<PAGE> 1
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
Thorn Apple Valley, 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)(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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
THORN APPLE VALLEY, INC.
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 18, 1998
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 Wednesday, November 18, 1998 at 11:00 A.M.,
Eastern Standard Time, to consider and act upon the following matters:
(1) The election of two directors to serve until the expiration of
their three year terms 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 21, 1998
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
29, 1998 accompanies this Notice.
By Order of the Board of Directors
/s/ RONALD D. RISHER
RONALD D. RISHER
Secretary
Southfield, Michigan
October 16, 1998
<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 NOVEMBER 18, 1998
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 Wednesday, November 18, 1998, at 11:00 A.M., Eastern
Standard Time, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders. The approximate mailing date for this proxy statement
is October 19, 1998.
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.
The presence, in person or by proxy, of a majority of the shares of Common
Stock entitled to vote at the Annual Meeting will constitute a quorum at the
Annual Meeting. The persons nominated for election as Directors will be elected
by a plurality of the shares of Common Stock. Proxies in the accompanying form
which are properly executed and duly returned to the Company and not revoked
will be voted as specified and, if no direction is made, will be voted for each
of the persons nominated for election as directors.
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 21,
1998, 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 6,137,423 shares of Common Stock.
1
<PAGE> 4
I. ELECTION OF DIRECTORS
The Company's By-laws provide that the Company shall have at least three
and no more than nine directors, with the exact number to be determined by the
Board. The Board of Directors currently is comprised of seven directors divided
into three classes. Unless otherwise instructed, proxy holders will vote the
proxies received by them for the election of the two nominees named below. Both
of the nominees for director are currently directors of the Company. If either
nominee becomes unavailable for any reason, it is intended that the proxies will
be voted for a substitute nominee designated by the Board. The Board of
Directors has no reason to believe that the nominees named will be unable to
serve if elected. Any vacancy occurring on the Board of Directors for any reason
may be filled by vote of a majority of the directors then in office until the
next meeting of shareholders.
Each of the nominees was elected to his present term at the 1997 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
BENEFICIALLY BENEFICIALLY
POSITIONS AND OFFICES OWNED AS OF OWNED AS OF TERM
NAME AND YEAR WITH COMPANY AND SEPTEMBER 21, SEPTEMBER 21, TO
FIRST BECAME A DIRECTOR AGE OTHER PRINCIPAL OCCUPATIONS 1998 1998 EXPIRE
----------------------- --- --------------------------- -------------- -------------- ------
<S> <C> <C> <C> <C> <C>
-- NOMINEES FOR ELECTION AS DIRECTORS --
Henry S Dorfman (1959)......... 76 Chairman of the Board...... 2,420,642(1) 39.4 2001
Joel Dorfman (1978)............ 47 President and Chief
Executive Officer of the
Company.................... 638,360(2) 9.8 2001
-- DIRECTORS CONTINUING IN OFFICE --
Moniek Milberger (1959)........ 68 Certified Public Accountant
and Consultant to the
Company, Southfield,
Michigan................... 650 * 1999
John C. Canepa (1983).......... 68 Consulting Principal, Crow
Chizek, Grand Rapids,
Michigan................... 200 * 1999
Louis Glazier (1988)........... 49 Executive Vice President
Finance and Administration
of the Company............. 81,721(3) 1.3 2000
Burton D. Farbman (1988)....... 55 President of The Farbman
Group, Southfield,
Michigan................... 1,375 * 2000
Seymour Roberts (1992)......... 64 Senior Vice President,
Senior Partner, N.W. Ayer &
Partners, Detroit,
Michigan................... 300 * 2000
-- OTHER EXECUTIVE OFFICERS --
Keith Jahnke...................................................... 70,650(4) *
Edward Boan....................................................... 63,037(5) *
All directors and executive officers as a group (9 persons)....... 2,989,825(6) 44.7
</TABLE>
- -------------------------
* Less than 1.0%
(1) Henry S Dorfman owns outright and has the sole voting and investment power
for 2,420,642 shares. Also included in the shares beneficially owned by
Henry S Dorfman are (a) 1,700,806 shares held by Henry S
2
<PAGE> 5
Dorfman as trustee under charitable remainder trusts for the benefit of
Henry S Dorfman's children, 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) 286,660 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 286,660 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 638,360 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 21, 1998, Joel
Dorfman has the right to acquire 351,250 shares pursuant to the Company's
1982 Stock Option Plan, the Company's 1990 Employee Stock Option Plan and
the Company's 1996 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
11,414 shares. In addition, within 60 days of September 21, 1998, Mr.
Glazier has the right to acquire 70,000 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) Keith Jahnke owns outright and has the sole voting and investment power for
650 shares. In addition, within 60 days of September 21, 1998, Keith Jahnke
has the right to acquire 70,000 shares pursuant to the Company's Stock
Option Plans.
(5) Mr. Boan owns outright and has sole voting and investment power for 537
shares. In addition, within 60 days of September 21, 1998, Edward Boan has
the right to acquire 62,500 shares pursuant to the Company's Stock Option
Plans.
(6) Total includes 523,750 shares which such persons have the right to acquire
within 60 days of September 21, 1998 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.
Joel Dorfman has served as President of the Company since March 1985 and
Chief Executive Officer of the Company since July 1995.
During the fiscal year ended May 29, 1998 ("fiscal 1998"), the Board of
Directors held four 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 1998, the
Executive Committee took action by written consent but did not meet.
The Company has a standing Stock Option Committee. The members of the Stock
Option Committee are Henry S Dorfman, Moniek Milberger 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
1998, the Stock Option Committee held one meeting.
3
<PAGE> 6
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 1999 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 August 30, 1999.
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
1998, 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 1998, the Audit
Committee held two meetings.
The Company has an Executive Compensation Committee. 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. During fiscal 1998, the Executive Compensation Committee
did not meet.
PRINCIPAL HOLDERS OF SECURITIES
As of September 21, 1998, Henry S Dorfman was the beneficial owner of
2,420,642 shares (39.4%) 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 Henry S Dorfman as trustee under charitable remainder
trusts for the benefit of Henry S Dorfman's children, 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 286,660 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.
As of September 21, 1998, Joel Dorfman was the beneficial owner of 638,360
shares (9.8%) of the Company's Common Stock, of which Henry S Dorfman has the
power to vote 286,660 shares. As of September 21, 1998, Henry S Dorfman,
together with members of his family, directly or indirectly beneficially owned
2,771,892 shares (42.7%) 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.
As of September 21, 1998, David A. Rocker, a registered investment advisor,
beneficially owned 596,600 shares (9.7%) of the Company's Common Stock, all of
which shares are held in investment advisory accounts managed by Mr. Rocker. Mr.
Rocker has sole voting and investment power over all such shares. The address of
Mr. Rocker is 45 Rockefeller Plaza, New York, New York 10111.
As of September 21, 1998, Heartland Advisors, Inc. ("Heartland"), a
registered investment advisor, beneficially owned 533,595 shares (8.7%) of the
Company's Common Stock, all of which shares are held in
4
<PAGE> 7
investment advisory accounts of Heartland. Heartland has sole voting and/or
investment power over such shares. The address of Heartland is 790 North
Milwaukee Street, Milwaukee, Wisconsin 53202.
As of September 21, 1998, DDJ Capital Management, LLC ("DDJ"), a registered
investment advisor, may be deemed to beneficially own 588,340 shares (9.6%) of
the Company's Common Stock, all of which are held in portfolios of clients
advised by DDJ. In particular, DDJ Overseas Corp., a company advised by and
affiliated with DDJ, owns 515,860 shares of Common Stock, The Copernicus Fund,
L.P., a limited partnership advised by and affiliated with DDJ, owns 50,330
shares of Common Stock and Kepler Overseas Corp., a company advised by DDJ, owns
22,150 shares of Common Stock. DDJ Copernicus, an affiliate of DDJ, is the
general partner of The Copernicus Fund, L.P., and may be deemed to beneficially
own the shares of Common Stock owned by The Copernicus Fund, L.P. DDJ Galileo
Corp., an affiliate of DDJ, is the general partner of DDJ Overseas Corp., and
may be deemed to beneficially own the shares of Common Stock owned by DDJ
Overseas Corp. The address of each of DDJ, DDJ Galileo Corp., The Copernicus
Fund, L.P., and DDJ Copernicus, LLC is 141 Linden Street, Suite 4, Wellesly,
Massachusetts 02181. The address of each of DDJ Overseas Corp. and Kepler
Overseas Corp. is c/o Goldman Sachs (Cayman), Harbour Centre, George Town, Post
Office Box 896, Grand Cayman Islands.
As of September 21, 1998, Capital Guardian Trust company ("Capital
Guardian"), a bank as defined in Section 3(a)6 of the Exchange Act, beneficially
owned 405,000 shares (6.6%) of the Company's Common Stock. Capital Guardian a
wholly-owned subsidiary of Capital Group Companies, Inc., serves as an
investment advisor to the various investment accounts in which are held shares
of the Company's Common Stock. The address of Capital Guardian is 333 South Hope
Street, Los Angeles, California 90071.
As of September 21, 1998, Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, may be deemed to beneficially own 336,940 shares
(5.5%) of the Company's Common Stock, all of which shares were held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, for all of which
Dimensional serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares. The address of Dimensional is 1299 Ocean Avenue,
l1th Floor, Santa Monica, California 90401.
Management does not know of any other person who beneficially owned, as of
September 21, 1998, more than 5% of the Company's Common Stock.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended May 29, 1998, May 30, 1997 and May 31, 1996 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
------------------------------------- AWARDS
FISCAL OTHER ANNUAL ------------ ALL OTHER
YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
------ ------ ----- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joel Dorfman.............. 1998 $441,538 21,938 50,000 25,355(3)
President and 1997 486,100 -- 20,003 50,000 31,352(3)
Chief Executive Officer 1996 600,000 -- 12,387 40,000 25,361(3)
Henry S Dorfman........... 1998 -0- 24,270 -- 6,524(3)
Chairman of the Board 1997 207,058 -- 52,943 -- 7,178(3)
1996 500,000 -- 119,262 -- 7,178(3)
Louis Glazier............. 1998 240,385 8,260 12,500 1,000
Executive Vice President 1997 250,000(3) -- 22,415 12,500 1,000
Finance and
Administration 1996 250,000 -- 13,103 10,000 2,261(3)
Keith Jahnke.............. 1998 240,385 2,675 12,500 1,000
Executive Vice President 1997 250,000 -- 2,675 12,500 1,000
Processed Meats 1996 250,000 -- 2,675 10,000 1,000
Edward Boan............... 1998 240,385 2,155 12,500 1,000
Executive Vice President 1997 250,000 -- 2,150 12,500 1,000
Pork and Human Resources 1996 250,000 -- 1,975 10,000 1,000
</TABLE>
- -------------------------
(1) Includes amounts relating to use of company-owned automobiles and
reimbursement of business, entertainment and other expenses.
(2) Except as noted, consists only of the Company's 401(k) contributions.
(3) 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 31,
1998) of $1,938,496, $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 31, 1998 were $387,330, $221,654 and $12,455,
respectively.
6
<PAGE> 9
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 29, 1998 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
PERCENTAGE OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION AT
GRANTED TO PER SHARE END OF TEN-YEAR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ------- ------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Joel Dorfman.............. 50,000 20.49% 15.813 February 14, 2008 $497,235 $1,260,090
Henry S Dorfman........... -- -- -- --
Louis Glazier............. 12,500 5.12 15.813 February 14, 2008 124,309 315,023
Keith Jahnke.............. 12,500 5.12 15.813 February 14, 2008 124,309 315,023
Edward Boan............... 12,500 5.12 15.813 February 14, 2008 124,309 315,023
</TABLE>
- -------------------------
(1) Each Option granted in fiscal 1998 is exercisable immediately.
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
$8,750. In addition, during fiscal 1998, Mr. Milberger received $21,800 as
compensation for consulting services rendered to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended May 29, 1998, Joel Dorfman, John C. Canepa,
Burton D. Farbman, Moniek Milberger and Seymour Roberts served as members 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
are eligible to 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
7
<PAGE> 10
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 dependent 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. None of the Company's executive officers received a cash bonus
in fiscal 1998.
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.
Fiscal 1998 Compensation Decisions Regarding Joel Dorfman. In accordance
with the Company's Cash Bonus Plan, the Executive Compensation Committee did not
approve a bonus for Joel Dorfman for fiscal 1998. Joel Dorfman did not
participate in the approval of his own compensation, but did participate in
discussion of the Company's performance for fiscal 1998 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 28, 1993,
May 22, 1994, May 26, 1995, May 31, 1996, May 30, 1997 and May 29, 1998 (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 INDUSTRY NASDAQ
(FISCAL YEAR COVERED) VALLEY, INC. INDEX MARKET INDEX
<S> <C> <C> <C>
1993 100 100 100
1994 126.63 117.68 109.66
1995 91.83 141.79 120.03
1996 71.21 178.53 169.42
1997 89.95 235.18 190.08
1998 81.21 237.34 241.34
</TABLE>
- -------------------------
* Total return assumes reinvestment of dividends.
TRANSACTIONS WITH MANAGEMENT
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 1998, the Company paid approximately $1,983,000 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 1998 under a one-year lease extension that expires January 1999.
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
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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 29, 1998 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with. As of the date
hereof, the Company is not aware of any failure to file a required report.
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IV. OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANT
PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers LLP as
independent auditor for the fiscal year ending May 28, 1999.
Representatives of PricewaterhouseCoopers LLP 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 1999 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 August 30, 1999.
By Order of the Board of Directors
/s/ RONALD D. RISHER
RONALD D. RISHER
Secretary
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 November 18, 1998 and at any and all
adjournments or postponements thereof:
<TABLE>
<S> <C>
1. ELECTION OF [ ] FOR all nominees listed below
2 DIRECTORS (except as marked to the contrary below)
1. ELECTION OF [ ] WITHHOLD AUTHORITY
2 DIRECTORS to vote for all nominees listed below.
(Instruction: To withhold authority to vote for any individual
nominee, mark the box next to the nominee's name below.)
[ ] Henry S Dorfman [ ] Joel Dorfman
</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:________ , 1997 _______________(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.
