<PAGE>
===============================================================================
SCHEDULE 14A INFORMATION
-----------------
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
- ------------------------------------------------------------------------------
HUDSON FOODS, INC.
(Name of Registrant as Specified in its Charter)
- ------------------------------------------------------------------------------
TOMMY D. REYNOLDS
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
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(2) Aggregate number of securities to which transaction applies: N/A
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(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (1) N/A
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
-------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] 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: $0.00
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(2) Form, Schedule or Registration Statement No.: N/A
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(3) Filing Party: N/A
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(4) Date Filed: N/A
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<PAGE>
HUDSON FOODS, INC.
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 10, 1995
To the Stockholders of Hudson Foods, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Hudson
Foods, Inc., a Delaware corporation (the "Company"), will be held at the
Continuing Education Center, East and Center Streets, Fayetteville, Arkansas, on
Friday, February 10, 1995, at 10:00 a.m., local time, for the following
purposes:
1. To elect eight directors to serve for the ensuing year.
2. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
RECORD DATE
Only stockholders of record at the close of business on December 13, 1994,
will be entitled to vote at the Annual Meeting and any adjournments thereof.
The Company's Proxy Statement and Annual Report are submitted herewith.
By Order of the Board of Directors
Tommy D. Reynolds
Secretary
Rogers, Arkansas
January 5, 1995
YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO DATE, SIGN AND
PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH
YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE
GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER OR VOTE YOUR
SHARES IN PERSON IN THE EVENT YOU SHOULD ATTEND THE MEETING.
<PAGE>
HUDSON FOODS, INC.
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 10, 1995 AND ANY ADJOURNMENTS
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy, for use only at the Annual Meeting of Stockholders to be
held at the Continuing Education Center, East and Center Streets, Fayetteville,
Arkansas, on Friday, February 10, 1995, at 10:00 a.m., local time, and any
adjournments thereof, is solicited on behalf of the Board of Directors of Hudson
Foods, Inc. (the "Company"). Such solicitation is being made primarily by mail,
but may also be made in person or by telephone or telegraph by officers,
directors and regular employees of the Company. All expenses incurred in the
solicitation will be borne by the Company.
Any stockholder executing a proxy retains the right to revoke it at any time
prior to exercise at the Annual Meeting. A proxy may be revoked by giving
written notice to Tommy D. Reynolds, Secretary of the Company. A proxy may also
be revoked by the execution of a later proxy or by voting the shares in person
at the Annual Meeting. If not revoked, all shares represented by properly
executed proxies will be voted. Where a stockholder has specified a choice with
respect to any matter to be acted upon at the meeting, such shares will be voted
in accordance with the stockholder's wishes.
The approximate date this Proxy Statement is first being mailed to
stockholders is January 5, 1995.
OUTSTANDING STOCK AND VOTING RIGHTS
At the Annual Meeting, each stockholder will be entitled to one vote for each
share of Class A common stock, $.01 par value ("Class A common stock"), and ten
votes for each share of Class B common stock, $.01 par value ("Class B common
stock"), owned of record at the close of business on December 13, 1994. The
outstanding stock of the Company as of December 13, 1994, totaled 13,222,092
shares of Class A common stock and 6,401,882 shares of Class B common stock.
Votes may be cast in person or by proxy. The stock transfer books of the
Company will not be closed.
The enclosed form of proxy provides a method for stockholders to withhold
authority to vote for any one or more of the director nominees while still
granting authority to the proxy to vote for the remaining nominees. The names
of all nominees are listed on the proxy card. If you wish to grant the proxy
authority to vote for all nominees, check the box marked "FOR." If you wish to
withhold authority to vote for all nominees, check the box marked "WITHHOLD
AUTHORITY." If you wish your shares to be voted for some nominees and not for
one or more of the others, indicate the name(s) of the nominee(s) for whom you
are withholding the authority to vote by writing the name(s) of such nominee(s)
in the space provided on the form of proxy.
<PAGE>
Although shares represented by proxies containing abstentions or indicating
broker non-votes will be considered as present at the meeting for purposes of
determining the presence of a quorum, abstentions and broker non-votes will not
otherwise be counted on any matters submitted to a vote at the meeting.
ELECTION OF DIRECTORS
(ITEM 1)
NOMINEES
The Company's By-Laws provide that the number of directors constituting the
Board of Directors shall be not less than three nor more than 15, as determined
by the Board of Directors. The Board's size is currently set at eight members.
The Company's directors each serve for a term of one year and until their
successors shall be elected and qualified. The following slate of eight
nominees has been chosen by the Board of Directors, and the Board recommends
that each be elected.
<TABLE>
<CAPTION>
Name Age Experience
- ------------------------- --- ----------------------------------------------------------------
<S> <C> <C>
James T. Hudson 70 Chairman of the Board and Chief Executive Officer of the
Company since its organization in February 1972. President
of the Company from its organization until October 1985.
Prior to 1972, was with Ralston Purina for 26 years, the last
seven as Operating Director of the West Central Region.
Chairman of the Board of the National Broiler Council from
1982 to 1984. Past President of the Arkansas Poultry
Federation.
Michael T. Hudson 47 President of the Company since October 1985; Chief
Operating Officer since August 1987. Prior to joining the
Company in 1972, was employed for two years in the
Southeast Region of Ralston Purina's poultry operations.
Since joining the Company, has served as Vice President --
Sales, Vice President -- Sales and Marketing and Vice
President -- Production. Director since 1972.
Charles B. Jurgensmeyer 51 Chief Financial Officer and Executive Vice President of the
Company. Prior to joining Hudson in 1972, was employed in
the West Central Region of Ralston Purina's poultry
operations for seven years, primarily in finance and accounting
positions. Has previously served as Secretary/Treasurer and
Controller of the Company. Director since July 1985.
Elmer W. Shannon 73 Began service with the Company in 1972 as Marketing
Manager. Retired as Vice President and Director of
Marketing in April 1984. Subsequently retained by the
Company as a consultant. Director since December 1986.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name Age Experience
- ------------------------- --- ----------------------------------------------------------------
<S> <C> <C>
Jerry L. Hitt 48 Physician. Engaged in family practice at Rogers Medical
Center, Rogers, Arkansas since 1971. Director since
November 1989.
Kenneth N. May 64 Consultant. Vice President -- Research and Quality Assurance
of Holly Farms Foods, Inc. from September 1973 through
September 1985; President and Chief Executive Officer of
Holly Farms Foods, Inc. from October 1985 through January
1988; and Chairman and Chief Executive Officer of Holly
Farms Foods, Inc. from January 1988 through August 1989.
Subsequently retained by the Company as a consultant.
Director since December 1989. Dr. May also serves as a
director of Embrex, Inc.
James R. Hudson 36 Vice President -- Director of Transportation Division of the
Company since September 1992. Served as the Company's
Director of Fleet Operations from November 1984 until
August 1992. Director since November 1992. Previously
served as Director from July 1985 until December 1985.
Jane M. Helmich 43 Homemaker. Director since November 1992.
</TABLE>
Each of the foregoing nominees is currently serving as a director of the
Company and was elected at the Company's most recent Annual Meeting. Each
nominee has been employed as described above for at least the past five years.
James T. Hudson is the father of Michael T. Hudson, James R. Hudson and Jane M.
Helmich; there are no other family relationships among the foregoing nominees.
By reason of his ownership, directly and beneficially, of shares of the
Company's Class A common stock and Class B common stock, James T. Hudson is
deemed to be a control person of the Company. None of the companies or
organizations listed opposite the name of any director above is a parent,
subsidiary or affiliate of the Company.
Unless otherwise designated, the enclosed proxy will be voted for the
election of the foregoing nominees as directors. The Board of Directors does
not contemplate that any of said nominees will be unable to stand for election,
but should any nominee unexpectedly become unavailable for election, the persons
named as proxies shall have the authority to vote for the election of any other
person.
MEETINGS AND COMMITTEES
The Board of Directors held four meetings in fiscal 1994. All directors were
present for at least 75 percent of such meetings. The Company pays outside
directors an annual fee of $10,000 and $500 plus expenses for each meeting
attended.
The Board maintains a standing Audit Committee; Dr. Hitt is currently its
sole member. The Audit Committee is charged with annually reviewing
transactions between the Company and its corporate officers and performing such
additional duties as may be required by the rules of the New York Stock
3
<PAGE>
Exchange or as may be specifically assigned from time to time by the Board. The
Audit Committee held two meetings during fiscal 1994.
The Company has a Compensation Committee whose primary function is to
establish the Company's compensation policies. See "Report of Compensation
Committee" contained herein. This committee, comprised of James T. Hudson
(Chairman), Michael T. Hudson and Charles B. Jurgensmeyer, held one meeting
during fiscal 1994.
The Company does not have a standing nominating committee. The Board
nominates persons to stand for election as directors. The Board will consider
suggestions for names of possible future nominees made in writing by
stockholders and sent to the Secretary of the Company so that they are received
on or before November 1 in any year.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of December 13, 1994, the beneficial
ownership of the Company's outstanding Class A common stock and Class B common
stock by each of the Company's directors, each executive officer listed in the
Summary Compensation Table, all directors and officers of the Company as a
group, and each person other than a director known by the Company to be the
beneficial owner of more than 5 percent of its outstanding Class A common stock
or Class B common stock.
<TABLE>
<CAPTION>
CLASS A STOCK/(1)/ CLASS B STOCK/(1)/
------------------------------------ ------------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
NAME BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
- --------------------------------- -------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
James T. Hudson 6,138,835/(2)(3)(7)/ 33.4% 6,400,000/(4)/ 99.9%
Michael T. Hudson 537,585/(3)(5)(7)/ 3.9 500,000 7.8
Charles B. Jurgensmeyer 554,624/(3)/ 4.2 -- --
Elmer W. Shannon 30,629/(3)/ * -- --
Jerry L. Hitt 13,500/(3)/ * -- --
Kenneth N. May 17,567/(3)/ * -- --
James R. Hudson 405,800/(3)(6)(7)/ 3.0 400,000 6.2
Jane M. Helmich 438,585/(3)(6)(7)/ 3.2 400,000 6.2
Donard W. Perkins 36,183/(3)/ * -- --
All directors and officers as a 7,739,700 38.9 6,400,000 99.9
group (12 persons)
</TABLE>
- -------------------------
* Less than 1 percent.
4
<PAGE>
FOOTNOTES TO PRINCIPAL STOCKHOLDERS' TABLE
/(1)/ Calculated based on 13,222,092 shares of Class A common stock
outstanding and 6,401,882 shares of Class B common stock outstanding as of
December 13, 1994. However, for purposes of computing the beneficial ownership
of any individual, it was assumed that such individual had exercised all options
and/or made all conversions by which that individual had the right, within 60
days following December 13, 1994, to acquire shares of Class A common stock.
The group total similarly assumes that all directors and officers had exercised
their options and/or made conversions for shares of Class A common stock.
/(2)/ James T. Hudson holds 100 shares of Class A common stock in his own
name. He has rights under revocable proxies to vote 1,000,000 shares of Class A
common stock, which are held in blocks of 500,000 each by Charles B.
Jurgensmeyer and Gary L. Anderson. Mr. Hudson's wife holds 1,000 shares of
Class A common stock in her own name. Because of the revocable proxies and Mrs.
Hudson's stock ownership, Mr. Hudson is considered beneficially to own 1,001,000
shares of Class A common stock. Mr. Hudson has disclaimed beneficial ownership
of those shares. Mr. Hudson also holds a total of 5,100,000 shares of Class B
common stock, which may be converted at any time into a like number of shares of
Class A common stock, and is thus considered to own the shares of Class A common
stock into which his shares of Class B common stock may be converted.
/(3)/ Includes shares of Class A common stock that the named individual
may acquire within the next 60 days by exercise of stock options, in the
following amounts: James T. Hudson, 37,285; Michael T. Hudson, 37,285; Charles
B. Jurgensmeyer, 37,285; Elmer W. Shannon, 8,000; Jerry L. Hitt, 13,000; Kenneth
N. May, 4,000; James R. Hudson, 5,800; Jane M. Helmich, 37,285 (through the
exercise of options held by her husband, Larry E. Helmich); and Donard W.
Perkins, 27,285.
/(4)/ James T. Hudson holds 5,100,000 shares of Class B common stock in
his own name. In addition, Mr. Hudson has rights under revocable proxies to
vote another 1,300,000 shares, which are held in blocks of 400,000 each by James
R. Hudson and Jane M. Helmich, and 500,000 shares by Michael T. Hudson, and thus
is considered a beneficial owner of those shares. James T. Hudson cannot
convert those shares of Class B common stock to Class A common stock and,
therefore, such shares are not attributed to him as Class A common stock. Mr.
Hudson has disclaimed beneficial ownership of the shares for which he holds
revocable proxies.
/(5)/ Michael T. Hudson holds 300 shares of Class A common stock jointly
with his children. In addition, Mr. Hudson holds 500,000 shares of Class B
common stock, which may be converted at any time into a like number of shares of
Class A common stock. Mr. Hudson is thus considered beneficially to own the
shares of Class A common stock into which his shares of Class B common stock may
be converted.
/(6)/ James R. Hudson and Jane M. Helmich each hold 400,000 shares of
Class B common stock, which may be converted at any time into a like number of
shares of Class A common stock. Mr. Hudson and Ms. Helmich are thus considered
beneficially to own the shares of Class A common stock into which their shares
of Class B common stock may be converted.
/(7)/ Such person's address is 1225 Hudson Road, Rogers, Arkansas 72756.
EXECUTIVE OFFICERS
James T. Hudson, Michael T. Hudson, Charles B. Jurgensmeyer, James R.
Hudson, Donard W. Perkins, James B. Clemmons, Joe E. Campbell and Tommy D.
Reynolds serve as executive officers of the Company. The first four named
individuals also serve as directors, and are described above under the caption
"Election of Directors."
5
<PAGE>
Donard W. Perkins, age 63, has served as Vice President -- Director of the
Broiler Division since July 1988. Prior to joining the Company, he was Senior
Vice President -- Processing, Sales & Marketing for Pilgrim's Pride Corporation
from 1976 to May 1983; Vice President -- General Manager of Spring Valley (a
division of Lane Poultry) from May 1983 to December 1986; and Senior Vice
President --Processing, Sales & Marketing for Cagle's Inc. from December 1986
until his employment with the Company.
James B. Clemmons, age 55, has served as President of the Ohse Foods
Division since December 1987. Prior to joining Ohse Foods, he was Product
Manager for the Frozen Food Division of Armour from 1980 to 1984; Senior Product
Manager for the Frozen Food Division of Armour from 1984 to 1985; and General
Manager for the Frozen Food Division of Armour from 1985 until his employment
with the Company.
Joe E. Campbell, age 64, has served as Vice President -- Director of
Acquisitions since October 1994, and previously served as Director of
Foodservice Operations since November 1989. Prior to joining Hudson he was Vice
President and Chief Operating Officer for Holly Farms Food Service Inc. from
1980 to 1986, and President and Chief Executive Officer of Holly Farms Food
Service Inc. from 1986 until his employment with the Company.
Tommy D. Reynolds, age 41, has been employed by the Company since May 1979
in various accounting, auditing and finance positions. He has served as
Secretary and Treasurer since October 1992, and previously served as Assistant
Secretary and Assistant Treasurer since 1986. Mr. Reynolds is a certified
public accountant in the state of Arkansas.
EXECUTIVE COMPENSATION
GENERAL
The Company's philosophy is that total compensation programs for its Chief
Executive Officer and other executives should be established by the process used
for its other salaried employees, except that a larger portion of executive
compensation should be tied directly to the performance of the business.
The Company also believes that executive compensation should be subject to
objective review. It is for this reason that the Compensation Committee of the
Board of Directors (the "Committee") has been established. The Committee is
comprised of James T. Hudson (Chairman), Michael T. Hudson and Charles B.
Jurgensmeyer, all executive officers and directors of the Company. Operating
within the guidance provided by the Board of Directors, the Committee's role is
to assure that the compensation strategy of the Company is aligned with the
interest of the stockholders, and the Company's compensation structure will
allow for fair and reasonable base salary levels and the opportunity for senior
executives to earn short-term and long-term compensation that reflects both
Company and individual performance as well as industry practice.
The following is a report submitted by the above listed committee members in
their capacity as the Board's Compensation Committee, addressing the Company's
compensation policy as it related to the Company's Chief Executive Officer and
its other executive officers for fiscal 1994.
6
<PAGE>
REPORT OF COMPENSATION COMMITTEE
COMPENSATION POLICY
The goal of the Company's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
stockholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate annual base compensation with bonuses based upon corporate performance
and individual initiatives and performance. Base compensation is designed to
ensure that the Company can attract and retain high caliber executive officers,
and reflects the Company's assessment of compensation levels generally
prevailing elsewhere in the market for services of persons performing similar
duties. Measurement of corporate performance is primarily based on Company
goals, industry performance levels and comparisons with the Company's results in
prior years. Accordingly, in years in which performance goals and industry
levels are achieved or exceeded, or in which the Company's results improve in
comparison to the results of prior years, executive compensation should be
higher than in years in which performance is below expectations. Annual cash
compensation, together with the payment of incentive and deferred compensation,
is designed to attract and retain qualified executives and to ensure that such
executives have a continuing stake in the long-term success of the Company. All
executive officers, and management in general, are eligible for and do
participate in incentive compensation plans.
In evaluating annual executive compensation, the Committee examines the
Company's overall performance, focusing particularly on sales growth, net
margin, return on average stockholders' equity, and the Company's current ratio
and debt-to-equity ratio. These factors are compared with designated Company
performance goals, prior years' performance and performance of several other
publicly-traded companies in the industry. In addition, other factors are taken
into consideration, such as cost of living increases, competitors' performance,
as well as the individual executive officer's past performance and potential
with the Company. Bonus compensation is also tied to performance goals, some of
which are specific to the performance of various operating divisions within the
Company.
FISCAL 1994 COMPENSATION
For fiscal 1994, the Company's executive compensation program consisted of
(i) base salary, adjusted from the prior year, (ii) a bonus pool based upon the
performance measurements described above, and (iii) contributions under the
Company's broad-based Employee Stock Purchase Plan. Stock options are granted
from time to time to members of management, based primarily on such person's
potential contribution to the Company's growth and profitability. The Committee
feels that options and other stock-based performance compensation arrangements
are an effective incentive for managers to create value for stockholders since
the value of an option bears a direct relationship to the Company's stock price.
Contributions by the Company to the Employee Stock Purchase Plan are fixed as a
percentage of employee participant contributions.
The Company's objective is to obtain a financial performance that achieves
several goals over time. Specifically, the Company seeks to achieve, over a
five-year period, an average compound annual sales growth of 15 percent, an
average 3 percent return on sales (net margin), and an average return on average
stockholders' equity of 15 percent. Other financial goals are maintaining a
current ratio of greater than 1.35 to 1 and a debt-to-equity ratio of less than
2 to 1. The philosophy underlying these goals is that unless targets are set
aggressively, they will be too easily met and thus not serve to stimulate the
performance the Company expects of its executives. Consequently, failure to
achieve any one or
7
<PAGE>
more targets in a given year may, in the Committee's opinion, be more reflective
of the high standards of achievement set by the Company than other factors.
During fiscal 1994, the Company achieved sales growth of 13.1 percent over
the prior year, a net margin of 2.6 percent, a return of 14.1 percent on average
stockholders' equity and, at year-end, had a current ratio of 1.87 to 1 and a
debt-to-equity ratio of 0.46 to 1. For the five-year period ended with fiscal
1994, the Company achieved an average compound annual sales growth of 10.9
percent, an average net margin of 1.4 percent, and an average return on average
stockholders' equity of 8.0 percent. While fiscal 1994 performance did not
achieve stated goals in several categories, the results reflected improvements
from the five-year average figures.
The performance oriented nature of the Company's compensation program is
best exemplified by examining the salary paid to James T. Hudson, the Company's
Chairman and Chief Executive Officer. See "CEO Compensation" below.
CEO COMPENSATION
Mr. James T. Hudson has been Chairman and CEO of the Company since its
inception in 1972. Consistent with the other executive officers, the structure
of Mr. Hudson's compensation package reflects the philosophy of "total
compensation and pay for performance" and includes components of both short and
long-term Company performance. The components of Mr. Hudson's compensation
package are reviewed annually and adjusted to reflect both the Company's overall
performance and the compensation level perceived by the Committee to prevail
among officers performing similar duties with other publicly traded companies.
Specific performance targets are not fixed and evaluated, but the Committee
pays special attention to Mr. Hudson's position as Chairman and CEO of the
Company, the Company's overall performance and the strategic decisions of the
Company in setting Mr. Hudson's compensation package. The Committee has the
discretion to pay an incentive bonus or option grant whether or not any specific
performance indicators are met.
CONCLUSION
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate goals
and stockholder interest. As performance goals are met or exceeded, resulting
in increased value to stockholders, executives are rewarded commensurately. The
Committee believes that compensation levels during fiscal 1994 adequately
reflect the Company's compensation goals and policies.
James T. Hudson - Chairman
Michael T. Hudson
Charles B. Jurgensmeyer
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each director on the Compensation Committee is also an executive officer of
the Company.
The Company has entered into grower contracts involving poultry farms owned
by certain of its officers and directors. The contracts provide for the
placement of Company owned flocks on the farms during the grow-out phase of
production. The contracts are identical to those entered into by the Company
with nonrelated parties and are terminable at any time by the Company. The
ownership of the farms and the aggregate amounts paid by the Company to members
of the Compensation Committee under the grower contracts during fiscal 1994 are
as follows: James T. Hudson (2 farms), $202,000; H&G Farms (50 percent owned by
James T. Hudson), $160,000; Michael T. Hudson (1 farm), $74,000; and Charles B.
Jurgensmeyer (1 farm), $52,000.
James T. Hudson owns and leases to the Company two aircraft under separate
agreements. A Cessna Citation III is leased on a month-to-month basis at a
current rent of $68,000 per month. A Cessna 421 is leased at a rent of $500 per
each hour of operation. Each lease provides that the Company shall be
responsible for operating costs, insurance, maintenance and taxes. The
Company's Board of Directors has determined that the aircraft lease arrangements
are as favorable to the Company as those it could otherwise obtain. Mr.
Hudson's total payment from the Company for the aircraft leases was $956,000 in
fiscal 1994.
The Company has periodically made cash advances to James T. Hudson. Such
advances accrue interest at the cost of the Company's short-term borrowings at
month end, plus 0.5 percent. The largest aggregate amount of these advances
during fiscal 1994 was $217,000. At October 1, 1994, these advances totaled
approximately $217,000. Additionally, the Company advances premium payments on
a life insurance policy covering Mr. Hudson, such premiums to be repaid from the
policy proceeds. At October 1, 1994, such premium payment advances totaled
$3,933,000.
On May 19, 1994, James T. Hudson purchased from the Company two lots at the
Pinnacle Country Club for $120,000 each. These lots were previously purchased
by the Company on October 4, 1991 and were sold to Mr. Hudson at the Company's
cost.
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning the
compensation paid by the Company to its Chief Executive Officer and each of the
four most highly compensated executive officers other than the Chief Executive
Officer (collectively, the "named executive officers") during the fiscal years
indicated.
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------------------- COMPENSATION
NAME AND FISCAL OTHER ANNUAL ------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION/(1)/
- ------------------------------- ------ -------- ---------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
James T. Hudson 1994 $475,000 $1,200,000 $36,704 -- $75,204
Chief Executive Officer and 1993 450,000 400,000 47,184 15,000 68,934
Chairman of the Board 1992 450,000 -- 39,204 -- 63,169
Michael T. Hudson 1994 350,000 500,000 42,738 -- 1,900
President and Chief 1993 325,000 350,000 25,536 15,000 1,740
Operating Officer 1992 325,000 -- 54,048 -- 1,560
Charles B. Jurgensmeyer 1994 300,000 400,000 2,610 -- 28,010
Chief Financial Officer and 1993 275,000 300,000 10,716 15,000 19,780
Executive Vice President 1992 275,000 -- 3,972 -- 11,350
Donard W. Perkins 1994 180,000 334,800 -- -- 13,725
Vice President - Director of 1993 170,000 185,640 -- 5,000 10,825
Broiler Division 1992 170,000 -- -- -- 8,275
James R. Hudson 1994 168,000 250,000 -- -- --
Vice President - Director of 1993 160,000 200,000 -- 15,000 --
Transportation Division 1992 150,000 18,254 -- -- --
</TABLE>
(1) Includes the following items of compensation:
(a) Company's contribution to the named individual's retirement account in the
following amounts: Charles B. Jurgensmeyer, $6,000 (fiscal 1994), $5,500
(fiscal 1993), $1,375 (fiscal 1992); and Donard W. Perkins, $3,600 (fiscal
1994), $3,400 (fiscal 1993), $3,400 (fiscal 1992).
(b) Dollar value benefit premium payments under split dollar life insurance
policies covering the named individual for which the Company will be
reimbursed for premiums paid, in the following amounts: James T. Hudson,
$75,204 (fiscal 1994), $68,934 (fiscal 1993), $63,169 (fiscal 1992);
Michael T. Hudson, $1,900 (fiscal 1994), $1,740 (fiscal 1993), $1,560
(fiscal 1992); and Charles B. Jurgensmeyer, $5,510 (fiscal 1994), $2,280
(fiscal 1993), $2,100 (fiscal 1992).
(c) Company's matching contribution to the named individual under the Company's
Employee stock Purchase Plan in the following amounts: Charles B.
Jurgensmeyer, $16,500 (fiscal 1994), $12,000 (fiscal 1993), $7,875 (fiscal
1992); and Donard W. Perkins, $10,125 (fiscal 1994), $7,425 (fiscal 1993),
$4,875 (fiscal 1992).
COMPENSATION PURSUANT TO PLANS
Retirement Plan. The Company provides a 401(k) Retirement Plan (the
"Retirement Plan") for the benefit of its employees. Participation in the
Retirement Plan is by voluntary employee contributions. For a contribution not
exceeding 4 percent of an employee's salary, the Company matches 50 percent of
the amount contributed. The assets are invested under the terms of a trust
administered by James T.
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<PAGE>
Hudson, Michael T. Hudson, Charles B. Jurgensmeyer and Kent A. Doss.
Contributions for all executive officers as a group (8 persons) were $6,000 in
fiscal 1992. Contributions for all employees (excluding executive officers)
were $1,070,000 in fiscal 1994, $848,000 in fiscal 1993, and $717,000 in fiscal
1992.
Executive Salary Deferral Plan. In July of 1992, the Company established its
Executive Salary Deferral Plan, which is a non-qualified deferred compensation
arrangement, exempt from certain restrictions imposed by the Internal Revenue
Code on 401(k) plans. Participation in the Executive Salary Deferral Plan is
limited to select management and highly compensated employees of the Company.
Participants in the Executive Salary Deferral Plan may not participate in the
Retirement Plan. Participants may contribute up to 10 percent of their gross
pay to the Executive Salary Deferral Plan and the Company will match 50 percent
of the first 4 percent of each participant's contribution. Assets are held in
individual accounts for each participant and these accounts are held in a
special trust. The trust assets will become subject to the claims of the
Company's general creditors in the event of bankruptcy. The Company's
contributions for all executive officers as a group (8 persons) were $19,000 in
fiscal 1994, $16,000 in fiscal 1993 and $4,000 in fiscal 1992. Contributions
for all employees (excluding executive officers) were $79,000 in fiscal 1994,
$55,000 in fiscal 1993 and $12,000 in fiscal 1992.
Salary Continuation Plan. The Company has entered into agreements with
approximately 30 of its key employees providing for the payment of specified
benefits in the event of the employee's retirement or death. Generally, a
covered employee (or the employee's beneficiary) is entitled to receive a fixed
sum annually for the 15 years following the employee's retirement or death.
Benefits are not paid for an employee's retirement before reaching age 65,
unless the Company's Executive Committee has approved the early retirement. In
the event that voting control of the Company ceases to be held by the Hudson
family, termination of a covered employee entitles the employee to receive the
stated retirement benefits over periods ranging from 15 to 25 years beginning on
the later of the employee's termination or attainment of age 55.
The Salary Continuation Plan Agreements provide annual retirement or death
benefits of $100,000 each for James T. Hudson, Michael T. Hudson, Charles B.
Jurgensmeyer, James R. Hudson and Donard W. Perkins.
Life Insurance. The Company maintains life insurance policies on its
executives, including a split-dollar policy on James T. Hudson, Michael T.
Hudson and Charles B. Jurgensmeyer, in which the beneficiaries have been
selected by the executives. Upon the death of each of these executive officers,
the Company will be reimbursed by the policy beneficiary to the extent of
premiums paid by the Company.
Employee Stock Purchase Plan. The Company's Amended and Restated 1990
Employee Stock Purchase Plan (the "Purchase Plan") allows participating full-
time employees to purchase Class A common stock on the New York Stock Exchange
at market prices. Purchases are made through regular payroll deductions, which
may not be less than 1 percent nor more than 10 percent of the participant's
gross earnings from the Company. The Company will, subject to certain
restrictions in the Purchase Plan, annually contribute in cash and/or Class A
common stock up to 15 percent of each participant's aggregate contributions to
the Purchase Plan during the preceding ten years, except with respect to any
contributions that have been withdrawn by the participant. The Company pays all
administrative costs and brokerage commissions. The Purchase Plan was adopted
in July 1990, became effective on the first
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<PAGE>
day of fiscal 1991 and was amended in December, 1992, to qualify for an
exemption from the automatic application of Section 16 of the Securities
Exchange Act.
Of the approximately 8,900 employees eligible to participate in the Purchase
Plan, 831 were participants as of the last day of fiscal 1994. The Company's
contributions for all executive officers as a group (8 persons) were $49,000 in
fiscal 1994, $36,000 in fiscal 1993 and $24,000 in fiscal 1992. The Company's
aggregate matching contributions for all employees (excluding executive
officers) were $366,000 in fiscal 1994, $254,000 in fiscal 1993, and $179,000 in
fiscal 1992.
Stock Option Plan. The Company's Second Amended and Restated 1985 Stock
Option Plan (the "Option Plan") has reserved 1,200,000 and 300,000 shares of
Class A common stock for issuance under the incentive stock option portion and
the non-qualified stock option portion, respectively. Under the Option Plan, a
committee of the Board of Directors may grant to "key" employees options to
purchase shares of Class A common stock at a price which is no less than 100
percent of the fair market value of such shares on the date of grant (110
percent in the case of individuals holding 10 percent or more of the Company's
Class A common stock). "Key" employees are determined by the committee, and may
include directors, executive officers, and other officers and employees of the
Company and its subsidiaries. Options must expire no later than the tenth
anniversary of the date of grant. Subject to those conditions, the exercise
price and the duration of options granted are set by the committee. There were
no stock options granted by the Company in fiscal 1994.
During fiscal 1994, the Company did not make any awards, other than those
described above, pursuant to any long-term incentive plans. The Company did not
reprice any of its options during fiscal 1994.
The following table sets forth the options exercised, the value realized and
the fiscal year-end value of unexercised options for each of the named executive
officers.
AGGREGATED OPTION EXERCISES IN FISCAL 1994
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END /4/
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ---------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James T. Hudson -- -- 34,285/1/ 9,000/1/ $534,879 $136,710
Michael T. Hudson -- -- 34,285/1/ 9,000/1/ 534,879 136,710
Charles B. Jurgensmeyer -- -- 34,285/1/ 9,000/1/ 534,879 136,710
Donard W. Perkins -- -- 26,285/2/ 3,000/2/ 411,619 45,570
James R. Hudson 31,485 $404,726 2,800/3/ 9,000/3/ 43,750 136,710
</TABLE>
- -------------------
/1/ Messrs. James T. Hudson, Michael T. Hudson and Charles B. Jurgensmeyer's
options consist of the following:
- 14,285 shares granted on April 28, 1988, at $7.00 per share, expiring
April 28, 1998, of which 14,285 shares are exercisable.
- 14,000 shares granted on October 1, 1990, at $7.125 per share, expiring
October 1, 1995, of which 14,000 shares are exercisable.
- 15,000 shares granted on October 5, 1992, at $7.56 per share, expiring
October 5, 1997, of which 6,000 shares are exercisable.
12
<PAGE>
/2/ Mr. Donard W. Perkins' options consist of the following:
- 14,285 shares granted on April 28, 1988, at $7.00 per share, expiring
April 28, 1998, of which 14,285 shares are exercisable.
- 10,000 shares granted on October 1, 1990, at $7.125 per share,
expiring October 1, 1995, of which 10,000 shares are exercisable.
- 5,000 shares granted on October 5, 1992, at $7.56 per share, expiring
October 5, 1997, of which 2,000 shares are exercisable.
/3/ Mr. James R. Hudson's options consist of the following:
- 2,800 shares granted on October 1, 1990, at $7.125 per share,
expiring October 1, 1995, of which 2,800 shares are exercisable.
- 9,000 shares granted on October 5, 1992, at $7.56 per share, expiring
October 5, 1997, of which no shares are exercisable.
/4/ Amounts represent the excess of the market value over the exercise price
as of October 1, 1994.
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total returns
for the Company, the Standard & Poor's 500 Stock Index ("S&P 500") and an index
of peer companies selected by the Company (the "Peer Group").
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG HUDSON FOODS INC., S&P 500 INDEX AND PEER GROUP INDEX
<CAPTION>
Hudson
Measurement period Foods S&P 500 Peer Group
(Fiscal Year Covered) Inc. Index Index
- --------------------- -------- -------- ----------
<S> <C> <C> <C>
Base period 9/89 $100.00 $100.00 $100.00
9/90 $ 52.86 $ 90.76 $ 69.88
9/91 $ 55.41 $119.04 $ 77.36
9/92 $ 57.19 $132.20 $ 85.20
9/93 $ 80.16 $149.39 $107.99
9/94 $170.97 $154.89 $128.20
</TABLE>
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<PAGE>
The total cumulative return on investment (change in the year end stock price
plus reinvested dividends) for each of the periods for the Company, the Peer
Group and the S&P 500 is based on the stock price or composite index at the end
of fiscal 1989.
The above graph compares the performance of the Company with that of the S&P
500, and the Peer Group with the investment weighted on market capitalization.
The Peer Group consists of WLR Foods, Inc., Pilgrim's Pride Corporation,
Sanderson Farms, Inc., Golden Poultry Company, Inc. and Cagle's, Inc. These
companies were approved by the Compensation Committee.
CERTAIN TRANSACTIONS
The Company has entered into grower contracts involving poultry farms owned by
certain of its officers and directors. The contracts provide for the placement
of Company-owned flocks on the farms during the grow-out phase of production.
The contracts are identical to those entered into by the Company with nonrelated
parties and are terminable at any time by the Company. The ownership of the
farms and the aggregate amounts paid by the Company under the grower contracts
during fiscal 1994 are as follows: James T. Hudson (2 farms), $202,000; H&G
Farms (50 percent owned by James T. Hudson), $160,000; Michael T. Hudson (1
farm), $74,000; Charles B. Jurgensmeyer (1 farm), $52,000; James R. Hudson and
Larry E. Helmich (1 farm, joint ownership), $97,000; and Elmer W. Shannon (1
farm), $104,000.
Larry E. Helmich has been an employee of the Company since 1979. For fiscal
1994, Mr. Helmich received salary and bonus totaling $385,000. Mr. Helmich
served as a member of the Board of Directors from July 1985 until December 1985,
and continues to serve as the General Manager of the Noel Complex in Noel,
Missouri. Mr. Helmich is the husband of Jane M. Helmich, the son-in-law of
James T. Hudson and the brother-in-law of Michael T. Hudson and James R. Hudson.
James T. Hudson was a party to other certain transactions with the Company
during fiscal 1994. See "Executive Compensation Committee Interlocks and
Insider Participation."
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. Such persons are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1994, or written representations from certain reporting
persons, the Company believes that all directors, officers and persons who own
more than 10 percent of a registered class of the Company's equity securities
have complied in a timely fashion with their reporting obligations under Section
16(a) for fiscal 1994.
14
<PAGE>
AUDITORS TO BE PRESENT
The Company employs Coopers & Lybrand L.L.P. of Tulsa, Oklahoma as its
principal independent public accountants. A representative of Coopers & Lybrand
is expected to attend the Annual Meeting and will have the opportunity to make a
statement. The representative will also be available to respond to appropriate
questions.
VOTING PROCEDURES
Nominees for the Board of Directors of the Company will be elected by a
plurality of the votes of shares of all classes of common stock present in
person or represented by proxy at the Annual Meeting. Stockholder votes cast by
proxy or in person at the Annual Meeting will be tabulated by the Company's
transfer agent, Chemical Trust Company of California in Los Angeles, and the
results will be announced by the transfer agent at the Annual Meeting.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders to be held on February 9, 1996 must be received by the Company on
or before September 6, 1995, in order to be eligible for inclusion in the
Company's proxy statement and form of proxy. To be so included, a proposal must
also comply with all applicable provisions of Regulation 14A under the
Securities Exchange Act of 1934.
The Company's By-Laws require that for business to be properly brought before
the Annual Meeting by a stockholder, the Company's Secretary must receive a
written proposal for the consideration of such business at least 120 days prior
to the scheduled meeting date. Any stockholder who wishes to bring business
before an Annual Meeting should contact the Company for additional information
as to the procedures to be followed.
ADDITIONAL INFORMATION AVAILABLE
UPON WRITTEN REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL FURNISH A COPY OF
THE COMPANY'S 1994 ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO. THE WRITTEN REQUEST SHOULD BE SENT TO THE SECRETARY, AT THE
COMPANY'S EXECUTIVE OFFICE. THE WRITTEN REQUEST MUST STATE THAT AS OF DECEMBER
13, 1994, THE PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER OF COMMON STOCK
OF THE COMPANY.
15
<PAGE>
OTHER MATTERS
So far as now known, there is no business other than that described above to
be presented to the stockholders for action at the Annual Meeting. Should other
business come before the meeting, votes may be cast pursuant to proxies in
respect to any such business in the best judgment of the persons acting under
the proxies.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN, DATE
AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES
NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Tommy D. Reynolds
Secretary
January 5, 1995
16
<PAGE>
HUDSON FOODS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 10, 1995
The undersigned hereby constitute(s) and appoint(s) James T. Hudson and
Charles B. Jurgensmeyer as Proxies, each with the power to appoint his
substitute, and hereby authorizes the Proxies, or either of them, to represent
and vote as designated on the reverse side all of the shares of common stock of
Hudson Foods, Inc. held of record by the undersigned on December 13, 1994, at
the Annual Meeting of Stockholders to be held on February 10, 1995, and any
adjournment thereof.
PLEASE SEE REVERSE SIDE
[Reverse of Proxy Card]
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
_______________
COMMON
1. ELECTION OF DIRECTORS Nominees: James T. Hudson; Michael T.
Hudson; Charles B. Jurgensmeyer;
FOR WITHHOLD Elmer W. Shannon; Jerry L. Hitt;
all AUTHORITY Kenneth N. May; James R. Hudson; and
Nominees for all Nominees Jane M. Helmich.
To withhold authority to vote for any
[_] [_] individual Nominee, write that
Nominee's name on the line below.
______________________________________
Please mark, sign, date and promptly
return this proxy card in the
2. IN THEIR DISCRETION on any other enclosed envelope. Please sign
matter which may properly come exactly as your name(s) appear(s) on
before the meeting, including any your stock certificate(s). When
adjournment thereof. shares are held by joint tenants,
both should sign. When signing as
FOR AGAINST ABSTAIN attorney, executor, administrator,
trustee, or guardian, please give
[_] [_] [_] full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized person.
Dated:__________________________, 1995
______________________________________
Signature
______________________________________
Signature if held jointly
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
