<PAGE> 1
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 (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 Rule 14a-11(c) or Rule 14a-12
THORN APPLE VALLEY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / 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> 2
THORN APPLE VALLEY, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 1995
To the Shareholders:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of Thorn Apple
Valley, Inc. (the "Company") will be held at the Radisson Plaza Hotel, 1500 Town
Center, Southfield, Michigan on Thursday, October 26, 1995 at 11:00 A.M.,
Eastern Daylight Time, to consider and act upon the following matters:
(1) The election of seven directors to serve until the next Annual
Meeting of Shareholders and until their successors shall have been duly
elected and qualified.
(2) Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on September 15, 1995
will be entitled to vote at the meeting.
Your attention is called to the attached proxy statement and accompanying
proxy. You are requested to sign and return the proxy in the enclosed envelope,
to which no postage need be affixed if mailed in the United States. If you
attend the meeting, you may withdraw your proxy and vote your own shares.
A copy of the Annual Report of the Company for the fiscal year ended May
26, 1995 accompanies this Notice.
By Order of the Board of Directors
JERRY D. PECK
Secretary
Southfield, Michigan
September 22, 1995
<PAGE> 3
THORN APPLE VALLEY, INC.
26999 CENTRAL PARK BOULEVARD, SUITE 300
SOUTHFIELD, MICHIGAN 48076
-------------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 1995
GENERAL INFORMATION
The Annual Meeting of Shareholders of Thorn Apple Valley, Inc. (the
"Company") will be held at the Radisson Plaza Hotel, 1500 Town Center,
Southfield, Michigan on Thursday, October 26, 1995, at 11:00 A.M., Eastern
Daylight Time, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders. The approximate mailing date for this proxy statement
is September 22, 1995.
It is important that your shares be represented at the meeting. If you do
not intend to attend the meeting, please sign and date the enclosed proxy and
return it to the Company. The proxy is solicited by the Board of Directors of
the Company. The shares represented by valid proxies in the enclosed form will
be voted if received in time for the Annual Meeting. The expenses in connection
with the solicitation of proxies will be borne by the Company and may include
requests by mail and personal contact by the Company's directors, officers and
employees. The Company will reimburse brokers or other nominees for their
expenses in forwarding proxy materials to principals. Any person giving a proxy
has the power to revoke it at any time before it is voted.
VOTING RIGHTS AND PRINCIPAL HOLDERS OF SECURITIES
Only holders of record of shares of the Company's Common Stock, $0.10 par
value per share ("Common Stock"), at the close of business on September 15,
1995, are entitled to notice of and to vote at the meeting and at any and all
adjournments or postponements thereof, each share having one vote. On the record
date, the Company had issued and outstanding 5,779,002 shares of Common Stock.
As of September 15, 1995, Henry S Dorfman was the beneficial owner of
2,141,295 shares (37.1%) of the Company's Common Stock. Included in the shares
beneficially owned by Henry S Dorfman are (a) 1,700,806 shares of the Company's
Common Stock held by the Dorfman Family Limited Partnership, which shares Henry
S Dorfman has the power to vote, and (b) 55,000 shares of the Company's Common
Stock held by the Henry S Dorfman and Mala Dorfman Foundation, which Henry S
Dorfman has the power to vote. Also included in the shares beneficially owned by
Henry S Dorfman are 287,196 shares of the Company's Common Stock that are
subject to a Shareholder Agreement, dated as of August 1, 1988 (the "Shareholder
Agreement"), pursuant to which Henry S Dorfman has the sole power to vote such
shares; such shares are owned by Joel Dorfman, Henry S Dorfman's son. See pages
2-3 for additional information.
As of September 15, 1995, Joel Dorfman was the beneficial owner of 498,896
shares (8.6%) of the Company's Common Stock, which includes 287,196 shares which
Henry S Dorfman has the power to vote (see pages 2-3 for additional
information). As of September 15, 1995, Henry S Dorfman, together with members
of his family, directly or indirectly beneficially owned 2,352,995 shares
(40.7%) of the Company's outstanding Common Stock. The address of Henry S
Dorfman and Joel Dorfman is 26999 Central Park Boulevard, Suite 300, Southfield,
Michigan 48076.
Management does not know of any other person who beneficially owned, as of
September 15, 1995, more than 5% of the Company's Common Stock.
1
<PAGE> 4
I. ELECTION OF DIRECTORS
The Board of Directors proposes that the seven persons named below as
nominees be elected as directors of the Company to hold office until the next
annual meeting of shareholders and until their successors are duly elected and
qualified:
<TABLE>
<S> <C>
John C. Canepa Louis Glazier
Henry S Dorfman Moniek Milberger
Joel Dorfman Seymour Roberts
Burton D. Farbman
</TABLE>
The persons named in the accompanying proxy intend to vote all valid
proxies received by them for the election of these nominees. In case any nominee
is unable or declines to serve, which is not anticipated, it is intended that
the proxies be voted in accordance with the best judgment of the proxy holders.
Each of the foregoing nominees was elected to his present term at the 1994
Annual Meeting of Shareholders. The following table sets forth the name, age,
position with the Company, principal occupation, term of service and beneficial
ownership of Common Stock with respect to each nominee to serve as a director.
The information as to securities owned by each nominee has been furnished by
such nominee. The following table also sets forth the name and beneficial
ownership of Common Stock with respect to each executive officer of the Company
named in the Summary Compensation Table below and all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF OUTSTANDING
COMMON STOCK COMMON STOCK
OF THE COMPANY OF THE COMPANY
POSITIONS AND OFFICES WITH BENEFICIALLY BENEFICIALLY
NAME AND YEAR FIRST COMPANY OWNED AS OF OWNED AS OF
BECAME A DIRECTOR AGE AND OTHER PRINCIPAL OCCUPATIONS SEPTEMBER 15, 1995 SEPTEMBER 15, 1995
- ---------------------------- --- --------------------------------------------------- ------------------
-- NOMINEES FOR ELECTION AS DIRECTORS --
<S> <C> <C> <C> <C>
Henry S Dorfman (1959)...... 73 Chairman of the Board............ 2,141,295(1) 37.1%
Joel Dorfman (1978)......... 44 President and Chief Executive
Officer of the Company........... 498,896(2) 8.6%
Moniek Milberger (1959)..... 65 Certified Public Accountant and
Consultant to the Company,
Southfield, Michigan............. 650 *
John C. Canepa (1983)....... 65 Chairman of the Board of Old Kent
Financial Corporation, Grand
Rapids, Michigan................. 0 0%
Louis Glazier (1988)........ 46 Executive Vice President Finance
and Administration of the
Company.......................... 47,311(3) *
Burton D. Farbman (1988).... 52 President of The Farbman Group,
Southfield, Michigan............. 375 *
Seymour Roberts (1992)...... 61 Senior Vice President, Senior
Partner, N.W. Ayer & Partners,
Detroit, Michigan................ 300 *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF OUTSTANDING
COMMON STOCK COMMON STOCK
OF THE COMPANY OF THE COMPANY
BENEFICIALLY BENEFICIALLY
OWNED AS OF OWNED AS OF
NAME SEPTEMBER 15, 1995 SEPTEMBER 15, 1995
- ---------------------------- ------------------ ------------------
<S> <C> <C>
- -- OTHER EXECUTIVE OFFICERS --
Keith Jahnke........................................................ 35,000(4) *
Edward Boan......................................................... 27,500(5) *
All directors and executive officers as a group (9 persons)......... 2,751,327(6) 47.6%
</TABLE>
- -------------------------
* Less than 1.0%
(1) Henry S Dorfman owns outright and has the sole voting and investment power
for 98,293 shares. Also included in the shares beneficially owned by Henry S
Dorfman are (a) 1,700,806 shares held by the Dorfman Family Limited
Partnership, which Henry S Dorfman has the power to vote, (b) 55,000 shares
held by the Henry S Dorfman and Mala Dorfman Foundation, which shares Henry
S Dorfman has the power to vote, and (c) 287,196 shares owned by his son,
Joel Dorfman, which shares are subject to the Shareholder Agreement,
pursuant to which Henry S Dorfman has the sole power to vote such shares.
Such 287,196 shares are also included in the shares indicated as shares
beneficially owned by Joel Dorfman.
(2) Joel Dorfman, the son of Henry S Dorfman, owns 287,196 shares, all of which
are subject to the Shareholder Agreement and which Henry S Dorfman has the
power to vote. In addition, within 60 days of September 15, 1995, Joel
Dorfman has the right to acquire 211,250 shares pursuant to the Company's
1982 Stock Option Plan and the Company's 1990 Employee Stock Option Plan
(collectively referred to as the "Company's Stock Option Plans"). Also
included in the number listed in the table above are 450 shares held in
custodial accounts for the benefit of Joel Dorfman's sons.
(3) Louis Glazier owns outright and has the sole voting and investment power for
11,724 shares. In addition, within 60 days of September 15, 1995, Mr.
Glazier has the right to acquire 35,000 shares pursuant to the Company's
Stock Option Plans. Also included in the number listed in the table above
are 307 shares owned by one of Mr. Glazier's daughters.
(4) Within 60 days of September 15, 1995, Keith Jahnke has the right to acquire
35,000 shares pursuant to the Company's Stock Option Plans.
(5) Within 60 days of September 15, 1995, Edward Boan has the right to acquire
27,500 shares pursuant to the Company's Stock Option Plans.
(6) Total includes 308,750 shares which such persons have the right to acquire
within 60 days of September 15, 1995 pursuant to the Company's Stock Option
Plans.
OTHER INFORMATION RELATING TO NOMINEES
The following is a brief account of the business experience during the past
five years of each nominee for election as a director of the Company:
Henry S Dorfman has served as Chairman of the Board of Directors since
1959. Mr. Dorfman also served as Chief Executive Officer of the Company from
1959 to July, 1995. Mr. Dorfman was a founder of the Company and, by virtue of
his relationship to the Company and stockholding interest, might be deemed to be
in "control" of the Company within the meaning of Rule 12b-2 of the Securities
Exchange Act of 1934.
Joel Dorfman has served as President of the Company since March, 1985 and
Chief Executive Officer of the Company since July, 1995. By virtue of his
relationship to the Company, Mr. Dorfman might be deemed to be in "control" of
the Company within the meaning of Rule 12b-2 of the Securities Exchange Act of
1934.
Moniek Milberger has been a Certified Public Accountant in private practice
since 1960 and serves as a consultant to the Company.
3
<PAGE> 6
John C. Canepa has been Chairman of the Board of Old Kent Financial
Corporation since March, 1995. Mr. Canepa also served as President and Chief
Executive Officer of Old Kent Financial Corporation and Old Kent Bank and Trust
Company, Grand Rapids, Michigan, from 1970 to 1995. Mr. Canepa is also a
director of Old Kent Financial Corporation and Old Kent Bank and Trust Company.
Louis Glazier has been Executive Vice President Finance and Administration
of the Company since July, 1988.
Burton D. Farbman has been President of The Farbman Group, a real estate
development and management company, since 1987, and prior to that was President
of the Farbman Group in 1977.
Seymour Roberts has been a Senior Vice President and Senior Partner of N.W.
Ayer & Partners, an advertising agency, since February, 1992. From 1973 to 1991,
Mr. Roberts served as Executive Vice President and General Manager of W.B. Doner
& Company, an advertising agency.
During the fiscal year ended May 26, 1995 ("fiscal 1995"), the Board of
Directors held five meetings. Each of the incumbent directors listed above
attended at least 75% of the Board of Directors and committee meetings held
during the period in which he served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Executive Committee. The members of the
Executive Committee are Henry S Dorfman, Joel Dorfman and John C. Canepa. The
Executive Committee meets on call as required between meetings of the Board of
Directors and has authority to take any action which is not specifically
prohibited by the Michigan Business Corporation Act. During fiscal 1995, the
Executive Committee took action by unanimous consent on one occasion.
The Company has a standing Stock Option Committee. The members of the Stock
Option Committee are Henry S Dorfman, Moniek Mikelberg and Burton D. Farbman.
The duties of the Stock Option Committee include the administration and the
granting of stock options under the Company's stock option plans. During fiscal
1995, the Stock Option Committee held one meeting.
The Company has a standing Nominating Committee. The members of the
Nominating Committee are Joel Dorfman, Burton D. Farbman and John C. Canepa. The
Nominating Committee considers the performance of incumbent directors and
recommends to the shareholders nominees for election as directors. The
Nominating Committee will consider nominees for directors recommended by
shareholders. Such recommendations for the 1996 Annual Meeting of Shareholders
should be submitted to the Chairman of the Board at 26999 Central Park
Boulevard, Suite 300, Southfield, Michigan 48076, no later than May 26, 1996.
The Company has a standing Compensation Committee. The members of the
Compensation Committee are Joel Dorfman, John C. Canepa, Burton D. Farbman,
Moniek Milberger and Seymour Roberts. The duties of the Compensation Committee
include recommending to the entire Board of Directors of the Company the
compensation arrangements for senior management and directors of the Company and
approving transactions between the Company, on the one hand, and officers,
directors and shareholders of the Company, on the other hand. During fiscal 1995
the Compensation Committee held one meeting.
The Company has a standing Audit Committee. The members of the Audit
Committee are John C. Canepa, Burton D. Farbman, Moniek Milberger and Seymour
Roberts. The duties of the Audit Committee include overseeing the relationship
with the Company's independent accountants; nominating the Company's independent
accountants for approval by the entire Board of Directors of the Corporation;
reviewing with the independent accountants the scope, cost and results of the
auditing engagement; reviewing and approving fees for audit and non-audit
professional services provided by the independent accountants; reviewing reports
submitted by the independent accountants; and reviewing the adequacy of the
Company's system of internal accounting controls. During fiscal 1995, the Audit
Committee held two meetings.
The Company created an Executive Compensation Committee in the beginning of
fiscal 1995. The members of the Executive Compensation Committee are Burton D.
Farbman and Seymour Roberts. The duties of the Executive Compensation Committee
include administering the cash bonus plan for participating executives
("Participants"); establishing performance criteria for granting the annual cash
bonus; insuring Participants have met their stated performance goals and
approving the annual cash bonus paid to such Participants.
4
<PAGE> 7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended May 26, 1995, May 27, 1994, and May 28, 1993 concerning the compensation
of Joel Dorfman, the executive officer of the Company who performs the functions
of the chief executive officer, and each of the Company's other four most highly
compensated executive officers whose total annual salary and bonus exceeded
$100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- AWARD
FISCAL OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS COMPENSATION(2)
- --------------------------- ------ -------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Joel Dorfman............... 1995 $650,000 $250,000 $ 12,791(3) 40,000 $31,062(4)
President and Chief 1994 650,000 400,000 114,139(3)(5) 40,000 31,666(4)
Executive Officer 1993 600,000 510,000 1,040,400(3)(6) 37,500 29,248(4)
Henry S Dorfman............ 1995 550,000 175,000 32,575(3) -- 7,231(4)
Chairman of the Board 1994 550,000 400,000 43,983(3) -- 6,525(4)
1993 550,000 430,000 50,000(3) -- 4,103(4)
Louis Glazier.............. 1995 175,000 137,500 198,366(3)(13) 10,000 1,961(4)
Executive Vice 1994 175,000 270,000 14,759(3) 10,000 1,911(4)
President Finance 1993 150,000 390,000 -- 7,500 1,736(4)
and Administration
Keith Jahnke............... 1995 175,000 75,000 2,145(3) 10,000 700
Executive Vice President 1994 175,000 150,000 155,250(3)(7) 10,000 650
Sales and Marketing 1993 150,000 160,000 354,167(3)(8) 7,500 600
Edward Boan................ 1995 175,000 75,000 93,850(3)(11) 10,000 700
Executive Vice President 1994 175,000 150,000 1,975(3) 10,000 650
Pork and Human Resources 1993 150,000 160,000 138,683(3)(12) 7,500 600
</TABLE>
- -------------------------
(1) Each bonus accrued in the fiscal year indicated and was paid in the
following fiscal year.
(2) Except as noted, consists only of the Company's 401(k) contributions.
(3) Includes amounts relating to use of company-owned automobiles and
reimbursement of business, entertainment and other expenses.
(4) Includes premiums paid by the Company for Joel Dorfman, Henry S Dorfman and
Louis Glazier in connection with split dollar life insurance policies
maintained by the Company on their lives in policy amounts (as of May 26,
1995) of $1,995,101, $178,000 and $100,000, respectively. Pursuant to this
arrangement, the Company pays the annual premiums on such policies, each of
which is owned by the spouse of the insured, and the Company has received a
collateral assignment of the policies and will recover the premiums
advanced, without interest, upon the death or termination of employment of
each insured. The aggregate premiums paid (and to be recovered by the
Company) for these policies on the lives of Joel Dorfman, Henry S Dorfman
and Louis Glazier as of May 26, 1995 were $308,262, $200,773 and $11,194,
respectively.
(5) Includes gain on exercise of stock options of $67,915.
(6) Includes gain on exercise of stock options of $950,400.
(7) Includes gain on exercise of stock options of $153,125.
(8) Includes gain on exercise of stock options of $354,167.
(9) Includes gain on exercise of stock options of $87,917.
(10) Includes gain on exercise of stock options of $196,500.
5
<PAGE> 8
(11) Includes gain on exercise of stock options of $91,875.
(12) Includes gain on exercise of stock options of $136,708.
(13) Includes gain on exercise of stock options of $196,500.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended May 26, 1995 to each of the
executive officers of the Company named in the Summary Compensation Table above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED VALUE
------------------------------------------------------ AT ASSUMED ANNUAL RATES
PERCENTAGE OF OF STOCK PRICE
TOTAL OPTIONS APPRECIATION AT END OF
GRANTED TO PER SHARE TEN-YEAR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- -------------------------- ---------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joel Dorfman.............. 40,000 23.46 $ 26.00 10/19/04 $654,050 $1,657,600
Henry S Dorfman........... -- -- -- -- -- --
Louis Glazier............. 10,000 5.87 26.00 10/19/04 163,500 414,000
Keith Jahnke.............. 10,000 5.87 26.00 10/19/04 163,500 414,000
Edward Boan............... 10,000 5.87 26.00 10/19/04 163,500 414,000
</TABLE>
- -------------------------
(1) Each Option granted in fiscal 1995 is exercisable immediately.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended May 26, 1995 by each of the executive
officers named in the Summary Compensation Table above and the value of
unexercised options held by such persons as of May 26, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES ACQUIRED VALUE YEAR-END EXERCISABLE/ YEAR-END EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
- --------------------------------- --------------- -------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Joel Dorfman..................... -- -- 211,250/0 $ 944,841/0
Henry S Dorfman.................. -- -- 0/0 0/0
Louis Glazier.................... 7,500 196,500 35,000/0 13,750/0
Keith Jahnke..................... -- -- 35,000/0 13,750/0
Edward Boan...................... 7,500 91,875 27,500/0 3,438/0
</TABLE>
- -------------------------
(1) Based on the May 26, 1995 closing price on the NASDAQ National Market System
of $18.375 per share.
6
<PAGE> 9
COMPENSATION OF DIRECTORS
Under the Company's standard arrangements, each director who is not an
officer of the Company receives an annual director's fee in the amount of $5,000
and a fee of $500 for each meeting of the Board of Directors of the Company
which they attend. In addition, during fiscal 1995, Mr. Milberger received
$27,000 as compensation for consulting services rendered to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended May 26, 1995, Joel Dorfman served as a member
of the Company's Compensation Committee. Joel Dorfman has been President of the
Company since March, 1985 and Chief Executive Officer since July, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee's overall compensation policy
applicable to the Company's executive officers is to provide a compensation
program that is intended to attract and retain qualified executives for the
Company and to provide them with incentives to achieve Company goals and
increase shareholder value. The Compensation Committee implements this policy
through establishing salaries and bonuses. The Compensation Committee's current
policy is not to provide significant pension or other retirement benefits for
the Company's employees.
Salaries. The Compensation Committee's policy is to provide salaries that
are generally similar to those of similar executive officers in similar
companies. The Compensation Committee determines comparable salaries through
discussions with candidates for such positions, Company research and the
research of independent consultants concerning the salaries paid by the
Company's competitors.
Bonuses. Messrs. Henry S Dorfman, Joel Dorfman, Glazier, Jahnke and Boan
receive cash bonuses pursuant to the Company's Cash Bonus Plan, which was
approved by the shareholders at the 1994 Annual Meeting, and which is
administered by the Executive Compensation Committee. The Company's bonus
program (the "Executive Bonus Program") permits other executive officers, and
certain other participating employees, as selected by the Compensation Committee
in its sole discretion, to earn annual cash bonus awards. The Compensation
Committee's policy is to provide a major portion of each executive officer's
total compensation in the form of such bonuses to provide them with incentives
to achieve the Company's financial and operational goals and increase
shareholder value. Bonuses are generally determined as a percentage of the
Company's pre-tax income in excess of predetermined target levels which vary
from year to year as established by the Compensation Committee at the beginning
of each fiscal year. As a result, the compensation of the Company's executive
officers is made dependant on the Company's overall performance. Such bonuses
are also intended to identify and give priority to the Company's goals by tying
compensation to the Company's business plans. In addition to the foregoing, for
employees who are not covered by the Company's Cash Bonus Plan, the Compensation
Committee takes into account the participant's position, salary level and
individual contributions to the Company in determining a particular bonus award.
Other participants in the Executive Bonus Program are selected from among those
employees of the Company who the Compensation Committee believes have the
capacity to contribute in a substantial way to the successful performance of the
Company. Bonuses are paid following the end of the fiscal year for which the
bonus is earned.
Stock Options. Stock options are awarded by the Stock Option Committee of
the Board of Directors. The Stock Option Committee's policy is to award stock
options to the Company's officers in amounts reflecting the participant's
position and ability to influence the Company's overall performance. Options are
intended to provide participants with an increased incentive to make
contributions to the long-term performance of growth of the Company, to join the
interests of participants with the interests of shareholders of the Company and
to attract and retain qualified employees. The Stock Option Committee's policy
has been to grant options with a term of ten-years to provide a long-term
incentive and to fix the exercise price of the options at the fair market values
of the underlying shares on the date of grant. As a result, such options will
only have value if the price of the underlying shares increases.
7
<PAGE> 10
Fiscal 1995 Compensation Decisions Regarding Joel Dorfman. The Executive
Compensation Committee approved a $250,000 bonus for Joel Dorfman for fiscal
1995. This bonus was calculated in accordance with the Company's Cash Bonus
Plan. Joel Dorfman did not participate in the approval of his own compensation,
but did participate in the discussion of the Company's performance for fiscal
1995 and the determination of bonuses for the other participants in the
Executive Bonus Program.
By the Compensation Committee
JOEL DORFMAN
JOHN C. CANEPA
BARTON D. FARBMAN
MONIEK MILBERGER
SEYMOUR ROBERTS
8
<PAGE> 11
PERFORMANCE GRAPH
The following line graph compares for the fiscal years ended May 25, 1990,
May 31, 1991, May 29, 1992, May 28, 1993, May 27, 1994, and May 26, 1995 (i) the
yearly cumulative total shareholder return (i.e., the change in share price plus
the cumulative amount of dividends, assuming dividend reinvestment, divided by
the initial share price, expressed as a percentage) on the Company's Common
Stock, with (ii) the cumulative total return of the NASDAQ Market Index, and
with (iii) the cumulative total return on the common stock of the Media General
Meat Packing Index (assuming dividend reinvestment and weighted based on market
capitalization at the end of each year):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THORN APPLE VALLEY, INC., NASDAQ MARKET INDEX AND MEAT PACKING INDEX
FISCAL YEAR END
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THORN APPLE MEAT PACKING NASDAQ MARKET
(FISCAL YEAR COVERED) VALLEY INC. INDEX INDEX
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 658.81 140.34 99.83
1992 588.86 124.69 106.28
1993 731.62 127.65 127.19
1994 926.43 150.22 139.48
1995 671.82 180.99 152.66
</TABLE>
- -------------------------
* Total return assumes reinvestment of dividends.
TRANSACTIONS WITH MANAGEMENT
John C. Canepa, a director of the Company, is Chairman of the Board of Old
Kent Financial Corporation ("Old Kent"), Grand Rapids, Michigan. During fiscal
1995, the Company paid $221,544 as interest and fees on loans from Old Kent to
the Company. The maximum outstanding borrowings by the Company from Old Kent
during fiscal 1995 were $8,219,078. On May 26, 1995, $4,960,000 remained
outstanding to Old Kent. The Company expects to continue to have transactions
with Old Kent in the ordinary course of business, including loans and other
services. In the opinion of management, the Company's commercial dealings with
Old Kent are on terms as favorable as those available from other third-party
banks.
During fiscal 1995, the Company paid $226,453 in interest to Henry S
Dorfman on funds borrowed from him. The maximum outstanding borrowings from Mr.
Dorfman during the fiscal year were $3,659,608. During fiscal 1995 interest on
such borrowings accrued at a floating rate per annum equal to approximately 1%
below the prevailing prime lending rate. On May 26, 1995, borrowings of
$1,415,241 remained outstanding from Mr. Dorfman.
9
<PAGE> 12
The Company currently leases approximately 10,500 square feet of office
space at 18800 West Ten Mile Road, Southfield, Michigan on a month-to-month
basis for a monthly rental of $14,550. The owner and lessor of this building is
JEL Associates, in which Joel Dorfman and Louis Glazier own a controlling
interest. During fiscal 1995, the Company paid JEL Associates rent of $174,600.
In the opinion of management, the terms of this real estate lease were at least
as favorable to the Company as terms generally available to the Company from
independent parties at the time of such transactions.
The Company uses a freezer warehouse facility owned by Freezer Services of
Michigan, Inc., a corporation of which 75% of the stock is owned by Henry S
Dorfman. During fiscal 1995, the Company paid $2,311,000 to Freezer Services of
Michigan for storage charges, blast freezing and handling. Additionally, the
Company paid Freezer Services of Michigan $882,000 for rent during fiscal 1995
under a three-year lease that expired in 1994. The Company is currently
operating under a one-year lease extension that expires in January 1995. In the
opinion of management, the terms of the Company's dealings with Freezer Services
of Michigan were at least as favorable to the Company as generally available to
the Company from independent parties at the time of the transactions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended May 26, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that one
report, covering one transaction was filed late by Edward Boan. As of the date
hereof, Mr. Boan has not failed to file a required report.
10
<PAGE> 13
III. OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANT
Coopers & Lybrand L.L.P. is the independent auditor for the Company and its
subsidiaries and has reported on the consolidated financial statements included
in the Annual Report of the Company which accompanies this proxy statement. The
Company's independent auditor is appointed by the Board of Directors. The Board
of Directors has reappointed Coopers & Lybrand L.L.P. as independent auditor for
the fiscal year ending May 25, 1996.
Representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting of Shareholders and will be available to respond to appropriate
questions and will have an opportunity to make a statement at the meeting if
they desire to do so.
OTHER PROPOSALS
Neither the Company nor its Board of Directors intends to bring before the
Annual Meeting any matters other than those set forth in the Notice of Annual
Meeting, and they have no present knowledge that any other matters will be
presented for action at the Meeting by others. However, if any other matters
properly come before such Meeting, it is the intention of the persons named in
the enclosed form of proxy to vote in accordance with their best judgment.
A shareholder proposal which is intended to be presented at the 1996 Annual
Meeting of Shareholders must be received by the Company at its principal
executive office, 26999 Central Park Boulevard, Suite 300, Southfield, Michigan
48076, by May 25, 1996.
By Order of the Board of Directors
JERRY D. PECK
Secretary
September 22, 1995
11
<PAGE> 14
THORN APPLE VALLEY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THORN
APPLE VALLEY, INC.
The undersigned hereby appoints Henry S Dorfman and Louis Glazier,
and each of them, the proxies of the undersigned, with full power of
substitution, to vote all shares of Common Stock, $0.10 par value per
share, of Thorn Apple Valley, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Company to be held on October 26, 1995 and at any and all
adjournments or postponements thereof:
<TABLE>
<S> <C> <C>
/ / WITHHOLD AUTHORITY
1. ELECTION OF / / FOR all nominees listed below to vote for all nominees listed
7 DIRECTORS (except as marked to the contrary below) below.
</TABLE>
(Instruction: To withhold authority to vote for any individual
nominee, mark the box next to the nominee's name below.)
<TABLE>
<S> <C> <C> <C>
/ / Henry S Dorfman / / John C. Canepa / / Louis Glazier / / Burton D. Farbman
/ / Seymour Roberts / / Joel Dorfman / / Moniek Milberger
</TABLE>
IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED FOR THE
ELECTION OF THE DIRECTORS NAMED ABOVE. EXCEPT AS SPECIFIED TO THE
CONTRARY ABOVE, THE UNDERSIGNED AUTHORIZES THE PROXIES TO EXERCISE
THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be Signed on Reverse Side)
Proxy No. No. of Shares
<TABLE>
<S> <C> <C>
Dated:_______________________, 1995 _________________________ , (L.S.) ____________________________(L.S.)
SIGNATURE SIGNATURE
</TABLE>
Please sign exactly as your name appears hereon. When signing as
attorney, executor, personal representative, administrator or
guardian, please give your full title as such. If shares are held in
the name of more than one person, each person must sign the Proxy. If
a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
