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
Check the appropriate box:
Definitive proxy statement
HORMEL FOODS CORPORATION
(Name of Registrant as Specified in its Charter)
L. D. GORDEN - DIRECTOR OF TAXES
(Name of Person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(I)(ii), 14a-6(i)(1), or 14a-
6(J)(2)
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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
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:
Not Applicable
(2) Form, schedule or registration statement no:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date Filed:
Not Applicable
HORMEL FOODS CORPORATION
AUSTIN, MINNESOTA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To The Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
Hormel Foods Corporation, a Delaware corporation, will be held in the
main auditorium of the Austin High School, Austin, Minnesota, on
Tuesday, January 30, 1996, at 8:00 p.m. for the following purposes:
1. To elect a board of 14 directors for the ensuing year.
2. To vote on ratification of appointment, by the Board of
Directors,
of Ernst & Young as independent auditors for the fiscal year which
will end October 26, 1996.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed December 4, 1995, at the close of
business, as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting.
By order of the Board of Directors
T. J. LEAKE
Secretary
December 29, 1995
HORMEL FOODS CORPORATION
1 HORMEL PLACE
AUSTIN, MINNESOTA 55912
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders to be held on
January 30, 1996. The shares represented by the enclosed proxy will be
voted in accordance with the stockholder's directions if the proxy is
duly executed and returned prior to the meeting. If no directions are
specified, the shares will be voted for the election of directors
recommended by the Board of Directors and for the appointment of Ernst
&
Young as independent auditors for the next fiscal year. Any person
giving a proxy may revoke it at any time before it is exercised by
contacting the Secretary of the Company.
The expenses of soliciting proxies will be paid by the Company. If it
appears necessary or advisable, proxies may be solicited at Company
expense personally, or by telephone or telecopy, by directors,
officers
and other employees who will not receive additional compensation. The
Company will also reimburse brokerage firms, and other custodians,
nominees and fiduciaries, for their reasonable out-of-pocket expenses
in
sending proxy materials to beneficial owners. Your cooperation in
promptly signing and returning the enclosed proxy will help to avoid
additional expense.
The Company had 76,721,239 shares of Common Stock outstanding as of
December 4, 1995. Each share of stock is entitled to one vote. The
Company has no other class of shares outstanding. Only common
stockholders of record at the close of business as of December 4,
1995,
are entitled to notice of, and to vote at, the Annual Meeting of
Stockholders. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker nonvotes are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. Shares represented by abstentions are counted
in the same manner as shares submitted with a "withheld" or "no" vote
in
tabulations of the votes cast on proposals presented to stockholders,
whereas shares represented by broker nonvotes are deemed not present,
and therefore, not counted for purposes of determining whether a
proposal has been approved. This proxy statement and form of proxy are
being mailed to stockholders on or about December 29, 1995.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any stockholder intending to present a proposal at the Annual Meeting
of Stockholders to be held in 1997 must arrange to have the proposal
delivered to the Company not later than August 31, 1996, in order to
have the proposal considered for inclusion in the proxy statement and
the form of proxy for that meeting.
ELECTION OF DIRECTORS
It is intended that the persons named as proxies in the enclosed proxy
will vote for the election of the fourteen nominees named below to
hold
office as directors until the next Annual Meeting of Stockholders and
until their successors are elected and qualify. In the event any of
such
nominees should become unavailable for any reason, which the Board of
Directors does not anticipate, it is intended that the proxies will
vote
for the election of such substitute persons, if any, as shall be
designated by the Board of Directors. Directors are elected by a
plurality of the votes cast. The fourteen candidates receiving the
highest number of votes will be elected.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Principal Year
Occupation First
and Five Year Became a
Name Age Business Experience Director
<S> <C> <C> <S> <C>
JOHN W. ALLEN 65 Professor in the Food Industry Management Program 1989
at Michigan State University
JAMES W. COLE* 61 Group Vice President, Foodservice Group 1990
WILLIAM S. DAVILA 64 President and Chief Operating Officer of The Vons 1993
Companies, Inc., 1984 to 1992; President Emeritus of
The Vons Companies, Inc. since 1992
DAVID N. DICKSON* 52 Group Vice President, International and Corporate 1990
Development
LUELLA G. GOLDBERG 58 Chair, Board of Trustees, Wellesley College, 1985 to 1993; 1993
Acting President, Wellesley College, July 1, 1993 to
October 1, 1993; Trustee, Wellesley College;
Director, Minnesota Orchestral Association;
Vice Chair, University of Minnesota Foundation;
Member, Board of Overseers, University of Minnesota
School of Management
DON J. HODAPP* 57 Group Vice President, Administration, 1986 to 1992; 1986
Executive Vice President and Chief Financial Officer
since 1992
JOEL W. JOHNSON* 52 Executive Vice President of Marketing and Sales of the 1991
Company, 1991 to 1992; President, 1992 to January 25, 1993;
President and Chief Operating Officer, January 26, 1993 to
October 1, 1993; President and Chief Executive Officer,
October 1, 1993 to December 7, 1995; Chairman, President
and Chief Executive Officer since December 7, 1995
GERALDINE M. JOSEPH 72 Former United States Ambassador to the Netherlands; 1974-1978
Senior Fellow, Hubert H. Humphrey Institute 1981
of Public Affairs 1984 to 1993; Director, German
Marshall Fund of the U.S.; Director, National
Democratic Institute for International Affairs;
Advisory Committee Member, Humphrey Policy Forum;
Director, Minnesota International Center
STANLEY E. KERBER* 58 Group Vice President, Meat Products Group 1990
EARL B. OLSON 80 Chairman of the Board, Jennie-O Foods, Inc. 1987
(a wholly owned subsidiary of Hormel Foods
Corporation since 1986)
ROBERT F. PATTERSON* 56 Group Vice President, Prepared Foods Group 1990
GARY J. RAY* 49 Group Vice President, Operations Group, 1990 to 1992; 1990
Executive Vice President of Operations since 1992
RAY V. ROSE 72 Food Industry Consultant 1981
ROBERT R. WALLER, M.D. 58 Professor of Ophthalmology, Mayo Medical School; 1993
President and Chief Executive Officer, Mayo Foundation;
Executive Committee Chair, Board of Trustees,
Mayo Foundation; Chair, Mayo Foundation
for Medical Education and Research
</TABLE>
*Messrs. Cole, Dickson, Hodapp, Johnson, Kerber, Patterson, and Ray
are members of the Executive Committee of the Board of Directors.
Mr. Allen is a member of the Board of Directors of Alliance
Associates, Inc., Coldwater, Michigan, and Brooks Beverage Management,
Inc., Holland, Michigan.
Mr. Davila is a member of the Board of Directors of The Vons
Companies, Inc., Los Angeles, California, Wells Fargo Bank, San
Francisco, California, and Pacific Gas and Electric, San Francisco,
California.
Mrs. Goldberg is a member of the Board of Directors of Reliastar
Financial Corporation, TCF Financial Corporation, and Piper Jaffray
Investment Trust, Inc., all of Minneapolis, Minnesota.
Mr. Johnson is a member of the Board of Directors of Meredith
Corporation, Des Moines, Iowa.
Mr. Rose is a member of the Board of Directors of Smith's Food and
Drug, Inc., Salt Lake City, Utah.
No family relationship exists between any of the nominees for director
of the Company.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a retainer of
$23,000 and $1,200 for attendance at each Board Meeting. In addition,
a
fee of $500 or $1,000, depending upon location and duration of
meeting,
is paid for attendance at committee meetings. The Chairpersons of the
Audit, Compensation, and Nominating Committees each receive an
additional $2,000 per year. Additionally, each February 1, each
nonemployee director receives a grant of 1,000 options at fair market
value, and an award of $5,000 worth of Restricted Shares. Directors
who
are employees of the Company receive $100 for each Board Meeting they
attend, which has remained unchanged since 1934.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors met seven times during the last fiscal year.
All of these meetings were regular, scheduled meetings.
The Company has Audit, Personnel, Compensation, and Nominating
Committees of the Board of Directors.
The Audit Committee members are Mrs. Joseph, Chairperson, Mr. Allen,
Mr. Davila, and Mrs. Goldberg. The Committee met three times during
the
last fiscal year. The Audit Committee reviews the arrangement and
scope
of the audit, reviews the activities and recommendations of the
Company's internal auditors, considers comments by the independent
accountants with respect to the adequacy of internal control
procedures
and the consideration given or the corrective action taken by
management, reviews internal accounting procedures and controls with
the
Company's financial and accounting staff and reviews nonaudit services
provided by the Company's independent accountants.
The Company has a Personnel Committee consisting of Mr. Johnson,
Chairperson, Mr. Rose, and Dr. Waller. This Committee deals, among
other
things, with matters of management positions and the succession of
management. The Committee met twice during the last fiscal year.
The Company has a Compensation Committee consisting of Mr. Rose,
Chairperson, and Mr. Davila. The primary function of this Committee is
to establish compensation arrangements for all officers of the Company
and other senior management personnel. The Committee met five times
and
held one meeting by telephone conference call during the last fiscal
year.
The Company has a Nominating Committee, consisting of Dr. Waller,
Chairperson, Mr. Johnson, Mrs. Joseph, and Mr. Rose. Board of
Directors
nominees are proposed by the Nominating Committee, which will consider
nominees recommended by stockholders. Stockholder recommendations
should
be sent to the Secretary of the Company for forwarding to the
Nominating
Committee. The Committee met once during the last fiscal year.
PRINCIPAL SHAREHOLDERS
Information as to the persons or groups known by the Company to be
beneficial owners of more than five percent of the Company's voting
securities, as of October 28, 1995, is shown below:
<TABLE>
<CAPTION>
Name and Address Amount Percent
Title of Class of Beneficial Owner Beneficially Owned of Class
<S> <C> <C> <C>
Common Stock The Hormel Foundation (1) 32,029,080 41.76%
501 16th Avenue NE
Austin, MN 55912
Common Stock The Hormel Foods Corporation (2) 4,227,873 5.51%
Joint Earnings Profit
Sharing Trust
1 Hormel Place
Austin, MN 55912
</TABLE>
(1) The Hormel Foundation holds 2,539,050 of such shares as
individual owner and 29,490,030 of such shares as trustee of various
trusts. The Hormel Foundation, as trustee, votes the shares held in
trust. The Hormel Foundation has a remainder interest in all of the
shares held in trust. The remainder interest consists of corpus and
accumulated income in various trusts which are to be distributed
when the trusts terminate upon the death of designated
beneficiaries, or upon the expiration of twenty-one years after the
death of such designated beneficiaries.
The Hormel Foundation was converted from a private to a public
foundation on December 1, 1980. The Certificate of Incorporation and
Bylaws of the Foundation provide for a Board of Directors, a
majority of whom represent nonprofit agencies to be given support by
the Foundation. Each member of the Hormel Foundation has equal
voting rights.
Members of The Hormel Foundation are: I. J. Holton, retired
Chairman
of the Board of Hormel Foods; Richard L. Knowlton, retired Chairman
of the Board of Hormel Foods; Don J. Hodapp, Executive Vice
President and Chief Financial Officer of Hormel Foods; William R.
Hunter, retired Executive Vice President of Hormel Foods; Joel W.
Johnson, Chairman, President and Chief Executive Officer of Hormel
Foods; Jerry A. Anfinson, Certified Public Accountant, Austin;
Raymond B. Ondov, Attorney, Austin; James G. Huntting, Jr., retired
President of Huntting Elevator Company of Austin; Kermit F.
Hoversten, Attorney, representing the City of Austin; John H.
Dibble, Executive Director, United Way of Austin, Inc.; Ed C.
Wilson, Jr., Officer in Charge, The Salvation Army of Austin; Donald
R. Brezicka, St. Olaf Hospital Administrator, representing the St.
Olaf Hospital Association, Austin; Neil A. Perry, Executive
Director, Young Men's Christian Association, Austin; James R.
Mueller, Executive Director, Cedar Valley Rehabilitation Workshop,
Inc., Austin; H. O. Schmid, Director, Hormel Institute, Austin,
representing the University of Minnesota; Peter A. Tangren,
representing the Austin Public Education Foundation Inc.; and Philip
Richardson, Attorney, Austin, representing the Austin Community
Scholarship Committee.
(2) The Trustee of the Company's Joint Earnings Profit
Sharing Trust is required to obtain and follow voting direction from
Trust participants when voting the Common Stock held in the Trust.
SECURITY OWNERSHIP OF MANAGEMENT
Information as to beneficial ownership of the Company's equity
securities by directors, nominees, and executive officers of the
Company
as of October 28, 1995, is shown below:
<TABLE>
<CAPTION>
Name of Amount Percent
Title of Class Beneficial Owner Beneficially Owned (1) of Class
<S> <C> <C> <C> <C>
Common Stock John W. Allen (2) 6,551 *
Common Stock James W. Cole (2) (5) 107,673 *
Common Stock William S. Davila (2) 7,143 *
Common Stock David N. Dickson (2) (5) 57,635 *
Common Stock Luella G. Goldberg (2) 7,237 *
Common Stock Don J. Hodapp (2) (3) (4) (5) 198,608 *
Common Stock Joel W. Johnson (2) (4) (5) 225,397 *
Common Stock Geraldine M. Joseph (2) (3) 8,062 *
Common Stock Stanley E. Kerber (2) (3) (5) 134,033 *
Common Stock Earl B. Olson (2) 329,883 *
Common Stock Robert F. Patterson (2) (3) (5) 137,592 *
Common Stock Gary J. Ray (2) (3) (5) 178,075 *
Common Stock Ray V. Rose (2) 6,683 *
Common Stock Robert R. Waller, M.D. (2) 3,649 *
Common Stock All Directors and Executive (6) 2,530,631 3.24%
Officers as a Group
</TABLE>
(1) Except as otherwise indicated and subject to applicable
community property and similar statutes, the persons listed as
beneficial owners of the shares of the Company's Common Stock have
sole voting and investment power with respect to said shares.
Holdings are rounded to the nearest full share.
(2) The total number of shares of the Company's Common Stock
beneficially owned by the following persons includes the following
number of shares subject to immediately exercisable options: Mr.
Allen - 4,000; Mr. Cole - 90,000; Mr. Davila - 3,000; Mr. Dickson -
42,428; Mrs. Goldberg - 2,000; Mr. Hodapp - 104,000; Mr. Johnson -
210,000; Mrs. Joseph - 4,000; Mr. Kerber - 70,000; Mr. Olson -
4,000; Mr. Patterson - 75,000; Mr. Ray - 134,000; Mr. Rose - 4,000;
and Dr. Waller - 3,000.
(3) The total number of shares of the Company's Common Stock
beneficially owned by the following nominees for election as
directors includes the following number of shares of the Company's
Common Stock beneficially owned by members of their respective
households: Mr. Hodapp - 19,069; Mrs. Joseph - 1,000; Mr. Kerber -
30,000; Mr. Ray - 56; and Mr. Patterson - 25,000.
(4) Does not include any shares owned by The Hormel
Foundation, of which Mr. Johnson and Mr. Hodapp are members.
(5) Shares listed as beneficially owned include, where
applicable, shares allocated to participants' accounts under the
Hormel Tax Deferred Investment Plan 401(k)A and the Company's
Founders' Fund Plan, and a pro-rata share of unallocated shares held
in the Company's Joint Earnings Profit Sharing Trust for the benefit
of participants.
(6) As of October 28, 1995, all directors and executive
officers as a group owned beneficially 1,419,428 shares subject to
immediately exercisable options. Shares listed as beneficially owned
include, where applicable, shares allocated to participants'
accounts under the Hormel Tax Deferred Investment Plan 401(k)A and
the Company's Founders' Fund Plan and a pro-rata share of
unallocated shares held in the Company's Joint Earnings Profit
Sharing Trust for the benefit of participants.
* Less than one percent.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee (the "Committee") consists exclusively of
nonemployee directors, and is responsible for setting and
administering
the policies that govern the compensation of executive officers of the
Company, including the five executive officers named in this proxy
statement. The Committee also administers the Company's stock option
plans and Operators' Share Incentive Compensation Plan.
Philosophy/Objectives
The Committee's objective is to attract and retain the most highly
qualified executive officers in a manner which provides incentives to
create stockholder value. This objective is accomplished by
establishing
compensation which is calculated to attract and retain the best
management talent available while at the same time providing both
significant risk and opportunity for reward based on Company
performance.
Executive officer Annual Compensation as related in the Summary
Compensation Table on page 10 consists of salary and formula bonus
determined by Company earnings under the Company's Operator Share
Incentive Compensation Plan. Long Term Compensation is provided by
stock
options and restricted shares which provide longer term compensation
opportunities based on increases in the value of the Company's stock.
In
its considerations, except as noted below, the Committee does not
assign
quantitative relative weights to different factors or follow
mathematical formulae. Rather, the Committee exercises its discretion
and makes a judgment after considering the factors it deems relevant.
The Committee believes that it has set compensation at appropriate
levels which reflect each executive's contribution to achieving the
Company's goals and in a manner that ties the executive's earning
opportunity to the welfare of the Company's stockholders.
In the Committee's view, it is in the Company's best interest to offer
compensation opportunities which enable the Company to compete with
other American industrial companies for the most effective talent
available. However, it is also the Committee's view that such
opportunities should involve compensation which is significantly "at
risk" to the fortunes of the Company. For that reason, while total
Annual Compensation is targeted to place an executive's total
compensation at the 75th percentile of the compensation reported by a
consultant retained by the Company as described below, the proportion
of
formula bonus in the compensation mix will generally increase as the
executive officer's responsibilities and compensation increase. In the
case of the five executive officers named in the Summary Compensation
Table, the "at risk" formula bonus exceeds salary for each of the
reported years.
Executive Officer Annual Compensation: Salary and Operators' Share
Incentive Plan
Salary is the weekly cash payment which is assured to the executive
officer as part of the employment relationship.
The formula bonus determined by Company earnings under the Company's
Operators' Share Incentive Compensation Plan is the after tax earnings
per share reported by the Company at fiscal year end on a designated
number of shares of the Company's Common Stock ("Operators' Shares").
Operators' Shares do not constitute any form of equity ownership in
the
Company, and are limited to a method for calculating compensation. The
level of salary and number of Operators' Shares is determined annually
in the following manner in the case of each executive officer.
Each executive officer position has been rated based on evaluation
criteria provided by an independent nationally recognized management
compensation firm ("Consultant"). The Consultant has rated the Chief
Executive Officer ("CEO") position and, with input from the CEO, has
rated the major officer positions reporting directly to the CEO,
including all executive officers named in the Summary Compensation
Table. Other executive positions within the Company are rated by a job
evaluation committee currently comprising the CEO, the Company's two
Executive Vice Presidents, and the Company's Vice President of Human
Resources, utilizing the Consultant as a resource.
The ratings of each executive officer position are a measurement of
job content expressed in numerical points, measuring qualitative
attributes of the position using a methodology developed by the
Consultant. The Consultant annually assigns a range of compensation
values to those numerical ratings using Consultant's data base drawn
from surveys of several hundred American companies in a variety of
industries. The Committee has determined that it is appropriate and in
the Company's best interest to set the policy guideline for Company
compensation at the 75th percentile of the range of compensation
provided by the Consultant for a given numerical rating. Once the
level
of compensation is established, the appropriate amount is provided
through a combination of salary and Operators' Shares. A significant
percentage of that compensation for all executive officers is provided
by awarding Operators' Shares. For purposes of determining the number
of
Operators' Shares to be awarded, Operators' Shares are valued based on
a
three year average of Company earnings. The basic concept underlying
Operators' Shares has been used by the Company since 1932 as a
significant component of executive compensation. Compensation from
Operators' Shares exceeded salary for each executive officer named in
the Summary Compensation Table in each of the past three fiscal years.
In addition to the salary and Operators' Shares described above,
Annual Compensation may include a discretionary cash bonus proposed by
the CEO for a small group of executive officers which the Committee
has
the authority to accept or reject, and a bonus provided by the
Committee
for the CEO. In the case of selected executive officers below the CEO
responsible for sales and marketing groups, the receipt of the bonus
depends on achieving the predetermined pretax profit goal for the
group
reporting to the executive officer. In the case of other executive
officers below the CEO, receipt of the bonus depends upon the
Committee's acceptance of the CEO's recommendation based on the CEO's
assessment of the executive officer's performance. The Committee has
accepted the CEO's recommendation in each of the last three fiscal
years.
Executive Officer Long-Term Compensation: Stock Option Plan
Acting as the Committee administering the Company's 1991 Key Employee
Stock Option and Award Plan, the Committee reviews recommendations
from
the CEO for the grant of options or Restricted Shares to executive
officers (other than the CEO) and other eligible recommended
employees.
The Committee's determination of option grants reflected in the
Summary
Compensation Table took into consideration the executive officer's
past
grants, compensation level, contributions to the Company during the
last
completed fiscal year, and potential for contributions in the future.
(No Restricted Shares were awarded during fiscal year 1995.)
Options are granted at the market price of the Company stock at date
of grant, and provide compensation to the optionee only to the extent
the market price of the stock increases between the date of grant and
the date the option is exercised. Options are intended to provide long
term compensation tied specifically to increases in the price of the
Company's stock.
The total number of options granted in each year, which may vary from
year to year, bears a general relationship to the total number of
options authorized by the Company's stockholders divided by the number
of years in the term of the Plan under which the options are awarded.
While options are generally awarded based on the influence an
executive
position is considered by the Committee to have on stockholder value,
the number of options awarded may vary up or down from prior year
awards
based on the level of an individual executive officer's contribution
to
the Company in a particular year, based on the recommendation of the
CEO.
Chief Executive Officer Compensation
The cash compensation of the CEO is established by the Committee in
generally the same way as cash compensation is determined for other
executive officers, and the Committee employs generally the same
criteria for option grants and Restricted Share awards as apply to
other
executive officers, taking into consideration the CEO's responsibility
for the total enterprise. In addition to salary and formula bonus
under
the Operators' Share Incentive Compensation Plan, as described above,
the Committee awarded Mr. Johnson as CEO a discretionary bonus of
$100,000. The bonus was paid because the Company as a whole exceeded
pretax earnings achieved in the prior fiscal year. The amount of the
bonus was determined by the Committee in its sole discretion.
In fiscal 1995 the Committee recommended, and the Company through its
Board of Directors established, a plan to allow Mr. Johnson to earn
deemed years of credited service for purposes of calculating
retirement
benefits by remaining with the Company until at least age 60. In
making
this recommendation the Committee recognized that this is a common
practice when bringing executives at Mr. Johnson's level into a
company,
the financial sacrifice by Mr. Johnson in leaving the pension
arrangement with his previous employer, the value which the Company
has
received from Mr. Johnson's prior experience, and the benefit to the
Company of providing Mr. Johnson a strong incentive to remain with the
Company until at least age 60. The plan, and the benefits provided Mr.
Johnson, are further described at page 12.
Deductibility of Compensation Under Internal Revenue Code Section 162
(m)
Section 162(m) of the Internal Revenue Code, adopted in 1993, imposes
a $1 million cap, subject to certain exceptions, on the deductibility
to
a company of compensation paid to the five executive officers named in
such company's proxy statement. The Committee has reviewed the
Company's
1991 Key Employee Stock Option and Award Plan and has concluded that
the
Plan complies with the transitional rules under Section 162(m), so
that
any compensation realized from the exercise of stock options would not
be affected by Section 162(m). Additionally, cash compensation
voluntarily deferred by the executive officers named in this proxy
statement under the Company's Deferred Compensation Plans is not
subject
to the Section 162(m) cap until the year paid. Thus, compensation paid
this fiscal year subject to the Section 162(m) cap is not expected to
exceed $1 million for any named executive officer. Therefore the
Company
believes it will not be subject to any Section 162(m) limitations on
the
deductibility of compensation paid to the Company's named executive
officers for fiscal year 1995.
The Committee presently intends to take necessary steps within the
time permitted to maintain the qualification of the Company's 1991 Key
Employee Stock Option and Award Plan under Section 162(m), which may
include a future request for stockholder approval for a limitation on
the number of shares for which options may be granted to any one
participant. Additionally, the Committee continues to consider other
steps which might be in the Company's best interest to comply with
Section 162(m), while reserving the right to award future compensation
which would not comply with the Section 162(m) requirements for
nondeductibility if the Committee concluded that this was in the
Company's best interests.
THE COMPENSATION COMMITTEE
Ray V. Rose, Chairman
William S. Davila
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the last three fiscal years earned by or awarded to the Chief
Executive Officer and the four other most highly compensated executive
officers of the Company:
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Other
Annual Restricted Securities
Compen- Stock Underlying LTIP All Other
Salary Bonus sation Award(s) Options/ Payouts Compensa-
Name and Principal Position Year ($)(1) ($)(2) ($)(3) ($) SARs (#)(4) ($) tion ($)(5)(6)
<S> <C> <C> <C> <C> <S> <C> <C> <C> <C>
Joel W. Johnson 1995 344,600 618,100 - 0 40,000 0 17,332
President and 1994 323,100 662,000 - 0 40,000 0 16,474
Chief Executive Officer 1993 273,300 558,000 - 0 50,000 0 15,464
Don J. Hodapp 1995 233,800 406,450 - 0 22,000 0 11,920
Executive Vice President, and 1994 227,700 429,200 - 0 22,000 0 11,938
Chief Financial Officer 1993 217,300 356,000 - 0 30,000 0 11,174
Gary J. Ray 1995 192,200 359,350 - 0 22,000 0 10,224
Executive Vice President 1994 186,100 383,000 - 0 22,000 0 10,207
1993 175,700 315,200 - 0 30,000 0 9,496
James W. Cole 1995 176,600 310,069 - 0 15,000 0 9,214
Group Vice President 1994 171,400 273,300 - 0 15,000 0 9,166
1993 165,300 190,400 - 0 30,000 0 8,704
Robert F. Patterson 1995 175,700 290,450 - 0 15,000 0 9,528
Group Vice President 1994 165,300 352,200 - 0 15,000 0 9,154
1993 154,900 281,200 - 0 25,000 0 8,471
</TABLE>
(1) Includes director fee payments of $100 per meeting attended for
each officer named in the table.
(2) Includes payments under the Company's Operators' Share Incentive
Compensation Plan as well as annual discretionary bonuses. The
amounts shown in the Table include those amounts voluntarily
deferred by the named individuals under the Company's Deferred
Compensation Plans, which permit participants to voluntarily defer
receipt of all or part of the payments currently due to the
participant under the Operators' Share Incentive Compensation Plan.
(3) There was no Other Annual Compensation exceeding the lesser of
$50,000 or 10% of total Annual Compensation in each of the years
shown.
(4) No SARs were awarded in 1993, 1994, or 1995.
(5) The amount shown includes Company Joint Earnings Profit Sharing
distributions which may be authorized by the Board of Directors in
its discretion based on Company profits. The total amount of Company
distributions declared available to all participants by the Board is
allocated in the same proportion as each person's base weekly wage
bears to the total base wage for all eligible persons. Payments to
the executive officers named in the Table are calculated using the
same proportional formula as is used for all eligible employees.
Joint Earnings Profit Sharing distributions were for Mr. Johnson
$16,482 in 1995, $15,624 in 1994, and $15,314 in 1993; for Mr.
Hodapp $11,070 in 1995, $11,088 in 1994, and $10,374 in 1993; for
Mr. Ray $9,102 in 1995, $9,072 in 1994, and $8,398 in 1993; for Mr.
Cole $8,364 in 1995, $8,316 in 1994, and $7,904 in 1993; and for Mr.
Patterson $8,364 in 1995, $8,064 in 1994, and $7,410 in 1993. "All
Other Compensation" also includes Company matching payments of up to
$200.00 under the Company's Founders' Fund Plan and up to $650.00
under the Hormel Tax Deferred Investment Plan A. Both of these
matching payments, in the same amount, are available to all other
eligible employees. Company matching payments were for Mr. Johnson
$200 and $650 in 1995, $200 and $650 in 1994, and $150 and $0 in
1993; for Mr. Hodapp $200 and $650 in 1995, $200 and $650 in 1994,
and $150 and $650 in 1993; for Mr. Ray $200 and $650 in 1995, $200
and $650 in 1994, and $150 and $650 in 1993; for Mr. Cole $200 and
$650 in 1995, $200 and $650 in 1994, and $150 and $650 in 1993; and
for Mr. Patterson $200 and $650 in 1995, $200 and $650 in 1994, and
$150 and $650 in 1993. For Mr. Ray and Mr. Patterson "All Other
Compensation" includes Company contributions to a disability
insurance program which is available to all other eligible employees
with benefits proportional to Annual Compensation. Mr. Ray received
contributions of $272 in 1995, $285 in 1994, and $298 in 1993, and
Mr. Patterson received $314 in 1995, $240 in 1994, and $261 in 1993.
(6) None of the named executive officers held any Restricted Stock at
year end.
STOCK OPTIONS TABLE
The following tables summarize option grants and exercises during 1995
to or by the Chief Executive Officer or the executive officers named
in
the Summary Compensation Table above, and the values of options
granted
during 1995 and held by such persons at the end of 1995.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential
Realizable
Value at
Assumed Annual
Rates of
Stock Price
Appreciation for Prior
Individual Grants Option Term Columns Annualized(4)
Number % of
of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/ Employees or Base
SARs Granted in Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 0%($)(2) 5%($)(3) 10%($)(3) 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Joel W. Johnson 40,000 10.67% $24.75 1/11/05 $0 $622,606 $1,577,805 $0 $62,261 $157,781
Don J. Hodapp 22,000 5.87% $24.75 1/11/05 $0 $342,433 $867,793 $0 $34,243 $86,779
Gary J. Ray 22,000 5.87% $24.75 1/11/05 $0 $342,433 $867,793 $0 $34,243 $86,779
James W. Cole 15,000 4.00% $24.75 1/11/05 $0 $233,477 $591,677 $0 $23,348 $59,168
Robert F. Patterson 15,000 4.00% $24.75 1/11/05 $0 $233,477 $591,677 $0 $23,348 $59,168
</TABLE>
Total potential realizable value for the five officers who received
stock option grants is $1,774,426 and $4,496,744 respectively, under
the
5% and 10% stock price growth assumptions. Assuming 5% and 10% stock
price growth over a period of 10 years commencing January 11, 1995,
the
increase in total stockholder value from stock price appreciation
alone
for the average number of shares outstanding during fiscal year 1995
would be $1,193,681,184 and $3,025,022,485 respectively.
(1) All options granted during the period were granted at the market
value on the date of grant. No SARs were granted during the fiscal
year ended October 28, 1995.
(2) The SEC requires the columns which show 5% and 10% annual stock
price appreciation over the option terms. The column which shows 0%
appreciation is not required by the SEC.
(3) These amounts represent certain assumed rates of appreciation
only. Actual gains, if any, on stock option exercises are dependent
on the future performance of the Company and overall market
conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
(4) Computed by dividing potential realizable value at the assumed
annual rates of stock price appreciation by the term of the option.
This column is not required by the SEC.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year
End
Option/SAR Values (1)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options at Fiscal
Fiscal Year End (#)(5) Year End ($)(3)(4)(5)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(2)(4) Unexercisable Unexercisable
<S> <C> <C> <C> <C> <C>
Joel W. Johnson 0 0000 210,000/0 $375,000/0
Don J. Hodapp 30,000 $284,375 104,000/0 142,000/0
Gary J. Ray 0 0000 134,000/0 303,250/0
James W. Cole 30,000 242,249 90,000/0 121,875/0
Robert F. Patterson 20,000 195,000 75,000/0 95,625/0
</TABLE>
(1) There are no outstanding SARs.
(2) Value realized represents the aggregate difference between the
market value on the date of exercise and the applicable exercise
price.
(3) Unrealized value of in-the-money options at year end represents
the aggregate difference between the market value at October 28,
1995 and the applicable exercise price.
(4) The differences between market value and exercise price in the
case of both value realized and unrealized value accumulate over
what may be, in many cases, several years.
(5) There are no unexercisable options.
PENSION PLAN
The Company maintains noncontributory defined benefit pension plans
covering substantially all employees. Pension benefits for salaried
employees are based upon the employee's highest five consecutive years
of compensation (as described below) of the last 10 calender years of
service and the employee's length of service. The Company also
maintains
a supplemental executive retirement plan that provides pension
benefits
calculated under the qualified defined benefit pension plan formula
that
exceed the annual benefit limitation for defined benefit plans
qualifying under the Internal Revenue Code. The Company has
established
a plan for Mr. Johnson which will credit Mr. Johnson with deemed years
of service for purposes of determining both the amount of and
eligibility for retirement benefits under the Company's pension plan,
supplemental executive retirement plan, post retirement medical
benefits
plan, and any other Company plans which pay benefits based on
retirement
status. Mr. Johnson will receive no benefit under the plan if his
employment with the Company terminates for any reason before July 14,
2003. After July 13, 2003 he will be credited with years of deemed
service according to a schedule established by the plan. The plan
provides that cash payments which Mr. Johnson will receive after
retirement will be reduced by the amounts which Mr. Johnson is
entitled
to receive from the pension plan maintained by his previous employer.
The following tabulation shows the estimated aggregate annual pension
payable to an employee under the qualified defined pension plan and
the
supplemental executive retirement plan upon normal retirement at the
end
of fiscal year 1995 at age 65 under various assumptions as to final
average annual compensation and years of service, and on the
assumptions
that the retirement plans will continue in effect during such time
without change and that the employee will select a single life annuity
option. The pension benefits shown below reflect an integration with
Social Security benefits.
Average Annual
Compensation Years of Service
<TABLE>
<CAPTION>
15 20 25 30 35 40 45
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 250,000 $ 57,474 $ 76,632 $ 95,790 $ 114,948 $ 134,106 $ 153,264 $ 172,422
$ 500,000 $ 117,474 $ 156,632 $ 195,790 $ 234,948 $ 274,106 $ 313,264 $ 352,422
$ 750,000 $ 177,474 $ 236,632 $ 295,790 $ 354,948 $ 414,106 $ 473,264 $ 532,422
$1,000,000 $ 237,474 $ 316,632 $ 395,790 $ 474,948 $ 554,106 $ 633,264 $ 712,422
$1,250,000 $ 297,474 $ 396,632 $ 495,790 $ 594,948 $ 694,106 $ 793,264 $ 892,422
$1,500,000 $ 357,474 $ 476,632 $ 595,790 $ 714,948 $ 834,106 $ 953,264 $1,072,422
$1,750,000 $ 417,474 $ 556,632 $ 695,790 $ 834,948 $ 974,106 $1,113,264 $1,252,422
$2,000,000 $ 477,474 $ 636,632 $ 795,790 $ 954,948 $1,114,106 $1,273,264 $1,432,422
The compensation for the purpose of determining the pension benefits
consists of Annual Compensation and Restricted Stock Awards. The years
of credited service for individuals listed in the Summary Compensation
Table are: 4 years for Mr. Johnson; 29 years for Mr. Hodapp; 27 years
for Mr. Ray; 32 years for Mr. Cole; and 31 years for Mr. Patterson.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total shareholder return
on the Company's Common Stock during the five fiscal years preceding
October 28, 1995, with the Standard & Poor's 500 Stock Index and the
Standard & Poor's Food Group Index (assuming the investment of $100 in
each vehicle on October 27, 1990, and the reinvestment of all
dividends
during such period).
Comparison of Five Year Cumulative Total Return
Among Hormel Foods Corporation, S & P 500 Index, and S & P Food Group
Index
OTHER INFORMATION RELATING TO DIRECTORS, NOMINEES,
AND EXECUTIVE OFFICERS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Persons serving as members of the Compensation Committee during fiscal
year 1995 were William S. Davila, Ray V. Rose, and R. L. Knowlton. Mr.
Knowlton was an officer of the Company during the fiscal year prior to
his election to the Committee. Dubuque Foods, Inc., a wholly-owned
subsidiary of the Company, paid $481,763.87 in usual and ordinary
brokerage commissions during the Company's fiscal year 1995 to
Firebird
Foods, Phoenix, Arizona, in which Mr. Robert Knowlton, brother of Mr.
R.
L. Knowlton, holds majority ownership.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers, and any persons holding more
than
10% of the Company's Common Stock to report their initial ownership of
the Company's Common Stock and any subsequent changes in that
ownership
to the Securities and Exchange Commission and the New York Stock
Exchange. Specific due dates for these reports have been established,
and the Company is required to disclose in this proxy statement any
failure to file by those dates during 1995. To the best of the
Company's
knowledge, all of these filing requirements were satisfied. In making
these disclosures, the Company has relied on the representations of
its
directors and officers and copies of the reports that they have filed
with the Commission.
APPROVAL OF APPOINTMENT OF AUDITORS
Subject to ratification by the stockholders, the Board of Directors
has appointed Ernst & Young, independent public accountants, to audit
the financial statements of the Company and its consolidated
subsidiaries for the fiscal year which will end October 26, 1996.
Ernst
& Young are the present public auditors and have served as public
auditors for the Company since 1931. Representatives of the firm are
expected to be present at the meeting and will be afforded an
opportunity to make a statement, if they desire to do so and be
available to respond to appropriate questions. Management is not aware
of any direct or indirect financial interest or any other connections
Ernst & Young may have with the Company or its subsidiaries except the
usual professional status of an independent auditor.
Audit services rendered by Ernst & Young for the fiscal year ended
October 28, 1995, included the examination of the financial statements
of the Company and its subsidiaries, review of certain documents filed
by the Company with the Securities and Exchange Commission, and
examination of the financial statements of various employee benefit
plans.
The affirmative vote of the majority of the shares of Common Stock
represented at the meeting shall constitute ratification. The Board of
Directors recommends a vote FOR the proposal to approve the
appointment
of Ernst & Young.
OTHER MATTERS
The management of your Company does not know of any matters to be
presented at the meeting other than those mentioned above. However, if
any other matters come before the meeting, it is intended that the
holders of the proxies will vote thereon in their discretion.
By order of the Board of Directors
T. J. LEAKE
Secretary
December 29, 1995
HORMEL FOODS CORPORATION
1 Hormel Place
Austin, MN 55912
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Joel W. Johnson, Don J. Hodapp,
Gary J. Ray or a majority thereof present, or if only
one be present, then that one, with full power of substitution, and
hereby authorizes them to represent and to vote as designated below
all the shares of Common Stock of Hormel Foods Corporation held of
record by the undersigned on December 4, 1995, at the Annual Meeting
of Stockholders to be held on January 30, 1996, or any adjournment
thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below
(except as marked to the contrary below)
WITHHOLD AUTHORITY
(to vote for all nominees)
John W. Allen, James W. Cole, William S. Davila, David N.
Dickson,
Luella G. Goldberg, Don J. Hodapp, Joel W. Johnson,
Geraldine M. Joseph,
Stanley E. Kerber, Earl B. Olson, Robert F. Patterson, Gary
J. Ray, Ray
V. Rose, Robert R. Waller, M.D.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
2. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG AS THE
INDEPENDENT AUDITORS OF THE CORPORATION.
FOR AGAINST ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
YES NO
SHARES____________________
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, the
proxy will be voted FOR Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney,
executor, administrator,
trustee or guardian,
please give full title as
such. If a corpora-
tion, please sign in full
corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership
name by authorized person.
Dated January________, 1996
________________________________
Signature
________________________________
Signature if held jointly
</TABLE>
