SCHEDULE 14A INFORMATION
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IBP, inc.
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April 9, 1996
IBP's annual meeting is to be held on April 18, 1996. At the
meeting, shareholders will be asked to approve three proposals as
set out in the enclosed Proxy Statement in addition to electing
directors. The purpose of this letter is to offer IBP's
perspective in regard to the three proposals.
Proposal Two: Amend the Articles of Incorporation to increase the
authorized shares of Common Stock from 100,000,000 to 200,000,000
In evaluating this proposal please note the following points:
* This increase is for general corporate purposes. The
Company has no intent at present to issue any additional
shares.
* The additional authorized shares improve IBP's financial
flexibility and could be used for stock splits and/or
dividends at some time in the future.
Proposal Three: Approval of the 1996 Stock Option Plan
In evaluating this proposal please note the following points:
* The 1996 plan, contrary to prior plans, does not allow
the repricing of an option's exercise price.
* The 1996 plan, contrary to prior plans, expressly states
the vesting schedule for options as follows: 40% are
exercisable after two years from the date of grant and
20% become exercisable in each of years three, four and
five. Early vesting can occur in cases of death, normal
retirement, permanent disability, or changes in control.
* To date IBP has always purchased stock on the open market
for its option plans rather than use authorized but
unissued shares for option exercises. Under the 1987
Stock Option Plan 960,000 shares of Common Stock as of
December 30, 1995 must be purchased on the open market
by IBP for delivery whenever options are exercised (Note
G of the Notes to Consolidated Financial Statements of
the 1995 Annual Report).
* Although IBP did a two-for-one stock split in the form of
a stock dividend, the option grant levels for employees
have remained constant and did not double.
* IBP has insufficient authorized shares under prior plans
to continue to grant options to its personnel. IBP's
option grants are made to all management employees.
* The 1996 plan does not allow the exercise price of
options to be less than 100% of the Fair Market Value of
the stock on the date of grant.
Proposal Four: Approval of the 1996 Officer Long-Term Stock Plan
In evaluating this proposal please note the following points:
* Receipt of awards under the 1996 plan is conditioned upon
the continued employment of the participating employee
providing an incentive for the employee to remain with
the company for a specified period of time.
* To date IBP has always purchased stock on the open market
for its grant plans rather than use authorized but
unissued shares for stock grants.
* IBP has insufficient authorized shares under prior plan
to continue to grant shares to personnel.
IBP appreciates your continued support and investment in the
company. Any questions or comments you may have in regard to these
matters may be addressed to Lon Grigsby at (402) 241-3004 or Nate
Hodne at (402) 241-2121.
Sincerely,
/s/ Robert L. Peterson
----------------------
Chairman and Chief
Executive Officer
