<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 240.14a-11(c) or 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
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: N/A
-------------------------------------------------------------------
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:* N/A
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
-------------------------------------------------------------------
* 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
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
===============================================================================
<PAGE>
HUDSON FOODS, INC.
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 9, 1996
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 9, 1996, 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 meeting or any adjournment thereof.
Record Date
Only stockholders of record at the close of business on December 13,
1995, will be entitled to vote at the Annual Meeting and any adjournment
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
December 20, 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 9, 1996 AND 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 9, 1996, at
10:00 A.M., local time, and any adjournment 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 December 28, 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, 1995. The outstanding stock of the Company as of
December 13, 1995, totaled 20,470,573 shares of Class A common stock and
9,602,672 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.
<PAGE>
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.
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
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.
<PAGE>
<TABLE>
<CAPTION>
Name Age Experience
- ---------------------- ----- -------------------------------------------------
<S> <C> <C>
James T. Hudson 71 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 48 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 52 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 74 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.
Jerry L. Hitt 49 Physician. Engaged in family practice at Rogers
Medical Center, Rogers, Arkansas since 1971.
Director since November 1989.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name Age Experience
- ---------------------- ----- -------------------------------------------------
<S> <C> <C>
Kenneth N. May 65 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 37 Vice President-Director of Transportation 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 44 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 1995. Each
director was present for at least 75 percent of such meetings and the
meetings held by all committees of the board on which he or she served.
The Company pays outside directors an annual fee of $10,000 and $500
plus expenses for each meeting attended.
<PAGE>
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 Exchange or as may be specifically assigned from time
to time by the Board. The Audit Committee held two meetings during
fiscal 1995.
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 1995.
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 1, 1995, 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)/
--------------------------------------------------------
Number of Percent of
Shares Owned Class Owned
Name Beneficially Beneficially
- --------------------------------------------------------------------------------
<S> <C> <C>
James T. Hudson 9,042,028/(2)(3)(8)/ 32.2%
Michael T. Hudson 789,878/(3)(5)(8)/ 3.7
Charles B. Jurgensmeyer 736,716/(3)/ 3.6
Elmer W. Shannon 47,443/(3)/ *
Jerry L. Hitt 26,175/(3)/ *
Kenneth N. May 28,805/(3)/ *
James R. Hudson 604,500/(3)(6)(8)/ 2.9
Jane M. Helmich 655,825/(3)(6)(7)(8)/ 3.1
Donard W. Perkins 59,351/(3)/ *
All directors and officers
as a group (12 persons) 11,587,881 38.4
- --------------------------------------------------------------------------------
<PAGE>
CLASS B STOCK/(1)/
- -----------------------------------
Number of Percent of
Shares Owned Class Owned
Beneficially Beneficially
- -----------------------------------
<C> <C>
9,600,000/(4)/ 99.9%
750,000 7.8
-- --
-- --
-- --
-- --
600,000 6.3
600,000 6.3
-- --
9,600,000 99.9
- -----------------------------------
</TABLE>
* Less than 1 percent of the outstanding shares of the Company's Class A
common stock.
FOOTNOTES TO PRINCIPAL STOCKHOLDERS' TABLE
/(1)/ Calculated based on 20,470,573 shares of Class A common stock
outstanding and 9,602,672 shares of Class B common stock outstanding as
of December 1, 1995. 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 the 60 days following December 1, 1995,
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. All amounts
reflect a three-for-two stock split effected March 27, 1995 for
stockholders of record as of February 28, 1995.
/(2)/ James T. Hudson holds 56,028 shares of Class A common stock in
his own name. He has rights under revocable proxies to vote 1,330,000
shares of Class A common stock, which are held in blocks of 650,000 by
Charles B. Jurgensmeyer and 680,000 by a third party no longer
affiliated with the Company. Mr. Hudson's wife holds 1,500 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 1,331,500 shares of Class A common stock. Mr. Hudson has
disclaimed beneficial ownership of those shares. Mr. Hudson also holds
a total of 7,650,000 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.
<PAGE>
/(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, 4,500; Michael T.
Hudson, 39,428; Charles B. Jurgensmeyer, 39,428; Elmer W. Shannon,
6,000; Jerry L. Hitt, 13,500; Kenneth N. May, 6,000; James R. Hudson,
4,500; Jane M. Helmich, 39,428 (through the exercise of options held by
her husband, Larry E. Helmich); and Donard W. Perkins, 1,500.
/(4)/ James T. Hudson holds 7,650,000 shares of Class B common stock
in his own name. In addition, Mr. Hudson has rights under revocable
proxies to vote another 1,950,000 shares, which are held in blocks of
600,000 each by James R. Hudson and Jane M. Helmich, and 750,000 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 450 shares of Class A common stock
jointly with his children. In addition, Mr. Hudson holds 750,000 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 600,000 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)/ Jane M. Helmich holds 450 shares of Class A common stock as
custodian for a minor child, and Ms. Helmich's husband holds 15,947
shares of Class A common stock in his own name. Because of the
custodianship and Mr. Helmich's stock ownership, Ms. Helmich is
considered beneficially to own 16,397 shares of Class A common stock.
/(8)/ 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, Tommy D. Reynolds, and Norbert E. Woodhams
currently 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."
<PAGE>
Donard W. Perkins, age 64, 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.
Tommy D. Reynolds, age 42, has served as Secretary and Treasurer
since October 1992, and previously served as Assistant Secretary and
Assistant Treasurer beginning in 1986. He has been employed by the
Company since May 1979 in various accounting, auditing and finance
positions. Mr. Reynolds is a certified public accountant in the state
of Arkansas.
Joe E. Campbell, age 65, served as Vice President--Director of
Acquisitions from October 1994 until retiring at the end of fiscal 1995,
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.
Norbert E. Woodhams, age 49, has served as President of the
Specialty Foods Division since the Division's inception in August 1995,
and served as President of the Pierre Frozen Foods Division from March
1994 until August 1995. Prior to joining the Company, he was Group Vice
President of Tyson Foods Inc., Red Meat Division, from 1991 to March
1994 and President and Chief Executive Officer of Henry House, a
division of Holly Farms, Inc., from 1987 to 1991.
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") was
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.
<PAGE>
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 1995.
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, percentage
capitalization through long-term debt, and the Company's current 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.
<PAGE>
FISCAL 1995 COMPENSATION
For fiscal 1995, 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 keeping long-term obligations less than 50 percent of
total capitalization, defined as long-term obligations plus
stockholders' equity. 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 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 1995, the Company achieved sales growth of 15.3
percent over the prior year, a net margin of 3.0 percent, and a return
of 13.9 percent on average stockholders' equity. At year-end, the
Company's current ratio was 2.55 to 1 and long-term obligations
accounted for 29.9 percent of total capitalization. For the five-year
period ended with fiscal 1995, the Company achieved an average compound
annual sales growth of 12.5 percent, an average net margin of 1.7
percent, and an average return on average stockholders' equity of 9.3
percent. Fiscal 1995 performance achieved all but one stated goal for
the year, while drawing the Company closer to its five-year average
goals.
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.
<PAGE>
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 1995 adequately reflect the Company's compensation
goals and policies.
James T. Hudson - Chairman
Michael T. Hudson
Charles B. Jurgensmeyer
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 non-related 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 1995 are as follows:
James T. Hudson (2 farms), $233,000; H&G Farms (50 percent owned by
James T. Hudson), $198,000; Michael T. Hudson (1 farm), $130,000; and
Charles B. Jurgensmeyer (1 farm), $62,000.
<PAGE>
During fiscal 1995, James T. Hudson owned and leased aircraft to the
Company at monthly rates ranging from $80,000 to $90,000 or at the rate
of $500 per 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 $1,708,000 in fiscal 1995.
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 1995 was $219,000. At September 30,
1995, these advances totaled $216,000. Additionally, the Company
advances premium payments on a life insurance policy covering Mr.
Hudson. These premiums will be repaid from the policy proceeds. At
September 30, 1995, such premium payment advances totaled $6,084,000.
<PAGE>
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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name and Fiscal
Principal Position Year Annual Compensation
- --------------------------------------------------------------------------------
Other Annual
Salary Bonus Compensation
------------------------------------
<S> <C> <C> <C> <C>
James T. Hudson 1995 $500,000 $ 700,000 $24,432
Chief Executive Officer and 1994 475,000 1,200,000 36,704
Chairman of the Board 1993 450,000 400,000 47,184
Michael T. Hudson 1995 400,000 525,000 24,240
President and Chief 1994 350,000 500,000 42,738
Operating Officer 1993 325,000 350,000 25,536
Charles B. Jurgensmeyer 1995 350,000 425,000 7,884
Chief Financial Officer and 1994 300,000 400,000 2,610
Executive Vice President 1993 275,000 300,000 10,716
Donard W. Perkins 1995 189,000 325,836 --
Vice President - Director 1994 180,000 334,800 --
of Broiler Division 1993 170,000 185,640 --
James R. Hudson 1995 175,000 250,000 5,688
Vice President - Director 1994 168,000 250,000 --
of Transportation 1993 160,000 200,000 --
<PAGE>
Long-Term All Other
Compensation Compensation/(1)/
- -----------------------------------
Options(#)
- -----------------------------------
<C> <C>
-- $96,255
-- 75,204
15,000 68,934
-- 2,100
-- 1,900
15,000 1,740
-- 40,799
-- 28,010
15,000 19,780
-- 23,436
-- 13,725
5,000 10,825
-- --
-- --
15,000 --
</TABLE>
/(1)/ Includes the following items of compensation:
(a) Company's contribution to the named individual's deferred
compensation account in the following amounts: Charles B.
Jurgensmeyer, $13,319 (fiscal 1995), $6,000 (fiscal 1994),
$5,500 (fiscal 1993); and Donard W. Perkins, $10,476 (fiscal
1995), $3,600 (fiscal 1994), $3,400 (fiscal 1993).
(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, $96,255 (fiscal
1995), $75,204 (fiscal 1994), $68,934 (fiscal 1993); Michael
T. Hudson, $2,100 (fiscal 1995), $1,900 (fiscal 1994),
$1,740 (fiscal 1993); and Charles B. Jurgensmeyer, $5,910
(fiscal 1995), $5,510 (fiscal 1994), $2,280 (fiscal 1993).
(c) Company's matching contribution to the named individual
under the Company's Employee Stock Purchase Plan in the
following amounts: Charles B. Jurgensmeyer, $21,570 (fiscal
1995), $16,500 (fiscal 1994), $12,000 (fiscal 1993); and
Donard W. Perkins, $12,960 (fiscal 1995), $10,125 (fiscal
1994), $7,425 (fiscal 1993).
<PAGE>
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. Participants
may contribute up to 15 percent of their gross pay, excluding bonuses,
to the Retirement Plan. The Company will match 50 percent of the first
4 percent of each participant's contribution. The assets are invested
under the terms of a trust administered by Wells Fargo Bank of San
Francisco, California. The Company made no matching contributions for
executive officers in fiscal 1995. Contributions for all employees
(excluding executive officers) were $1,219,000 in fiscal 1995,
$1,070,000 in fiscal 1994, and $848,000 in fiscal 1993.
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 may contribute
up to 15 percent of their gross pay, including bonuses, to the Executive
Salary Deferral Plan. 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 $33,000 in fiscal 1995, $19,000 in fiscal 1994, and
$15,000 in fiscal 1993. Contributions for all employees (excluding
executive officers) were $141,000 in fiscal 1995, $79,000 in fiscal
1994, and $55,000 in fiscal 1993.
SALARY CONTINUATION PLAN. The Company has entered into agreements
with 32 past or present 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.
<PAGE>
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 for the amount 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 for purchases.
The Purchase Plan was adopted in July 1990, became effective on the
first 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 10,300 employees eligible to participate in the
Purchase Plan, 1,024 were participants as of the last day of fiscal
1995. The Company's contributions for all executive officers as a group
(8 persons) were $56,000 in fiscal 1995, $49,000 in fiscal 1994, and
$36,000 in fiscal 1993. The Company's aggregate matching contributions
for all employees (excluding executive officers) were $538,000 in fiscal
1995, $366,000 in fiscal 1994, and $254,000 in fiscal 1993.
STOCK OPTION PLAN. The Company's Second Amended and Restated 1985
Stock Option Plan (the "Option Plan") has reserved 1,800,000 and 450,000
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
1995.
During fiscal 1995, 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 1995.
<PAGE>
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 1995
AND FISCAL YEAR-END OPTION VALUES/(1)/
<TABLE>
<CAPTION>
Options at
Fiscal Year End(#)
- --------------------------------------------------------------------------------
Shares Acquired Value
Name on Exercise (#) Realized Exercisable Unexercisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James T. Hudson 55,928 $748,037 -- 9,000/(4)/
Micheal T. Hudson 21,000 292,698 34,928/(2)/ 9,000/(2)/
Charles B. Jurgensmeyer 21,000 292,698 34,928/(2)/ 9,000/(2)/
Donard W. Perkins 40,928 677,890 -- 3,000/(3)/
James R. Hudson 8,700 153,338 -- 9,000/(4)/
Value of Unexercised In-the-Money
Options at Fiscal Year End/(5)/
- ------------------------------------
Exercisable Unexercisable
- ------------------------------------
<C> <C>
$ -- $79,515
316,590 79,515
316,590 79,515
-- 26,505
-- 79,515
</TABLE>
/(1)/ Reflects a three-for-two stock split effected March 27, 1995 for
stockholders of record as of February 28, 1995.
/(2)/ Messrs. Michael T. Hudson and Charles B. Jurgensmeyer's options
consist of the following:
- 21,428 shares granted on April 28, 1988, at $4.667 per share,
expiring April 28, 1998, of which 21,428 shares are exercisable.
- 22,500 shares granted on October 5, 1992, at $5.04 per share,
expiring October 5, 1997, of which 13,500 shares are exercisable.
/(3)/ Mr. Donard W. Perkins' options consist of the following:
- 3,000 shares granted on October 5, 1992, at $5.04 per share,
expiring October 5, 1997, of which no shares are exercisable.
<PAGE>
/(4)/ Messrs. James T. Hudson and James R. Hudson's options consist of
the following:
- 9,000 shares granted on October 5, 1992, at $5.04 per share,
expiring October 5, 1997, of which no shares are exercisable.
/(5)/ Amounts represent the excess of the market value over the
exercise price as of September 30, 1995.
COMPANY PERFORMANCE
The following graph presents 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").
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
AMONG HUDSON FOODS INC., S & P 500 INDEX, AND PEER GROUP INDEX
<TABLE>
<CAPTION>
Hudson
Measurement Period Foods S & P 500 Peer Group
(Fiscal Year Covered) Inc. Index Index
- --------------------------------------------------------------------
<S> <C> <C> <C>
Base Period 9/90 $100.00 $100.00 $100.00
9/91 104.81 131.17 110.70
9/92 108.19 145.66 121.92
9/93 151.64 164.60 154.53
9/94 323.43 170.67 183.45
9/95 297.43 221.43 166.80
</TABLE>
The cumulative total return on investment (change in the year end
stock price plus reinvested dividends) for each period is based on an
assumed initial investment of $100 in stock or the composite index at
the end of fiscal 1990.
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.
<PAGE>
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 non-related 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 1995 are as follows: James T. Hudson (2 farms), $233,000; H&G
Farms (50 percent owned by James T. Hudson), $198,000; Michael T. Hudson
(1 farm), $130,000; Charles B. Jurgensmeyer (1 farm), $62,000; James R.
Hudson and Larry E. Helmich (1 farm, joint ownership), $93,000; and
Elmer W. Shannon (1 farm), $87,000.
Larry E. Helmich has been an employee of the Company since 1979.
For fiscal 1995, Mr. Helmich received salary and bonus totaling
$425,000. 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 1995. 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 1995, 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), except that during fiscal
1995, reports on Form 4 were filed late by Messrs. J.T. Hudson, J.R.
Hudson, Hitt, Shannon and Ms. Helmich.
<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 Mellon
Shareholder Services of Los Angeles, California, 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 14, 1997 must be received
by the Company on or before August 23, 1996, 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.
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
December 20, 1995
<PAGE>
HUDSON FOODS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 9, 1996
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, 1995, at the Annual Meeting of Stockholders to be held
on February 9, 1996, and any adjournment thereof.
PLEASE SEE REVERSE SIDE
[Reverse of Proxy Card]
This proxy, when properly executed, will be voted Please mark
in the manner directed herein by the undersigned. your votes as
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED indicated in
FOR PROPOSALS 1 AND 2. this example [X]
1. ELECTION OF DIRECTORS Nominees: James T. Hudson; Michael T.
Hudson; Charles B. Jurgemsmeyer; Elmer W.
FOR WITHHOLD Shannon; Jerry L. Hitt; Kenneth N. May;
all AUTHORITY James R. Hudson; and Jane M Helmich.
Nominees for all Nominees
[_] [_] 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 enclosed envelope.
2. IN THEIR DISCRETION on any Please sign exactly as your name(s)
other matter which may properly appear(s) on your stock certificate(s).
come before the meeting, When shares are held by joint tenants, both
including any adjournment thereof. should sign. When signing as attorney,
executor, administrator, trustee, or
FOR AGAINST ABSTAIN 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:_______________________________, 1996
___________________________________________
Signature
___________________________________________
Signature if held jointly
