPont which were assigned by Ralston in
connection with its sale of its protein technologies business.
Certain Transactions with Management
On April 7, 1999, we entered into a Separation Agreement with Gonzalo Dal Borgo,
our former Vice President for Strategic Product Development who retired on April
30, 1999. A copy of the Separation Agreement was filed with the SEC as an
exhibit to our May 31, 1999 Quarterly Report. In the Separation Agreement, we
agreed to pay Mr. Dal Borgo a cash severance package having a present value
equal to approximately $580,000. A portion of the severance will be paid to Mr.
Dal Borgo over the next four years. The cash severance package includes amounts
for salary and bonus for a two year period, accrued but unused paid time off for
Mr. Dal Borgo, relocation expenses, expected employment search expenses and
certain legal and financial planning expenses expected to be incurred by Mr. Dal
Borgo as a result of the termination of his employment. The agreement also
contains provisions relating to the treatment of Mr. Dal Borgo's other employee
benefits with us, including insurance arrangements, his participation in our
Savings Investment Plan and Non-Qualified Deferred Compensation Plan and the
treatment of stock options which had been previously awarded to Mr. Dal Borgo.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
To the best of our knowledge, all of the filings for our executive officers and
directors required under Section 16(A) of the Securities Exchange Act of 1934
were made on a timely basis in 1999.
OTHER BUSINESS
The Board knows of no business that will be presented for consideration at the
2000 Annual Meeting of Shareholders other than that stated above. Should any
such matter properly come before the meeting, votes may be cast pursuant to
proxies with respect to any such matter in the best judgment of the person or
persons acting under the proxies.
9
<PAGE>
OWNERSHIP OF OUR SECURITIES
The table below lists the persons known by us to beneficially own 5% or more of
our Common Stock as of November 1, 1999.
<TABLE>
<CAPTION>
Name and Address of Number of Shares % of Shares Explanatory
Beneficial Owner Beneficially Owned Outstanding Notes
------------------- ------------------ ----------- -----------
<S> <C> <C> <C>
Southeastern Asset Management, Inc. 1,301,584 12.18% (A)
6410 Poplar Ave., Suite 900
Memphis, TN 38119
Highbridge Capital Management, LLC 797,500 7.70% (B)
767 Fifth Avenue
New York, NY 10153
8.80%
Greenlight Capital LLC 912,300 (C)
420 Lexington Ave., Suite 875
New York, NY 10170
</TABLE>
(A) Based on information provided by Southeastern, at September 30, 1999,
clients of Southeastern Asset Management, Inc. ("Southeastern"), an
investment adviser registered under Section 203 of the Investment
Advisors Act of 1940 and a series of Longleaf Partners Funds Trust
("Longleaf"), an investment company registered under Section 8 of the
Investment Company Act of 1940 owned in the aggregate 1,301,584 shares.
Southeastern has sole voting power with respect to 101,384 of the
shares and shared voting power with Longleaf with respect to 1,179,600
of such shares and no voting power with respect to 20,600 of such
shares. In addition, Southeastern has sole dispositive power with
respect to 121,984 of such shares and shared dispositive power with
Longleaf with respect to 1,179,600 of such shares.
(B) Based on information contained in Amendment No. 1 to Schedule 13G filed
by Highbridge Capital Management, LLC ("Highbridge Management") and
Highbridge Capital Corporation (Highbridge Capital") on February 25,
1999. Each of Highbridge Capital and Highbridge Management has shared
voting power over all 797,500 shares and shared dispositive power over
all 797,500 shares.
(C) Based on Amendment No. 2 to Schedule 13D which was filed with the SEC
on November 4, 1998 by (i) Greenlight Capital LLC ("Greenlight"); (ii)
David Einhorn; and (iii) Jeffrey A. Keswin. Messrs. Einhorn and Keswin
are principals of Greenlight, which company provides investment
management services to private individuals and institutions. Each of
Greenlight, Mr. Einhorn and Mr. Keswin have reported that they have
sole voting power and sole dispositive power with respect to all
912,300 shares.
10
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Options
Directors Shares Exercisable % of
and Beneficially Within Shares
Executive Officers Owned 60 Days Total Outstanding(A)
- -------------------------- ------------ ----------- ------- --------------
<S> <C> <C> <C> <C>
David R. Banks 470 0 470 *
Jay W. Brown 2,976 0 2,976 *
M. Darrell Ingram 1,366 (B) 0 1,366 *
H. Davis McCarty 921 (C) 0 921 *
Joe R. Micheletto 0 0 0 *
Martin K. Sneider 1,000 0 1,000 *
William P. Stiritz 41,155 (D) 0 41,155 *
Bill G. Armstrong 1,003 (E) 0 1,003 *
Ki Yong Kim 2,000 0 2,000 *
Eric M. Poole 750 0 750 *
David R. Wenzel 725 0 725 *
All Officers and Directors 52,396 0 52,396 *
</TABLE>
"Beneficial Ownership" includes those shares a director or executive officer has
the power to vote or transfer, as well as shares owned by immediate family
members that reside with the director or officer. The table above also indicates
shares that may be obtained within 60 days upon the exercise of options. An
asterisk in the column listing the percentage of shares beneficially owned
indicates the person owns less than 1% of the Common Stock as of November 1,
1999.
(A) The number of shares outstanding is the sum of (1) the number actually
outstanding on November 1, 1999, and (2) the number of shares of Common
Stock which would be issued if all options listed in the Options
Exercisable Within 60 Days column were exercised.
(B) Includes 26 shares of Common Stock held by Mr. Ingram's wife.
(C) Includes 492 shares of Common Stock held in Mr. McCarty's wife's trust
of which he serves as co-trustee.
(D) Includes 4,615 shares of Common Stock owned by Mr. Stiritz's wife and
934 shares of Common Stock owned by Mr. Stiritz's son. Mr. Stiritz
disclaims beneficial ownership of shares of Common Stock owned by his
wife and son.
(E) Includes 3 shares of Common Stock owned by Mr. Armstrong's wife.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation for each of the last two fiscal years of
our Chief Executive Officer and our other four most highly compensated executive
officers ("Named Executive Officers").
For fiscal year 1998, compensation received by the Named Executive Officers was
as of the Spin-off of Agribrands by Ralston, that is, for five months rather
than for a full fiscal year. Annualized salaries, i.e., the salary amounts which
would have been paid to the Named Executive Officers had they been paid for a
full year at the rates in effect from the Spin-off date through the end of the
fiscal year, are reflected in the "Salary" column. The full amount of bonuses we
paid at the end of fiscal year 1998 is reflected in the "Bonus" column. We have
not attempted to pro rate bonuses based on the relationship between the period
before the Spin-off and the period after the Spin-off.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation (Awards)
Securities
Other Annual Underlying All Other
Name and Compensation Options Compensation
Principal Position Year Salary ($) Bonus ($) ($) (#) ($)(1)
- ------------------------ ---- ---------- --------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
William P. Stiritz 1999 $ - $ - $ 67,220 (2) 500,000 $524,877
Chairman of the Board, 1998 $ - $ - $ 30,593 1,000,000 $ -
Chief Executive Officer
and President
Bill G. Armstrong 1999 $220,000 $143,000 $ - 25,000 $ 16,292
Chief Operating Officer 1998 $200,000 $150,000 $ - 10,000 $ 2,423
Ki Yong Kim 1999 $150,299 (3) $ 99,968 $ 53,532 (3)(4) 5,000 $239,976 (3)
Chief Operating Officer 1998 $117,036 $100,000 $ 28,468 10,000 $ 38,568
North Asia Region
Eric M. Poole 1999 $239,828 (5) $100,000 $161,227 (6) 2,500 $ 12,238
Chief Operating Officer 1998 $211,753 $ 70,000 $133,364 5,000 $ 2,696
Europe Region
David R. Wenzel 1999 $165,000 $ 82,500 $ - 25,000 $ 11,586
Chief Financial Officer 1998 $150,000 $ 90,000 $ - 10,000 $ 1,650
12
<PAGE>
<FN>
(1) The amounts shown in this column consist of the following:
(i) Matching contributions under our Savings Investment Plan:
o Mr. Armstrong, $3,060
o Mr. Poole, $4,671
o Mr. Wenzel, $2,700
(ii) Matching contributions under our Non-Qualified Deferred
Compensation Plan:
o Mr. Armstrong, $8,576
o Mr. Poole, $2,911
o Mr. Wenzel, $4,230
(iii) Profit sharing contributions under our Savings Investment
Plan:
o Mr. Armstrong, $4,656
o Mr. Poole, $4,656
o Mr. Wenzel, $4,656
(iv) Severance accrual for Mr. Kim for 1999 pursuant to certain
severance arrangements described in detail on page 16 under
the heading "Severance Plan."
(v) Key Man Life Insurance premiums in the amount of $5,000,000
paid on the life of Mr. Stiritz having a potential value under
certain funding and actuarial assumptions of $524,877. (See
Nominating and Compensation Committee Report on Executive
Compensation on page 17).
(2) The amount shown in this item includes $30,894 for a company automobile
for Mr. Stiritz.
(3) The amounts shown were converted to U. S. Dollars from South Korean Won
using the August 31, 1999 exchange rate of 1180.5 South Korean Won to 1
U.S. Dollar.
(4) The amount shown in this item includes $32,529 of interest foregone on
key money deposit on residence for Mr. Kim.
(5) The amount shown includes: (i) salary of $200,000, and (ii) $18,966 for
the differential in the cost of living between the United States and
Spain, and (iii) a U.S. paid premium of $20,862 for his undertaking an
assignment in a foreign country.
(6) The amount shown in this item includes expenses we incurred of $113,946
(converted to U.S. Dollars from Spanish Pesetas using the August 31,
1999 exchange rate of 157.38 Spanish Pesetas to 1 U.S. Dollar) in
connection with tax gross ups on Mr. Poole's salary and other benefits.
</FN>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to Exercise or for Option/SAR Term (2
Options/SARs Employees in Base Price Expiration -----------------------------
Name Granted (#) Fiscal Year ($/Sh)(1) Date 5% 10%
- ---------------- ------------ ------------ ----------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
B. G. Armstrong 25,000 (3) 3.47% $ 21.69 9/25/08 $ 341,018 $ 864,207
K. Y. Kim 5,000 (4) 0.69% $ 21.69 9/25/08 $ 68,204 $ 172,841
E. M. Poole 2,500 (3) 0.35% $ 21.69 9/25/08 $ 34,102 $ 86,421
W. P. Stiritz 500,000 (3) 69.37% $ 21.69 9/25/08 $6,820,362 $17,284,137
D. R. Wenzel 25,000 (3) 3.47% $ 21.69 9/25/08 $ 341,018 $ 864,207
<FN>
(1) Market price on date of grant.
(2) Potential realizable value is calculated based on an assumption that
the price of the Common Stock appreciates at the annual rates shown
(5%, 10%), compounded annually, from the date of grant of option until
the end of the option term. The value is net of the exercise price but
is not adjusted for the taxes that would be due upon exercise. We have
elected to illustrate the potential realizable value using 5% and 10%
assumed rates of appreciation pursuant to the rules of the SEC. This
does not represent our estimate or projection of future stock prices;
actual gains, if any, upon future exercise of any of these options will
depend on the actual performance of the Common Stock.
(3) Stock Option granted is 100% exercisable on September 25, 2003.
(4) Stock Appreciation Right granted is 100% exercisable on September 25,
2003.
</FN>
</TABLE>
14
<PAGE>
FISCAL YEAR END OPTION/SAR VALUES
The following table sets forth fiscal year-end option/SAR values. None of the
options reflected in the table were exercisable on August 31, 1999, the end of
our fiscal year. No options/SARs were exercised by any of the Named Executive
Officers listed below during fiscal year 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Exercise or In-the-Money Options/SARs
Grant Options/SARs at Year-End Base Price at Year-End ($)
(#)
------------------------------- ------------------------------
Name Date Exercisable Unexercisable ($/Sh) Exercisable Unexercisable
---- ---- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
B. G. Armstrong 5/29/98 0 10,000 $34.250 $ - $ 143,750
9/25/98 0 25,000 21.690 - 673,375
K. Y. Kim 5/29/98 0 10,000 34.250 - 143,750
9/25/98 0 5,000 21.690 - 134,675
E. M. Poole 5/29/98 0 5,000 34.250 - 71,875
9/25/98 0 2,500 21.690 - 67,338
W. P. Stiritz 5/12/98 0 1,000,000 36.680 - 11,945,000
9/25/98 0 500,000 21.690 - 13,467,500
D. R. Wenzel 5/29/98 0 10,000 34.250 - 143,750
9/25/98 0 25,000 21.690 - 673,375
</TABLE>
GRANTOR TRUST
We have established and funded an irrevocable grantor trust to provide a source
of funds to assist us in meeting our obligations under certain employee benefit
plans and programs in which the Named Executive Officers, as well as other
employees, participate. At the present time, assets of the trust consist
primarily of funds deposited with the trustee for investment in investment
options which mirror the performance of the investment funds offered by our
Savings Investment Plan. If we default in our funding obligations under the
trust, payment of obligations under such plans and programs will immediately
accelerate unless the employee elects to defer payment.
CHANGE-IN-CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
We have entered into Management Continuity Agreements with the Named Executive
Officers. The agreements provide that the officers will receive severance
compensation in the event of their voluntary or involuntary termination after a
change in control of Agribrands. The compensation provided would be in the form
of (i) a lump sum payment equal to the present value of continuing their
respective salaries and bonuses for a specified period following termination of
15
<PAGE>
employment, and (ii) the continuation of other employee benefits for the same
period. The initial applicable period will be two years for the Named Executive
Officers in the event of an involuntary termination of employment (including a
constructive termination), and one year in the event of a voluntary termination
of employment, which periods will be subject to reduction for periods the
relevant individual remains employed following a change in control. No payments
would be made if the Officer terminates employment because of death, disability
or normal retirement, or for cause. Payments would not continue beyond the
Officer's normal retirement date.
Contracts governing stock options and stock appreciation rights provide that
upon a change in control of Agribrands all terms, conditions, restrictions and
limitations in effect with respect to any unexercised awards lapse and no other
terms and conditions will be applied, and any unexercised, unvested, unearned or
unpaid shares become 100% vested.
SEVERANCE PLAN
Our Korean affiliate, in accordance with Korean Labor Law, provides lump sum
severance payments to employees upon termination of employment. The Korean
affiliate offers an enhanced severance plan for its executive officers in lieu
of the Korean-mandated obligation. This severance plan is partially funded. Mr.
Kim, as the chief executive officer of the Korean affiliate, participates in
this severance plan. His severance accrual is calculated based upon his current
salary (consisting of salary, bonus and certain benefits), years of service and
a multiplier based on position within the Korean affiliate. For the purpose of
calculating this severance benefit, Mr. Kim had, as of August 31, 1999, 26 years
of credited service, calculated to the nearest year. Credited service is based
upon employment by our Korean affiliate and includes the period the affiliate
was owned by Ralston, our former parent corporation. Earnings used in
calculating benefits under the severance plan previously described are
approximately equal to amounts included in the Salary and Bonus columns in the
Summary Compensation Table on page 12. If Mr. Kim's employment with us would
have been terminated as of the end of fiscal year 1999, his lump-sum severance
payment would have been $925,751 pursuant to this severance plan.
16
<PAGE>
NOMINATING & COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
I. Nominating and Compensation Committee
The Nominating and Compensation Committee (the "Committee") is comprised of
non-management directors free from interlocking or other relationships that
might be considered a conflict of interest. The Committee approves all direct
and indirect compensation of all executive officers, including base salary,
bonuses, and long-term stock-based awards such as stock options and restricted
stock. In accordance with the SEC rules, the Committee has provided the
following report regarding executive compensation.
II. Executive Officer Compensation
The Spin-off of our businesses from Ralston on April 1, 1998, was intended to be
a "triggering event" to introduce sharp focus and urgent action across all areas
of the business. The Committee expects that executive officer compensation, like
other performance levers, will be modified over time to fit the comprehensive
strategies that arise within this new context.
The long-term objective of our compensation and other human-resource-related
programs is to attract, retain and motivate employees and managers who afford us
an advantage over our competitors and can appropriately direct our response to
broader strategic options for creating shareholder value. In applying this
general objective to the Named Executive Officers, the Committee annually
reviews its Management Incentive Program, base salary increases, benefits, and
periodically approves additional stock-based compensation.
The Committee generally attempts to combine these forms of compensation in such
a way as to provide the opportunity for highly competitive total compensation,
but such that "at-risk" compensation (that is, compensation dependent on
retrospective measurement of personal and Agribrands' performance) is more
heavily weighted than is the norm for comparable companies. The Committee
monitors compliance with this objective by comparing the combined program with
data representing salaries at the 25th percentile and total cash compensation at
the 75th percentile of those in a broad-based index provided by external
compensation consultants. The Committee uses this broad-based index rather than
the comparable companies listed in the stock performance chart because of the
limited number of industry-specific comparisons available and in recognition
that we compete for management talent against the larger universe of companies
which require expertise in international management and finance.
The Management Incentive Program for 1999 established target bonuses (as a
percentage of salary) based on the percent of growth in net earnings per share,
either on a global or regional basis, and the achievement of individual goals (a
combination of quantitative and qualitative goals specific for each person).
17
<PAGE>
Increases or decreases from the target depended on the individual's and
Agribrands' performance against the stated goals. Bonuses for the Named
Executive Officers (not including our Chief Executive Officer - see below) were
then determined by applying the resulting formula against achievement levels.
Performance against personal goals is formally evaluated and documented at year
end.
Salaries for the Named Executive Officers (other than our Chief Executive
Officer) were based on review of the broad-based index data and consideration of
the Officer's performance and demonstrated competencies versus the full
requirements of the position.
Consistent with the objectives of more heavily weighting at-risk components of
compensation and establishing a connection between employee interests and those
of the shareholders, in fiscal 1999, the Committee granted 57,500 non-qualified
stock options and stock appreciation rights to the Named Executive Officers
(other than our Chief Executive Officer) under our Incentive Stock Plan. The
Committee expects to utilize stock options or stock appreciation rights in the
future to accomplish a variety of goals including increased emphasis on
long-term value creation and management retention.
III. Chief Executive Officer Compensation
Prior to our Spin-off from Ralston, it was established that our Chief Executive
Officer would receive stock options in lieu of salary for a period of five
years. This decision was based on a desire to (1) ensure retention of our Chief
Executive Officer for the first five years of operation for the new company, (2)
provide appropriate compensation for our Chief Executive Officer without the
need for substantial cash outlays, and (3) fully align the interests of our
Chief Executive Officer with those of our shareholders.
In fiscal year 1998, our Chief Executive Officer was granted 1,000,000
non-qualified stock options, utilizing a formula proposed by external
compensation consultants (based on a modified Black-Scholes methodology). The
grant was intended to provide him with the potential to receive the present
value equivalent to five year's compensation for a Chief Executive Officer of
comparably-sized companies and with experience equivalent to our Chief Executive
Officer. At the beginning of fiscal year 1999, the Committee, based on the then
trading range of the stock, approved a second grant of 500,000 non-qualified
stock options to our Chief Executive Officer. The total number of non-qualified
options granted was within the range originally proposed by the external
compensation consultants. Each of the grants of options vests on the fifth
anniversary of the date of the grant.
18
<PAGE>
During fiscal year 1999, we funded a $102 million insurance policy on the life
of our Chief Executive Officer. The principal purpose of entering into this
program was to provide us flexibility to respond to any crises or perceived
crises that might arise upon the unexpected death of our Chief Executive
Officer, especially given the attention placed on the significance of his role
at the time of the Spin-off. We elected to use a split-dollar program for this
policy which allows additional funding within the program to accrue without tax
and may provide a cash-value benefit to our Chief Executive Officer at the end
of the program. Depending on investment earnings, this structure may enable us
to achieve the insurance objective at a lower cost than we would realize paying
for a term policy. In order to take advantage of this structure, we funded the
program with $5 million in fiscal year 1999. This Proxy Statement indicates
compensation of $524,877 for our Chief Executive Officer related to this
funding. This amount was computed using a formula required for disclosure
purposes, but, without additional funding by us, it is not certain whether any
benefit will actually accrue to our Chief Executive Officer. Any potential
future benefit for our Chief Executive Officer (in the form of cash value at the
end of year seven of the program), will be dependent on investment earnings
within the program and additional funding by us, if any.
IV. Discretionary Profit Sharing Contribution to Savings Investment Plan
Based on fiscal year 1998 financial performance of Agribrands, the Committee
approved a discretionary profit sharing contribution to employees accounts in
the Savings Investment Plan. The aggregate amount we contributed to the Plan did
not exceed $85,000. The allocation among employees, including the Named
Executive Officers (other than our Chief Executive Officer), ranged between
1.79% and 2.99% of individual compensation.
M. D. Ingram-Chairman D. R. Banks
J. W. Brown M. K. Sneider
H. D. McCarty
19
<PAGE>
PERFORMANCE GRAPH
The graph displayed below is presented in accordance with SEC requirements.
Shareholders are cautioned against drawing any conclusions from the data
contained therein, as past results are not necessarily indicative of future
performance. This graph in no way reflects our forecast on future financial
performance.
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Exchange Act, that
might incorporate future filings, including this Proxy Statement, in whole or in
part, the following Performance Graph and the Nominating and Compensation
Committee Report on Executive Compensation set forth above shall not be
incorporated by reference into any such filings.
The following line graph shows the cumulative total shareholder return on a $100
investment in our Common Stock in comparison to cumulative total return of the
stocks in the S&P 500, S&P SmallCap 600, MSCI EAFE and International Feed
Producers Indices.
The International Feed Producer Index is a company-constructed index. The index
is a market value weighted average in U.S. Dollars of selected publicly-traded
international animal feed producers, consisting of: Charoen Pokphand Feedmill
Public Co. (Thailand), Charoen Pokphand Indonesia, Gold Coin Berhad (Malaysia),
Gyomarc'h Nutrition Animale (France), Nutreco Holding BV (Netherlands), Ridley
Canada, Ltd., Ridley Corp. Ltd. (Australia) and Woo Sung Feed Company (Korea).
We note that the value stated for the International Feed Producers Index for
8/31/98 in last year's proxy statement was incorrectly stated as $98.34. The
correct value of $78.14 is stated this year. This will be the last year we use
this index for comparison purposes. This fiscal year we were added to the S&P
SmallCap 600 Index, and we believe that due to the difficulty of compiling the
data for the company-constructed index that this index offers a simpler and more
familiar measure for comparison of our performance.
The MSCI EAFE Index (Morgan Stanley Capital International-Europe, Australia and
Far East Index) is a market value weighted average of approximately 1,100
securities listed on exchanges in Europe, Australia, New Zealand and Asia, but,
does not include U.S. listed securities. Since we conduct substantially all of
our business outside of the United States, we believe that this index provides a
useful comparison.
20
<PAGE>
Comparison of Total Return on $100 Invested in
Agribrands International, Inc. Common Stock on April 1, 1998 vs.
S&P 500, S&P SmallCap 600, MSCI EAFE and International Feed Producers
The graph depicts the following returns:
S&P S&P MSCI International
Agribrands 500 SmallCap 600 EAFE Feed Producers
---------- ------ ------------ ------ --------------
4/1/98 100.00 100.00 100.00 100.00 100.00
8/31/98 81.18 86.39 70.25 88.59 78.14
8/31/99 135.54 119.15 86.52 109.74 130.96
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at our 2001 Annual Meeting
scheduled to be held on January 26, 2001 must be received by Agribrands by July
31, 2000 for inclusion in our Proxy Statement and proxy relating to that
meeting.
In order for a shareholder to nominate a candidate for director, under our
Bylaws we must receive timely notice of the nomination in advance of the
meeting. Ordinarily, such notice must be received not less than 90 days before
the meeting or before October 29, 2000 for the 2001 Annual Meeting. The
shareholder filing a notice of nomination must include information about the
nominee, such as name, address, occupation and shares held.
In order for a shareholder to bring other business before a shareholder meeting,
timely notice must be received by the Company prior to October 29, 2000. The
notice must include a description of the proposed business, the reasons
therefor, and other specified matters.
Upon receipt of any such proposal, we will determine whether or not to include
such proposal in the Proxy Statement, proxy and/or Annual Meeting agenda under
regulations governing the solicitation of proxies.
In each case, the notice must be given to our Secretary, whose address is 9811
South Forty Drive, St. Louis, Missouri 63124. Any shareholder desiring a copy of
our Bylaws will be furnished one without charge upon written request to the
Secretary.
By order of the Board of Directors,
/S/ Michael J. Costello
- ------------------------
Michael J. Costello
Secretary
November 23, 1999
21
<PAGE>
Annex
[LOGO]
AGRIBRANDS INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
JANUARY 28, 2000 AT 2:00 P.M.
AT GATEWAY CENTER, ONE GATEWAY DRIVE, COLLINSVILLE, ILLINOIS
The undersigned appoints William P. Stiritz and Michael J. Costello, and each of
them, lawful attorneys and proxies of the undersigned, with power of
substitution, to represent the undersigned at the Annual Meeting of Shareholders
of Agribrands International, Inc. to be held on January 28, 2000, and at any
adjournments thereof, and to vote in accordance with the instructions on the
reverse side all shares of Common Stock of the Company which the undersigned is
entitled to vote.
IMPORTANT -- PLEASE SIGN AND DATE ON BACK OF CARD.
RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE;
NO POSTAGE NECESSARY.
- --------------------------------------------------------------------------------
DETACH AND RETURN PROXY CARD
IMPORTANT
PLEASE VOTE THE ABOVE PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS.
IF YOU REQUIRE SPECIAL ARRANGEMENTS TO PARTICIPATE AT THIS MEETING,
PLEASE CONTACT THE COMPANY'S INVESTOR RELATIONS DEPARTMENT
AT (314) 812-0504 PRIOR TO THE MEETING.
IF YOUR ADDRESS HAS CHANGED, PLEASE BE SURE TO NOTIFY
INVESTOR RELATIONS PROMPTLY.
RETAIN ADMISSION TICKET BELOW
- --------------------------------------------------------------------------------
ADMISSION TICKET
FOR PRE-REGISTRATION, PLEASE SIGN BELOW.
PRESENT THIS CARD AT THE ENTRANCE TO THE MEETING ROOM.
AGRIBRANDS INTERNATIONAL, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
GATEWAY CENTER
ONE GATEWAY DRIVE, COLLINSVILLE, ILLINOIS
THURSDAY, JANUARY 28, 2000
2:00 P.M.
SIGNATURE_________________________________________
<PAGE>
The proxies are directed to vote as specified.
If no direction is given, the proxies will vote FOR all nominees listed below
and in their discretion on all other matters coming before the meeting and any
adjournment thereof. The Board of Directors recommends a vote FOR all nominees
for election as directors.
1. Election of Directors:
H. Davis McCarty
Joe R. Micheletto FOR [__] WITHHELD [__]
For, except vote withheld from the following
nominee:
- -------------------------------
2. Discretionary authority to vote other matters properly brought before the
meeting:
GRANT [__] DENY [__]
Check here if you plan to attend the annual meeting. [__]
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title of such.
-------------------------------------
-------------------------------------
Signature(s)/(Title(s) Date
- --------------------------------------------------------------------------------
DETACH AND RETURN PROXY CARD
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING,
WHETHER OR NOT YOU ATTEND THE MEETING IN PERSON.
TO MAKE SURE YOUR SHARES ARE REPRESENTED,
WE URGE YOU TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
IF YOU PLAN TO ATTEND THE MEETING,
PLEASE MARK THE BOX ON THE PROXY CARD ABOVE.
RETAIN ADMISSION TICKET BELOW
- --------------------------------------------------------------------------------
[MAP]
