SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and 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 Section 240.14a-11(c) or Section
240.14a-12
( IBP, inc. )
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 is 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 No.: ____________________________
3) Filing Party: __________________________________________________
4) Date Filed: __________________________
[IBP GREEN LOGO
TO BE INSERTED
HERE]
March 17, 1999
Dear Stockholder:
It is our pleasure to invite you to IBP, inc.'s Annual meeting of
Stockholders to be held at IBP's new World Headquarters at 800 Stevens Port
Drive, Dakota Dunes, South Dakota on Thursday, April 22, 1999. The meeting will
begin at 3:00 p.m. Central Daylight Time. At the meeting, we will briefly
review the Company's progress in 1998, discuss our prospects for 1999 and
entertain questions. Refreshments will be served. The following proxy
statement provides information about the meeting.
If you are unable to attend in person, please be sure to vote your shares
by proxy. We ask that you mark, sign, date and promptly return the enclosed
proxy card in the enclosed self-addressed envelope, so we may be assured of
a quorum to transact business. Your prompt response will help the Company
avoid additional and unnecessary solicitation costs. In person or by proxy,
your vote is important. Thank you!
To obtain current information regarding IBP, the Company encourages
investors to call the Investor Relations Department at (605)235-2587, or to
visit IBP's Internet address at www.ibpinc.com.
Your attention is directed to the attached Proxy Statement.
Sincerely,
Robert L. Peterson
Chairman of the Board
and Chief Executive Officer
IBP, inc.
800 Stevens Port Drive
Dakota Dunes, SD 57049
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 22, 1999
To the Stockholders:
The Annual Meeting of Stockholders of IBP, inc. will be held in the
Conference Center of IBP's World Headquarters located at 800 Stevens Port
Drive in Dakota Dunes, South Dakota, on Thursday, April 22, 1999, at 3:00 p.m.
Central Daylight Time for the following purposes:
1. To elect nine directors to serve for one year terms expiring at the
annual meeting in 2000 and until their successors are elected and
qualified;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 15, 1999,
will be entitled to notice of and to vote at the meeting.
In order to assure a quorum, all stockholders are urged to vote by proxy
or attend the meeting. However, whether or not you expect to attend, we urge
you to read the accompanying proxy statement and then complete, sign, date and
return the enclosed proxy card in the enclosed postage prepaid envelope. It
is important that your shares be represented at the meeting. Your promptness
will assist us in preparing for the meeting and avoiding the cost of a follow-
up mailing. If you receive more than one proxy card because you own shares
registered in different names or at different addresses, each proxy card
should be completed and returned.
Robert L. Peterson
Chairman of the Board
Dakota Dunes, South Dakota
March 17, 1999
IBP, inc.
800 Stevens Port Drive
Dakota Dunes, SD 57049
-----------------------
PROXY STATEMENT
-----------------------
GENERAL INFORMATION
The enclosed proxy card, IBP's Annual Report to Stockholders and this proxy
statement have been mailed to stockholders on or about March 18, 1999, in
connection with the solicitation of proxies by the Board of Directors of IBP,
inc. ("IBP") for use at the Annual Meeting of Stockholders. The Annual
Meeting of Stockholders will be held in the Conference Center of IBP's World
Headquarters located at 800 Stevens Port Drive in Dakota Dunes, South Dakota,
on April 22, 1999, at 3:00 p.m. Central Daylight Time. This is the first
year the meeting will be held in the new World Headquarters located in South
Dakota. IBP anticipates moving from the current headquarters located at P.O.
Box 515, Dakota City, Nebraska 68731 to the new World Headquarters in March
of 1999. Stockholders of record at the close of business March 15, 1999, are
entitled to notice of and to vote at the meeting and at adjournment thereof.
As of the close of business on March 8, 1999, IBP had outstanding 92,282,596
shares of Common Stock, each of which is entitled to one vote.
Unless instructed otherwise, the persons named as proxies intend to vote
shares of Common Stock represented by duly executed proxies FOR the election
of the nominees for director selected by the Board of Directors. If any
other business is properly brought before the annual meeting, the proxies
will be voted in accordance with the discretion of the persons named as
proxies. Any proxy may be revoked by the stockholder at any time prior to
the voting of the proxy at the meeting by a written revocation received by
the Secretary of IBP, by properly executing and delivering a later-dated
proxy or by attending the meeting and requesting the return of the proxy and
voting in person.
A majority of the outstanding shares of Common Stock must be represented at
the annual meeting in person or by proxy in order to constitute a quorum for
the transaction of business. The record holder of each share of Common Stock
as of March 15, 1999, will have one vote for each share so held.
Directors are elected by a plurality of the votes cast. Stockholders may not
cumulate their votes. The nine candidates receiving the highest number of
votes will be elected as directors. Under Delaware law and IBP's Bylaws,
abstentions and broker non-votes are not counted and have no effect on the
tally as to which of the nine candidates have received the highest number of
votes and are elected as directors, except that the withholding or
abstention of a vote denies the candidate that vote. Under certain
conditions, if you do not exercise the voting rights of stock in which you
hold the beneficial interest, those shares might be voted by the record owner.
Solicitation of Proxies
The expense of this solicitation will be paid by IBP. To the extent
necessary to assure sufficient representation at the meeting, proxies may be
solicited by any appropriate means by officers, directors and regular
employees of the Company for which they will receive no additional
compensation. IBP will retain the services of Corporate Investor
Communications at a cost of approximately $7,000 plus certain mailing costs,
to deliver proxy material and to aid in the solicitation of proxies to
ensure that a quorum is represented at the annual meeting. IBP will pay persons
holding stock in their names or the names of their nominees, but not owning
such stock beneficially, such as brokerage houses, banks and other
fiduciaries, for the expense of forwarding soliciting material to their
principals.
Stockholder Proposals for 2000 Annual Meeting
In the event that any stockholder desires to submit a proposal for action at
the 2000 Annual Meeting of Stockholders, such proposal must be received at
IBP's principal offices at 800 Stevens Port Drive, Suite 835, Dakota Dunes,
South Dakota 57049, marked to the attention of the Secretary of IBP, no later
than November 18, 1999. It is suggested that any stockholder desiring to
submit a proposal do so by Certified Mail, Return Receipt Requested.
Stockholders should also note that, in addition to the requirement of timely
receipt by IBP of a proposal, a proposal must comply with the requirements of
Section 14(a) of the Securities Exchange Act of 1934 to be included in the
proxy solicitation material for the 2000 Annual Meeting of Stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 8, 1999, to the knowledge of IBP, no person beneficially owned
5% or more of any class of the outstanding voting securities of IBP, except as
follows:
Name and Address Amount and Nature Percent
Title of Of Beneficial of Beneficial Of
Class Owner Ownership (#) Class (%)
- -------- ---------------- ---------------- ---------
Common Archer Daniels- 12,951,400 (1) 14.0%
Stock Midland Company
("ADM")
4666 Fairies Parkway
Decatur, IL 62526
Common Brandes Investment
Stock Partners, L.P. 6,051,871 (2) 6.5%
12750 High Bluff Drive
San Diego, CA 92130
Common Barclays Global
Stock Investors, N.A. 5,777,123 (3) 6.2%
45 Fremont Street
San Francisco, CA 94105
__________________
(1) ADM has sole investment power over 12,951,400 shares, and sole voting
power over 12,951,400 shares, according to its Schedule Form 4 dated
October 5, 1998, and filed with the Securities and Exchange Commission
("SEC").
(2) Brandes Investment Partners, L.P. has sole investment power
over 6,051,871 shares, and sole voting power over 6,051,871 shares,
according to its Schedule 13G dated February 11, 1999, and filed with the
Securities and Exchange Commission.
(3) Barclays Global Investors, N.A. has sole investment power over
5,197,623 shares, and sole voting power over 5,777,123 shares, according
to its Schedule 13G dated February 16, 1999, and filed with the Securities
and Exchange Commission.
ELECTION OF DIRECTORS
It is intended that proxies received will be voted FOR the election of nine
nominees as directors unless authority to so vote is withheld. Although the
Board of Directors does not know of any reason why any nominee will be
unavailable for election, in the event any nominee should be unavailable at
the time of the meeting, the proxies may, but need not, be voted for a
substitute nominee selected by the Board of Directors.
The Bylaws of IBP provide that any stockholder entitled to vote for the
election of directors at a meeting may nominate persons for election as
directors by giving timely notice in proper written form, containing the
information required by the Bylaws, to the Secretary of IBP. To be timely,
such notice must be delivered to or mailed to and received at the principal
executive offices of IBP not less than 60 nor more than 90 days prior to the
meeting. However, if less than 60 days' notice or public disclosure of the
date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever first
occurs.
The following biographical information is furnished as of February 17,
1999, with respect to each of the nine nominees for election as director at
the annual meeting.
RICHARD L. BOND, 51 Director since 1995
Mr. Bond has served as the President and Chief Operating Officer of IBP
since March 1, 1997. Prior to that he was President, Fresh Meats since 1995;
Executive Vice President, Beef Division since 1994; and the Group Vice
President, Beef Sales and Marketing since 1989.
JOHN S. CHALSTY, 65 Director since 1987
Mr. Chalsty was elected Chairman of the Board of Donaldson, Lufkin &
Jenrette, Inc. ("DLJ") in February, 1996. He served as Chief Executive Officer
from September 1986 to February 1998. Mr. Chalsty also served as President of
DLJ from 1986 to 1996, after having served as Chairman of DLJ's Capital
Markets Group for more than two years. He joined the firm in 1969 as an oil
analyst. He was elected to DLJ's Board of Directors in 1971 and was named
Director of Research in 1972. Mr. Chalsty was appointed head of the
Investment Banking Division in 1979. When the firm was reorganized in
January, 1984 Mr. Chalsty was named Chairman of the Capital Markets Group.
Currently, Mr. Chalsty is also a member of the Board of Directors of EQ,
Occidental Petroleum Corporation, SAPPI Limited, and he has been a member of
the Executive Committee of AXA since January 1997. From 1990 to 1994 Mr.
Chalsty served as Vice Chairman of the New York Stock Exchange Inc.
DR. WENDY L. GRAMM, 54 Director since 1993
Dr. Gramm chaired the Commodity Futures Trading Commission from 1988 to
1993. She has served as Administrator for Information and Regulatory Affairs
at the White House Office of Management and Budget (OMB) and was the Executive
Director of the Presidential Task Force on Regulatory Relief. Dr. Gramm also
directed the Federal Trade Commission's Bureau of Economics. She holds a
Ph.D. in economics from Northwestern University and began her career as a
professor of economics at Texas A&M University. Dr. Gramm is an economist and
is Director of the Regulatory Studies Program of the Mercatus Center at George
Mason University in Fairfax, Virginia. She serves on the Boards of Directors
of Enron Corporation, State Farm Insurance Companies, the Chicago Mercantile
Exchange and Invesco Funds.
JOHN J. JACOBSON, JR., 55 Director since 1998
Mr. Jacobson is the President of TransAm Trucking, Inc. ("TransAm") which
he founded in 1987. For a twenty year period prior to 1987, Mr. Jacobson was
a member of the Board of Directors and an Executive Vice President of Idlewild
Foods, Inc., a holding company which controlled National Beef Packing, Co., a
beef products company; Liberal International Sales, an export sales company of
meat and by-products; and Supreme Feeders, a commercial cattle feeding
operation. Mr. Jacobson occupied executive positions in all of the companies
controlled by Idlewild Foods, Inc. In addition, Mr. Jacobson was the
President and founder of National Carriers, the nation's third largest
refrigerated carrier. TransAm is one of the carriers that provides services
to IBP, and in 1998 approximately 15.1% of TransAm's revenues were derived
from services provided to IBP.
EUGENE D. LEMAN, 56 Director since 1989
Mr. Leman has served as the President, Fresh Meats of IBP since March 1,
1997. Prior to that he was the President, Allied Products since 1995; and the
Executive Vice President, Pork Division since 1986.
DR. MARTIN A. MASSENGALE, 65 Director since 1996
Dr. Massengale has been President Emeritus; Director, Center for Grassland
Studies; and Foundation Distinguished Professor at the University of Nebraska
since 1994. From 1958 to 1976 Dr. Massengale was a professor at the
University of Arizona and the Associate Dean, College of Agriculture,
University of Arizona. From 1976 to the present he has been with the
University of Nebraska where he has served as a Vice Chancellor, Chancellor,
Interim President and President of the University, a position he held from
1991 to 1994. Dr. Massengale has been named to the Board of Directors of
Woodmen Accident & Life Company, the Board of Managers of America First
Companies, L.L.C., and the Board of Trustees of Great Plains Funds.
ROBERT L. PETERSON, 66 Director since 1976
Mr. Peterson has served as Chairman of the Board and Chief Executive
Officer of IBP since August 12, 1981. Mr. Peterson joined IBP in 1961. He
left IBP in 1969 for a period during which he started a pork products company,
Madison Foods, Inc. He returned to IBP in 1976 when IBP acquired Madison
Foods, Inc. In 1977, he was elected IBP's President and Chief Operating
Officer. Mr. Peterson is a Director of MidAmerican Energy Company.
MICHAEL L. SANEM, 56 Director since 1998
Mr. Sanem has been self-employed as a cattle feeder and private investor
since 1994. Prior to this, Mr. Sanem was employed by Monfort of Colorado as
Vice President of Slaughter, Hides and By-Products Operations from 1979 to
1982. In 1982, he was promoted to Group Vice President, and in 1987, after
ConAgra, Inc. acquired Monfort, he became Monfort's Executive Vice President
of Beef Operations. From 1989 to 1994, Mr. Sanem was the President and a
director of Monfort, Inc., and was responsible for Monfort's beef, lamb,
trucking and specialty operations.
JOANN R. SMITH, 59 Director since 1993
Ms. Smith served as Assistant Secretary for Marketing and Inspection
Services for the United States Department of Agriculture (USDA) from 1989 to
1993 and has served in numerous capacities in the livestock industry. She is
a former President of the National Cattlemen's Association and has chaired the
Cattlemen's Beef Promotion and Research Board. Ms. Smith acts as Secretary
and Treasurer for Smith Brothers, a farming and ranching operation, is the
Secretary and Treasurer for Smith Construction, and is President of Smith
Associates, an agricultural marketing business.
Information Regarding the Board of Directors and its Committees
The Board of Directors has established an Audit Committee, Compensation
Committee, Executive Committee, Nominating Committee and Plans Administration
Committee.
The Board of Directors met five times during the 1998 fiscal year. All
directors attended at least 75 percent of the Board of Directors meetings.
All directors attended at least 75 percent of the committee meetings for which
they were eligible, except for Mr. Chalsty who missed two Audit Committee
meetings during 1998.
The Executive Committee, during the intervals between meetings of the Board
of Directors, exercises all powers of the Board of Directors, except as
otherwise provided by law and the IBP Bylaws. The members of the Executive
Committee currently are Messrs. Peterson (Chairman), Bond, and Leman. The
Executive Committee met or acted by written consent eleven times during 1998.
The Audit Committee selects the firm of independent public accountants to
audit the financial statements of IBP and its consolidated subsidiaries,
subject to approval of the Board of Directors; discusses with the independent
public accountants the scope and results of their audit; discusses with the
independent public accountants, and with the management of IBP, IBP's
financial, accounting and reporting principles, policies and practices;
discusses with the independent public accountants, and with the Controller of
IBP and his staff, the adequacy of the corporation's accounting, financial and
operating controls; and reports to the Board of Directors. The members of the
Audit Committee currently are Mr. Tinstman (Chairman), Mr. Chalsty, Dr.
Gramm, Mr. Jacobson, Dr. Massengale, Mr. Sanem and Ms. Smith. The Audit
Committee held four meetings during 1998.
The Compensation Committee reviews and approves compensation arrangements,
including annual incentive awards, for officers of IBP. The members of the
Compensation Committee currently are Mr. Chalsty (Chairman), Dr. Gramm, Mr.
Jacobson, Dr. Massengale, Mr. Sanem and Ms. Smith. The Compensation Committee
held one meeting during 1998.
The Nominating Committee makes recommendations as to candidates for
election to the Board of Directors and their qualifications to fill board
vacancies in connection with proposed slates of nominees for directors for
whose election proxies will be solicited by the Board of Directors. The
Nominating Committee will consider properly submitted recommendations of
stockholders if the recommendation is submitted pursuant to the procedures
previously outlined. The members of the Nominating Committee currently are Dr.
Gramm (Chairperson), Mr. Chalsty, Mr. Jacobson, Dr. Massengale, Mr. Sanem, Ms.
Smith and Mr. Tinstman. The Nominating Committee held one meeting during
1998.
The Plans Administration Committee administers the restricted stock and
employee stock option plans of IBP. The members of the Plans Administration
Committee currently are Ms. Smith (Chairperson), Mr. Chalsty, Dr. Gramm, Mr.
Jacobson, Dr. Massengale, and Mr. Sanem, none of whom are eligible for
selection as participants in these plans. The Plans Administration Committee
held one meeting during 1998.
Information Regarding Directors' Compensation
Officers of IBP who are also directors do not receive any fee or
remuneration for services as members of the Board of Directors or of any
committee of the Board of Directors. Non-management directors receive a
retainer fee of $25,000 per annum, $2,500 per annum for each committee they
chair and $1,000 for each board or committee meeting that they attend. Non-
management directors also receive stock options pursuant to the IBP Directors
Stock Option Plan.
In January 1993, IBP entered into a consulting agreement with Mr. Tinstman.
Under the consulting agreement Mr. Tinstman agreed to continue to act as an
independent general consultant to IBP, which includes chairing the IBP
Retirement Savings Plan Administration Committee which administrates an
Internal Revenue Code Section 401(k) plan with in excess of $186 million of
invested funds. Pursuant to such agreement, Mr. Tinstman receives $3,000 per
month as long as the agreement is in effect. In addition, Mr. Tinstman is
entitled to hospitalization coverage and, subject to IBP's best efforts,
disability insurance. Mr. Tinstman also receives the annual fees and meeting
fees paid to non-management directors of IBP and stock options pursuant to
the IBP Directors Stock Option Plan. Mr. Tinstman acted as a director of IBP
during 1998 but has elected to retire and not run for re-election in 1999.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 17, 1999, beneficial
ownership of IBP Common Stock, the sole class of IBP stock, for each director
of IBP, for each person nominated as a director of IBP, for each executive
officer named in the Summary Compensation Table and for all directors and
executive officers (including those executive officers not named in the
Summary Compensation Table, if any) of IBP as a group. Unless otherwise
indicated, the persons named below have sole voting and investment power with
respect to the Common Stock shown as beneficially owned by them.
Amount and Nature
Name of Beneficial Owner - of Beneficial Percent of
Position with IBP Ownership (#) (1) Class (%) (3)
- -------------------------- ----------------- -------------
Richard L. Bond - Director
and Executive Officer 80,974 *
John S. Chalsty - Director 8,900 *
R. Randolph Devening
Executive Officer 0 *
Wendy L. Gramm - Director 3,900 *
Craig J. Hart - Executive
Officer 20,355 *
John J. Jacobson, Jr.
Director 5,000 *
Eugene D. Leman - Director
and Executive Officer 137,217 *
Martin A. Massengale - Director 900 *
Robert L. Peterson - Director
and Executive Officer 563,002 *
Michael L. Sanem - Director 30,000 *
Larry Shipley - Executive
Officer 41,244 *
JoAnn R. Smith - Director 5,500 *
Dale C. Tinstman - Director 14,700 (2) *
All Directors and Executive
Officers As A Group (19 Persons) 1,331,028 1.44
__________________
(1) This number includes stock options granted pursuant to the IBP 1987 Stock
Option Plan, the IBP 1993 Stock Option Plan and the IBP Directors Stock
Option Plan, and which are exercisable as of February 17, 1999, or within
60 days thereafter: Mr. Bond 72,624; Mr. Chalsty 3,900; Dr. Gramm 3,900;
Mr. Hart 16,412; Mr. Leman 74,000; Dr. Massengale 400; Mr. Peterson
216,000; Mr. Shipley 26,244; Ms. Smith 1,700; and Mr. Tinstman 3,900;
and all other Executive Officers 265,076.
(2) Includes 2,000 shares owned by Mr. Tinstman's wife, as to which Mr.
Tinstman disclaims any beneficial ownership.
(3) Individually, the executive officers, directors and nominees for
director beneficially own less than 1% of IBP's Common Stock.
JOINT REPORT OF THE COMPENSATION
AND PLANS ADMINISTRATION COMMITTEES
Compensation and Plans Administration Committees
The Compensation Committee of the Board of Directors is comprised entirely
of disinterested and outside directors. The Committee is responsible for
establishing the levels of compensation (except stock option grants and long-
term stock awards) for the executive officers of the Company. The Committee
annually evaluates IBP's performance and compensation paid to its executive
officers.
The Plans Administration Committee reviews and approves the grant of stock
options and awards of restricted stock pursuant to IBP's stock option and
long-term stock plans for the Company's officers and employees. This
committee is comprised entirely of disinterested and outside directors.
Committees' Report on Executive Compensation
Base Salary
The annual compensation of executive officers of IBP includes a base
salary, coupled with a cash bonus which is calculated in accordance with an
established formula based on the operating income of IBP. The Compensation
Committee from time to time uses outside consultants and published
compensation survey data to review competitive rates of pay, to establish
salary ranges and to set target base salary levels for officers. The amount
of the employee's base salary is a function of the employee's officer
position, or grade level, and individual performance. The employee's
individual performance is measured against expectations related to budgetary
performance or operating income results and operating performance standards.
Bonus Payments
The annual compensation of employees participating in IBP's officers' bonus
program, including executive officers, is dependent on overall corporate
performance. The dollar amount of the bonus pool from which bonuses are paid
is established as a percent of operating income as adjusted for non-operating
expenses such as pushdown accounting. Target bonuses are based on the percent
of increase or decrease in such operating income from the prior year.
Stock Option Grants and Restricted Stock Awards
IBP has stock option plans for all of its management employees and a long-
term stock plan for its officers, including executive officers. The purpose
of the plans is to assist in securing and retaining employees of ability by
making it possible to offer them an incentive, in the form of a proprietary
interest in IBP, to join or continue in the service of IBP and to increase
their efforts on its behalf.
Levels for both stock option grants and restricted stock awards are
established by the Plans Administration Committee on the basis of an
employee's officer position or grade level. Stock options are typically
granted for terms of ten years and normally become exercisable in increments
beginning after the second and continuing through the fifth year of the stock
option term. The restricted stock awards are made subject to continued
employment, generally for five years.
Corporate Performance
In evaluating corporate performance to establish compensation for fiscal
year 1998, the Compensation Committee considered the fact that operating
income for 1997 for bonus purposes was down 32% from 1996 and net earnings per
diluted share were down to $1.25 in 1997 from $2.07 in 1996. The Compensation
Committee established a standard salary increase budget of 4%, for fiscal year
1998 for officers. The budget percentage was based on the standard percentage
increase for all management employees of the Company. Individual salary
increases were determined for all management employees, including executive
officers, based on each individual's contributions to operating unit and
corporate performance.
Compensation of Chief Executive Officer
The Chairman and Chief Executive Officer's salary and performance-based
bonus for 1998 were established by the Compensation Committee in December of
1994. Mr. Peterson's base salary remained at $1,000,000. His performance-
based bonus for 1998 was established at 1.506% (pursuant to the five year
formula approved by stockholders at the 1995 Annual Meeting) of the first
$100,000,000 of operating income, after adjustments and consistent with the
bonus calculations for management generally, and 1% of any operating income
that exceeded $100,000,000. These actions were based on the 1993 changes to
Section 162(m) of the Internal Revenue Code which require that any
compensation over $1,000,000 be performance-based (or meet other exceptions
provided by the Section) to be deductible by the Company. The salary and
performance-based bonus were determined pursuant to the changes to Section
162(m) and in order to retain Mr. Peterson as Chairman and Chief Executive
Officer. The bonus method was designed to incentivize Mr. Peterson with a
performance-based bonus that was competitive with the industry and also allows
the Company to take a deduction for federal income tax purposes.
John S. Chalsty Wendy L. Gramm John J. Jacobson, Jr.
Martin A. Massengale Michael L. Sanem JoAnn R. Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
The members of the Compensation Committee are Mr. Chalsty (Chairman), Dr.
Gramm, Mr. Jacobson, Dr. Massengale, Mr. Sanem and Ms. Smith.
<TABLE>
SUMMARY COMPENSATION TABLE (1)
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------- --------------------------------
Other
Annual Restricted Securities All
Name and Compen- Stock Underlying Other
Principal Year Salary Bonus sation Awards Options Compen-
Position sation
($) ($) ($)(2) ($)(3) (#) ($)
- ------------ ---- ------ --------- ------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. 1998 1,000,000 4,568,006 57,566 0 30,000 160,486
Peterson,
Chairman 1997 1,000,000 2,805,501 70,445 1,448,125 30,000 91,943
& Chief
Executive 1996 1,000,000 3,719,696 0 0 30,000 123,732
Officer
Richard L. 1998 516,667 550,800 0 0 21,000 30,243
Bond,
President 1997 469,167 288,345 0 70,000 35,900 19,262
& Chief
Operating 1996 312,500 300,000 0 0 12,000 22,489
Officer
Eugene D. 1998 325,500 346,800 0 0 12,000 19,096
Leman,
President, 1997 301,000 195,278 0 50,000 17,000 12,391
Fresh Meats 1996 229,167 225,900 0 0 9,000 16,492
Larry 1998 289,150 260,000 0 0 12,000 16,942
Shipley,
President 1997 144,667 148,411 0 140,000 16,000 5,955
IBP
Enterprises 1996 149,150 135,000 0 0 6,000 10,073
Craig J. 1998 92,083 70,000 0 0 3,120 5,403
Hart,
Vice 1997 87,833 41,400 0 75,000 3,120 3,617
President
& Controller 1996 85,000 60,000 0 0 3,120 6,118
R. Randolph 1998 700,000 1,217,650 0 0 0 35,700
Devening (5)
President 1997 471,154 624,279 0 0 0 25,053
& Chief
Executive 1996 0 0 0 0 0 0
Officer,
Foodbrands
America, Inc.
</TABLE>
_______________________________
(1) No other types of compensation required to be reported in the table were
paid or were payable to any of the named executive officers and, therefore,
the column which the SEC regulations created to report "Long-Term Incentive
Plan Payouts" has been deleted from the table. IBP has not granted any
SARs pursuant to the IBP 1993 Stock Option Plan and 1996 Stock Option Plan
and has therefore removed SARs from the columns of this table and reported
only options.
(2) Except for Mr. Peterson in 1997 and 1998, the perquisites and other
personal benefits provided to the executive officers do not exceed the
threshold established by the SEC and are not reported in the table. The
other annual compensation reported for Mr. Peterson consists of perquisites
provided by the Company. For the perquisites reported in 1998, $22,950 of
this amount is attributable to Company automobile expenses and $28,409 is
attributable to Mr. Peterson's personal use of Company aircraft.
(3) Restricted stock was granted to certain officers pursuant to the IBP
Officer Long-Term Stock Plan. The shares vest five years from the date
of grant contingent upon continued employment with IBP. Early vesting may
occur pursuant to the Plan's provisions due to events such as death or
total disability. The value of the shares on the date of grant listed is
listed for the named executive officers in the Summary Compensation Table.
Under certain past grants, and certain future grants to executive officers,
the Company is obligated to pay the executive officer's mandatory minimum
Federal tax withholdings and Medicare tax portion of the Federal Insurance
Contribution Act upon vesting and receipt of the shares. Dividends paid on
the restricted stock are used to purchase additional shares of restricted
stock pursuant to the provisions of the Plan. These additional shares are
then credited to an officer's award. The number of shares of restricted
Common Stock in each named officer's account pursuant to the IBP Officer
Long-Term Stock Plan on December 26, 1998, and the aggregate fair market
value of the shares based upon a fiscal year-end closing price of $28.9375
per share, were as follows: Mr. Peterson - 70,340 shares valued at
$2,035,464; Mr. Bond - 29,469 shares valued at $852,759; Mr. Leman - 18,767
shares valued at $543,070; Mr. Shipley - 25,818 shares valued at $747,108;
and Mr. Hart - 4,893 shares valued at $141,591.
(4) All Other Compensation includes 1996, 1997 and 1998 profit sharing
contributions made by the Company into the named officer's account in the
IBP Retirement Income Plan ("RIP"). The profit sharing attributable to
each named officer for 1998 is as follows: Mr. Peterson $107,948;
Mr. Bond - $30,122; Mr. Leman - $18,977; Mr. Shipley - $16,857; and
Mr. Hart - $5,368. The profit sharing and employer matching amounts
contributed by Foodbrands America, Inc. ("Foodbrands") into Mr. Devening's
401(k) account in 1998, and which are attributable to IBP, equaled $5,050.
All Other Compensation also reports life insurance premiums paid by the
Company for the named officer. The amount of insurance premiums paid by
the Company for each named officer in 1998, and any cash surrender value
the named officer is entitled to under a policy, is as follows:
Mr. Peterson - $52,538 ($49,605 of this amount represents the cash
surrender value of a policy and $2,933 represents the premiums paid);
Mr. Bond - $121; Mr. Leman - $119; Mr. Shipley - $85; and Mr. Hart - $35.
Foodbrands paid $30,650 in life insurance premiums for Mr. Devening in
1998 which is attributable to IBP.
(5) Mr. Devening is the President and Chief Executive Officer of Foodbrands
America, Inc. ("Foodbrands"), a subsidiary of IBP. The acquisition of
Foodbrands was completed on May 7, 1997, and IBP has not reported any of
Mr. Devening's compensation for the period prior to IBP acquiring
Foodbrands. Mr. Devening's compensation shown for 1997 are those amounts
attributable to the period in which IBP has owned Foodbrands.
Employment Contracts
Except for Mr. Peterson, IBP has employment agreements with all of its
executive officers, including Messrs. Bond, Leman, Shipley and Hart. Each
agreement is for a term of five years, Messrs. Bond's and Leman's commenced
March 1, 1997; Mr. Shipley's commenced August 18, 1997 and Mr. Hart's
commenced December 22, 1995. Each provides for a one year non-compete
obligation from the employee following the termination of employment with IBP.
The agreements provide for, among other things, a minimum base salary and
participation in IBP employee benefit plans including specifically stock
options and the IBP Officer Long-Term Stock Plan as an incentive to an
employee's long term commitment to IBP. For the four IBP executive officers
named in the Summary Compensation Table who currently have employment
contracts, the minimum base salaries are: Mr. Bond - $500,000; Mr. Leman -
$315,000; Mr. Shipley - $250,000; and Mr. Hart - $85,000. While the
agreements terminate by their terms after five years, either party to an
agreement has the right to terminate it, subject to the non-compete
obligation, upon one year's notice.
IBP does not have termination or change of control plans or contracts with
any of its employees, except as provided for in the IBP 1987 Stock Option
Plan, the IBP 1993 Stock Option Plan, the 1996 Stock Option Plan, the IBP
Officer Long-Term Stock Plan and the 1996 Officer Long-Term Stock Plan.
Mr. Devening's agreement commenced on August 2, 1994, was amended on
December 31, 1996 and continues until December 31, 1999, subject to a one year
extension. The minimum base salary for Mr. Devening is $700,000, and in
addition Mr. Devening is entitled to an annual bonus based on Foodbrands
obtaining target goals for earnings before interest and taxes ("EBIT"). Mr.
Devening's agreement also contains a non-compete obligation in which Mr.
Devening agrees not to compete for a period of twenty-four (24) months after
termination, and in return he will receive a payment of $1 million dollars
distributed over such twenty-four month period. In addition, Mr. Devening's
employment agreement and a stay bonus agreement call for Foodbrands to make
certain payments to Mr. Devening due to the change of control which occurred
upon IBP's acquisition of Foodbrands.
<TABLE>
OPTION GRANTS TABLE
Option Grants in 1998 (1)
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
for Option Term
Individual Grant (10 years)
----------------------------------------------------------------------- ------------------
Number of Percent of Market
Securities Total Options Exercise Price on
Underlying Granted or Base Date of
Options to Employees Price Expiration Grant(3)
Name Granted(#)(2) in Fiscal Year(%) ($/share) Date ($/Share) (3) 5%($) 10%($)
- ---- ------------ ----------------- --------- ---------- -------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L.
Peterson 30,000 4.67 16.5625 08/31/08 25.5625 270,000 312,482 791,891
Richard L.
Bond 21,000 3.27 16.5625 08/31/08 25.5625 189,000 218,737 554,324
Eugene D.
Leman 12,000 1.87 16.5625 08/31/08 25.5625 108,000 124,993 316,756
Larry
Shipley 12,000 1.87 16.5625 08/31/08 25.5625 108,000 124,993 316,756
Craig J.
Hart 3,120 0.49 16.5625 08/31/08 25.5625 28,080 32,498 82,357
R. Randolph
Devening 0 0 0 - 0 0 0 0
</TABLE>
______________________
(1) All options were granted pursuant to the 1996 Stock Option Plan. IBP has
not granted any SARs pursuant to the 1996 Stock Option IBP has therefore
removed SARs from the title and columns of this table and has reported
only options.
(2) The options are granted for terms of ten years and become exercisable in
increments beginning after the second and continuing through the fifth year
of the option term. All options are priced at the fair market value of
the IBP Common Stock on the effective date of the grant.
(3) In 1998 the effective date for IBP's annual stock option grant to
management was August 31, 1998, however, the decision to grant options
effective August 31, 1998 was not finalized until November 30, 1998. IBP
believes under the SEC's rules, the date of grant would be considered
November 30, 1998. As of the effective date of the grants the market
price was $16.5265, but the price on the date of grant (as described
above) was $25.5625. Pursuant to the SEC rules, IBP has added tables
showing the market price on the date of grant and the difference in value of
the grants based on the date of grant market price and the effective date
market price (since no portion of these options are exercisable for two
years, the ability of the named officer to realize any gain will be
subject to the market value of IBP stock when the options become
exercisable).
<TABLE>
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES TABLE
Aggregated Option Exercises in 1998
and 1998 Year-End Option Values (1)
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at 1998 Year-End (#) At 1998 Year-End (#)
------------------------------ --------------------------
Shares
Acquired
on
Exercise Value
Name (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L.
Peterson 0 0 216,000 114,000 2,934,750 948,375
Richard L.
Bond 0 0 62,664 84,356 739,084 727,305
Eugene D.
Leman 4,000 46,000(2) 70,000 48,000 1,026,250 412,250
Larry
Shipley 0 0 24,324 41,856 246,972 362,228
Craig J.
Hart 164 2,100(2) 16,412 12,112 197,311 92,631
R. Randolph
Devening 0 0 0 0 0 0
</TABLE>
- -------------------------
(1) IBP has not granted any SARs pursuant to the IBP 1993 Stock Option Plan
and 1996 Stock Option Plan. IBP has therefore removed SARs from the title
and columns of this table and has reported only options granted.
(2) The shares acquired on exercise by Mr. Leman and Mr. Hart were held by
them. For the value realized, IBP has reported the product of the number of
shares exercised times the difference between the closing of IBP Common
Stock on the date of exercise and the option exercise price.
PERFORMANCE GRAPH
The following performance graph compares the registrant's stock performance
over the past five years against the performance of both an equity market
index and a peer group index that cover the same five year period.
IBP, inc.
Comparison of Five Year Cumulative Total Return
IBP, inc., S&P 500 Index and S&P 400 Index (1)
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
IBP,
inc. $100.00 $120.08 $201.46 $191.26 $166.92 $232.41
S&P
500 100.00 101.16 139.17 174.64 232.90 301.28
S&P
400 100.00 98.45 128.91 151.91 200.91 227.85
(1) Assumes $100 invested on December 23, 1993 in IBP, inc. Common Stock, the
S&P 500 Index, and the S&P 400 Index. Each of the three measures of
cumulative total return assumes reinvestment of dividends.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC and the New York
Stock Exchange. Executive officers, directors and greater than ten-percent
stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that forms were not required, the Company
believes that during the fiscal year ending December 26, 1998 there was
compliance with all Section 16(a) filing requirements applicable to its
executive officers and directors. Based on IBP's review of Archer-Daniels-
Midlands, Inc. ("ADM") Form 3 dated February 4, 1998, IBP believes that this
form was filed late since it is dated February 4, 1998 and was due January 23,
1998 (the date that is ten days after the date of the event requiring ADM to
file the statement).
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of IBP selected
PricewaterhouseCoopers LLP as independent public accountants to audit the
consolidated financial statements of IBP and its consolidated subsidiaries for
fiscal year 1998. PricewaterhouseCoopers LLP has audited IBP's financial
statements annually since 1995.
During IBP's two most recent fiscal years there had been no disagreements
with IBP's accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, nor has the
principal accountant's reports on IBP's financial statements for either of the
past two years contained any adverse opinion or disclaimer of opinion,
qualification or modification as to uncertainty, audit scope or accounting
principles.
A member of PricewaterhouseCoopers LLP is expected to be present at the
annual meeting of stockholders. Such member will have an opportunity to make
a statement if so desired and will be available to respond to appropriate
questions.
INCORPORATION BY REFERENCE
The financial information, supplementary financial information and
management's discussion and analysis are incorporated by reference into this
proxy statement from the 1998 Annual Report to Stockholders, a copy of which
has been delivered with this proxy statement.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be presented at
the meeting. However, if any such matters are presented for action, it is the
intention of the proxy holders named in the enclosed proxy card to vote in
accordance with their discretion on such matters unless stockholders specify
otherwise.
By Order of the Board of Directors
Sheila B. Hagen
Secretary
PROXY CARD
- ----------
If no direction is given, this proxy will be voted FOR Item 1.
The Board of Directors Recommends a Vote FOR Item 1.
Item 1 - Election of directors duly nominated.
For Withheld Richard L. Bond, John S. Chalsty, Wendy L.
Gramm, John J. Jacobson, Jr., Eugene D. Leman,
- ------- ------ Martin A. Massengale, Robert L. Peterson,
Michael L. Sanem and JoAnn R. Smith
To withhold authority to vote for any individual nominee, write that
nominee's name on the line below)
__________________________________________________________
Please mark, date and sign as your name appears below and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should indicate when signing. If the signer is a corporation or
partnership, please sign in full corporate or partnership name, by President,
authorized officer or authorized partner. If shares are held jointly, each
shareholder named should sign.
Date _____________________________________
Signature_________________________________
Signature_________________________________
____________________________________________________________________________
FOLD AND DETACH HERE
Annual Meeting
of
IBP, inc.
Thursday, April 22, 1999
Agenda
------
* Election of Directors
* Transaction of other business properly brought before the
meeting or any adjournment thereof
PROXY
- ----------------------------------------------------------------------------
SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders
IBP, inc.
IBP World Headquarters
Conference Center
800 Stevens Port Drive
Dakota Dunes, South Dakota 57049
THURSDAY, APRIL 22, 1999 - 3:00 P.M.
The undersigned stockholder hereby appoints Robert L. Peterson and Sheila
B. Hagen, or either of them, the proxies of the undersigned to vote, as
indicated on the reverse side, all shares registered in the name of the
undersigned on all matters which may come before the 1999 Annual Meeting of
Stockholders of IBP,inc. or any adjournment thereof.
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given such shares will be voted for Item 1,
and in accordance with the discretion of the persons named as proxies on all
other business.
____________________________________________________________________________
FOLD AND DETACH HERE
Annual
Meeting of Stockholders
April 22, 1999
In order to assure a quorum, all stockholders are urged to vote by proxy or
attend the meeting. However, whether or not you expect to attend, we urge
you to read the accompanying Proxy Statement and then complete, sign, date
and return the proxy card in the enclosed postage prepaid envelope. It is
important that your shares be represented at the meeting. Your promptness
will assist us in preparing for the meeting and avoiding the cost of a
follow-up mailing. If you receive more than one proxy card because you own
shares registered in different names or at different addresses, each proxy
card should be completed and returned.
