[GRAPHIC OMITTED]
PIONEER HI-BRED INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held
February 27, 1996
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of the Shareholders of
Pioneer Hi-Bred International, Inc. to be held at its Carver Center located at
7000 Pioneer Parkway, Johnston, Iowa, 50131 on Tuesday, February 27, 1996, at
2:00 P.M., Central Standard Time, for the following purposes:
1. To elect four (4) Directors.
2. To approve the Pioneer Hi-Bred International, Inc. Management Reward
Program - Performance-Based.
3. To approve the Pioneer Hi-Bred International, Inc. Restricted Stock Plan -
Performance-Based.
4. To approve the Pioneer Hi-Bred International, Inc. Stock Option Plan.
5. To amend the Articles of Incorporation to remove Article VII regarding
indemnification.
6. To ratify and approve the form of indemnification agreement to be entered
into between the Company and its Directors and Officers and approve and
authorize substantially similar agreements to be entered into in the future.
7. To ratify the appointment of KPMG Peat Marwick LLP as independent auditors.
8. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this notice.
The close of business on December 29, 1995, has been fixed as the record date
for determining the shareholders entitled to notice of, and to vote at, this
meeting. Such shareholders may vote in person or by Proxy. The stock transfer
books will not be closed.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE DATE, SIGN, AND RETURN PROMPTLY
THE ACCOMPANYING PROXY, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THANK YOU IN ADVANCE FOR YOUR COOPERATION.
BY ORDER OF THE BOARD OF DIRECTORS
Jerry L. Chicoine, Secretary
January 12, 1996
<PAGE>
PIONEER HI-BRED INTERNATIONAL, INC.
700 Capital Square, 400 Locust Street
Des Moines, Iowa 50309
(515) 248-4800
Corporate Headquarters
P R O X Y S T A T E M E N T
The enclosed Proxy is being solicited by the Board of Directors of Pioneer
Hi-Bred International, Inc. (the "Company") in connection with the Annual
Meeting of Shareholders to be held on February 27, 1996, or at any adjournment
or adjournments thereof. To assure adequate representation at the Annual
Meeting, shareholders are requested to promptly sign and return the enclosed
Proxy. The Proxy Statement and Proxy are first being mailed to shareholders on
or about January 12, 1996.
RECORD DATE; VOTING OF SHARES
Only shareholders of record at the close of business on December 29, 1995, will
be entitled to vote at the Annual Meeting.
As of the close of business on December 15, 1995, there were 83,486,729 shares
of Common Stock outstanding. The exact number of votes which the holders of the
outstanding shares as of close of business on December 29, 1995 will be entitled
to cast at the 1996 Annual Meeting cannot be determined at the date of this
Proxy Statement because a shareholder has until February 22, 1996 to establish
(in accordance with the procedures set out in Exhibit A) that the Shareholder is
entitled to more votes than indicated on the Shareholder's Proxy. In summary,
each share beneficially owned continuously by the same person since December 29,
1992 will be entitled to five (5) votes per share and all other shares are
entitled to one (1) vote per share. Exhibit A to this Proxy Statement outlines
the procedures for determining when changes in beneficial ownership are deemed
to occur.
Proxies furnished by shareholders pursuant hereto will be voted in accordance
with the directions on such Proxies. If no choice is specified, the Proxy will
be voted (i) for the election of the nominees listed under "Election of
Directors"; (ii) for approval of the Pioneer Hi-Bred International, Inc.
Management Reward Program - Performance-Based; (iii) for approval of the Pioneer
Hi-Bred International, Inc. Restricted Stock Plan - Performance-Based; (iv) for
approval of the Pioneer Hi-Bred International, Inc. Stock Option Plan; (v) for
the amendment of the Articles of Incorporation to remove Article VII regarding
indemnification; (vi) for ratification and approval of the form indemnification
agreement to be entered into between the Company and its Directors and Officers
and approval and authorization of substantially similar agreements to be entered
into in the future; (vii) for ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors; and (vii) at the discretion of the Proxy
holders with regard to such other business as may come before the meeting. If
for any reason, oneor more of the nominees should be unable or refuse to serve
as a Director (an event which is not anticipated), the person named in the
enclosed Proxy will vote for substitute nominees of the Board of Directors
unless otherwise instructed. The Board of Directors knows of no matters to come
before the meeting other than those set forth in the Proxy Statement. If any
further business is presented to the meeting, the persons named in the Proxy
will act on behalf of the shareholders they represent according to their best
judgment.
Abstentions and broker nonvotes are treated as present and entitled to vote for
purposes of determining the presence of a quorum. Abstentions and broker
nonvotes are not counted for purposes of determining the election of Directors,
ratification of auditors, approval of the Management Reward Program -
Performance-Based, and ratification and approval of the form of indemnification
agreement to be entered into between the Company and its Directors and Officers
and approval and authorization of substantially similar agreements to be entered
into in the future. Abstentions are counted in determining the shares present at
the Annual Meeting and broker nonvotes are not counted in determining the shares
present at the meeting for approval of the Pioneer Hi-Bred International, Inc.
Restricted Stock Plan, Performance-Based, and approval of the Pioneer Hi-Bred
International, Inc. Stock Option Plan. In such case, abstentions have the effect
of a vote against a proposal and broker nonvotes have no effect on the approval
of a proposal. Abstentions and broker nonvotes are counted for the purpose of
determining the votes entitled to be cast on the proposal to amend the Articles
of Incorporation to remove Article VII regarding indemnification and thus have
the effect of a vote against the proposal.
REVOCABILITY; COSTS
Any shareholder giving a Proxy has the power to revoke it at any time before it
is voted. Revocation of a Proxy is effective upon receipt by the Secretary of
the Company of either (i) an instrument revoking it, or (ii) a duly executed
Proxy bearing a later date. In addition, a shareholder who is present at the
Annual Meeting may revoke the shareholder's Proxy and vote in person if the
shareholder so desires.
The cost of the solicitation of Proxies will be borne by the Company. Proxies
may be solicited personally, by telephone, or by Fax by a few regular employees
of the Company. The Company will reimburse brokers and other persons holding
stock in their names, or in the names of nominees, for their expenses in sending
Proxy material to principals and obtaining their Proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide for the classification of
the Board of Directors into three (3) classes with the Directors of each class
being elected for a term of three (3) years. The terms of the Directors
currently serving in Class I and Class III, extend to the Annual Meetings of
Shareholders in 1998 and 1997, respectively, and until a successor is elected
and qualified. At the Annual Meeting of Shareholders on February 27, 1996, four
(4) Class II Directors are to be elected to serve until the Annual Meeting of
Shareholders in 1999, and until their successors are elected and qualified. A
"For" vote by a majority of votes cast is required for election of the nominee.
Following is (i) a list of a nominees, and (ii) a list of other Directors
currently serving in Classes I and Class III.
The Board of Directors unanimously recommends a vote of "FOR" the election of
each of the nominees.
<TABLE>
<CAPTION>
Information Concerning Nominees
<S> <C> <C> <C>
Age at Director
Name 10/21/95 Since Background
Class II--Term Will Expire in 1999
Dr. Ray A. Goldberg.............. 69 1983 Since July, 1970, Dr. Goldberg has been Moffett
Professor of Agriculture and Business, Harvard
University Graduate School of Business
Administration. Dr. Goldberg is a Director of Archer
Daniels Midland, Inc., Decatur, Illinois (a corn,
soybean, and wheat processor), and Vigoro, Inc.,
Chicago, Illinois (a fertilizer company).
Dr. F. Warren McFarlan........... 58 1987 Dr. McFarlan has been the Ross Graham Walker
Professor of Business Administration, Harvard
University Graduate School of Business Administration
and tenured since 1973. Dr. McFarlan is a Director
of Providian Corporation, Louisville, Kentucky (an
insurance company), and Computer Sciences
Corporation, Los Angeles, California (a computer
system integration company).
Dr. Owen J. Newlin............... 67 1967 From 1978 to 1993, Dr. Newlin served in an executive
position with the Company. Dr. Newlin retired as
Senior Vice President of the Company in April, 1993.
Dr. Newlin is a Director of Boatman's Bank, Iowa,
N.A. and Central Iowa Health System (a non-profit
hospital), each of Des Moines, Iowa.
Thomas N. Urban.................. 61 1973 Mr. Urban is currently Chairman of the Board of the
Company. Between 1984 and March, 1995, Mr. Urban
served as President. Mr. Urban served as Chief
Executive Officer from March, 1995 to August, 1995.
As of August, 1995, Mr. Urban is a Senior Lecturer at
Harvard Graduate School of Business. Mr. Urban is
also a Director of Equitable of Iowa Companies, Des
Moines, Iowa (a life insurance and annuities
company), Sigma Aldrich Corporation, St. Louis,
Missouri (a research chemicals company), and the Case
Corporation, Racine, Wisconsin (a construction and
agricultural equipment company).
Information Concerning Directors Continuing in Office
Age at Director
Name 10/21/95 Since Background
Class I -- Term Expires in 1998
Dr. Pedro M. Cuatrecasas......... 59 1991 Since 1989, Dr. Cuatrecasas has served as Vice
President of Warner-Lambert Company, Morris Plains,
New Jersey (a pharmaceutical company), and as
President of its Pharmaceutical Research Division in
Ann Arbor, Michigan.
Fred S. Hubbell.................. 44 1990 Since April, 1993, Mr. Hubbell has served as Chairman
of Equitable of Iowa Companies, Des Moines, Iowa (a
life insurance and annuities company). Mr. Hubbell
has held the position of Chief Executive Officer
since April, 1989, and President since May, 1987, of
Equitable of Iowa Companies. Mr. Hubbell is a
Director of Equitable of Iowa Companies and The
Macerich Company, Santa Monica, California (a
shopping center REIT).
Charles S. Johnson............... 57 1981 Mr. Johnson is currently President and Chief
Executive Officer of the Company effective September,
1995. Mr. Johnson previously was President and Chief
Operating Officer effective March, 1995. Mr. Johnson
was Executive Vice President from March, 1993 to
March, 1995. Since 1973, Mr. Johnson has served in
an executive position with the Company. Mr. Johnson
is also a Director of Boatman's Bank, N.A., Des
Moines, Iowa and Principal Mutual Life Insurance
Companies, each of Des Moines, Iowa.
H. Scott Wallace................. 44 1988 Since 1992, Mr. Wallace has been a criminal justice
and government relations consultant, primarily as
Special Counsel for the National Legal Aid and
Defender Association (a nonprofit educational
association of lawyers). From 1985 to 1992, Mr.
Wallace was Legislative Director, National
Association of Criminal Defense Lawyers, Washington,
D.C.
Herman H.F. Wijffels............. 53 1990 Since 1986, Mr. Wijffels has been Chairman of the
Executive Board of Rabobank Nederland, The
Netherlands (a cooperative banking organization doing
business internationally).
<PAGE>
Age at Director
Name 10/21/95 Since Background
Class III--Term Expires in 1997
Nancy Y. Bekavac................. 48 1994 Since July, 1990, Ms. Bekavac has been President of
Scripps College, Claremont, California. From 1988
through 1990, Ms. Bekavac served as Counselor to the
President, Dartmouth College, Hanover, New
Hampshire. Ms. Bekavac is also a Director of Electro
Rent Corp., Van Nuys, California (a computer and
electronic test and measurement equipment leasing
company) and of Price Enterprises, Inc. of San Diego,
California (a real estate and marketing company).
C. Robert Brenton................ 65 1973 Since 1990, Mr. Brenton has been Chairman of the
Board of Brenton Banks, Inc., and is currently a
Director of Brenton Banks, Inc., Des Moines, Iowa.
Mr. Brenton also served as President of Brenton
Banks, Inc. from 1969 to 1990.
Luiz Kaufmann.................... 50 1994 Since November, 1993, Mr. Kaufmann has been the
President and CEO of Aracruz Celulose S.A., Rio de
Janeiro, Brazil (a pulp producer). From November,
1990 through October, 1993, Mr. Kaufmann was the
Executive Vice President of Petropar S.A., Porto
Alegre, Brazil (an investment holding company), and
from January, 1985 through November, 1990 was the
Chief Executive Officer of Multiplic S.A., Rio de
Janeiro, Brazil (a financial holding company).
Dr. Virginia Walbot.............. 49 1985 Since 1989, Dr. Walbot has been a Professor at
Stanford University's Department of Biological
Sciences, Stanford, California.
Fred W. Weitz.................... 66 1978 Mr. Weitz is President of Essex Meadows, Inc., Des
Moines, Iowa (an operator of proprietary retirement
communities and owner of commercial real estate).
From 1964 to 1995, Mr. Weitz was the President of The
Weitz Corporation, Des Moines, Iowa (a building
construction and real estate development company).
Mr. Weitz is also a Director of Principal Mutual Life
Insurance Company and Wilian Holding Company (parent
company of Economy Forms Corp., a manufacturer of
concrete forms), each of Des Moines, Iowa.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Audit Committee, Compensation Committee, and
Nominating Committee.
The Audit Committee is composed of five (5) Directors: Herman H.F. Wijffels
(Chairman), C. Robert Brenton, Luiz Kaufmann, Dr. Owen Newlin, and Dr. Virginia
Walbot. This Committee has general oversight responsibility with respect to the
Company's financial reporting including making recommendations to the Board of
Directors as to the independent accountants of the Company, reviewing with
independent accountants the scope of their examination and other matters, and
reviewing generally the internal auditing procedures of the Company. The Audit
Committee meets as required and met three (3) times during fiscal 1995.
The Compensation Committee administers all executive compensation programs of
the Company. During Fiscal Year 1995, the committee was composed of three (3)
Directors: Fred S. Hubbell (Chairman), Dr. Pedro Cuatrecasas and Dr. Ray
Goldberg (he has resigned as a member of the Compensation Committee). The
Compensation Committee meets as required and met four (4) times during fiscal
1995.
The Nominating Committee is composed of five (5) Directors: Dr. F. Warren
McFarlan (Chairman), Thomas N. Urban, H. Scott Wallace, Nancy Y. Bekavac, and
Fred W. Weitz. This Committee establishes criteria for and presents the names of
the nominees for membership on the Board of Directors, including those nominees
recommended by shareholders, to the Board of Directors for approval. In
addition, it is the responsibility of this Committee to continue to search for
persons qualified to be members and to bring to the attention of the Chairman
and the Board of Directors any proposed nominees for further consideration and
action.
The Committee will consider nominees recommended by shareholders. Any such
recommendation should be sent to the Secretary of the Company in accordance with
the procedure set forth in the Company's Bylaws. Shareholders may nominate
candidates for the Board of Directors at an annual meeting of Shareholders, only
if prior written notice of such intention has been given to the Secretary of the
Company not later than 90 days prior to the anniversary date of the record date
set for the immediate preceding year's annual meeting of Shareholders and with
respect to election to be held at a special meeting of shareholders, only if
prior notice of such intention has been given to the Secretary of the Company
not later than the close of business on the tenth day following the date on
which notice of such meeting is first given to shareholders. Such notice shall
include (a) the name and address of the shareholder and nominee, (b) a
description of all arrangements or understandings between the shareholder,
nominee and other persons (naming such persons) regarding the nomination, (c)
the consent of the nominee to serve as a Director if elected, and (d) a
representation that the shareholder is the holder of record of Company stock and
intends to appear in person or by proxy to nominate the person specified in the
notice. In addition, the notice shall include such other information regarding
the nominee as would be required to be included in a Proxy Statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated by the Board of Directors.
The Nominating Committee is also responsible for reviewing management's
evaluation of any officers proposed for nomination to the Board of Directors,
and reviewing the qualifications of, and, when appropriate, interviewing
candidates who may be proposed for nomination to the Board of Directors,
including those nominees recommended by shareholders. The Nominating Committee
meets as required and met two (2) times during fiscal 1995.
The Board of Directors met four (4) times during fiscal 1995. All members
attended at least 75% of the total number of meetings of the Board of Directors
and of the Committees of the Board on which they serve, except for Nancy
Bekavac. Ms Bekavac attended 75% of the Board meetings but less than 75% of all
committee meetings.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the shares of Common Stock beneficially owned, at
November 22, 1995, by (i) each Director, (ii) each of the Named Executive
Officers as defined in "Compensation-Executive Compensation," (iii) all
Executive Officers and Directors as a group, and (iv) each person known by the
Company to own more than 5% of the Common Stock.
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Name Owned 1 Percent of Class 2
OVER 5% BENEFICIAL OWNERS:
<S> <C> <C>
Jean Wallace Douglas.................................. 7,555,995 3 9.05%
Robert B. Wallace..................................... 5,904,186 4 7.07%
OTHERS:
Nancy Y. Bekavac ...................................... 535 (*)
C. Robert Brenton ..................................... 1,098 (*)
Jerry L. Chicoine ..................................... 44,084 (*)
Pedro M. Cuatrecasas .................................. 606 (*)
Dr. Ray A. Goldberg ................................... 8,400 (*)
Fred S. Hubbell ....................................... 2,192 (*)
John D. James ......................................... 19,302 (*)
Charles S. Johnson .................................... 45,995 (*)
Luiz Kaufmann.......................................... 0 (*)
Dr. Richard L. McConnell............................... 25,682 (*)
Dr. F. Warren McFarlan ................................ 2,744 (*)
Dr. Owen J. Newlin .................................... 805,298 (*)
Thomas N. Urban ....................................... 403,495 5 (*)
Dr. Virginia Walbot ................................... 480 (*)
H. Scott Wallace ...................................... 676,281 (*)
Fred W. Weitz ......................................... 5,970 (*)
Herman H.F. Wijffels .................................. 0 (*)
All Executive Officers and Directors as a Group (33 persons)2,214,184 2.66%
<FN>
(*) The number of shares owned represents less than 1% of the outstanding stock.
1 Shares listed include Restricted Stock which have restrictions on transfer
for five (5) years after the date of grant. Unless otherwise indicated in
the notes, where applicable, each shareholder and/or the spouse of the
shareholder, have sole voting and investment power with respect to the
shares beneficially owned.
2 Based solely on the number of outstanding shares; does not take into
account disparities in voting rights which may arise due to the fact that
some shares are entitled to five (5) votes per share and some shares are
entitled to one (1) vote per share.
</FN>
<FN>
3 Includes 1,620,000 shares held by the Wallace Genetic Foundation, of
which Mrs. Douglas is President and one (1) of three (3) Directors. Such
shares are also included in the amount beneficially owned by Robert B.
Wallace. Mrs. Douglas' address is c/o W. Leslie Douglas, 725-15th
Street, N.W., Washington, D.C. 20005.
</FN>
<FN>
4 Includes 1,620,000 shares held by the Wallace Genetic Foundation, of which
Mr. Wallace is one (1) of three (3) Directors. Such shares are also
included in the amount beneficially owned by Jean Wallace Douglas. Mr.
Wallace's address is 1120-19th Street, Suite 550, Washington, D.C., 20036.
In March, 1995, the Company purchased 55,173 shares for $2,000,021.25 from
the Gordon Wallace Estate. Gordon Wallace is the former spouse of Mr.
Wallace. Mr. Wallace was a co-executor of the estate. The price paid was
equal to the closing price for the day on which the shares were purchased.
The repurchase was consistent with the Company's open market repurchases.
5 Includes 141,313 shares held by an estate of which Mr. Urban is executor
and 2,215 shares held by trusts of which Mr. Urban is a trustee, of which
he disclaims beneficial ownership.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
Set forth below are the names, ages, titles, and present and past positions of
the persons serving as Executive Officers of the Company.
<S> <C> <C> <C>
Age at Officer
Name 10/21/95 Since Background
Wayne L. Beck ................... 47 1993 Mr. Beck was elected to his present position as Vice
President, Supply Management, North American Seed
Division, effective March, 1993, and since 1988,
served as Director of North American Seed Division-
Production.
Carrol D. Bolen.................. 57 1983 Mr. Bolen was elected to his present position as Vice
President, effective January, 1983. Mr. Bolen served
as Director of the Company's Specialty Plant Products
Division from September, 1988 until 1994, when he was
appointed Director of Business Development. During
1995, Mr. Bolen was named to his current position as
Vice President, Legal and Government Affairs.
Dr. Anthony J. Cavalieri ........ 44 1995 Mr. Cavalieri was elected to his present position as
Vice President effective March, 1995, and serves as
Director of Trait and Technology Development. From
December, 1990 to January, 1994, Mr. Cavalieri was
Director, Technology Support and from January, 1994
to March, 1995, was Director, Trait and Technology
Development.
Jack A. Cavanah ................. 57 1991 Mr. Cavanah was elected to his present position as
Vice President effective March, 1991, and serves as
Director of Corn Research. Mr. Cavanah has been an
employee of the Company since 1962.
Jerry L. Chicoine ............... 53 1988 Mr. Chicoine was elected to his present position as
Senior Vice President, Chief Financial Officer and
Corporate Secretary effective March, 1990. Mr.
Chicoine served as Senior Vice President and Chief
Financial Officer from 1989 to 1990.
Dwight G. Dollison .............. 52 1988 Mr. Dollison was elected to his present position as
Vice President and Treasurer effective March, 1995
and previously held the position of Treasurer from
1988 to 1995, and from 1980 to September, 1990, held
the position of Controller of the Company.
Andre Faget ..................... 60 1989 Mr. Faget was elected to his present position as Vice
President and Director of Operations, South Europe,
effective September, 1993, and from 1988 to September,
1993, served as the Regional
Operations Director for Europe.
Thomas M. Hanigan ............... 41 1995 Mr. Hanigan was elected to his present position as
Vice President effective March, 1995, and serves as
Director of Information Management and Business
Information Services. From 1986 to March, 1991, Mr.
Hanigan was Director of Farm Services. From March,
1991 to July, 1993, Mr. Hanigan was Director or
Business Information Services. From July 1993 to
March, 1995, Mr. Hanigan was the Director of
Information Management of the Company.
Brian G. Hart ................... 40 1991 Mr. Hart was elected to his present position as Vice
President and Corporate Controller effective March,
1995 and from September, 1990 to March, 1995, was the
Corporate Controller.
James R. Houser ................. 40 1995 Mr. Houser was elected to his present position as
Vice President effective March, 1995 and serves as
Director of Nutrition and Industry Markets. From
1989 to 1992, Mr. Houser was the assistant Director
of the Company's European Region. In 1992, Mr.
Houser was named Director of the Company's Microbial
Genetics Division.
John D. James ................... 50 1991 Mr. James was elected to his present position as
Senior Vice President effective March, 1994. Mr.
James previously held the position of Vice President
and Group Executive for the Company from March, 1991
to March, 1994, and was the President of Business
Information Services of the Company from 1986 to 1991.
Charles S. Johnson .............. 57 1981 See "Proposal 1: Election of Directors."
Dr. Hector R.R. Laurence ........ 50 1993 Dr. Laurence was elected to his present position as
Vice President effective March, 1993, and serves as
Director of Operations for Latin America (South
America/Central American/Caribbean). Dr. Laurence
has been an employee of the Company since 1984.
Mary A. McBride ................. 48 1991 Ms. McBride was elected to her present position as
Vice President, Marketing, in March, 1991, and previously
was the Market Analysis Director and Marketing
Director of the Company from
1987 to 1991.
Dr. Richard L. McConnell ........ 45 1991 Dr. McConnell was elected to his present position as
Senior Vice President and Director of Research in
March, 1994. From March, 1991 to March, 1994, he
held the position of Vice President, Director of
North America Research. Dr. McConnell has been a
research employee with the Company since 1974.
Dr. James E. Miller ............. 41 1995 Dr. Miller was elected to his present position as
Vice President in March, 1995 and also serves as
Director of Oilseeds and Field Crops Research. From
January, 1994 to March, 1995, Dr. Miller held the
position of Director, Oilseeds and Field Crops
Research. From February, 1990 to January, 1994, Dr.
Miller held the position of Director, Soybean
Research.
Paul E. Schickler ............... 43 1995 Mr. Schickler was elected to his present position as
Vice President of the Company effective March 1995,
and serves as Director of Resource Planning. Mr.
Schickler has been a Company employee since 1974 in
various administrative roles.
Harold F. Thorne ................ 48 1995 Mr. Thorne was elected to his present position as
Vice President of the Company in March, 1995, and
serves as Director of Africa, Middle East, Asia and
China. From 1994 to 1995, Mr. Thorne was Director of
Operations for Africa, Middle East, Asia and China
and also Director of Government Affairs. From 1988
to 1994, Mr. Thorne was Director of Business
Development of the Company.
John T. Watson .................. 58 1991 Mr. Watson was elected to his present position as
Vice President of the Company in March, 1991, and
serves as Director of Operations for the Commonwealth
of Independent States, Oceania, and Turkey. From
1988 to March, 1991, Mr. Watson was the
Administrative Director, International Operations,
with responsibility over multiple geographic areas.
Robert K. Wichmann .............. 58 1986 Mr. Wichmann was elected to his present position as
Vice President of Sales, North American Seed
Division, in March, 1986.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Philosophy
The Compensation Committee's guiding principle is to encourage and reward
executives and key managers for short-term and long-term performance. The
Company believes that performance creates shareholder value. A substantial
portion of executive compensation is contingent upon meeting specific
performance goals. As an employee assumes greater responsibility, a larger
portion of his/her total compensation is contingent on performance. The
performance criteria are selected based upon executives' ability to impact such
performance and the correlation of such performance to shareholder value.
Share ownership and retention are integral parts of the compensation program.
This assures that executives/owners, like other shareholders, have a concrete
interest in the long-term success of the Company. It also gives executives the
long-term perspective required in an industry in which it takes several years to
develop a product.
The Company is the global leader in an industry which requires extensive
research and a long-term focus to be successful. The Company wants to attract
and retain top-notch employees in order to sustain the long-term success
necessary to maintain its leadership. To support this business strategy, the
Company's fiscal year 1995 targeted total compensation opportunity was
aggressively competitive based on challenging pre-tax profit, asset utilization,
and key individual/team goals. Following is a table which shows targeted
compensation levels for each component of compensation as compared to
compensation of executives in similar positions in Comparator Organizations.
<TABLE>
<CAPTION>
Target Competitive Percentile
Compensation Component if Planned Results Achieved*
<S> <C>
Base Salary 50th - 60th
Total Annual Cash Compensation (Base + Annual Reward) 65th - 75th
Long-Term Rewards 65th - 75th
Benefits 50th - 60th
Total Compensation (Base + Rewards + Benefits) 65th - 75th
<FN>
* The above targets are general guides for all positions. Small variances
in actual compensation compared to the above targets may occur from year to
year based on changing market data and other factors. The Compensation
Committee will monitor the programs over time to align the compensation
with the above targets and philosophy stated in this report.
</FN>
</TABLE>
Exceeding planned results would result in total compensation above the 75th
percentile while performance below planned levels could result in total
compensation below the 50th percentile.
Competitive market compensation information was gathered for the Compensation
Committee, with input from an independent consultant, from a group of 58
companies (Comparator Organizations) having one (1) or more of the following
attributes: related industry, similar revenue size, research orientation,
substantial international operations, or geographic proximity to the Company.
The Compensation Committee believes that the Comparator Organizations represent
the Company's most direct competitors for executive talent. Although some of the
companies in the Comparator Organizations are in the Combined Value Line Index
utilized for shareholder return comparison in the "Performance Graph," the
Compensation Committee believes that the Company's most direct competitors for
executive talent are not necessarily all of the companies that should be
included in an index established for comparing shareholder returns for the
following reasons: 1) direct competitors for executive talent are not
necessarily the same companies that are relevant for comparing shareholder
returns because such factors as the geographical location and size of
organization have a greater impact on salaries than on investor decisions, and
2) the ability to obtain accurate compensation information influences which
companies are included in the pay comparison.
Role of the Compensation Committee
The Compensation Committee has responsibility for reviewing and approving the
design of the Company's compensation programs and pension and welfare benefits.
For the Chairman and CEO/President, the Compensation Committee also has
responsibility for determining base salary, annual rewards, and long-term
rewards. For other executives, the Compensation Committee also has
responsibility for reviewing salary and rewards. All Compensation Committee
members are non-employee members of the Board of Directors. An independent
compensation consultant has provided input on executive compensation program
design and helped conduct competitive total compensation analysis. Compensation
Committee decisions relating to compensation of the Chairman and CEO/President
are reviewed by the full Board of Directors.
Compensation Components
Other than employee benefits, there are three (3) primary components in the
compensation package for executives. All components of compensation are
collectively considered when setting each individual component of compensation.
Base Salary. The base salaries of executives are reviewed and set annually. As
noted above, base salaries are targeted at the 50th to 60th percentile of
Comparator Organizations' executives in similar positions. In addition to
considering salaries in the Comparator Organizations, individual salaries are
determined by executives' responsibilities, experience, past performance,
internal equity considerations, and the internal relative value of positions.
During fiscal year 1995, salaries of executives were increased by 13.79% based
primarily on increased responsibilities, competitive pay adjustments and
performance.
Management Reward Program. The Management Reward Program is designed to focus
management efforts on critical annual and long-term performance goals and to
reward results achieved in relation to those goals. Two separate plans are
utilized to meet this objective. Both reward executives for achievement of
goals. The Management Reward Program--Performance-Based (the "MRP Part I")
provides "performance-based compensation" as defined under 162(m) of the
Internal Revenue Code (the "Million Dollar Cap Legislation"). It rewards
individuals for meeting financial goals approved by the Compensation Committee.
Rewards under this plan are a significantly larger portion of the total reward
opportunity for executives than rewards under the second plan.
Part II of the Management Reward Program (the "MRP Part II") rewards executives
for meeting individual or team goals. Again, performance is the driver in
determining rewards.
Target reward opportunities under both plans are established and monitored
according to competitive market standards. Target rewards begin at 8% of fiscal
year-end base salary for key employees and range from 37% to 59% of fiscal
year-end base salary for executives, with the target percentage increasing with
increased responsibility. In fiscal 1995, total cash compensation (base + annual
reward) was targeted at the 65th to 75th percentile of compensation of
executives in similar positions at the Comparator Organizations for achieving
plan results. The Compensation Committee decided to implement this aggressively
competitive approach for two reasons: 1) to ensure that the Company continues to
attract and retain top-notch employees necessary to maintain global leadership
in its research intensive businesses, and 2) financial performance goals
achievement would place the Company at or above the 75th percentile of the
Comparator Organizations in terms of business performance. Actual rewards can
range from zero, when financial and individual performance is low, to several
multiples of the target reward opportunities when performance is high.
Under the fiscal year 1995 MRP Part I, financial goals were approved at the
beginning of the fiscal year by the Compensation Committee consistent with the
planning process. These goals were measured in terms of pre-tax profit and asset
utilization (the amount of assets utilized to achieve pre-tax profit) at the
Company level and business unit levels. Executives received between 25% and 100%
of the targeted reward based on Company-wide performance and the balance, if
any, based on business unit performance depending on each executive's specific
responsibilities. Rewards increased with increased pre-tax profit and increased
when less assets were utilized to accomplish the pre-tax profit. These two (2)
measures were used because they provide measurable goals, the achievement of
which executives can directly impact, and that the Compensation Committee
believe in combination are highly correlated to increases in shareholder value.
The effect of using these two (2) measures is to simulate a return on asset
goal. Because the Compensation Committee believes pre-tax profit more directly
impacts shareholder value, the Committee weighed pre-tax profit more heavily
than asset utilization. When target levels were met, pre-tax profit was weighted
10% more than asset utilization.
Under the MRP Part II, individual or team goals are used to reward achievement
and initiative and may be measured by both objective and subjective measures and
financial and nonfinancial factors. The individual or team goals do not as
directly impact shareholder value as the financial goals, so the rewards under
the MRP Part II represent approximately one-third (1/3) of executives' potential
target annual reward opportunities and are limited to at most 20% of fiscal
year-end base salary.
For fiscal year 1995, rewards under the MRP Part I fell short of targeted levels
for executives due to below target pretax profits. Pretax profit was less than
target due in part to the reduced corn acreage planted by farmers because of
weather and government programs. All executives exceeded their individual or
team goals resulting in better than target rewards under the MRP Part II.
Generally, the combined reward under MRP Part I and Part II was less than
target.
With shareholder approval, beginning in fiscal year 1996, the company-wide Part
I reward will be based on annual performance compared to two key financial
goals: Earnings Per Share (EPS) growth and Return on Ending Equity (ROE). In
addition, all executives will have 100% of their Part I annual reward based on
company-wide performance. The Company will also continue to target total annual
cash compensation at the 65th to 75th percentile of executives in similar
positions at Comparator Organizations for achieving planned results. While the
approach used in 1995 for MRP Part I has worked well in the past, the above
enhancements will better align executive compensation with increases in
shareholder value, and are consistent with the Company's goals to achieve
double-digit EPS growth over time and to sustain 20% ROE.
Long-Term Reward--Restricted Stock Program. The intent of the Long-Term
Reward--Restricted Stock Program is to align the interests of executives with
the long-term interests of shareholders and to focus executives on the long-term
success of the Company through ownership and retention of Company stock. As a
result, all executives are eligible for Restricted Stock rewards.
Executives were granted an amount of Restricted Stock approximately equal in
value to the cash earned under the MRP Part I (such grants are
"performance-based compensation" as defined under the Million Dollar Cap
Legislation) and the cash earned under the MRP Part II, subject to minimum and
maximum amounts. To be competitive, certain senior level executives were granted
Restricted Stock equal in value to a multiple (1.05 - 1.35) of the cash earned
under both plans. Restricted Stock is valued based on market value without
regard to restrictions on transfer. Grants of such Restricted Stock are made
after the fiscal year-end.
The method of determining the annual Restricted Stock reward has been set forth
to ensure stock ownership, align executives' interests with shareholders, focus
executives on the medium/long-term success of the Company, reward goal
achievement, and to be competitive with practices of Comparator Organizations.
To encourage continued employment, the Restricted Stock is forfeited if an
executive ceases employment within five (5) years of the grant of Restricted
Stock for any reason other than death, disability, or retirement after attaining
the age of 65 unless the Compensation Committee, in its sole discretion, waives
the restrictions.
Due to the Company-wide performance in fiscal year 1995, executives will receive
below target awards under the Long-Term Reward--Restricted Stock Program.
With shareholder approval, the Restricted Stock Program will change in fiscal
year 1996 and beyond. Restricted Stock grants will be based on performance
compared to a three-years earnings per share growth goal. The Committee believes
this will strengthen the relationship between medium/long-term Company
performance and executive rewards. In addition, corporate officers have been
granted stock options during fiscal year 1996 contingent on shareholder approval
of the new Stock Option Plan to further align long-term Company performance and
shareholder value increases with executive compensation.
Details about the proposed changes to the "Management Reward Program -
Performance-Based," the "Restricted Stock Plan - Performance-Based," and the
"Stock Option Plan" appear later in this proxy.
Compensation of the Chairman and President
The compensation of the Chairman and President is based on the policies and
programs described above.
Base Salary. Mr. Urban received a performance-based increase of 11.2 percent on
September 1, 1994 to position his pay at the 60th percentile of the Comparator
Organizations' chief executive officers. This increase also recognized Mr.
Urban's long-term contribution to the Company's performance and his success in
strategically positioning the Company for the future.
Management Reward Program. Company performance in fiscal year 1995 fell short of
goals. Consequently, MRP Part I payouts were below the targeted opportunity. Mr.
Urban's reward under the MRP Part I was $224,999 or 36.29% of his fiscal
year-end base salary. In addition, Mr. Urban exceeded his individual and team
goals resulting in a reward of $105,401 or 17.0% of his fiscal year-end base
salary (for a total reward of $330,400 or 53.29% of fiscal year-end base
salary). The target for accomplishing planned results was 59% of base salary.
Mr. Urban's individual and team goals involved overseeing a smooth transition to
a new corporate operating leadership and positioning the Company for the future
through extensive long range planning activities.
Long-Term Reward--Restricted Stock Program. In accordance with the Long-Term
Reward--Restricted Stock Program, and reflecting the Company-wide performance
and Mr. Urban's performance, shares of Restricted Stock approximately equal in
value to $446,031 will be awarded to Mr. Urban. The Compensation Committee
believes that this grant appropriately rewards Mr. Urban's for his contributions
to the Company's long-term success and the creation of shareholder value.
Compensation Committee members: Fred S. Hubbell (Chairman), Dr. Ray Goldberg
and Dr.Pedro Cuatrecasas.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Fred S. Hubbell, Chairman of the Compensation Committee, serves as the Chief
Executive Officer of Equitable of Iowa Companies. Thomas N. Urban, Chairman of
the Board and former President and Chief Executive Officer of the Company,
serves on the Board of Directors for Equitable of Iowa Companies, but is not on
its Compensation Committee.
Mr. Urban served on the Board of Directors of The Weitz Corporation until March,
1995. The Weitz Corporation had no formal Compensation Committee. Fred W. Weitz,
former President of The Weitz Corporation (retired in March, 1995), serves on
the Board of Directors of the Company, but is not on its Compensation Committee
The Company has employed in the past, and in the future may employ, The Weitz
Corporation or one (1) or more of its subsidiaries as the general contractor for
the construction of certain of its buildings. To date, substantially all
contracts have been on a guaranteed maximum cost, fixed fee basis. Since
September 1, 1994, the active contracts between The Weitz Corporation, and its
subsidiaries and the Company have been approximately $14,329,755, including
approximately $9,982,229 of scheduled but uncompleted work. The Weitz
Corporation was founded in 1855 and is a leading contractor in Iowa. Mr. Weitz
was formerly President, Director, and controlling shareholder of The Weitz
Corporation, and continues to be a Director of the Company. Mr. Weitz sold his
interest in The Weitz Corporation, and retired from his position of President
and Director in March of 1995. Based upon its experience with other construction
companies, the Company believes that the construction services and contract
terms furnished by The Weitz Corporation are comparable to those it would have
obtained from other construction companies.
Dr. Ray A. Goldberg is paid a fee of $2,683 per month for certain consulting
services for a three year period beginning in July, 1995. Dr. Goldberg resigned
from the Compensation Committee of the Company.
It is the belief of the Board of Directors of the Company that the ability of
the Compensation Committee to make fair compensation decisions was not
compromised by any of the above situations.
COMPENSATION
Executive Compensation
The following table sets forth compensation information for the Chairman and
President and the other four (4) most highly compensated Executive Officers
(Named Executive Officers) for fiscal years 1993, 1994, and 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
----------------
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted All Other
Annual Stock Options/ LTIP Compen-
Name and Principal Position Year Salary Bonus Compen- Award(s)6 SARs Payouts sation7
($) ($) sation ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas N. Urban8 1995 620,004 330,400 446,031 25,193
Chairman and President 1994 557,604 960,306 621,059 20,633
1993 483,514 189,859 256,282 16,817
Charles S. Johnson4 1995 474,690 247,546 321,810 29,880
Executive Vice President 1994 372,996 596,569 378,218 24,990
1993 336,595 311,395 363,020 20,852
Jerry L. Chicoine 1995 310,008 149,547 179,464 16,573
Senior Vice President and 1994 273,000 400,764 235,872 13,798
Chief Financial Officer 1993 226,560 132,095 146,637 11,456
John D. James 1995 222,091 115,740 138,893 10,155
Senior Vice President 1994 188,854 216,699 113,633 7,064
1993 178,585 114,111 102,677 4,260
Richard L. McConnell 1995 235,308 111,159 133,396 9,968
Senior Vice President/ 1994 160,000 194,636 101,790 8,307
Director of Research 1993 142,937 95,520 83,250 2,866
<FN>
1 Restricted Stock is valued without regard to restrictions on transfer.
Aggregate restricted stockholding and their market values, without regard
to restrictions on transfer, held at 1995 fiscal year end are as follows:
Mr. Johnson 45,125 shares, $1,940,375; Mr. Chicoine 23,943 shares,
$1,029,549; Mr. James 16,438 shares, $706,834; and Mr. McConnell 12,509
shares, $537,887. Dividends are paid quarterly to restricted stockholders.
Mr. Urban does not hold any restricted stock because his shares were vested
in connection with his early retirement.
2 Consists of above-market interest accruing on deferred compensation
(portion of interest in excess of 120% of the applicable federal long-term
rate) and Company contributions to defined contribution plan (401(k)) as
follows: Mr. Urban - 1995-above market interest $25,193, and 401(k) $0; Mr.
Johnson - 1995-above market interest $28,880, and 401(k) $1,000; Mr.
Chicoine - 1995-above market interest $15,573, and 401(k) $1,000; Mr. James
- 1995-above market interest $9,155, and 401(k) $1,000; and Mr. McConnell -
1995-above market interest $8,968, and 401(k) $1,000
3 Retired after the year-end.
4 Charles S. Johnson is President and Chief Executive Officer, effective
September 1995.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pension Plans
Estimated Annual Retirement Benefits
for Years of Service Indicated
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
Average
Compensation* 10 15 20 25 30 35
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$400,000 $240,000 $240,000 $240,000 $240,000 $240,000 $240,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
600,000 360,000 360,000 360,000 360,000 360,000 360,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
800,000 480,000 480,000 480,000 480,000 480,000 480,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
1,000,000 600,000 600,000 600,000 600,000 600,000 600,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
1,200,000 720,000 720,000 720,000 720,000 720,000 720,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
1,400,000 840,000 840,000 840,000 840,000 840,000 840,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
1,600,000 960,000 960,000 960,000 960,000 960,000 960,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
1,800,000 1,080,000 1,080,000 1,080,000 1,080,000 1,080,000 1,080,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
2,000,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
2,200,000 1,320,000 1,320,000 1,320,000 1,320,000 1,320,000 1,320,000
- ---------------------- -------------- ------------ ------------ -------------- ------------- --------------
<FN>
* Average compensation includes salary, bonus, and Restricted Stock valued
without regard to restrictions on transfer (as reported in the Summary
Compensation Table).
</FN>
</TABLE>
The above table shows the target amount of combined annual pension income
payable to a covered participant at normal retirement age (age 65) under the
Company's qualified defined benefit pension plan, social security, and the
Company's non-qualified supplemental pension plan (SERP). The Company plans
provide for the payment of post-retirement benefits on a 15-year term certain
basis with death benefits payable to an employee's surviving spouse or other
designated beneficiary.
The calculation of retirement benefits under the qualified pension plan is based
upon years of service with the Company and average earnings for the highest five
(5) consecutive years out of the last ten (10) years preceding retirement (age
55 with at least five (5) years of service). Covered compensation includes
salary and bonus (as reported in the Summary Compensation Table). Years of
service as of August 31, 1995 for Named Executive Officers are as follows:
Thomas N. Urban: 24 years; Charles S. Johnson: 30 years; Jerry L. Chicoine: 10
years; John D. James: 11 years; Dr. Richard L. McConnell: 21 years.
The non-qualified supplemental pension plan (SERP) provides for the payment of
additional benefits to certain Executive Officers (including the Named Executive
Officers). At normal retirement age (age 65) and upon early retirement as
accepted and approved by the Board of Directors, these Executive Officers will
receive, when combined with qualified pension plan benefits and social security
benefits, 60% of their final average earnings regardless of their length of
service. Benefits may also be payable upon a disability. These benefits are
based on average earnings for the last four (4) fiscal years preceding
retirement. Covered compensation includes salary, bonus, and restricted stock
valued, without regard to restrictions on transfer, (as reported in the Summary
Compensation Table). Benefits will be paid out on a 15-year term certain basis
with death benefits payable to an employee's surviving spouse or other
designated beneficiary.
For purposes of the non-qualified supplemental pension plan (SERP), covered
compensation as of August 31, 1995 for the Named Executive Officers is as
follows: Thomas N. Urban: $1,693,481 (This reflects Mr. Urban's final average
earnings calculated using the estimated bonus and estimated restricted stock
grant at announcement of his early retirement for the final fiscal year);
Charles S. Johnson: $1,044,046; Jerry L. Chicoine: $639,019; John D. James:
$476,724; Richard L. McConnell: $479,863.
Director Compensation
Non-employee Directors receive $1,000 per month for serving as Director, plus
$3,500 for each meeting of the Board of Directors attended, and $500 for certain
special meetings. In lieu of the above fees, Thomas N. Urban will receive 12
monthly payments of $25,833.00 commencing September, 1995 and ending August,
1996, for serving as the Chairman. Directors also are reimbursed for travel
expenses incurred in connection with their attendance at Board and Committee
meetings. Employee Directors do not receive any compensation for serving on the
Board of Directors. Directors may elect to use their compensation to purchase
stock at its fair market value through a Monthly Stock Purchase Plan.
Severance Plans and Other Arrangements
The Company has no employment agreements with any of the Named Executive
Officers.
The Company maintains a Severance Compensation Plan for certain management
employees (Severance Plan). The Severance Plan is designed to aid the Company in
attracting and retaining the highly qualified individuals who are essential to
its success and to avoid distractions inherent in the threat of a Change in
Control.
The Severance Plan is triggered upon a Change in Control of the Company. In the
event of involuntary termination of employment within three (3) years following
a Change in Control, participants under the Severance Plan are entitled to a
continuation of certain benefits for one year and a cash payment equal to three
(3) times the participant's base salary and annual bonus. Participants include
all of the Named Executive Officers as well as other key managerial personnel.
Each participant eligible under the Severance Plan is entitled to receive a
gross-up payment equal to the amount of any federal excise taxes imposed upon
compensation payable upon a Change in Control and the additional taxes that
result from such payment.
The Named Executive Officers and other key employees customarily have been
granted restricted stock that vests upon completion of five (5) years of
continuous employment following the grant. The Restricted Stock also vests upon
a Change in Control; upon termination because of normal retirement, death or
disability; upon early retirement accepted and approved by the Compensation
Committee; or for other reasons the Compensation Committee deems appropriate.
The Named Executive Officers and other key employees are entitled to receive
non-qualified Supplemental Pension Plan (SERP) benefits and deferred
compensation benefits under the Deferred Compensation Plan (the Named Executive
Officers and other key employees are entitled to defer a lifetime maximum of
$100,000 of their compensation with earnings at above market interest) if they
are terminated without cause or resign for a stated good reason within five (5)
years following a Change in Control. Participants' beneficiaries will also
receive benefits in the case of death. Otherwise SERP benefits will be paid upon
normal retirement (age 65), or upon early retirement (age 55 with at least five
(5) years of service) accepted and approved by the Compensation Committee, or in
the Board of Directors' discretion upon other termination. Deferred compensation
benefits will be paid with accrued above market interest upon normal retirement
(age 65), with benefits reduced on early retirement (age 58), and at the prime
interest rate upon other termination.
In addition, Named Executive Officers and other key employees are entitled to
defer up to $25,000 a year under the Annual Deferred Compensation Plan. Such
compensation earns a rate of one percent (1%) above the average of the 10-year
United States Treasury rate and is paid upon retirement or other termination of
employment.
Mr. Urban is receiving early retirement benefits under the SERP and deferred
compensation plans. In connection with his early retirement, the Compensation
Committee accelerated vesting of Mr. Urban's restricted stock (67,893 shares
plus approximately 10,373 shares (assuming an August 31, 1995 closing price) to
be granted under the Restricted Stock Plan for performance in 1995). Pursuant to
an election under the Restricted Stock Plan, a portion of the shares granted
prior to 1995 were used to pay the tax withholding obligation. In addition, the
Company purchased 32,861 shares of stock from Mr. Urban for $1,224,072. The
price was equal to the average of the high and low sales price for the day of
the purchase. The repurchase was consistent with the Company's open market
repurchases.
Company contributions to the 401(k) Defined Contribution Plan shall vest over a
five (5) year period and otherwise shall vest upon retirement, death, or
disability, and termination for other than cause within three (3) years of a
Change in Control. The maximum annual contribution by the Company is $1,000 per
employee.
For purposes of the Severance Plan, the Restricted Stock Plan, SERP, the
deferred compensation plans, and the 401(k) Plan, "Change in Control" means an
acquisition by any person of 25% or more of any class of voting securities of
the Company or election of 25% or more of the Board of Directors without
recommendation from the Board.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock versus the S&P 500 and Value Line Food Processors Large
Cap Index and Small Cap Index combined ("Combined Value Line Index") for the
five (5) year period commencing August 31, 1990. The Value Line Food Processor
Large Cap Index includes the Company and the Value Line Food Processor Small Cap
Index includes the Company's only major competitor that is publicly traded. The
other major competitors are divisions or subsidiaries of larger publicly traded
companies.
[GRAPHIC OMITTED]
<TABLE>
--------------- ---------- ---------- ---------- --------- ---------
1991 1992 1993 1994 1995
--------------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
PHB $135 $210 $264 $256 $360
--------------- ---------- ---------- ---------- --------- ---------
--------------- ---------- ---------- ---------- --------- ---------
Peer $147 $154 $149 $160 $188
Group
--------------- ---------- ---------- ---------- --------- ---------
--------------- ---------- ---------- ---------- --------- ---------
S & P 500 $127 $137 $158 $167 $202
--------------- ---------- ---------- ---------- --------- ---------
</TABLE>
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year and reinvestment of dividends.
PROPOSALS 2, 3, and 4
APPROVAL OF "MANAGEMENT REWARD PROGRAM - PERFORMANCE-BASED";
"RESTRICTED STOCK PLAN - PERFORMANCE-BASED" AND THE "STOCK OPTION PLAN"
The Company's guiding principle for compensation is to encourage and reward
executives for short term and long term performance that will create shareholder
value. The Company believes that the key drivers in creating shareholder value
are earnings per share ("EPS") growth and return on ending equity ("ROE"). As a
result, the Company has established goals of double digit EPS growth over time
and sustaining 20% ROE. The Company believes its compensation package should
create an incentive for its key employees to reach these goals and to ultimately
create shareholder value.
Share ownership and retention is also important to a successful compensation
program. This assures that the key employee/owners, like other shareholders,
have a concrete interest in the long term success of the Company.
Therefore, the Company seeks approval of the Pioneer Hi-Bred International, Inc.
Management Reward Program - Performance-Based ("Performance-Based Reward
Program"), the Pioneer Hi-Bred International, Inc. Restricted Stock Plan -
Performance-Based ("Performance-Based Restricted Stock Program") and the Pioneer
Hi-Bred International, Inc. Stock Option Plan ("Stock Option Plan"). These new
programs will replace the Company's former management reward program
performance-based plan Part I and its restricted stock plans discussed in the
section titled "Compensation Committee Report on Executive Compensation".
Shareholder approval is sought in part to qualify the programs as
"performance-based compensation" as defined under 162(m) of the Internal Revenue
Code ("Million Dollar Cap Legislation"). As such, it is intended that
compensation paid under these plans will not be subject to the million dollar
cap limit under the Million Dollar Cap Legislation.
Shareholder approval is also sought in part to conform the Performance-Based
Restricted Stock Plan and Stock Option Plan to section 16b-3 of the Securities
and Exchange Act of 1934 (the "Act"). Therefore, grants and certain uses of
stock to pay the exercise price and tax withholding will be exempt from
potential profit disgorgement under Section 16 of the Act. The usefulness of the
plans will be impaired if Section 16b-3 of the Exchange Act is not complied with
because of such potential for profit disgorgement.
The Compensation Committee and the Board of Directors have approved the
Performance-Based Reward Program, the Performance-Based Restricted Stock Program
and the Stock Option Plan, conditioned upon subsequent shareholder approval.
Proposal 2 will be approved if a majority of the votes cast on Proposal 2 are
cast in favor of the proposal. Proposals 3 and 4 will be approved if a majority
of votes represented at the Annual Meeting vote for Proposal 3 and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3, AND 4.
Proposal 2: Approval of the Management Reward Program-Performance-Based
Purpose. The Performance-Based Reward Program is designed to focus management
efforts on earnings per share ("EPS") growth and return on ending equity ("ROE")
goals and to reward results achieved in relation to those goals.
Eligibility. Full-time, regular employees on the US or Canadian payroll and in
pay bands I-IV (inclusive) and lower pay bands with appropriate approval are
eligible (currently approximately 800 employees are eligible under the
Performance-Based Reward Program). Job factors such as the following may be
considered in establishing an appropriate pay band for an employee's position:
1) complexity, 2) impact , 3) knowledge, skill and competencies, and 4)
experience. The Compensation Committee may adjust which pay band an employee
must be in to be eligible. Pay bands may also be further divided or consolidated
if necessary. In addition, other employees of the Company or its subsidiaries or
affiliates, including officers not on the U.S. or Canadian payroll, approved by
the Compensation Committee shall be eligible for participation. All Executive
Officers will be eligible.
Goals. Rewards will be based primarily on the EPS Growth Percentage as described
below and to a lesser extent on ROE relative to target goals as established
below. EPS means the after tax earnings per share of the weighted average daily
stock outstanding without giving effect to the dilutive impact of outstanding
options. ROE means net income over ending shareholders equity. Actual EPS Growth
Percentage and ROE results will be adjusted to remove the impact of unusual or
nonrecurring events.
Overview. Rewards are based upon a multiple of a Participant's target percentage
of base salary. The multiple is based upon EPS Growth and ROE Performance.
Therefore the multiple is a combination of the EPS Growth Multiplier and ROE
Modifier. The target percentage is based upon the perosn's pay band.
An example of the formula used to calculate the performance-based reward will
illustrate this objective performance-based formula. It assumes that the EPS
Growth target (Fiscal Year 1996 EPS of $2.44) is met but ROE is 19%. The
following management reward would be obtained:
<TABLE>
<CAPTION>
EPS Growth ROE Pay Band Executive's Performance-
Multiplier x Modifier x Target % x Base Salary = Based Reward
<S> <C> <C> <C> <C>
1 x .95 x 37% x 200,000 = $70,300
</TABLE>
Establishment of Targets and EPS Growth. The target EPS Growth is 12-14% growth
which is consistent with the Company's goal of double digit EPS over time. The
target ROE is 20%, consistent with the Company's goal to sustain 20% ROE.
The plan is based on the assumption that EPS will grow 13% annually from Fiscal
Year 1995 through Fiscal Year 2000. The EPS Growth Percentage each Fiscal year
is based upon that year's EPS as compared to the 13% EPS Target for the previous
Fiscal Year. This EPS growth calculation is consistent with the Company's five
year planning process and the long term nature of its business. See below for
current target EPS Growth and EPS Growth Percentage that corresponds to various
EPS levels.
<TABLE>
<CAPTION>
EPS Performance Table*
------------------------------------------------------------------
EPS EPS
---------------------------------------
---------------------------------------
Growth %** Multiplier*** 1996 1997 1998 1999 2000
------------------------------------------------------------------
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 0.00 2.16 2.44 2.76 3.12 3.52
------------------------------------------------------------------
------------------------------------------------------------------
1% 0.08 2.18 2.47 2.79 3.15 3.56
------------------------------------------------------------------
------------------------------------------------------------------
2% 0.17 2.20 2.49 2.81 3.18 3.59
------------------------------------------------------------------
------------------------------------------------------------------
3% 0.25 2.22 2.51 2.84 3.21 3.63
------------------------------------------------------------------
------------------------------------------------------------------
4% 0.33 2.25 2.54 2.87 3.24 3.66
------------------------------------------------------------------
------------------------------------------------------------------
5% 0.42 2.27 2.56 2.90 3.27 3.70
------------------------------------------------------------------
------------------------------------------------------------------
6% 0.50 2.29 2.59 2.92 3.30 3.73
------------------------------------------------------------------
------------------------------------------------------------------
7% 0.58 2.31 2.61 2.95 3.33 3.77
------------------------------------------------------------------
------------------------------------------------------------------
8% 0.67 2.33 2.64 2.98 3.37 3.80
------------------------------------------------------------------
------------------------------------------------------------------
9% 0.75 2.35 2.66 3.01 3.40 3.84
------------------------------------------------------------------
------------------------------------------------------------------
10% 0.83 2.38 2.68 3.03 3.43 3.87
------------------------------------------------------------------
------------------------------------------------------------------
11% 0.92 2.40 2.71 3.06 3.46 3.91
------------------------------------------------------------------
------------------------------------------------------------------
TARGET 12% 1.00 2.42 2.73 3.09 3.49 3.94
------------------------------------------------------------------
------------------------------------------------------------------
RANGE 13% 1.00 2.44 2.76 3.12 3.52 3.98
------------------------------------------------------------------
------------------------------------------------------------------
14% 1.00 2.46 2.78 3.14 3.55 4.01
------------------------------------------------------------------
------------------------------------------------------------------
15% 1.25 2.48 2.81 3.17 3.58 4.05
------------------------------------------------------------------
------------------------------------------------------------------
16% 1.40 2.51 2.83 3.20 3.62 4.09
------------------------------------------------------------------
------------------------------------------------------------------
17% 1.55 2.53 2.86 3.23 3.65 4.12
------------------------------------------------------------------
------------------------------------------------------------------
18% 1.70 2.55 2.88 3.25 3.68 4.16
------------------------------------------------------------------
------------------------------------------------------------------
19% 1.85 2.57 2.90 3.28 3.71 4.19
------------------------------------------------------------------
------------------------------------------------------------------
20% 2.00 2.59 2.93 3.31 3.74 4.23
------------------------------------------------------------------
------------------------------------------------------------------
21% 2.05 2.61 2.95 3.34 3.77 4.26
------------------------------------------------------------------
------------------------------------------------------------------
22% 2.10 2.64 2.98 3.36 3.80 4.30
------------------------------------------------------------------
------------------------------------------------------------------
23% 2.15 2.66 3.00 3.39 3.83 4.33
------------------------------------------------------------------
------------------------------------------------------------------
24% 2.20 2.68 3.03 3.42 3.86 4.37
------------------------------------------------------------------
------------------------------------------------------------------
25% 2.25 2.70 3.05 3.45 3.90 4.40
------------------------------------------------------------------
<FN>
* Points beyond 25% will be determined by using the same methodology in
calculating the table entries.
** The EPS Growth Percentage is calculated as follows (EPS for the applicable
fiscal year minus the Prior Year's Target EPS) divided by the Prior Year's
Target EPS. The Prior Year's Target EPS assumes EPS has grown 13% annually
from Fiscal Year 1995.
*** The Multiplier is explained below in the section title "Reward
Calculation".
</FN>
</TABLE>
For example: if in 1998 the EPS is 3.01, the EPS Growth Percentage is 9% and the
multiplier is .75 under the current table.
As a result of the method of calculation, following a year or years of above
target EPS Growth, actual EPS Growth from the previous year's EPS may be minimal
or negative, but target may be met. The target EPS Growth may be met because the
annualized EPS Growth rate is 12-14% over time. The opposite may result.
Following a year or years of below target EPS Growth, actual EPS Growth from the
previous year's EPS may exceed 12-14% but target may not be met.
Prior to the Fiscal Year or within the first 90 days of the Fiscal Year ("Prior
to the Fiscal Year"), the Committee has the discretion to modify target levels.
Target Percent. For each pay band or subset thereof, a percent is established
which will be used in the calculation of the reward. The following table sets
forth the percent of base salary to be used in the reward calculation for the
Chief Executive Officer and plan participants in pay bands I-IV ("Pay Band
Target Percent").
<TABLE>
<CAPTION>
Pay Band Pay Band
Target Percent
------------- -----------------
<S> <C>
CEO 62%
I 47%
II 32-37%*
III 12-27%*
IV 5-12%*
<FN>
*The exact Pay Band target Percent for each subset will be determined "Prior to
the Fiscal Year".
</FN>
</TABLE>
The Pay Band Target Percents may be modified by the Compensation Committee
"Prior to the Fiscal Year". If a key management employee moves from one pay band
or subset thereof to another in the Fiscal Year, the Target Percent for an
individual will be adjusted prorata for the portion of year in each pay band or
subset thereof.
Reward Calculation. The Pay Band Target Percent is multiplied by an EPS Growth
multiplier (see the table in the section titled "Establishment of Targets and
EPS Growth") and an ROE modifier (see the table below) which is then multiplied
by the individual's base salary as of the fiscal year-end to arrive at a
participant's reward. The EPS Growth multiplier increases when the EPS Growth
Percentage increases. The ROE modifier increases when ROE increases. A prorata
adjustment will be made for a participant that is eligible at the end of the
Fiscal Year but not eligible during the entire Fiscal Year .
<TABLE>
<CAPTION>
ROE Performance Table*
-------------- --------------
ROE Modifier
-------------- --------------
<S> <C>
16% ** .80
-------------- --------------
-------------- --------------
17% .85
-------------- --------------
-------------- --------------
18% .90
-------------- --------------
-------------- --------------
19% .95
-------------- --------------
-------------- --------------
20% 1.00
-------------- --------------
-------------- --------------
21% 1.05
-------------- --------------
-------------- --------------
22% 1.10
-------------- --------------
-------------- --------------
23% 1.15
-------------- --------------
-------------- --------------
24%*** 1.20
-------------- --------------
<FN>
* For example, if ROE is 19%, the ROE modifier is .95.
** Equal to or less than 16%
*** Equal to or greater than 24%
</FN>
</TABLE>
"Prior to the Fiscal Year", the Committee has the discretion to modify the EPS
Growth multiplier and ROE modifier.
Maximum Reward. In no event will the reward that a participant receives under
the Performance-Based Reward Program exceed three (3) million dollars for a Plan
Year. Performance would need to substantially exceed target levels for any
employee to achieve such a reward with current and anticipated base salary
levels.
Rewards if Target Levels are Met. The following table sets forth the approximate
rewards for fiscal year 1996 if target levels are met:
<TABLE>
<CAPTION>
--------------------------------------------------- -----------------
Name and Position* Target Reward
--------------------------------------------------- -----------------
<S> <C>
Charles S. Johnson, President and CEO $390,600
--------------------------------------------------- -----------------
--------------------------------------------------- -----------------
Jerry L. Chicoine, Senior Vice President $164,500
--------------------------------------------------- -----------------
--------------------------------------------------- -----------------
John D. James, Senior Vice President $129,250
--------------------------------------------------- -----------------
--------------------------------------------------- -----------------
Richard L. McConnell, Senior Vice President $131,600
--------------------------------------------------- -----------------
--------------------------------------------------- -----------------
All 20 Executive Officers (including those listed $1,756,053
above)
--------------------------------------------------- -----------------
--------------------------------------------------- -----------------
Directors who are not employees 0
--------------------------------------------------- -----------------
--------------------------------------------------- -----------------
All employees other than Executive Officers $5,342,955
--------------------------------------------------- -----------------
<FN>
* Thomas N. Urban, who was the CEO for fiscal 1995 has retired as an
Executive Officer and therefore will not be entitled to benefits under
the Performance-Based Reward Program.
</FN>
</TABLE>
Compensation Committee Certification. Before any reward is paid, the
Compensation Committee will certify that the material terms of the
Performance-Based Reward Program were satisfied.
Change in Control. In the event of an Involuntary Termination as defined in the
Performance-Based Reward Program (including leaving for Stated Good Reason as
defined in the Performance-Based Reward Program), a participant will be entitled
to a prorata benefit. For purposes of the Performance-Based Reward Program,
"Change in Control" means an acquisition by any person of 25% or more of any
class of voting securities of the Company or election of 25% or more of the
Board of Directors without recommendation from the Board.
Administration, Amendment and Termination. The Performance-Based Reward Program
shall be administered by the Compensation Committee or any successor committee,
(the "Committee"). The Committee shall have authority to make all the
determinations required under the Performance-Based Reward Program. The
Committee may delegate its authority as it relates to a participant who is not
an Executive Officer to an Executive Officer. The Performance-Based Reward
Program at any time may be amended prior to the Fiscal Year by the Board of
Directors without shareholder approval except as required by law. The Board of
Directors may terminate the Performance-Based Reward Program at any time. After
a Change in Control, any termination or amendment will not apply to the Fiscal
Year in which such change was adopted or earlier Fiscal Year. No change the one
year prior to or after a Change in Control will affect benefits paid upon an
Involuntary Termination after a Change in Control.
Effective Date and Duration. If shareholder approval is obtained, the
Performance-Based Reward Program will be effective September 1, 1995. It will
continue until terminated by the Board of Directors.
Proposal 3: Approval of the Restricted Stock Plan-Performance-Based
Purpose. The intent of the Performance-Based Restricted Stock Program is to do
the following: 1) align the interest of Executive Officers and other
participants with the long-term interest of shareholders through the ownership
and retention of common stock; and 2) focus management efforts on the Company's
long term earning per share ("EPS") Growth goal and to reward results achieved
in relation to this goal.
Eligibility. Full time regular employees on the U.S. or Canadian payroll in pay
bands I-III (inclusive) and lower pay bands with appropriate approval and those
employees of the Company or its subsidiaries or affiliates, including those
officers not on the U.S. or Canadian payroll, approved by the Compensation
Committee are eligible under the Performance-Based Restricted Stock Program
(currently approximately 230 employees are in the Performance-Based Restricted
Stock Plan). Job factors such as the following may be considered in establishing
an appropriate pay band for an employee's position: 1) complexity, 2) impact ,
3) knowledge, skill and competencies, and 4) experience. In addition, the
employee must be eligible not only on the last day of the Fiscal Year but also
on the date of the grant unless his employment terminates in the interim because
of normal retirement, total and permanent disability, death, or with
Compensation Committee approval, early retirement. Prior to the beginning of the
fiscal year, the Compensation Committee may adjust which pay band an employee
must be in to be eligible. Pay bands may be further divided or consolidated if
necessary. All Executive Officers will be eligible.
Goals. Rewards will be based on the Three Year EPS Growth Percentage relative to
target goal as established below. EPS means the after tax earnings per share of
the weighted average daily stock outstanding without giving effect to the
dilutive impact of outstanding options. The Three Year EPS Growth will be
adjusted to remove the impact of unusual or nonrecurring events. Because this is
a new plan, the rewards for the first two years will be based upon the EPS
Growth Percentage for one and two years respectively.
Overview. Rewards are based upon a multiple of a participant's target percentage
of base salary. The multiple is based upon three year EPS growth. The multiple
will be less than 1 when performance is less than target; 1 when performance
equals target; and greater than 1 when performance exceeds target. The target
percentage is based upon the person's pay band.
An example of the formula used to calculate performance-based reward will
illustrate this objective performance-based formula. It assumes that the Three
Year EPS Growth target is met (EPS, excluding unusual and nonrecurring events,
for the three years ended at the end of Fiscal Year 1996 is 6.71). The following
reward would be obtained:
<TABLE>
<CAPTION>
EPS Growth Pay Band Executive's Value of Restricted
Multiplier x Target % x Base Salary = Stock Grant
<S> <C> <C> <C>
1 x 50% x 200,000 = $100,000
</TABLE>
Establishment of Targets and Three Year EPS Growth. The target Three Year EPS
Growth is an annualized 12-14% growth which is consistent with the Company's
goal of double digit EPS over time.
The target Three Year EPS Growth and Three Year EPS Growth Percentage are
calculated by using Fiscal Year 1995 EPS as the base EPS. This Three Year EPS
calculation is consistent with the Company's long range planning process and the
long term nature of its business. See below for current Three Year EPS Growth
Percentage that corresponds to a given three year total of EPS.
<TABLE>
<CAPTION>
Three Year EPS Growth Percentage and Multiplier Table*
--------------------------------------------------------
Three Year Total EPS
3 Year
EPS
Growth
%
** MULTIPLIER *** 1994- 199- 1996- 1997- 1998-
1996 1997 1998 1999 2000
--------------------------------------------------------
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 0.00 6.43 6.48 6.48 6.48 6.48
--------------------------------------------------------
--------------------------------------------------------
1% 0.08 6.45 6.55 6.61 6.68 6.74
--------------------------------------------------------
--------------------------------------------------------
2% 0.17 6.47 6.61 6.74 6.88 7.02
--------------------------------------------------------
--------------------------------------------------------
3% 0.25 6.49 6.68 6.88 7.08 7.30
--------------------------------------------------------
--------------------------------------------------------
4% 0.33 6.52 6.74 7.01 7.29 7.58
--------------------------------------------------------
--------------------------------------------------------
5% 0.42 6.54 6.81 7.15 7.51 7.88
--------------------------------------------------------
--------------------------------------------------------
6% 0.50 6.56 6.88 7.29 7.73 8.19
--------------------------------------------------------
--------------------------------------------------------
7% 0.58 6.58 6.94 7.43 7.95 8.51
--------------------------------------------------------
--------------------------------------------------------
8% 0.67 6.60 7.01 7.57 8.18 8.83
--------------------------------------------------------
--------------------------------------------------------
9% 0.75 6.62 7.08 7.72 8.41 9.17
--------------------------------------------------------
--------------------------------------------------------
10% 0.83 6.65 7.15 7.86 8.65 9.52
--------------------------------------------------------
--------------------------------------------------------
11% 0.92 6.67 7.22 8.01 8.89 9.87
--------------------------------------------------------
--------------------------------------------------------
12% 1.00 6.69 7.29 8.16 9.14 10.24
--------------------------------------------------------
--------------------------------------------------------
Target 13% 1.00 6.71 7.36 8.32 9.40 10.62
--------------------------------------------------------
--------------------------------------------------------
Range 14% 1.00 6.73 7.43 8.47 9.66 11.01
--------------------------------------------------------
--------------------------------------------------------
15% 1.25 6.75 7.50 8.63 9.92 11.41
--------------------------------------------------------
--------------------------------------------------------
16% 1.40 6.78 7.57 8.78 10.19 11.82
--------------------------------------------------------
--------------------------------------------------------
17% 1.55 6.80 7.64 8.94 10.46 12.24
--------------------------------------------------------
--------------------------------------------------------
18% 1.70 6.82 7.72 9.11 10.74 12.68
--------------------------------------------------------
--------------------------------------------------------
19% 1.85 6.84 7.79 9.27 11.03 13.13
--------------------------------------------------------
--------------------------------------------------------
20% 2.00 6.86 7.86 9.43 11.32 13.59
--------------------------------------------------------
--------------------------------------------------------
21% 2.05 6.88 7.94 9.60 11.62 14.06
--------------------------------------------------------
--------------------------------------------------------
22% 2.10 6.91 8.01 9.77 11.92 14.55
--------------------------------------------------------
--------------------------------------------------------
23% 2.15 6.93 8.08 9.94 12.23 15.04
--------------------------------------------------------
--------------------------------------------------------
24% 2.20 6.95 8.16 10.12 12.55 15.56
--------------------------------------------------------
--------------------------------------------------------
25% 2.25 6.97 8.24 10.29 12.87 16.08
--------------------------------------------------------
<FN>
* Points beyond 25% will be determined by using the same methodology in
calculating the table entries.
** The Three Year EPS Growth Percentage will be determined as follows: add the
EPS for three years (the most recently completed Fiscal Year and two prior
Fiscal Years) (This becomes the "Three Year Total EPS"). Total EPS is then
compared to the Three Year EPS Growth Percentage. The Three Year EPS Growth
percentage is determined assuming a specific EPS Growth percentage was
achieved since Fiscal Year 1995. Because this is a new plan, the rewards
for the first two years will be calculated using actual EPS, net of unusual
events, for 1994 and 1995.
*** The Multiplier is explained below in the reward calculation in the section
title "Reward Calculation".
</FN>
</TABLE>
For example: if the EPS in 1996 is 2.65, in 1997, 2.90, and in 1998, 3.08, the
Three Year EPS is 8.63. Under the current table the EPS Growth Percentage is 15%
and the multiplier is 1.25.
As a result of the method of calculation, following a period of above target EPS
Growth, the Three Year EPS Growth may be minimal or negative but targets may be
met. The Three Year EPS target may be met because the annualized EPS Growth rate
is 12-14% over time. The opposite may result. Following a period of below target
EPS Growth, the Three Year EPS Growth may exceed 12-14% but target may not be
met.
Prior to the Fiscal Year or within the first 90 days of the Fiscal Year ("Prior
to the Fiscal Year") the Committee has the discretion to modify target levels.
Target Percent. For each pay band or subset thereof, a percent is established
which will be used in the calculation of the reward. The following table sets
forth the percent of base salary used in the reward calculation for the Chief
Executive Officer and plan participants in pay bands I-III ("Pay Band Target
Percent").
<TABLE>
<CAPTION>
Pay Band
Pay Band Target Percent
---------------- --------------------
<S> <C>
CEO 75%
I 60%
II 45-50%*
III 25-40%*
<FN>
*The exact Pay Band Target Percent for each subset will be determined "Prior to
the Fiscal Year".
</FN>
</TABLE>
The Pay Band Target Percents may be modified by the Compensation Committee
"Prior to the Fiscal Year." If a key management employee moves from one pay band
or subset thereof to another in the Fiscal Year, the Target Percent for an
individual will be adjusted prorata for the subset of year in each pay band.
Reward Calculation. The Pay Band Target Percent is multiplied by a Three Year
EPS Growth multiplier (see the table in the section titled "Establishment of
Targets and Three Year EPS Growth") multiplied by the individual's base salary
as of the fiscal year-end to arrive at the value of a participant's reward. The
Three Year EPS Growth multiplier increases when the Three Year EPS Growth
Percentage increases. A prorata adjustment will be made for a participant that
is eligible at the end of the Fiscal Year but not for the entire Fiscal Year.
Shares of Restricted Stock equal in value to the amount calculated above will be
granted under the Performance-Based Restricted Stock Program. The grants will be
made following the fiscal year-end. The value of the Restricted Stock will be
determined without regard to any restrictions on transfer.
"Prior to the Fiscal Year", the Committee has the discretion to modify the Three
Year EPS Growth multiplier.
Maximum Reward. In no event will the maximum value at the date of grant, without
regard to any restrictions, of a reward to an employee under the
Performance-Based Restricted Stock Program, exceed 3 million dollars.
Performance would need to substantially exceed target levels for any employee to
achieve such a reward with current and anticipated base salary levels.
Rewards Granted if Target Levels are Met. The following table sets forth the
approximate dollar value and the approximate number of shares that would be
granted for fiscal year 1996 if target levels are met:
<TABLE>
<CAPTION>
-------------------------------------------------- ------------------ -----------------
Approximate Approximate No.
Name and Position* Dollar Value** of Shares***
-------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Charles S. Johnson, President and CEO $472,500 10,988
-------------------------------------------------- ------------------ -----------------
-------------------------------------------------- ------------------ -----------------
Jerry L. Chicoine, Senior Vice President $210,000 4,884
-------------------------------------------------- ------------------ -----------------
-------------------------------------------------- ------------------ -----------------
John D. James, Senior Vice President $165,000 3,837
-------------------------------------------------- ------------------ -----------------
-------------------------------------------------- ------------------ -----------------
Richard L. McConnell, Senior Vice President $168,000 3,907
-------------------------------------------------- ------------------ -----------------
-------------------------------------------------- ------------------ -----------------
All 20 Executive Officers (including those $2,204,617 51,270
listed above)
-------------------------------------------------- ------------------ -----------------
-------------------------------------------------- ------------------ -----------------
Directors who are not employees 0 0
-------------------------------------------------- ------------------ -----------------
-------------------------------------------------- ------------------ -----------------
All employees other than Executive Officers $5,747,756 133,669
-------------------------------------------------- ------------------ -----------------
<FN>
* Thomas N. Urban, who was the CEO for fiscal 1995 has retired as an
Executive Officer and therefore will not be entitled to benefits under the
Performance-Based Restricted Stock Program.
** The Restricted Stock is valued without regard to restrictions on transfer.
*** Based on 1995 fiscal year-end market price. The actual shares are not
granted until after year-end and will be based upon the actual fair market
value at the date of grant.
</FN>
</TABLE>
Compensation Committee Certification. Before any reward is paid, the
Compensation Committee will certify that the material terms of the
Performance-Based Restricted Stock Program were satisfied.
Shares Available. The number of shares of Common Stock which may be granted
under the Performance-Based Restricted Stock Program is 1,750,000 shares. There
is no restriction on the number of shares that may be granted to any employee,
except as set forth above in "Maximum Reward", or the number of times an
employee may receive an award of Restricted Stock. The number of shares will be
adjusted as necessary for stock dividends, stock splits, recapitalization, or
similar changes affecting the Company's stock. Shares granted under the
Performance-Based Restricted Stock Program may consist, in whole or in part, of
authorized but unissued shares of stock or of shares reacquired by the Company,
whether on the open market or otherwise, including shares previously granted
under the Performance-Based Restricted Stock Program and reacquired pursuant to
forfeiture restrictions imposed.
Terms and Conditions of Awards. Under the Performance-Based Restricted Stock
Program, the Compensation Committee will have discretion to determine the
restrictions or other limitations of the individual awards of Restricted Stock
granted under the Performance-Based Restricted Stock Program, which will be made
by means of a Restricted Stock Agreement between the Company and the
participant. The restrictions on the shares will terminate at such time(s) as
may be prescribed by the Compensation Committee, subject to any forfeiture
conditions which the Compensation Committee may choose to impose, such as
continued employment for a specified period of time. Any transfer of the shares
will be prohibited until such restrictions have terminated. It is presently
anticipated that shares will be granted under agreement providing that 100% of
the shares awarded would vest at one time after a five (5) year period of
employment following the grant, although the terms of any restricted stock
agreements may vary. Other conditions to the vesting of shares may be imposed in
the discretion of the Compensation Committee. In the event a participant's
employment with the Company terminates prior to the removal of any restrictions
on the shares for any reason other than normal retirement, death, total and
permanent disability or, if accepted and approved by the Compensation Committee,
early retirement, then any shares still subject to restrictions at the date of
termination shall automatically be forfeited. In the event that a participant's
employment with the Company terminates because of normal retirement, death,
total and permanent disability or if accepted and approved by the Compensation
Committee, early retirement, or when the Compensation Committee deems it
appropriate, unsatisfied vesting conditions would be waived by the Company.
Participants will not be required to pay any cash consideration for shares
awarded under the Performance-Based Restricted Stock Program.
Voting and Dividend Rights. Participants holding shares of Restricted Stock will
have full voting rights on such shares and also will have full dividend rights,
with any such dividends being paid currently. If any dividends are paid in
shares of the Company's stock, the dividend shares will be subject to the same
restrictions as the shares of Restricted Stock which are the basis for the
dividend.
Change in Control. In the event of an Involuntary Termination following a Change
in Control, as defined in the Performance-Based Restricted Stock Program
(including leaving for Stated Good Reason as defined in the Performance-Based
Restricted Stock Program) a participant will be entitled to a prorata benefit.
In addition, all outstanding restricted stock will vest upon a Change in
Control. For purposes of the Performance-Based Restricted Stock Program, "Change
in Control" means an acquisition by any person of 25% or more of any class of
voting securities of the Company or election of 25% or more of the Board of
Directors without recommendation from the Board.
Administration, Amendment and Termination. The Performance-Based Restricted
Stock Program shall be administered by the Compensation Committee or any
successor committee, (the "Committee"). The Committee shall have authority to
make all the determinations required under the Performance-Based Restricted
Stock Program . The Committee may delegate its authority as it relates to a
participant who is not an Executive Officer to an Executive Officer. The
Performance-Based Restricted Stock Program at any time may be amended prior to
the Fiscal Year by the Board of Directors without shareholder approval except as
required by law. The Board of Directors may terminate the Performance-Based
Restricted Stock Program at any time. After a Change in Control any termination
or amendment will not apply to the Fiscal Year in which such amendment was
adopted or earlier Fiscal Year. No change the one year prior to or after a
Change in Control will affect prorata benefits paid upon an Involuntary
Termination after a Change in Control.
Effective Date and Duration. If shareholder approval is obtained, the
Performance-Based Restricted Stock Program will be effective September 1, 1995.
It will continue until terminated by the Board of Directors.
Withholdings and Tax Consequences. The Company may require, as a condition to
any grant or to the release of any restrictions, security interest or escrow
thereunder, that the participant pay to the Company, in cash, any federal, state
or local taxes of any kind required by law to be withheld with respect to any
grant, vesting or delivery of restricted stock. The Compensation Committee, in
its sole discretion, may permit participants to pay such taxes a) through the
withholding of Restricted Stock otherwise deliverable to such participant in
connection with such vesting or delivery or b) the delivery to the Company of
shares of Company stock otherwise acquired by the Participant.
Under Section 83(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), participants who do not elect alternative tax treatment will be taxed
at ordinary income tax rates on the fair market value of their shares of
Restricted Stock at the time all restrictions lapse. Any dividends paid in cash
on the shares will be taxed as ordinary income at the time paid. The Company
will receive a tax deduction equal to the fair market value of the Restricted
Stock at the time all restrictions lapse.
Under Section 83(b) of the Code, participants may elect to be taxed on the value
of the Restricted Stock at the time such shares are granted instead of when the
restrictions on the shares lapse. If this election is made, the participant is
taxed on the value of the stock at the time it is granted at ordinary income tax
rates. Dividends paid on the Restricted Stock would be taxed as ordinary
dividend income. If the Section 83(b) election is made, the Company may take a
tax deduction in the year the stock is granted equal to the fair market value of
the stock at date of grant. The election referred to above is made at the
discretion of the participant, but must be made within thirty (30) days of the
award of Restricted Stock, with notice to the Company if such election is made.
Registration. It is the Company's current intent to register the shares with the
Securities and Exchange Commission on Form S-8.
Proposal 4: Approval of the Stock Option Plan
Purpose. The intent of the Stock Option Plan is to assure that executives and
other key employees have a substantial interest in the long-term success of the
Company and to give such employees the long-term perspective required in an
industry in which it takes several years to develop a product. The intent is
also to align the interests of such employees with the long-term interests of
shareholders.
Pay for performance is a key component of the Company's compensation philosophy.
In accordance with this philosophy and the Company's long-term focus, a greater
emphasis will be placed on performance and long-term compensation. This
increased emphasis is reflected in the Stock Option Plan described in this
section. Consistent with the Company's long-term focus, it is currently
anticipated that Options will be granted only once every five years to an
eligible employee.
Participation. Participation in the Plan is limited to Executive Officers
and those other key employees of the Company and its subsidiaries selected by
the Compensation Committee. Directors who are officers of the Company shall be
eligible to participate in the Plan. No Director who is not an officer of the
Company and no member of the Compensation Committee shall be eligible to
participate in the Plan. Currently only the Executive Officers (20 individuals)
of the Company have been granted stock options under the Stock Option Plan (such
grants are subject to shareholder approval of the Stock Option Plan).
Grants. The Compensation Committee may from time to time grant to participants
stock options ("Options") for such number of shares of Common Stock, $1 par
value of the Company ("Shares") as the Compensation Committee shall determine in
its sole discretion (such individuals to whom grants are made being herein
called "Optionees"). The Options granted shall take the form as the Compensation
Committee shall determine, subject to the general terms and conditions described
herein.
Exercise Price. The exercise price shall not be less than 100% of the fair
market value of the Shares on the date the Option is granted.
Exercise. Options may be exercised in whole or in part upon payment of the
exercise price of the Shares to be acquired. Payment shall be made in cash or,
in the discretion of the Compensation Committee, in Shares previously acquired
by the Optionee or a combination of cash and such shares of Common Stock. In
addition, Options may be exercised in whole or in part upon delivery to the
Company of an irrevocable written notice of exercise with irrevocable
instructions to a broker-dealer to sell (or margin) some or all of the Shares
and deliver sale (or margin loan) proceeds directly to the Company to pay the
exercise price and withholding taxes (this feature is referred to herein as the
"Brokerage Exercise Feature").
Terms of Options. The term during which each Option may be exercised shall be
determined by the Compensation Committee, but in no event shall an option be
exercisable in whole or in part in less than one year unless accelerated as set
forth herein or, more than ten years and one day from the date it is granted.
All rights to purchase shares pursuant to an option shall, unless sooner
terminated, expire at the date designated by the Committee. The Committee shall
determine the date on which each option shall become exercisable and may provide
that an option shall become exercisable in installments. The shares constituting
each installment may be purchased in whole or in part at any time after such
installment becomes exercisable, subject to such minimum exercise requirement as
is designated by the Committee. The Committee may accelerate the time at which
any option may be exercised in whole or in part. The Optionee shall not be
entitled to any voting rights on any stock represented by outstanding Options.
Termination of Employment. If an Optionee ceases to be an employee of the
Company due to Normal Retirement (age 65 or later), death or total and permanent
disability: a) each of the Optionee's unvested and unexpired Options shall
become fully vested, and b) each of the Optionee's exercisable Options
(including those Options vested in clause a of this paragraph) shall only remain
exercisable for, and shall otherwise terminate at the end of, a period of five
years or for such other period as the Committee determines in its sole
discretion from the date of termination of employment.
If an Optionee ceases to be an employee of the Company upon the occurrence of
his or her early retirement (age 55 or when the employee has at least five years
of service): a) the Committee in its sole discretion may vest all or a portion
of the Optionee's options, b) each of the Optionee's exercisable Options vested
in clause a of this paragraph shall only remain exercisable for, and shall
otherwise terminate at the end of a period determined by the Committee in its
sole discretion, and b) each of the Optionee's exercisable Options (excluding
those Options vested in clause a of this paragraph) shall only remain
exercisable for, and shall otherwise terminate at the end of a period of 1 year
or for such other period as the Committee determines in its sole discretion
after the date of Early Retirement.
If an Optionee ceases to be an employee of the Company due to Termination for
Cause, each of the Optionee's Options (including both vested and unvested
options) shall be forfeited.
If an Optionee ceases to be a full time employee of the Company for any reason
other than death, Disability, Normal or Early Retirement or Termination for
Cause, each of the Optionee's then exercisable Options shall only remain
exercisable for, and shall otherwise terminate at the end of a period of 90 days
or for such other period as the Committee determines in its sole discretion
after the date of termination of employment. All of Optionee's Options that were
not exercisable on the date of such termination shall be forfeited.
Notwithstanding anything to the contrary herein, if a participant ceases to be a
full time employee of the Company or any subsidiary, for any reason other than
Termination for Cause, the Compensation Committee at its sole discretion a) may
accelerate the vesting of any unvested Option so that it will become fully
vested and exercisable as of the date of such participant's termination of
employment and b) may establish a period for which any exercisable Option
(including those Options vested in clause a of this paragraph) shall remain
exercisable.
Notwithstanding what is stated in this section, an Option is not exercisable
after its expiration date established by the Compensation Committee as described
under "Terms of Options".
Change in Control. If there is a Change in Control of the Company, there will be
an automatic acceleration of the vesting of any outstanding Option so that it
will become fully vested and exercisable immediately prior to the Change in
Control and shall remain exercisable until its expiration date established by
the Compensation Committee. "Change in Control" means an acquisition by any
person of 25% or more of any class of voting securities of the Company or
election of 25% or more of the Board of Directors without recommendation from
the Board.
Competition. Notwithstanding anything stated above, unless an Optionee receives
explicit written consent to do so from the Company, if the Optionee engages in
Competition, as defined in the Stock Option Plan, each of the Optionee's Options
(including both vested and unvested options) are forfeited.
Options Granted Under the Stock Option Plan. The following table sets forth the
number of shares underlying the Stock Options and the estimated dollar value of
such options granted under the Stock Option Plan in September 1995. These
options cannot be exercised until, and will be void unless, shareholder approval
of the Stock Option Plan is obtained. Although many other companies grant stock
options annually it is currently anticipated that Options will be granted only
once every five years to an eligible employee because of the long term nature of
the seed business.
<TABLE>
<CAPTION>
--------------------------------------------------- ----------------- -------------------
Name and Position* No. of Shares** Dollar Value***
--------------------------------------------------- ----------------- -------------------
<S> <C> <C> <C>
Charles S. Johnson, President and CEO 304,000 $4,526,560
--------------------------------------------------- ----------------- -------------------
--------------------------------------------------- ----------------- -------------------
Jerry L. Chicoine, Senior Vice President 103,000 $1,533,670
--------------------------------------------------- ----------------- -------------------
--------------------------------------------------- ----------------- -------------------
John D. James, Senior Vice President 103,000 $1,533,670
--------------------------------------------------- ----------------- -------------------
--------------------------------------------------- ----------------- -------------------
Richard L. McConnell, Senior Vice President 103,000 $1,533,670
--------------------------------------------------- ----------------- -------------------
--------------------------------------------------- ----------------- -------------------
All 20 Executive Officers (including those listed 973,000 $14,487,970
above)
--------------------------------------------------- ----------------- -------------------
--------------------------------------------------- ----------------- -------------------
Directors who are not employees 0 0
--------------------------------------------------- ----------------- -------------------
--------------------------------------------------- ----------------- -------------------
All employees other than Executive Officers 0 0
--------------------------------------------------- ----------------- -------------------
<FN>
* Thomas N. Urban, who was the CEO for fiscal 1995 has retired as an
Executive Officer and therefore will not be entitled to benefits under the
Stock Option Plan.
** The Options granted in September of 1995 will not fully vest until five
years after the grant (1/3 of the options will vest after each of years 3,
4 and 5). All options will be granted with exercise price at least equal
to the fair market value of the underlying stock at the date of grant.
This strategy of granting and vesting will focus officers and key
employees on the long-term success of the Company. The value of options
granted under the Stock Option Plan in 1995 is designed to place total
compensation in the targeted range, as described in the Section titled
"Compensation Committee Report on Executive Compensation," for
participating executives.
*** Value of $14.89 per share underlying the option is derived through
application of the Black-Scholes option pricing model calculated as of the
date of grant. The actual value, if any, an officer may realize will
depend on the excess of the stock price over the exercise price on the
date the option is exercised, so there is no assurance the value realized
by the named individual will be at or near the value estimated by the
Black-Scholes model. Performance resulting in the creation of shareholder
value will be the key to the actual value realized.
</FN>
</TABLE>
Shares Available. The number of Shares that may be issued pursuant to the Stock
Option Plan is 3,000,000. The Shares issued pursuant to the Stock Option Plan
may consist, in whole or in part, of authorized but unissued shares of stock or
of Shares reacquired by the Company, whether on the open market or otherwise.
If, at any time, any Option expires or terminates unexercised or fails to vest,
such unpurchased Shares shall thereafter be available for further grants under
the Plan.
Maximum. The maximum number of shares with respect to which stock options may be
granted to any single individual in any period covering five consecutive Plan
Years shall not exceed 500,000 shares.
Administration. The Stock Option Plan shall be administered by the Compensation
Committee or any successor Committee, ("the Committee"). The Committee shall
have authority to make all determination required under the Stock Option Plan.
The Committee may delegate its authority as it relates to a participant who is
not an Executive Officer to an Executive Officer.
Adjustments. In the event of any change in the outstanding shares of stock of
the Corporation by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, or exchange of shares or other similar
corporate change, the Committee in its sole discretion shall make such
adjustments as it deems appropriate in the aggregate number and kind of shares
issuable under the Plan, in the number and kind of shares covered by grants made
under the Plan, and in the exercise price of outstanding Options, and such
determination shall be conclusive. In the event of any liquidation, dissolution,
merger, consolidation or other reorganization ("Transaction"), the Options shall
continue in effect except following a Transaction each Optionee shall be
entitled to receive in respect of each share subject to the outstanding Options
upon the exercise of any option the same stock, security or other consideration
that each holder of a share was entitled to receive in respect of a share. After
the Distribution Date as defined in the Rights Agreement between Pioneer Hi-Bred
International, Inc. and the First National Bank of Boston as Rights Agent, the
Committee will make adjustments to avoid the dilutive impact of the exercise of
rights or the exchange of rights pursuant to such agreement.
Effective Date and Duration. If shareholder approval is obtained, the Stock
Option Plan will be effective September 1, 1995. It will continue until
terminated by the Board of Directors.
Amendment and Termination of the Stock Option Plan. This Stock Option Plan may
be amended by the Board, without shareholder approval except as otherwise
required by the law. The Company reserves the right to terminate the Stock
Option Plan at any time by action of the Board. Neither amendment nor
termination of this Stock Option Plan shall affect any outstanding Options.
However, with the consent of the grantee affected thereby, the Committee may
amend or modify the grant of any outstanding Option in any manner to the extent
that the Committee would have had the authority to make such grant as so
modified or amended, including without limitation to change the date or dates as
of which an option becomes exercisable without limitation.
Withholding and Tax Consequences. The Company may require, as a condition to any
grant under the Stock Option Plan or to the delivery of certificates for shares
issued hereunder, that the Optionee pay to the Company, in cash, any federal,
state or local taxes of any kind required by law to be withheld with respect to
any grant, vesting, exercise or any delivery of shares or Options. The
Compensation Committee, in its sole discretion, may permit Participants to pay
such taxes through a) the withholding of shares otherwise deliverable to such
Participant in connection with the exercise of the Option, or b) the delivery to
the Company of Shares otherwise acquired by the Participant. In addition, the
Brokerage Exercise Feature may be used to pay the withholding taxes.
Generally, under the current federal income tax laws (a) no income is realized
by the Optionee at the time the Option is granted, (b) upon exercise of the
Option, the Optionee realizes ordinary income in an amount equal to the excess,
if any, of the fair market value of the Shares on the date of exercise over the
exercise price paid for the Shares, and the Company is entitled to a tax
deduction in the amount of ordinary income realized, and (c) upon disposition of
the Shares received upon the exercise of the Option, the Optionee recognizes, as
either short-term or long-term capital gain (or loss), depending upon the length
of time that the Optionee has held the Shares, income (or loss) equal to the
difference between the amount realized and the fair market value of the shares
on the date of exercise.
Registration. It is the Company's current intent to register the shares with the
Securities and Exchange Commission on Form S-8 .
PROPOSALS 5 AND 6
INDEMNIFICATION
Overview. In recent years, there has been an increase in the amount of
litigation seeking to impose liability on Directors and officers of
publicly-held corporations. The costs of defending or settling these actions,
whether or not they are well founded, may be substantial and in excess of the
financial capabilities of Directors, officers and employees named as defendants.
No Director or officers have been in the recent past, are, or are threatened to
be, defendants in litigation concerning their actions on behalf of the Company.
Although the Company has not experienced difficulty in attracting and retaining
Directors and officers in the past, the Board of Directors of the Company
believes that the continued success of the Company in attracting and retaining
qualified Directors, officers, and employees, is dependent, at least in part, on
the Company's ability to be competitive with other corporations which have
adopted arrangements providing Directors, officers and employees with the
maximum possible protection from personal financial risks. This protection
includes insurance, if available on a reasonable basis, as well as the maximum
indemnification permitted under applicable law. The Company presently maintains
policies of Directors' and officers' liability insurance. However, there is no
assurance that such coverage will continue to be available with such breadth of
coverage as the Company deems advisable and at reasonable premium cost.
Accordingly, the Board of Directors believes that it serves the Company's
interests to supplement any coverage which the Company may maintain in the
future by agreeing to indemnify any Directors, officers and employees to the
fullest extent permitted under applicable law.
The Company currently has indemnification provisions in its Articles of
Incorporation (the "Articles") and its Bylaws. The Company, in addition, has
entered into indemnification agreements with its Directors and officers and is
authorized to enter into agreements with its Directors and others in the future.
Such agreements were approved by the shareholders in 1989.
However, the Articles are inconsistent with the Bylaws, the indemnification
agreements, the maximum protection allowed by law and the practice of other
companies.
To remove this inconsistency, the Company proposes that Article VII of the
Articles regarding indemnification which is attached as Exhibit B be deleted.
The Company will provide indemnification as a matter of right under the Bylaws
to the fullest extent allowed by law as the law exists or may thereafter be
amended (but only to the extent greater protection is permitted) (such provision
is attached as Exhibit C). No Shareholder action is sought for the Bylaw
provision.
The Board of Directors and shareholders have previously authorized the Company
to enter into indemnification agreements with its Directors and officers. In
connection with deleting Article VII of the Articles, the Company also believes
it is appropriate to seek ratification and approval of indemnification
agreements substantially in the form attached to this Proxy Statement as Exhibit
D (collectively "the Indemnification Agreements") and to authorize substantially
similar agreements in the future with the Directors and officers of the Company.
Shareholder approval of the Indemnification Agreements is not required by law or
by the terms of the Indemnification Agreements. The Directors recognize that
they have a personal interest in having proposals 5 and 6 approved. In view of
this personal interest, the Directors have elected to again submit the
Indemnification Agreements to the shareholders for approval and ratification. If
the Indemnification Agreements are approved by shareholders, they will not be
void or voidable and the Company's shareholders may not later assert a claim
that the Indemnification Agreements are invalid due to improper authorization;
however, the shareholders may be able to challenge the validity of the
Indemnification agreements on other grounds.
The Bylaws and the Indemnification Agreements may be amended, altered or
repealed without shareholder approval. The Board of Directors reserves the right
to enter into a different form of indemnification agreement, or adopt different
Bylaws if, as a result of the Company's experience in administering the
provisions or for any other reason, the Board of Directors considers it
desirable to do so.
If one of the two proposals, but not both, are adopted the Company will
implement the adopted proposal. If Proposal 5 to remove Article VII of the
Articles is adopted and Proposal 6 regarding the Indemnification Agreements is
not adopted, the Company will amend the Articles and will reconsider the
implementation of such agreements. If Proposal 5 is not adopted but Proposal 6
is adopted, the Company will implement the Indemnification Agreements. In such
case, the Company will not amend the Articles because shareholder approval is
required to amend the Articles.
Iowa Business Corporation Act. The Company is subject to the Iowa Business
Corporation Act (the "Act") which provides for or permits indemnification of
Directors and officers in certain situations. Unless limited by its Articles of
Incorporation, indemnification is mandatory for a Director or an Officer (not an
employee) who was wholly successful, on the merits or otherwise, in the defense
of any proceeding to which the Director or officer was a party because such
person is or was a Director or officer of the corporation against reasonable
expenses incurred by the Director or officer in connection with the proceeding.
In addition, unless the Articles of Incorporation provide otherwise, a Director
or officer may apply for limited court ordered indemnification if certain
standards are met.
The Act by its terms expressly permits indemnification where a Director,
officer, employee or agent acted in good faith and in a manner such person
reasonably believed to be in (if acting in its official capacity), or not
opposed to, the Company's best interests, and, in a criminal action, if such
person had no reasonable cause to believe that his or her conduct was unlawful.
No indemnification is permitted in connection with a proceeding by or in the
right of a corporation in which the person was adjudged liable to the
corporation or in connection with any other proceeding charging improper
personal benefit to the Director, whether or not involving action in an official
capacity, in which the person was adjudged liable on the basis that personal
benefit was improperly received.
The Act also permits advancement of expenses to a Director, officer, employees
or agents upon 1) receipt of an undertaking by such to repay all amounts
advanced if it shall ultimately be determined that he or she is not entitled to
be indemnified by the corporation; 2) the person furnishes the corporation a
written affirmation of the person's good faith believes he or she has met the
applicable standard or conduct; or 3) determination is made that the facts then
known to those making the determination would not preclude indemnification.
Generally, the above provisions of the Act are permissive in nature. The only
indemnification requirement imposed by the Act is that a Company must indemnify
a Director or officer against reasonable expenses incurred in connection with
the successful defense of a proceeding.
The Act specifically provides that, subject to certain limitations, its terms
shall not be deemed exclusive of any other right to indemnification to which a
Director or officer may be entitled under a corporation's Articles of
Incorporation or Bylaws, or any agreement, vote of shareholders or disinterested
Directors, or otherwise. However, indemnification cannot be provided in the case
of 1) breach of the director's duty of loyalty to the corporation or
shareholders; 2) an act or omission not in good faith; 3) an intentional
misconduct; 4) a knowing violation of the law; 5) a transaction from which the
person seeking indemnification derives an improper personal benefit; 6)
liability for certain unlawful distributions; and 7) the person being adjudged
liable to the corporation in a proceeding by or in the right of the corporation.
Indemnification by or in the right of the corporation is limited to reasonable
expenses in connection with the proceeding.
THE ABOVE IS A SUMMARY OF THE ACT WHICH THE SHAREHOLDER SHOULD READ AND REVIEW
CAREFULLY
Securities and Exchange Commission. In the opinion of the Securities and
Exchange Commission, obligations to indemnify Directors and officers against
liability under the Securities Act of 1933 and the Securities Exchange Act of
1934 are contrary to public policy and are, therefore, unenforceable absent a
contrary decision by a court of appropriate jurisdiction. In the event that a
claim for indemnification under the indemnification agreements or Bylaws
involving liability under securities laws is asserted by a Director or officer,
the Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and the Securities Exchange Act of 1934.
Current Articles of Incorporation. In the current Articles, indemnification is
not provided in the case of negligence, fraud or other civil or criminal
misconduct. Current Iowa law generally allows indemnification except as set
forth in the last full paragraph of the section titled "Iowa Business
Corporation Act ."
The Articles also do not provide for mandatory advancement of cost.
In addition, the Articles require that in the case of settlement that
shareholder approval is required. There is no such requirement imposed by Iowa
law.
Bylaws. Under the Bylaws and Indemnification Agreements, officers, Directors and
employees will be indemnified to the fullest extent permitted by law. Under
current Iowa law, indemnification is generally not permitted in the
circumstances set forth in the last full paragraph of the section titled "Iowa
Business Corporation Act ."
The key terms of the Bylaw provision are the following:
a) The Company is required to indemnify officers, directors and employees
for expenses and liabilities by reason of the fact that such person is
or was a director, officer or employee of the Company or while a
director, officer or employee of the Company was serving for another
entity at the request or with approval of the Company to the fullest
extent permitted by law as the law exists or may thereafter be amended
(but only to the extent greater protection is permitted). The
provision does limit indemnification for proceedings initiated by the
indemnitee, except with Company consent, to enforce the
indemnification provision;
b) Mandatory expense advancement is provided upon a promise to repay if
it is later determined that the person was not entitled to
indemnification;
c) The following make determinations as to whether the applicable
standard was met: 1) the board of directors by majority vote of a
quorum consisting of directors not at the time parties to the
proceeding , 2) if a quorum cannot be obtained, a committee duly
designated by the board of directors, in which designation directors
who are parties may participate, consisting solely of two or more
directors not at the time parties to the proceeding, 3) special legal
counsel or 4) the shareholders;
d) Partial indemnification is provided if some but not all liabilities
and expenses are entitled to indemnification;
e) Company consent to settlement is required;
f) An individual may bring suit to enforce the Bylaw provisions if they
are not paid within 60 days after a written claim;
g) The rights under the Bylaws are nonexclusive of other rights to
indemnification;
h) The Company is authorized to set up trusts for payment of
indemnification (the Company does not currently anticipate setting up
such a trust);
i) The Company is authorized to provide insurance (the Company currently
has insurance);
j) The right to indemnification is contractual and cannot be amended
retroactively;
k) Indemnification is provided for suits to enforce the contractual
rights;
l) The Company is provided subrogation rights;
m) The potential indemnitee must provide notice of proceedings;
n) The Company is entitled to participate in any suit or to assume the
defenses of the indemnitees, with counsel reasonably satisfactory to
the indemnitee. Indemnitee shall have the right to employ its own
counsel. After the Company assumes defense, fees and expenses of such
counsel will be at the expense of the indemnitee unless 1) authorized
by the Company; 2) the Company has not employed counsel or cannot in
good faith without conflict assume the defense of indemnitee; or 3)
the counsel selected by the Company does not in fact assume the
defense;
o) The Company may, by Board of Directors resolution, provide
indemnification to officers, directors or employees of other entities
not otherwise provided indemnification by the Bylaws. The Company is
reviewing which officers, directors and employees of its affiliates it
may want to provide indemnification protection;
p) Indemnification and advancements are provided to an indemnitee for
serving as a witness; and
q) Directors, officers or employees are provided the protection stated
above for serving employee benefit plans.
Indemnification Agreements. The Indemnification Agreements are intended to
supplement the indemnification provisions of the Bylaws in order to attract and
retain qualified Directors and officers. In addition, by seeking shareholder
approval for the Indemnification Agreements, conflicts of interest issues are
minimized.
The terms of the Indemnification Agreements closely parallel the Bylaws. The
Indemnification Agreements require indemnification of and advancement of
expenses for Directors and officers to the fullest extent allowed by law as now
exist or may be amended, but only to any extent greater protection is provided.
The Indemnification Agreements also set forth a number of procedural and
substantive matters which presently are not covered or are covered in less
detail in the Bylaws, including the following:
First, each Indemnification Agreement requires that, at the time of any Change
in Control, as defined in the Indemnification Agreement, the Company will obtain
at its expense and maintain for the duration of the Indemnification Agreement an
irrevocable standby letter of credit in the amount of $1,000,000 or more in
favor of each person covered by an agreement to secure the obligations of the
Company under the Indemnification Agreement. A person covered by an
Indemnification Agreement could draw upon the letter of credit any time after he
or she makes a demand upon the Company for payment of a claim for
indemnification which is not subsequently paid by the Company. Each letter of
credit would provide a person covered by an Indemnification Agreement with the
assurance that, notwithstanding the inability of the Company or unwillingness of
a new Board of Directors to pay for indemnification under the Indemnification
Agreement, the person will have a minimum amount of protection from liability.
Second, the Indemnification Agreements establish a presumption that a person
covered by an Indemnification Agreement has met the applicable standard of
conduct required for indemnification, and the Company has the burden of proof
(by clear and convincing evidence) to overcome such presumption in reaching any
contrary determination. The termination of any claim, issue or matter does not
adversely affect the right to indemnification or create a presumption that the
person did not act in good faith. Reliance on certain information is deemed to
be in good faith and knowledge and actions of others is not imputed to the
indemnitee. The right of a person covered by an Indemnification Agreement to
indemnification under the Indemnification Agreement will be determined by a
forum selected by such persons consisting of either : (i) disinterested members
of the Board of Directors; (ii) independent legal counsel; or (iii) a panel of
three arbitrators. If the Company does not submit the claim to a selected forum
within 30 days after notice thereof or if the selected forum fails to reach a
decision within 30 days, the person covered by an Indemnification Agreement is
automatically deemed to be entitled to indemnification under the Indemnification
Agreement.
Third, the Indemnification Agreement does not terminate until the later of 10
years after the person ceases to serve in a capacity covered under the
Indemnification Agreement or termination of all proceedings in respect to which
the officer or director is granted the right of indemnification.
Fourth, the Indemnification Agreement explicitly states that all dismissals,
with or without prejudice, shall be deemed successful defenses if there is no
finding indemnitee did not act in good faith.
Fifth, the Indemnification Agreement obligates the Company to use reasonable
efforts to purchase and maintain insurance.
Sixth, the Indemnification Agreement prevents suits by or on behalf of the
Company against the Indemnitee two years after the person ceases to be a
director or officer or serve for the Company.
The Indemnification Agreements does not vary from the old in a material fashion.
The new forms will be used for current and new officers and directors. The
Indemnification Agreements will be permitted to cover actions occuring before
shareholder approval because the new agreement is substantially the same as
indemnification agreements previously approved by shareholders.
THE ABOVE SUMMARY DESCRIPTION OF THE CURRENT ARTICLES, THE BYLAWS, AND THE
INDEMNIFICATION AGREEMENTS, ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO
EXHIBITS B, C, D, RESPECTIVELY, WHICH THE SHAREHOLDERS SHOULD READ AND REVIEW
CAREFULLY.
Proposal 5: Approval of Amendment to the Articles Of Incorporation to Remove
Article VII Regarding Indemnification.
An affirmative vote of a majority of the outstanding votes is required to amend
the Articles to remove Article VII indemnification (Proposal 5). The Board of
Directors has voted for the amendment. Because of the requirements of the Iowa
Business Corporation Act regarding Article amendments and because there is a
personal interest, the Board of Directors submits the proposal for shareholder
approval without a recommendation.
Proposal 6: Ratification and Approval of the Form of Indemnification Agreement
to be Entered Into Between the Company and its Directors and Officers and
Approval and Authorization of Substantially Similar Agreements to be Entered
Into in the Future.
Votes cast in favor must exceed votes cast against for ratification and approval
this Proposal 6. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR
OF PROPOSAL 6.
PROPOSAL 7
APPROVAL OF AUDITORS
The Board of Directors, pursuant to the recommendation of its Audit Committee,
engaged KPMG Peat Marwick LLP to audit the Company's financial statements.
Although this appointment is not required to be submitted to a vote of the
shareholders, the Board of Directors continues to believe it is appropriate as a
matter of policy to request that shareholders ratify the appointment of KPMG
Peat Marwick LLP as principal independent auditors. If the shareholders should
not ratify the appointment, the Audit Committee will investigate the reasons for
shareholder rejection and the Board of Directors will reconsider the
appointment. Even if the appointment is ratified, the Board of Directors, in its
discretion may direct the appointment of a different independent auditor if the
Board of Directors determines that such a change would be in the best interest
of the Company and its shareholders.
The Company has been advised that neither KPMG Peat Marwick LLP nor any of its
partners has any direct or any material indirect financial interest in the
securities of the Company or any of its subsidiaries, and has had no material
relationship with the Company or its subsidiaries, except as auditors and
consultants on accounting procedures, compensation, securities, and tax matters.
A representative from KPMG Peat Marwick LLP will be at the Annual Meeting, will
have the opportunity to make a statement, if the representative so desires, and
will be available to respond to appropriate questions during the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 7.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report to Shareholders for the fiscal year ended August 31,
1995 is enclosed. The Annual Report is not to be regarded as Proxy solicitation
material.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The Board of Directors presently expects that the 1997 Annual Meeting will be
held on January 28, 1997. A shareholder intending to present a proposal to the
1997 Annual Meeting and wishing to have such proposal included in the Proxy
Statement and form of Proxy to be distributed by the Board of Directors in
connection with the 1997 Annual Meeting must submit such proposal in writing to
the Secretary, Pioneer Hi-Bred International, Inc., 700 Capital Square, 400
Locust Street, Des Moines, Iowa 50309. Such proposal must be received by the
Company at that address no later than September 16, 1996 in order to be included
in the Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Jerry L. Chicoine, Secretary
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REMINDED TO DATE, SIGN,
AND RETURN THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
<PAGE>
EXHIBIT A
January 12, 1996
PROCEDURES FOR DETERMINING CHANGES IN
BENEFICIAL OWNERSHIP OF COMMON STOCK
Effective November 14, 1985, the Articles of Incorporation of Pioneer
Hi-Bred International, Inc. (the "Company") were amended (the "Voting
Amendment") to provide that, subject to the provisions below, every share
of the Company's Common Stock is entitled to five (5) votes per share if
it has been beneficially owned continuously by the same holder for a
period of 36 consecutive months preceding the record date for the
shareholders' meeting. All other shares carry one (1) vote.
In general, the Voting Amendment provides that a change in beneficial
ownership of a share of Common Stock occurs whenever any change occurs in
the person or group who has or shares voting power, investment power, the
right to receive sale proceeds, or the right to receive dividends or other
distributions with respect to such share.
In the absence of proof to the contrary provided in accordance with the
procedures referred to below, a change in beneficial ownership shall be
deemed to have occurred whenever a share of Common Stock is transferred of
record into the name of any person.
In the case of a share of Common Stock held of record in the name of a
corporation, partnership, voting trustee, bank, trust company, broker,
nominee or clearing agency, or in any other name except that of a natural
person, if it has not been established pursuant to such procedures that
there has been no change in the person or persons who direct the exercise
of the powers or rights referred to above with respect to such share of
Common Stock during the period of 36 months immediately preceding the date
on which a determination is made of the shareholders who are entitled to
take any action, then a change in beneficial ownership shall be deemed to
have occurred during such period.
There are several exceptions and qualifications to the terms of the
Voting Amendment described above. For a copy of the complete Voting
Amendment, please contact the Company at the address listed below.
Shareholders who hold their shares in "street name" or through any other
method specified above are required to submit proof of continued
beneficial ownership to the Company in order to be entitled to five (5)
votes per share. Such proof must consist of a written certification by the
record owner that there has been no change in beneficial ownership (as
defined in the Voting Amendment) during the relevant period. The required
form for this certification is attached. The Company reserves the right,
however, to require evidence in addition to the certification in
situations where it reasonably believes an unreported change may have
occurred. Proof (including certifications) will be accepted only if it is
received by the Tabulating Agent at least five (5) days before the date
for the shareholders' meeting.
The Company will notify shareholders of record who are natural persons,
in advance of a shareholders' meeting, of the Company's determination as
to the number of shares for which they are entitled to five (5) votes per
share and the number of shares for which they are entitled to one (1)
vote. This determination will be shown on the Proxy cards for such
shareholders. Shareholders of record who disagree with such determination
may certify that no change in beneficial ownership has occurred during the
relevant period by following the same procedure set out in the previous
paragraph for other shareholders.
For Further Information
For further information concerning the Voting Amendment in general, or its
applicability to a shareholder's particular circumstances, please contact the
Company:
Pioneer Hi-Bred International, Inc.
700 Capital Square, 400 Locust Street
Des Moines, IA 50309
Attention: Jerry L. Chicoine, Secretary
Telephone number: 515-248-4800 or (800)247-5258
<PAGE>
PIONEER HI-BRED INTERNATIONAL, INC.
SHAREHOLDER CERTIFICATION FORM
FOR
ANNUAL MEETING OF SHAREHOLDERS
ON
FEBRUARY 27, 1996
USE ONLY IF YOU CLAIM MORE VOTING RIGHTS
THAN INDICATED ON YOUR PROXY CARD
The undersigned certifies that:
1. Of the _______________ shares of the Company's Common Stock held of
record by the undersigned on the close of business on December 29, 1995,
________________ shares have been beneficially owned continuously by the same
person since December 29, 1992; and
2. (Applicable only to shareholders who are natural persons) -- the
following is a statement supporting why the undersigned disagrees with the
Company's determination of the voting power (as shown on the Proxy card) to
which the undersigned is entitled in connection with the Annual Meeting:
---------------------------------------------------------------------------
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Dated: _____________________________________________________
- ---------------------------------------- -------------------------
(Print Shareholder Name) (Print Shareholder Name)
- ---------------------------------------- -------------------------
Signature of Shareholder(s) Signature of Shareholder(s)
Please sign exactly as name appears on the Proxy for the Annual Meeting. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
THIS CERTIFICATION SHOULD BE RETURNED IN THE ENCLOSED POSTAGE PAID ENVELOPE
PROVIDED.
<PAGE>
Exhibit B
ARTICLE VII
Each director and officer and each former director and officer of this
Corporation and each person who may serve at its request as a director or
officer of another corporation in which this Corporation or a subsidiary of this
Corporation owns shares of capital stock, or of which it is a creditor, shall be
indemnified by this Corporation against all costs and expenses reasonably
incurred by him in connection with any action, suit or proceeding in which he is
or may be involved by reason of his being, or having been, a director or officer
of this Corporation or of such other corporation (whether or not he is a
director or officer at the time of incurring such costs and expenses), except
with respect to matters as to which he shall be adjudged in any such action,
suit or proceeding to be liable by reason of his negligence, fraud or other
civil or criminal misconduct in the performance of his duties. In the case of
the settlement of any such action, suit or proceeding, he shall be indemnified
by this Corporation against the costs and expenses (including any amount paid in
settlement to this Corporation or to such other corporation or otherwise)
reasonably incurred by him in connection with such action, suit or proceeding
(whether or not he is a director or officer at the time of incurring such costs
and expenses) if, and only if, the holders of a majority of capital stock of the
Corporation represented at any annual meeting or special meeting of such
shareholders shall vote to approve such settlement and the reimbursement of such
director or officer of such costs or expenses.
The foregoing rights of indemnification shall apply to the heirs, executors
and administrators of any such director or officer, or former director or
officer or person and shall not be exclusive of other rights to which any such
director or officer or former director or officer or persons (or his heirs,
executors or administrators) may be entitled as a matter of law.
<PAGE>
Exhibit C
INDEMNIFICATION
Section 1. Indemnification. The Corporation shall indemnify every person
who is or was a party or involved (as a witness or otherwise) or is threatened
to be made a party or involved (as a witness or otherwise) (hereafter
Indemnitee) in any threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, formal or informal,
and whether or not by or in the right of the Corporation or otherwise (hereafter
a "Proceeding"), by reason of the fact that he is or was a director, officer, or
employee of the Corporation, or while a director, officer or employee of the
Corporation, is or was serving at the request of the Corporation (or such
service was approved by the Corporate Management Committee (committee of
Executive Officers selected by the President) or successor committee) as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise, or by reason of any action alleged to have been taken or
not taken by him while acting in any such capacity, against expenses (including
counsel fees and expenses when incurred) (hereafter "Expenses") and all
liability and loss, including judgments, fines (including excise taxes assessed
with respect to an employee benefit plan), and penalties and amounts paid or to
be paid in settlement (whether with or without court approval) (hereafter
"Liabilities"), actually incurred by him in connection with such Proceeding, to
the fullest extent permitted by law as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment).
Notwithstanding anything in this Article to the contrary, except with respect to
a proceeding to enforce rights to indemnification or advancement of expenses
under this Article , the Corporation shall provide indemnification and
advancement of Expenses under this Article to persons seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the Board of Directors.
Section 2. Advancement of Expenses. The right to indemnification
conferred in this Article shall include the right to be paid by the Corporation
the Expenses incurred in connection with the proceeding in advance of the final
disposition thereof promptly after receipt by the Corporation of a request
therefor stating in reasonable detail the Expenses incurred, provided, however,
that to the extent required by law, the payment of such Expenses in advance of
the final disposition of a proceeding shall be made only upon the Corporation's
receipt of an undertaking by or on behalf of such person to repay such amounts
if it shall ultimately be determined that he is not entitled to be indemnified
under this Article or otherwise (this undertaking need not be secured and must
be accepted without reference to the ability to repay).
Section 3. Determination. Any indemnification, under these Articles
(unless ordered by court or as otherwise provided in Section 2 for the
advancement of expenses) shall be made by the Corporation upon a determination
that the indemnification of the Indemnitee is proper in the circumstances
because he has met the applicable standard of conduct. Such determination shall
be made (1) by the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the Proceeding, (2) if a quorum cannot be
obtained, by a majority vote of a committee duly designated by the board of
directors, in which designation directors who are parties may participate,
consisting solely of two or more directors not at the time parties to the
proceeding, (3) by special legal counsel selected by the board of directors by
vote as set forth in clause "(1) or (2)" of this Section 3, if a quorum of the
board of directors cannot be obtained and a committee cannot be designated,
selected by majority vote of the full board of directors, in which selection
directors who are parties may participate, or (4) by the shareholders, but
shares owned by or voted under the control of directors who are at the time
parties to the proceeding shall not be voted on the determination.
Section 4. Partial Indemnification. If a person is entitled under this
Article to indemnification by the Corporation for some or a portion of
Liabilities and Expenses but not, however, for all of the total amounts thereof,
the Corporation shall nevertheless indemnify such person for the portion thereof
to which he is entitled.
Section 5. Specific Limitations On Indemnification. Notwithstanding
anything in these Bylaws to the contrary, the Corporation shall not be obligated
to make any payment under this Article for indemnification for Liabilities and
Expenses in connection with Proceedings settled without the consent of the
Corporation, which consent, however, shall not be unreasonably withheld.
Section 6. Payment and Factual Determinations. If a claim for
indemnification or advancement of expenses under this Article is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, the claimant may, at any time thereafter, bring
suit against the Corporation to recover the unpaid amount of the claim. The
claimant shall also be entitled to be paid the expenses of prosecuting such
claim to the extent he is successful in whole or in part on the merits or
otherwise in establishing his right to indemnification or to the advancement of
expenses.
Section 7. Other Rights. The right to indemnification, including the
right to the advancement of expenses, conferred in this Article shall not be
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses hereunder may be entitled under any Articles of
Incorporation, Bylaw, agreement, vote of shareholders or directors, or
otherwise. Subject to applicable law, to the extent that any rights to
indemnification or advancement of expenses of such person under any such
Articles of Incorporation, Bylaw, agreement, vote of shareholders or directors,
or otherwise, are broader or more favorable to such person, the broader or more
favorable rights shall control.
The Corporation shall have the express authority to enter into such
agreements as the Board of Directors deems appropriate for the indemnification
of, including the advancement of expenses to, present or future directors,
officers, employees and agents of the Corporation in connection with their
service to, or status with, the Corporation or any other corporation,
partnership, joint venture, trust or other enterprise, including any employee
benefit plan, for whom such person is serving at the request of the Corporation.
Section 8. Trust. The Corporation may create a fund of any nature which
may, but need not, be under the control of a trustee, or otherwise to secure or
insure in any manner its indemnification obligations, including its obligation
to advance expenses, whether arising under or pursuant to this Article or
otherwise.
Section 9. Insurance. The corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the corporation, or who, while a director, officer
employee or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, against liability asserted against
or incurred by that individual in that capacity or arising from the individual's
status as a director, officer, employee, or agent, whether or not the
corporation would have power to indemnify that individual against the same
liability.
Section 10. Contract. The right to indemnification, including the right
to advancement of expenses provided herein, shall be a contract right, shall
continue as to a person who has ceased to be a director, officer, employee, or
to serve in any other of the capacities described in Section 1, and shall inure
to the benefit of the heirs, personal representatives, executors and
administrators of such person. Notwithstanding any amendment, alteration, or
repeal of this Article or any of its provisions or the adoption of any provision
inconsistent with this Article or any of its provisions, any person, shall be
entitled to indemnification, including the right to the advancement of expenses,
in accordance with the provisions hereof with respect to any action taken or
omitted prior to such amendment, alteration, or repeal or adoption of such
inconsistent provision, except to the extent such amendment, alteration, repeal,
or inconsistent provision provides broader rights with respect to
indemnification, including the advancement of expenses, than the Corporation was
permitted to provide prior to the amendment, alteration, repeal, or the adoption
of such inconsistent provision or to the extent otherwise prescribed by law.
Section 11. Subrogation. In the event of any payment under this Article,
the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Corporation to bring suit to enforce
such rights.
Section 12. Notice of Proceedings. Indemnitee agrees promptly to notify
the Corporation in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder, but Indemnitee's omission to so notify the
Corporation shall not relieve the Corporation from any liability which it may
have to Indemnitee under this Article unless such omission materially prejudices
the rights of the Corporation (including without limitation, the Corporation
having lost significant substantive or procedural rights with respect to the
defense of any Proceeding). If such omission does materially prejudice the
rights of the Corporation, the Corporation shall be relieved from liability
under this Article only to the extent of such prejudice; but such omission will
not relieve the Corporation from any liability which it may have to Indemnitee
otherwise than under this Article.
Section 13. Defense of Claims. The Corporation will be entitled to
participate at its own expense in any Proceeding of which it has notice. The
Corporation jointly with any other indemnifying party similarly notified of any
Proceeding will be entitled to assume the defense of Indemnitee therein, with
counsel reasonably satisfactory to Indemnitee. After notice from the Corporation
to Indemnitee of its election to assume the defense of Indemnitee in any
Proceeding, the Corporation will not be liable to Indemnitee under this Article
for any Expenses subsequently incurred by Indemnitee in connection with the
defense thereof, except as otherwise provided below. Indemnitee shall have the
right to employ its own counsel in any such Proceeding but the fees and expenses
of such counsel incurred after notice from the Corporation of its assumption of
the defense thereof shall be at the expense of Indemnitee unless: (i) the
employment of counsel by Indemnitee has been authorized by the Corporation; or
(ii) the Corporation shall not in fact have employed counsel to or cannot in
good faith without conflict assume the defense of Indemnitee in such Proceeding
or such counsel has not in fact assumed such defense; in each of which case the
fees and expenses of Indemnitee's counsel shall be advanced by the Corporation.
Section 14. Other Entities. The board of directors may by resolution
provide for indemnification to officers, directors, or employee of other
entities not otherwise provided indemnification herein as it determines
appropriate.
Section 15. Employee Benefit Plans. A director, officer, or employee is
considered to be serving an employee benefit plan at the Corporation's request
if such person's duties to the Corporation also imposed duties on, or otherwise
involves services by, that person to the plan or to the participants in or
beneficiaries of the plan.
<PAGE>
Exhibit D
INDEMNIFICATION AGREEMENT
This Agreement is entered into as of this _____ day of
_________________, 19___, by and between PIONEER HI-BRED INTERNATIONAL, INC., an
Iowa corporation (the "Company"). and
_________________________________(Indemnitee").
WHEREAS, there is a general awareness that highly competent and
experienced persons are becoming more reluctant to serve as directors or
officers of publicity-held corporations unless they are protected by
comprehensive insurance or indemnification, especially since shareholder and
derivative lawsuits against publicly-held corporations, their directors and
officers for line-of-duty decisions and actions have increased in number in
recent years for damages in amounts which have no reasonable or logical
relationship to the amount Compensation received by the directors or officers
from the corporation, and
WHEREAS, the interpretations of ambiguous statues, regulations and
Bylaws are too uncertain to provide corporate officers and directors with
adequate, reliable knowledge of legal risks to which they may be exposed, and
WHEREAS, damages sought by class action plaintiffs in some cases amount
to substantial dollar amounts and, whether or not the case in meritorious, the
cost of defending these suits is enormous with few individual directors and
officers having the resources to sustain such legal costs or judgment in favor
of the plaintiffs even in cases where the defendant was neither culpable nor
profited personally to the detriment of the corporation, and
WHEREAS, it is generally recognized that the issues in controversy in
such litigation are usually related to the knowledge, motives and intent of the
director of officer and that he is usually the only witness with firsthand
knowledge of the essential facts or of exculpating circumstances who is
qualified to testify in his defense regarding matters of such subjective nature,
and that the long period of time which normally and usually elapses before such
suits can be disposed of can extend beyond the normal time for retirement for a
director or officer with the result that he, after retirement, or in the event
of his death, his spouse, heirs, executors or administrators, as the case my be,
may be faced with limited ability, undue hardship and an intolerable burden in
launching and maintaining a proper and adequate defense of himself or his estate
against claims for damages, and
WHEREAS, the Iowa Business Corporation Act, under which the Company is
organized, empowers corporations to indemnify and advance expenses of litigation
to persons serving as director, officer, employee, or agent of the corporation
or a person while a director or officer of the corporation also serves at the
request of the corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, and further specifies that the
indemnification and advancement of the expenses set forth in the Iowa Business
Corporation Act subject to certain limitations "are not exclusive of any other
rights to which those seeking indemnification or advancement of expenses are
entitled under a provision in the Articles of Incorporation or indemnification
or advancement of expenses are entitled under a provision in the Articles of
Incorporation or Bylaws, agreements, vote of shareholders or disinterested
directors or otherwise," and
WHEREAS, the Board of Directors of the Company, bases upon their
experience as business managers, have concluded that the continuation of present
trends in litigation against corporate directors and officers will inevitably
result in less effective direction and supervision of the Company, and the Board
deems such consequences to be so detrimental to the best interests of the
Company's shareholders that it has concluded that its directors and officers
should be provided with maximum protection against inordinate risks in order to
insure that the most capable persons available will be attracted to such
positions; therefore, said Board has further concluded that it is not only
reasonable and prudent but necessary for the Company contractually to obligate
itself to indemnify in a reasonable and adequate manner its directors and
officers and to assume for itself maximum liability for expenses and damages in
connection with claims lodged against them for their line-of-duty decisions and
actions, and
WHEREAS, the Company desires to have Indemnitee serve or continue to
serve as a director or officer of the Company free from undue concern for
unpredictable, inappropriate or unreasonable claims for damages by reason of his
being a director or officer of the Company or by reason of his decisions or
actions on its behalf, and Indemnitee desires to serve or to continue to serve,
or to continue to serve, (provided that he is furnished the indemnity provided
for hereinafter), in one or more of such capacities. NOW, THEREFORE:
WITNESSETH
THAT for and in consideration of the premises and the convenants
contained herein, the Company and Indemnitee do convenant and agree as follows:
ARTICLE I
DEFINITIONS
For purpose of the Agreement, the following terms shall have the meaning
given here:
SECTION 1.1. "Board" shall mean the Board of Directors of the Company.
SECTION 1.2. "Change in Control" shall mean a change in control of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on
any similar schedule or form) promulgated under the Securities Exchange Act of
1934, as amended and the rules and regulations thereunder (collectively the
"1934 Act"), whether or not the Company is then subject to such reporting
requirement, provided, however, that without limitation, such a Change in
Control shall be deemed to have occurred irrespective of the applicability of
the initial clause of this definition if (i) shareholders of the Company approve
(x) a consolidation or merger of the Company with any other corporation other
than a merger or consolidation that would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (y) a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or substantially
all of the Company's assets or (ii) any person (as such term is used in Sections
13(d) and 14(d) of the 1934 Act), but excluding any employee benefit or welfare
plan or employee stock plan of the Company or any subsidiary of the Company, or
any entity organized, appointed, established or holding securities of the
Company with voting power for or pursuant to the terms of any such plan) is or
becomes the "beneficial owner" (within the meaning of Rule 13d-3 under the 1934
Act) directly or indirectly of securities of the Company representing thirty
percent (30%) or more of the then outstanding voting power of the Company, or
(iii) the commencement of a tender offer which, if successful, would result in
the beneficial ownership described in (ii) above, or (iv) during any period of
twenty-four (24) consecutive months, individuals who at the beginning of such
period constituted the entire Board of Directors cease for any reason to
constitute at least a majority thereof unless the election of each new director
was approved by a vote of at lease two-thirds (2/3) of the directors then still
in office who were directors at the beginning of the period.
SECTION 1.3. "Corporate Status" describes the status of a person who is
or was a director or officer of the Company, or a member of any committee of the
Board, and the status of a person who, while a director or officer of the
Company, is or was serving at the request of the Company (or such service was
approved by the Corporate Management Committee (committee of Executive Officers
selected by the President) or successor committee) as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
The Indemnitee is considered to be serving an employee benefit plan at the
Company's request if such person's duties to the Company also imposed duties on,
or otherwise involves services by, that person to the plan or to the
participants in or beneficiaries of the plan.
SECTION 1.4. "Disinterested Director" shall mean a director of the
Company who neither is nor was a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
SECTION 1.5. "Expenses" shall mean without limitation expenses of
proceedings including all attorneys' fees, retainers, court costs, transcript
costs, fees of experts, accounting and witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness or
party in a Proceeding.
SECTION 1.6. "Good Faith" shall mean Indemnitee having acted in good
faith in a manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal Proceeding,
Indemnitee having acted in a certain manner with no reasonable cause to believe
his conduct was unlawful.
SECTION 1.7. "Liabilities" shall mean liabilities of any type
whatsoever, including without limitation, any judgments, fines, ERISA excise
taxes and penalties, excise taxes assessed with respect to an employee benefit
plan, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines, penalties, or amounts paid in settlement) in
connection with the investigation, defense settlement or appeal of any
Proceeding or any claim, issue or matter therein.
SECTION 1.8. "Proceeding" includes any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other actual, threatened or
completed proceeding whether civil, criminal, administrative or investigative,
formal or informal, other than one initiated by Indemnitee against the Company
or any director, officer, or agent of the Company unless (i) the Company has
joined in or the Board has consented to the initiation of such Proceeding, (ii)
the Proceeding is one to enforce indemnification rights under Article VIII or
(iii) the Proceeding is instituted after a Change in Control. For purposes of
the foregoing sentence, a "Proceeding" shall not be deemed to have been
initiated by Indemnitee where Indemnitee seeks to enforce Indemnitee's rights
under this Agreement.
SECTION 1.9. "Voting Securities" shall mean any securities of a company
that vote generally in the election of directors.
ARTICLE II
TERM OF AGREEMENT
This Agreement shall continue until and terminate upon the later of: (i)
ten years after the date the Indemnitee shall have ceased to serve in any of the
capacities covered by the agreement, or (ii) the final termination of all
pending Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee regarding the interpretation of enforcement of this
Agreement.
ARTICLE III
SERVICES BY INDEMNITEE, NOTICE OF PROCEEDINGS, DEFENSE OF CLAIMS
Section 3.1. Agreement to Serve. Indemnitee will serve and/ or continue
to serve at the will of the Company or under separate contract, if such exists,
as a director and/ or officer of the Company faithfully and to the best of his
ability so long as he is duly elected and qualified in accordance with the
provisions of the Bylaws thereof or until such time as he tenders his
resignation in writing. This Agreement does not create any additional right for
Indemnitee to serve as a director and/or officer other than at the will of the
Company or as otherwise provided by separate contract.
SECTION 3.2. Notice of Proceedings. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder, but Indemnitee's omission to so notify the Company shall not
relieve the Company from any liability which it may have to Indemnitee under
this Agreement unless such omission materially prejudices the rights of the
Company (including without limitation, the Company having lost significant
substantive or procedural rights with respect to the defense of any Proceeding).
If such omission does materially prejudice the rights of the Company, the
Company shall be relieved from liability under this Agreement only to the extent
of such prejudice; but such omission will not relieve the Company from any
liability which it may have to Indemnitee otherwise than under this Agreement.
SECTION 3.3. Defense of Claims. The Company will be entitled to
participate at its own expense in any Proceeding of which it has notice. The
Company jointly with any other indemnifying party similarly notified of any
Proceeding will be entitled to assume the defense of Indemnitee therein, with
counsel reasonably satisfactory to Indemnitee; provided, however, that the
Company shall not be entitled to assume the defense of Indemnitee in any
Proceeding if there has been a Change in Control or if Indemnitee has reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee with respect to such Proceeding. After notice from the Company to
Indemnitee of its election to assume the defense of Indemnitee in any
Proceeding, the Company will not be liable to Indemnitee under this Agreement
for any Expenses subsequently incurred by Indemnitee in connection with the
defense thereof, other than reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to employ his own counsel in any
such Proceeding but the fees and expenses of such counsel incurred after notice
from the Company of its assumption of the defense thereof shall be at the
expense of Indemnitee unless: (i) the employment of counsel by Indemnitee has
been authorized by the Company; (ii) Indemnitee shall have reasonably concluded
that counsel employed by the Company may not adequately represent Indemnitee; or
(iii) the Company shall not in fact have employed counsel to assume the defense
of Indemnitee in such Proceeding or such counsel has not in fact assumed such
defense or such counsel is not acting in connection therewith with reasonable
diligence; in each of which case the fees and expenses of Indemnitee's counsel
shall be advanced by he Company.
SECTION 3.4. Settlement of Claims. The Company shall not settle any
Proceeding in any manner which would impose any liability, penalty, or
limitation on Indemnitee without the written consent of Indemnitee; provided,
however, that Indemnitee will not unreasonably withhold consent to any proposed
settlement. The Company shall not be liable to indemnify Indemnitee under this
Agreement or otherwise for any amounts paid in settlement of any Proceeding
effected without the Company's written consent. The Company shall not
unreasonably withhold its consent to any proposed settlement. Notwithstanding
the above, Consent is not required after a Change in Control.
ARTICLE IV
INDEMNIFICATION
SECTION 4.1. In General. The Company shall indemnify and advance
Expenses to Indemnitee in connection with any Proceeding as provided in this
Agreement and to the fullest extent consistent with applicable law in effect on
the date hereof and to such greater extent as applicable law may hereafter from
time to time permit.
SECTION 4.2. Proceeding Other than a Proceeding by or in the Right of
the Company. If Indemnitee was or is a party or is threatened to be made a party
to any Proceeding (other than a Proceeding by or in the right of the Company) by
reason of his Corporate Status, or by reason of anything done or not done by him
in any such capacity, the Company shall, subject to Section 4.7 hereof,
indemnify him against any and all Expenses and Liabilities actually and
reasonably incurred by or for Indemnitee if he acted in Good Faith.
SECTION 4.3. Proceedings by or in the Right of the Company. If
Indemnitee was or is a party or is threatened to be made a party to any
Proceeding by or in the right of the Company to procure a judgment in its favor
by reason of his Corporate Status, or by reason of anything done or not done by
him in any such capacity, the Company shall, subject to Section 4.7 hereof,
indemnify him against any and all Expenses actually and reasonably incurred by
or for him in connection with the investigation, defense, settlement, or appeal
of such Proceeding if he acted in good Faith; except that no indemnification
under Section 4.3. shall be made in respect of any claim, issue or matter as to
which such person shall have been finally adjudged to be liable to the Company,
unless, and only to the extent, that a court of appropriate jurisdiction (
including but not limited to the court in which such Proceeding was brought)
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, regardless of whether Indemnitee
acted in Good Faith, Indemnitee is fairly and reasonably entitled to indemnity
for such Expenses which such court shall deem proper.
SECTION 4.4. Indemnification of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a party
to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee
shall be indemnified to the maximum extent consistent with law, against all
Expenses and Liabilities actually and reasonably incurred by or for him in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee to the maximum extent consistent with law, against all Expenses and
Liabilities actually and reasonably incurred by or for him in connection with
each successfully resolved claim, issue or matter. For purposes of this Section
4.4 and without limitation, the termination of any claim, issue or matter in
such a Proceeding by dismissal, with or without prejudice, shall be deemed to be
a successful result as to such claim, issue or matter, so long as there has been
no finding (either adjudicated or pursuant to Article VI) that Indemnitee did
not act in Good Faith.
SECTION 4.5. Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee, by reason
of Indemnitee's Corporate Status, has prepared to serve or has served as a
witness in any Proceeding, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by or for him in connection therewith.
SECTION 4.6. Partial Indemnification. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of Expenses but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
SECTION 4.7. Specific Limitations on Indemnification. Notwithstanding
anything in this Agreement to the contrary, the Company shall not be obligated
under this Agreement to make any payment to Indemnitee for indemnification with
respect to any Proceeding:
(a) To the extent that payment is actually made to Indemnitee
under any insurance policy, or is made to Indemnitee by the Company otherwise
than pursuant to this Agreement.
(b) If a court in such Proceeding has entered a judgment or other
adjudication which is final and has become nonappealable and establishes that a
claim of Indemnitee for such indemnification arose from: (i) a breach by
Indemnitee of Indemnitee's duty of loyalty to the Company or its shareholders;
(ii) acts or omissions of Indemnitee not in good Faith or which involve
intentional misconduct or knowing violations of the law; or (iii) a transaction
in which Indemnitee derived an improper personal benefit.
(c) If there has been no Change in Control, for Liabilities in
connection with Proceedings settled without the consent of the Company, which
consent, however, shall not be unreasonably withheld.
(d) for an Accounting of profits made from the purchase or sale
by Indemnitee of securities of the company within the meaning of Section 16(b)
of the 1934 Act or similar provisions of any federal, state or local statue or
regulation.
ARTICLE V
ADVANCEMENT OF EXPENSES
Notwithstanding any provision to the contrary in Article VI, the Company
shall advance all reasonable Expenses which, by reason of Indemnitee's Corporate
Status, were incurred by or for him in connection with any Proceeding in advance
of the final disposition thereof, with five (5) business days after the receipt
by the Company of a statement or statements from Indemnitee requesting such
advance or advances. Such statement or statements shall reasonably evidence the
Expenses incurred by or for Indemnitee. Indemnitee hereby agrees to repay any
Expenses advanced hereunder if it shall ultimately be determined that Indemnitee
is not entitled to be indemnified against such Expenses. Any advances and the
undertaking to repay pursuant to this Article V shall be unsecured and interest
free.
ARTICLE VI
DETERMINATION OF RIGHT TO INDEMNIFICATION
SECTION 6.1. No Determination Necessary when Indemnitee was Successful.
To the extent Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding referred to in Section 4.2 or 4.3 of this Agreement or
in the defense of any claim, issue or matter described therein, the Company
shall Indemnify Indemnitee against Expenses actually and reasonably incurred by
or for him in connection with the investigation, defense, or appeal of such
Proceeding.
SECTION 6.2. Determination of Good Faith. In the event that Section 6.1
is inapplicable, the Company shall also indemnify Indemnitee unless, and only to
the extent that, the Company shall prove by clear and convincing evidence to a
forum listed in Section 6.3 below that Indemnitee did not act in Good Faith.
SECTION 6.3. Forum for Determination. Indemnitee shall be entitled to
select from among the following the forum in which the validity of the Company's
claim under Section 6.2 hereof that Indemnitee is not entitled to
indemnification will be heard:
(a) A quorum of the Board consisting of Disinterested Directors;
(b) Legal counsel selected by Indemnitee, and reasonably approved
by the Board, which counsel shall make such determination in a written opinion;
or
(c) A panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by Indemnitee and the last of whom is
selected by the first two arbitrators so selected.
As soon as practicable, and in no event later than thirty (30) days after
written notice of Indemnitee's choice of forum pursuant to this Section 6.3, the
Company shall, at its own expense, submit to the selected forum in such manner
as Indemnitee or Indemnitee's counsel may reasonably request, its claim that
Indemnitee is not entitled to Indemnification, and the company shall act in the
utmost good faith to assure Indemnitee a complete opportunity to defend against
such claim. The fees and expenses of the selected forum in connection with
making the determination contemplated hereunder shall be paid by the Company. If
the Company shall fail to submit the matter to the selected forum within thirty
(30) days after Indemnitee's written notice or if the forum so empowered to make
the determination shall have failed to make the requested determination within
thirty (30) days after the matter has been submitted to it by the Company, the
requisite determination that Indemnitee has the right to indemnification shall
be deemed to have been made.
SECTION 6.4. Right to Appeal. Notwithstanding a determination by any
forum listed in Section 6.3 hereof that Indemnitee is not entitled to
indemnification with respect to a specific Proceeding, Indemnitee shall have the
right to apply to the court in which that Proceeding is or was pending, or to
any other court of competent jurisdiction, for the purpose of enforcing
Indemnitee's right to indemnification pursuant to this Agreement. Such
enforcement action shall consider Indemnitee's entitlement to indemnification de
novo, and Indemnitee shall not be prejudiced by reason of a prior determination
that Indemnitee is not entitled to indemnification. The Company shall be
precluded from asserting that the procedures and presumptions of this Agreement
are not valid, binding and enforceable. The Company further agrees to stipulate
in any such judicial proceeding that the Company is bound by all the provisions
of this Agreement and is precluded from making any assertion to the contrary.
SECTION 6.5. Expenses under this Agreement. Notwithstanding any other
provision in this Agreement to the contrary, the Company shall indemnify
Indemnitee against all Expenses incurred by Indemnitee in connection with any
hearing or proceeding under this Article VI involving Indemnitee and against all
Expenses incurred by Indemnitee in connection with any other action between the
Company and Indemnitee involving the interpretation or enforcement of the rights
of Indemnitee under this Agreement even if it is finally determined that
Indemnitee is not entitled to indemnification.
ARTICLE VII
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS
SECTION 7.1. Burden of Proof. In making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement and the Company shall have the burden of proof to overcome
that presumption.
SECTION 7.2. Effect of Other Proceedings. The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not of itself adversely affect the right of Indemnitee to indemnification
or create a presumption that Indemnitee did not act in Good Faith.
SECTION 7.3. Reliance as Safe Harbor. For purposes of any determination
of Good Faith, Indemnitee shall be deemed to have acted in Good Faith if
Indemnitee's action is based on the records or books of accounts of the Company,
including financial statements, or on information supplied to Indemnitee by the
officers of the Company in the course of their duties, or on the advice of legal
counsel for the Company or on information or records given or reports made to
the Company by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company. The provisions of
this Section 7.3 shall not be deemed to be exclusive to or limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
SECTION 7.4. Actions of Others. The knowledge and/or actions, or failure
to act, of any director, officer, agent or employee of the Company shall not be
imputed to Indemnitee for purposes of determining the right indemnification
under this Agreement.
ARTICLE VIII
LETTER OF CREDIT
In order to secure the obligations of the Company to indemnify and
advance amounts to Indemnitee under this Agreement, the Company shall obtain at
its expense at the time of any Change in Control, and deliver to Indemnitee an
irrevocable standby letter of credit naming Indemnitee as the sole beneficiary,
in an amount not less than $1,000,000 issued by a financial institution having
assets in excess of $1000,000,000 and containing terms and conditions reasonably
acceptable to Indemnitee (the "Letter of Credit"); provided, however, that
Indemnitee agrees to surrender to the Company any Letter of Credit delivered to
him on account of a Change in Control described in (a) Section 1.2(i) if the
approved transaction is abandoned or not consummated, or (b) Section 1.2(iii) if
the tender offer is not consummated, or if consummated, does not result in
beneficial ownership by the person making the tender offer of securities
representing thirty percent (30%) or more of the then outstanding voting power
of the Company; provided further that the surrender of the Letter of Credit
shall in no way affect the Company's obligation to deliver another Letter of
Credit at the time of a subsequent Change in Control. The Letter of Credit shall
provide that Indemnitee may from time to time draw certain amounts thereunder,
upon the presentation to the issuer thereof of a certificate executed by
Indemnitee certifying (i) that Indemnitee has made a request of the Company for
an amount not less than the amount Indemnitee is drawing upon under the Letter
of Credit and that the Company has not provided Indemnitee with such amount
within five (5) business days of his request, and (ii) that Indemnitee believes
that he is entitled under the terms of this Agreement to the amount which he is
drawing upon under the Letter of Credit. The Company shall maintain and renew
the Letter of Credit or a substitute letter of credit meeting the criteria of
this Article VIII during the term of this Agreement in a manner such that the
Letter of Credit shall have a initial term of three (3) years and shall be
extended for an additional year at the end of each year, so that is shall at all
times have at least two (2) years of its term remaining. The issuance of the
Letter of Credit shall not, in any way, diminish the obligation of the Company
to indemnify Indemnitee against Expenses and Liabilities to the full extent
required by this Agreement.
ARTICLE IX
NON-EXCLUSIVITY, INSURANCE, SUBROGATION
SECTION 9.1. Non-Exclusivity. The rights of Indemnitee hereunder shall
not be deemed exclusive of any other rights to which Indemnitee may at any time
be entitled under any provision of law, the Company's Articles of Incorporation,
any Bylaw, any agreement, a vote of shareholders or a resolution of directors,
or otherwise, and to the extent that during the term of this Agreement the
rights of the then existing directors and officers are more favorable to such
directors or officers than the rights currently provided to Indemnitee under
this Agreement, Indemnitee shall be entitled to the full benefits of such more
favorable rights. No amendment, alteration, rescission or replacement of this
Agreement or any provision hereof shall be effective as to Indemnitee with
respect to any action or inaction by such Indemnitee in Indemnitee's Corporate
Status prior to such amendment, alteration, rescission or replacement.
SECTION 9.2. Insurance. The Company presently has in place certain
policies of directors' and officers' liability insurance ("Insurance"). The
Company agrees that during the term of this Agreement, the Company shall use
reasonable efforts to purchase and maintain Insurance in effect for the benefit
of Indemnitee; provided, however, that the Company shall not be required to
maintain Insurance if the Company, in its sole discretion, determines that such
Insurance is not reasonably available; or that the premium cost of maintaining
such Insurance is substantially disproportionate to the amount of coverage
provided thereunder; or the protection provided by such Insurance is so limited
by exclusions, deductions or otherwise that there is insufficient benefit to
warrant the cost of maintaining such Insurance.
SECTION 9.3. Subrogation. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all papers required
and take all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce such
rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Successor and Assigns. (a) This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of Indemnitee and Indemnitee's heirs,executors, personal representatives
and administrators.
(b) If Indemnitee is deceased and is entitled to indemnification
under any provision of this Agreement, the Company shall indemnify Indemnitee's
estate and his spouse, heirs, administrators and executors against and the
Company shall, and does hereby agree, to assume any and all Expenses and
Liabilities actually and reasonably incurred by or for Indemnitee or his estate,
in connection with the investigation, defense, settlement or appeal of any such
Proceeding. Further, when requested in writing by the spouse of Indemnitee,
and/or the heirs, executors or administrators of Indemnitee's estate, the
Company shall provide appropriate evidence of the Company's agreement set out
herein, to indemnify Indemnitee against, and to itself assume, such Liabilities
and Expenses.
SECTION 10.2. Limitations of Actions and Release of Claims. No legal
action shall be brought and no cause of action shall be asserted by or on behalf
of the Company against Indemnitee, his spouse, heirs, executors or
administrators after the expiration of two years from the date Indemnitee ceases
(for any reason) to serve in any one or more of the capacities covered by this
Agreement, and any claim or cause of action of the Company shall be extinguished
and deemed released unless asserted by filing of a legal action within such
two-year period.
SECTION 10.3. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby, and (ii) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
SECTION 10.4. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all documents required
and shall do all acts that my be necessary to secure such rights and to enable
the Company effectively to bring suite to enforce such rights.
SECTION 10.5. No Adequate Remedy. The parties declare that it is
impossible to measure in money the damages which will accrue to either party by
reason of a failure to perform any of the obligations under this Agreement.
Therefore, if either party shall institute any action or proceeding to enforce
the provisions hereof, such party against whom such action or proceeding is
brought hereby waives the claim or defense that such party has an adequate
remedy at law, and such party shall not urge in any such action or proceeding
the claim or defense that the other party has an adequate remedy at law.
SECTION 10.6. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
these Agreement or to affect the construction thereof.
SECTION 10.7. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
The indemnification rights afforded to the Indemnitee hereby are contract rights
and may not be diminished eliminated or otherwise affected by amendments to the
Articles of Incorporation, as amended, Bylaws, as amended, or by other
agreements including directors' and officers' liability insurance policies of
the Company.
SECTION 10.8. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other.
SECTION 10.9. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
If to Indemnitee, as shown with Indemnitee's signature below.
If to the Company to:
Pioneer Hi-Bred International, Inc.
700 Capital Square
400 Locust Street
Des Moines, IA 50309
Attention: Jerry Chicoine, Esq.
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
SECTION 10.10. Governing Law. The parties agree that this Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Iowa without application of the conflict of laws principles
thereof.
SECTION 10.11. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto in reference to all the
matters herein agreed upon. This Agreement replaces in full all prior
indemnification agreements or understandings of the parties hereto, and any and
all such prior agreements or understandings are hereby rescinded by mutual
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PIONEER HI-BRED INTERNATIONAL, INC.
By_____________________________________
Its____________________________________
INDEMNITEE:_________________________
Address:_______________________________
-------------------------------
<PAGE>
PIONEER HI-BRED INTERNATIONAL, INC.
Proxy For Annual Meeting of Shareholders--February 27, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles S. Johnson and Jerry L. Chicoine, or
either of them, as Proxies, with the power of substitution in each, to vote all
shares of the Common Stock of Pioneer Hi-Bred International, Inc. (the
"Company") held of record by the undersigned at the close of business on
December 29, 1995, at the Annual Meeting of Shareholders of the Company to be
held on February 27, 1996, at 2:00 P.M., Central Standard Time, and at any
adjournment thereof, on all matters set forth in the Notice of Meeting and Proxy
Statement, a copy of which has been received by the undersigned, as follows on
the reverse side.
IN THEIR DISCRETION, THE PROXIES ARE EACH AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENTS THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED "FOR" EACH OF THE MATTERS STATED.
NQ= Total number of votes for shares eligible for one vote per share (___ NQ
divided by 1 = ___ NQ shares)
Q= Total number of votes for shares eligible for five votes per share (____
Q divided by 5 = _____ Q shares)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please mark votes as in this example.
IMPORTANT: Please place a mark in the appropriate box. Please date, sign, and
return promptly using the enclosed envelope.
1. Election of Directors -
Class II Nominees: Dr. Ray A. Goldberg
Dr. F. Warren McFarlan
Dr. Owen J. Newlin
Thomas N. Urban
FOR all nominees (except as marked to the contrary below) WITHHOLD from
all nominees (INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominee's name
in the space provided below).
2. ______________________________________________
.
To approve the Pioneer Hi-Bred International, Inc. Management Reward
Program - Performance-Based.
FOR AGAINST ABSTAIN
3. To approve the Pioneer Hi-Bred International, Inc. Restricted Stock Plan -
Performance-Based.
FOR AGAINST ABSTAIN
4. To approve the Pioneer Hi-Bred International, Inc. Stock Option Plan.
FOR AGAINST ABSTAIN
5. To amend the Articles of Incorporation to remove Article VII regarding
indemnification.
FOR AGAINST ABSTAIN
6. To ratify and approve the form of indemnification agreement to be entered
into between the Company and its Directors and Officers and approve and
authorize substantially similar agreements to be entered into in the future.
FOR AGAINST ABSTAIN
7. To ratify the appointment of KPMG Peat Marwick as independent auditors.
FOR AGAINST ABSTAIN
Please sign exactly as name appears on this Proxy. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature __________________________________ Date ___________________________
Signature __________________________________ Date ___________________________
MARK HERE FOR ADDRESS MARK HERE IF YOU PLAN
CHANGE AND NOTE BELOW TO ATTEND THE MEETING
