[GRAPHIC OMITTED]
PIONEER HI-BRED INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held
January 28, 1997
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 N.W. 62nd Avenue, Johnston, Iowa, 50131 on Tuesday, January 28, 1997, at
2:00 P.M., Central Standard Time, for the following purposes:
1. To elect five (5) Directors.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent auditors.
3. 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 November 29, 1996, 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
December 10, 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 January 28, 1997, 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
December 10, 1996.
RECORD DATE; VOTING OF SHARES
Only shareholders of record at the close of business on November 29, 1996, will
be entitled to vote at the Annual Meeting.
As of the close of business on November 15, 1996, there were 82,375,352 shares
of Common Stock outstanding. The exact number of votes which the holders of the
outstanding shares as of close of business on November 29, 1996 will be entitled
to cast at the 1997 Annual Meeting cannot be determined at the date of this
Proxy Statement because a shareholder has until January 23, 1997 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 November 29,
1993 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 ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors; and (iii) at the discretion of the Proxy holders with
regard to such other business as may come before the meeting. If for any reason,
one or 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 counted for purposes of determining the
presence of a quorum. Abstentions and broker nonvotes are not counted for
purposes of determining the election of Directors or ratification of auditors.
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 II, extend to the Annual Meetings of
Shareholders in 1998 and 1999, respectively, and until a successor is elected
and qualified. At the Annual Meeting of Shareholders on January 28, 1997, five
(5) Class III Directors are to be elected to serve until the Annual Meeting of
Shareholders in 2000, 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 Class I and Class II.
The Board of Directors unanimously recommends a vote of "FOR" the election of
each of the nominees.
<TABLE>
<CAPTION>
Information Concerning Nominees
Age at Director
Name 10/21/96 Since Background
Class III--Term Will Expire in 2000
<S> <C> <C> <C>
Nancy Y. Bekavac................. 49 1994 Since July, 1990, Ms. Bekavac has been President of
Scripps College, Claremont, California. 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., San Diego, California (a real estate
and marketing company).
C. Robert Brenton................ 66 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.
Luiz Kaufmann.................... 51 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).
Dr. Virginia Walbot.............. 50 1985 Since 1989, Dr. Walbot has been a Professor at Stanford
University's Department of Biological Sciences,
Stanford, California.
Fred W. Weitz.................... 67 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>
Information Concerning Directors Continuing in Office
<TABLE>
<CAPTION>
Age at Director
Name 10/21/96 Since Background
Class I -- Term Expires in 1998
<S> <C> <C> <C>
Dr. Pedro M. Cuatrecasas......... 60 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, Ann Arbor, Michigan.
Dr. Cuatrecasas is a Director of MDL Information
Systems, San Leandro, California (a chemical information
systems company); Alliance Pharmaceuticals, San Diego,
California (a pharmaceutical company); and Mitokor, San
Diego, California (an early research pharmaceutical
company).
Fred S. Hubbell.................. 45 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............... 58 1981 Mr. Johnson is currently President and Chief Executive
Officer of the Company since 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. and Principal
Mutual Life Insurance Companies, each of Des Moines,
Iowa.
H. Scott Wallace................. 45 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............. 54 1990 Since 1986, Mr. Wijffels has been Chairman of the
Executive Board of Rabobank Nederland, The Netherlands
(a cooperative banking organization doing business
internationally).
</TABLE>
<TABLE>
<CAPTION>
Age at Director
Name 10/21/96 Since Background
Class II--Term Expires in 1999
<S> <C> <C> <C>
Dr. F. Warren McFarlan........... 59 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............... 68 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. of
Des Moines, Iowa.
Thomas N. Urban.................. 62 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 Visiting Professor 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).
</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 four (4) Directors: Herman H.F. Wijffels
(Chairman), C. Robert Brenton, Dr. Owen J. Newlin and Dr. Virginia Walbot. Luiz
Kaufmann moved from the Audit Committee to the Compensation Committee in
December, 1995. 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 1996.
The Compensation Committee administers all executive compensation programs of
the Company. During Fiscal Year 1996, the committee was composed of three (3)
Directors: Fred S. Hubbell (Chairman), Dr. Pedro Cuatrecasas and Luiz Kaufmann.
Dr. Ray Goldberg resigned from the Compensation Committee in December, 1995 and
was replaced by Luiz Kaufmann. The Compensation Committee meets as required and
met two (2) times during fiscal 1996.
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 four (4) times during fiscal 1996.
The Board of Directors met four (4) times during fiscal 1996. 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 Herman H.F.
Wijffels. Mr. Wijffels attended 75% of the Board meetings, but less than 75% of
all committee meetings.
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the shares of Common Stock beneficially owned, at
November 22, 1996, 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.
<TABLE>
<CAPTION>
Shares Beneficially
Name Owned 1 Percent of Class 2
OVER 5% BENEFICIAL OWNERS:
<S> <C> <C>
Jean Wallace Douglas.................................. 6,474,450 3 7.86%
Robert B. Wallace..................................... 4,824,186 4 5.86%
OTHERS:
Nancy Y. Bekavac ...................................... 926 (*)
C. Robert Brenton ..................................... 1,098 (*)
Jerry L. Chicoine ..................................... 48,457 (*)
Pedro M. Cuatrecasas .................................. 837 (*)
Dr. Ray A. Goldberg 5................................. 8,400 (*)
Fred S. Hubbell ....................................... 2,724 (*)
John D. James ......................................... 20,840 (*)
Charles S. Johnson .................................... 50,899 (*)
Luiz Kaufmann.......................................... 131 (*)
Dr. Richard L. McConnell............................... 23,131 (*)
Dr. F. Warren McFarlan ................................ 2,872 (*)
Dr. Owen J. Newlin .................................... 753,566 (*)
Thomas N. Urban ....................................... 364,118 6 (*)
Dr. Virginia Walbot ................................... 605 (*)
H. Scott Wallace ...................................... 676,281 (*)
Fred W. Weitz ......................................... 5,570 (*)
Herman H.F. Wijffels .................................. 175 (*)
All Executive Officers and Directors as a Group (33 persons) 2,281,252 2.78%
<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.
3 Mrs. Douglas' address is 4733 Woodway Lane, N.W., Washington, D.C. 20016.
4 Mr. Wallace's address is 1120-19th Street, Suite 550, Washington, D.C.,
20036.
5 Dr. Ray A. Goldberg will retire from the Board of Directors on January 28,
1997.
6 Includes 104,213 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>
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.
<TABLE>
<CAPTION>
Age at Officer
Name 10/21/96 Since Background
<S> <C> <C> <C>
Wayne L. Beck ................... 48 1993 Mr. Beck was elected to his present position as Vice
President, Supply Management,effective March, 1993,
and since 1988, served as Director of North American
Seed Division-Production.
Carrol D. Bolen.................. 58 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 ........ 45 1995 Dr. 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, Dr. Cavalieri was
Director, Technology Support and from January, 1994 to
March, 1995, was Director, Trait and Technology
Development.
Jack A. Cavanah ................. 58 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 ............... 54 1988 Mr. Chicoine was elected to his present position as
Senior Vice President, Chief Financial Officer and
Corporate Secretary effective March, 1990.
Dwight G. Dollison .............. 53 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.
Andre Faget ..................... 61 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 ............... 42 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 March, 1991 to July, 1993, Mr. Hanigan
was Director of Business Information Services. From
July 1993 to March, 1995, Mr. Hanigan was the Director
of Information Management of the Company.
Brian G. Hart ................... 41 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 ................. 41 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 ................... 51 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............... 58 1981 Mr. Johnson is currently President and Chief Executive
Officer of the Company since 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.
Dr. Hector R. R. Laurence ....... 51 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 ................. 49 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 ........ 46 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 ............. 42 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 ............... 44 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 (Financial
Planning, Human Resources and Corporate
Communications). Mr. Schickler has been a Company
employee since 1974 in various administrative roles.
Harold F. Thorne ................ 49 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 .................. 59 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 .............. 59 1986 Mr. Wichmann was elected to his present position as Vice
President of Sales in March, 1986.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Philosophy
The Company's mission is to increase the wealth of our shareholders by
increasing the wealth of our customers through the science of genetics. The
Company does this by delivering high yielding products through a worldwide,
long-term, team effort.
The Company believes the key measures of increases in shareholder value and
long-term performance are earnings per share ("EPS") growth over time and return
on equity ("ROE"). Achieving these goals will also generate the cash flow and
financial strength required to support the Company's long-term efforts. As a
result, the Company has established goals of double digit EPS growth over time
and sustaining 20% ROE.
The Compensation Committee has aligned its programs with this business strategy
and key financial goals. The guiding principle is to encourage and reward
executives and key managers for short-term and long-term performance, with an
emphasis on double digit EPS growth over time and 20% ROE. Other performance
criteria are selected based upon executives' ability to impact such performance
and the correlation of such performance to the Company's strategy.
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 achieving these
goals.
Stock-based rewards 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.
The Company wants to attract and retain top-notch employees in order to sustain
long-term success, leadership and strategy. To help accomplish this goal, the
Company's targeted total compensation is competitive based on challenging
business 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 as defined below.
<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. The Company also
looks at the median compensation levels of the eleven top performing
companies (in terms of EPS growth and ROE) in the Comparator Organizations
as a guide. 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 provide total compensation above the 75th
percentile while performance below planned levels could result in total
compensation between the 50th and 65th percentiles or lower. Achieving targeted
results would place the Company well within the top quartile of the Comparator
Organization in terms of business performance.
For the five-year period ending in 1995, only four of the Comparator
Organizations achieved at least 12% annual EPS growth and 20% ROE. In the past
16 years, only three of these companies achieved a minimum five-year EPS growth
of 12% and 20% ROE at least 50% of the time.
Competitive market compensation information was gathered for the Compensation
Committee, with input from an independent consultant, from a group of over 50
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" on page
18, 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.
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.
Role of the Compensation Committee
The Compensation Committee has responsibility for reviewing and approving the
design of the compensation programs and pension and welfare benefits. For the
CEO/President, compensation is determined by the Compensation Committee and
reviewed by the full Board within the framework of the programs. For other
executives, the Compensation Committee has responsibility for reviewing salary
and rewards. All Compensation Committee members are non-employee members of the
Board. An independent compensation consultant has provided input on program
design.
Compensation Components
Other than employee benefits, there are three (3) primary components in the
compensation package for executives: base salary, management reward program and
long-term stock-based rewards. All components of compensation are collectively
considered when setting each individual component of compensation. Salary and
target reward levels are established and monitored according to the targeted
competitive levels as set forth in the "Philosophy" section. In addition, the
following factors are considered: responsibilities, experience, past
performance, internal equity considerations, and the internal relative value of
positions.
Base Salary. In fiscal 1996, salaries of executives were increased on average by
9.1% based primarily on increased executive responsibilities in part due to the
transition from Mr. Thomas N. Urban to Mr. Charles S. Johnson as CEO/President.
Other factors leading to the increase included competitive pay adjustments and
performance.
Management Reward Program. The Management Reward Program ("MRP") is designed to
focus management efforts on critical performance goals and to reward results
achieved in relation to those goals. Two separate plans are utilized to meet
this objective.
MRP--Performance-Based ("MRP Part I") rewards are based upon actual performance,
compared to target performance of 12-14% annual EPS growth over time and
sustained 20% ROE. Because the Compensation Committee believes EPS growth over
time more directly impacts shareholder value, the Management Reward Program
weights this factor more heavily than ROE.
The EPS growth goal is based on growth over time with fiscal 1995 as the
starting point. This is consistent with the Company's five-year planning process
and long-term nature of its business. It is also appropriate for a business that
has major fluctuations because of government programs and weather. MRP Part I
provides "performance-based compensation" as defined under 162(m) of the
Internal Revenue Code (the "Million Dollar Cap Legislation").
Part II of the Management Reward Program (the "MRP Part II") rewards executives
for meeting individual and/or team goals. Again, performance is the driver in
determining rewards. The goals may be measured by both objective and subjective
measures and include both financial and non-financial factors. The
team/individual goals do not as directly impact shareholder value as the
financial goals, so the rewards under MRP Part II represent approximately
one-fourth (1/4) of executives' potential target annual reward opportunity and
are limited to at most 20% of base salary.
Combined target rewards begin at 8% of base salary for participants and range
from 45% to 75% of base salary for executives, with the target percentage
increasing with increased responsibility. Actual rewards can range from zero,
when financial and individual performance is low, to multiples of the target
reward opportunities when performance is high.
In fiscal 1996, the Company had an outstanding 24% growth in EPS and 21.9% ROE,
well in excess of the 12-14% EPS growth and 20% ROE targets. EPS was $2.68
compared to $2.16 in fiscal year 1995. ROE was 21.9% compared to 20% in fiscal
year 1995. This resulted in rewards under the MRP Part I exceeding targeted
levels by approximately 2.4 times. All executives also exceeded their individual
or team goals resulting in better than target rewards under the MRP Part II.
The following is an example of the calculation of the MRP Part I reward. It uses
the fiscal 1996 EPS of $2.68 and ROE of 21.9%.
EPS Growth ROE Pay Band Executive's Performance-Based
Multiplier Modifier Target % Base Salary Reward
2.20 X 1.09 X 37% X $200,000 = $179,080X
The ROE Modifier ranges from .8 when ROE is 16% or lower to 1.2 when ROE is 24%
or higher; and is 1.0 when ROE is 20%. See below for current EPS Growth
multipliers that correspond to various EPS levels and EPS Growth percentages.
<TABLE>
<CAPTION>
EPS Performance Table*
----------------------------------------------------------------
EPS EPS Growth EPS (In $)
----------------------------------------------------------------
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
----------------------------------------------------------------
----------------------------------------------------------------
4% 0.33 2.25 2.54 2.87 3.24 3.66
----------------------------------------------------------------
----------------------------------------------------------------
8% 0.67 2.33 2.64 2.98 3.37 3.80
----------------------------------------------------------------
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
----------------------------------------------------------------
----------------------------------------------------------------
18% 1.70 2.55 2.88 3.25 3.68 4.16
----------------------------------------------------------------
----------------------------------------------------------------
22% 2.10 2.64 2.98 3.36 3.80 4.30
----------------------------------------------------------------
----------------------------------------------------------------
24% 2.20 2.68 3.03 3.42 3.86 4.37
----------------------------------------------------------------
<FN>
* The table is only a summary. There are various multipliers for points
between the points listed above and for points beyond 24%.
** 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 1995.
</FN>
</TABLE>
Long-Term Stock-Based Rewards. The purpose of the Long-Term Stock-Based Reward
Program is to, 1) align the interests of employees with the long-term interests
of shareholders; 2) encourage and reward medium/long-term performance; and 3)
retain top notch employees. There are two components of the Long-Term
Stock-Based Reward Program: Restricted Stock and Stock Options. Both provide
"performance based compensation" as defined under the Million Dollar Cap
Legislation.
The Restricted Stock and Stock Option Programs meet the above purposes by, 1)
rewarding management for increases in shareholder value; 2) focusing management
on the Company's long-term EPS growth; 3) ownership and retention of Company
stock; and 4) retention of management talent through vesting of Restricted Stock
and Options, generally over a five-year period.
- - - Restricted Stock Program. Restricted Stock Rewards are based upon actual
three-year EPS performance compared to target performance of 12-14% EPS growth
over time with fiscal 1995 as the starting point. This is consistent with the
Company's goal of double digit EPS growth over time, the Company's five-year
planning process and the long-term nature of its business. It is also
appropriate for a business that has major fluctuations because of government
programs and weather.
Target rewards begin at 20% of base salary for participants and range from 45%
to 75% of base salary for executives, with the target percentage increasing with
increased responsibility. Actual rewards can range from zero, when financial
performance is low, to multiples of the target reward opportunities when
performance is high.
EPS growth for fiscal 1996 resulted in Restricted Stock Rewards of approximately
2.2 times targeted levels. The following is an example of the calculation of the
performance-based Restricted Stock Reward.
It uses actual EPS of $6.95 for the three years ended August 31, 1996.
EPS Growth Pay Band Executive's Value of
Multiplier Target % Base Salary Restricted Stock
Grant
2.20 X 50% X $200,000 = $220,000
See below for current three-year EPS Growth Multiplier that corresponds to a
given three-year EPS.
<TABLE>
<CAPTION>
Three Year EPS Growth Percentage and Multiplier Table*
------------------------------------------------------------
Three Year Total EPS
-----------------------------------
3 Year EPS 3 Year EPS 1994- 1995- 1996- 1997- 1998-
Growth %** Multiplier 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
------------------------------------------------------------
------------------------------------------------------------
4% 0.33 6.52 6.74 7.01 7.29 7.58
------------------------------------------------------------
------------------------------------------------------------
8% 0.67 6.60 7.01 7.57 8.18 8.83
------------------------------------------------------------
TARGET 12% 1.00 6.69 7.29 8.16 9.14 10.24
------------------------------------------------------------
------------------------------------------------------------
RANGE 13% 1.00 6.71 7.36 8.32 9.40 10.62
------------------------------------------------------------
------------------------------------------------------------
14% 1.00 6.73 7.43 8.47 9.66 11.01
------------------------------------------------------------
------------------------------------------------------------
18% 1.70 6.82 7.72 9.11 10.74 12.68
------------------------------------------------------------
------------------------------------------------------------
22% 2.10 6.91 8.01 9.77 11.92 14.55
------------------------------------------------------------
------------------------------------------------------------
24% 2.20 6.95 8.16 10.12 12.55 15.56
------------------------------------------------------------
<FN>
* The table is only a summary. There are various multipliers for points
between the points listed above and for points beyond 24%.
** The Three Year EPS Growth Percentage will be determined as follows: add the
EPS for three years (the most recently completed fiscal year and the prior
two fiscal years, this becomes the "Three Year Total EPS"). Three Year 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 1995. Because this is a new plan, the
rewards for the first two years will be based on growth over one and two
years, respectively.
</FN>
</TABLE>
- - - Stock Options. Stock options were granted to executives at the beginning of
fiscal 1996. Consistent with the Company's long-term focus, it is currently
anticipated that options will be granted only once every five years to an
executive.
When vested, options can be exercised to purchase a predetermined amount of
Common Stock at a pre-established exercise price. The exercise price is equal to
the fair market value of the Common Stock at the date of the grant. The options,
generally, will not fully vest until five years after grant (1/3 of options will
vest after each of years 3, 4, and 5). Options expire 10 years following the
date of grant, although this period may be shortened after termination of
employment.
The number of options granted were established to put executive long-term
rewards, when combined with Restricted Stock grants, at the targeted competitive
levels as set forth in the "Philosophy" section if the aggressive EPS and ROE
targets are achieved. The Compensation Committee, with input from a compensation
consultant, used the widely accepted Black-Scholes model to estimate the value
of stock options. The ultimate value will depend on increases in the Company's
stock price.
Enhancements Beginning in Fiscal 1996
In fiscal 1995, Part I financial goals were based on pretax profit and asset use
or basically a return on asset goal. Beginning in fiscal 1996, EPS growth over
time and ROE goals were used as described above. Target compensation was also
increased consistent with our compensation strategy and challenging financial
goals. To increase executives' line of sight to Company-wide performance, all
executives now have 100% of their MRP Part I and all of their Restricted Stock
Rewards based on Company-wide results rather than business unit or
individual/team results. The stock option plan was also implemented in fiscal
1996.
The Compensation Committee believes that these enhancement better align
compensation with the Company's business strategy and financial goals and
creation of shareholder value. These changes were approved by the shareholders
last February.
Compensation of the President/CEO
Mr. Johnson's compensation is based on the policies and programs described
above.
Base Salary. Mr. Johnson received a base salary increase of 29.0% on September
1, 1995 to reflect his promotion to President/CEO and position his base pay
between the 50th and 60th percentiles of executives in similar positions at
Comparator Organizations, consistent with the Company's compensation strategy.
Management Reward Program. As stated above, the Company achieved 24% EPS growth
and 21.9% ROE, well in excess of the 12-14% EPS growth and 20% ROE targets.
Consequently, MRP Part I payouts were approximately 2.4 times target. Mr.
Johnson's reward under the MRP Part I was $941,346 or 149.4% of his fiscal
year-end base salary. In addition, Mr. Johnson exceeded his individual and team
goals resulting in a reward of $116,550 or 18.5% of his fiscal year-end base
salary (for a total reward of $1,057,896 or 167.9% of fiscal year and base
salary). The target for accomplishing the Company's financial goals was 75% of
base salary, consistent with the Company's compensation philosophy. Mr.
Johnson's individual and team goals involved continuing to enhance the Company's
long-range focus and related business alignment, communications and competency
building activities.
Long-Term Reward--Stock-Based Reward Program. As stated above, the Company had
24% EPS growth, compared to the 12-14% EPS growth target. Consequently,
Restricted Stock Rewards were approximately 2.2 times target. Restricted Stock
approximately equal in value to $1,039,500 or 165.0% of Mr. Johnson's base
salary will be awarded to him. His target for accomplishing the Company's
financial goals was 75% of base salary.
Mr. Johnson was also granted 304,000 stock options. It is anticipated that the
options will only be granted once every five years and will not fully vest for
five years. The amount of options granted were intended to put Mr. Johnson's
targeted total long-term rewards, when combined with Restricted Stock grants, in
line with the targeted competitive levels as set forth in the "Philosophy"
section.
Compensation Committee members: Fred S. Hubbell (Chairman), Dr. Pedro
Cuatrecasas and Luiz Kaufmann.
<PAGE>
COMPENSATION
Executive Compensation
The following table sets forth compensation information for the President/CEO
and the other four (4) most highly compensated Executive Officers (Named
Executive Officers) for fiscal 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted All Other
Other Annual Stock Options/ LTIP Compen-
Name and Principal Position Year Salary Bonus Compensation Awards7 SARs Payouts sation8
($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles S. Johnson 1996 1,039,500 304,000 35,650
630,000 1,057,896
President and 1995 247,546 321,810 29,880
474,690
Chief Executive Officer 1994 596,569 378,218 24,990
372,996
Jerry L. Chicoine 1996 459,451 462,005 103,000 19,863
350,004
Senior Vice President and 1995 149,547 179,464 16,573
310,008
Chief Financial Officer 1994 400,764 235,872 13,798
273,000
Richard L. McConnell 1996 367,566 369,611 103,000 11,925
280,008
Senior Vice President/ 1995 111,159 133,396 9,968
235,308
Director of Research 1994 194,636 101,790 8,307
160,000
John D. James 1996 360,998 363,005 103,000 12,262
275,004
Senior Vice President 1995 115,740 138,893 10,155
222,091
1994 216,699 113,633 7,064
188,854
Robert K. Wichmann 1996 259,407 266,257 40,000 19,652
242,052
Vice President 1995 98,588 98,588 16,161
218,059
North American Seed Sales 1994 223,809 122,408 11,901
202,244
<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 1996 fiscal year end
were as follows: Mr. Johnson 47,217 shares, $2,602,837; Mr. Chicoine 24,591
shares, $1,355,579; Dr. McConnell 13,241 shares, $729,910; Mr. James 15,935
shares, $878,417; and Mr. Wichmann 15,885 shares, $875,661. Dividends are
paid quarterly to restricted stockholders.
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. Johnson - 1996 above-market interest $34,650, and 401(k)
$1,000; Mr. Chicoine - 1996 above-market interest $18,863, and 401(k)
$1,000; Dr. McConnell - 1996 above-market interest $10,925, and 401(k)
$1,000; Mr. James - 1996 above-market interest $11,262, and 401(k) $1,000;
and Mr. Wichmann - 1996 above-market interest $18, 652, and 401(k) $1,000.
</FN>
</TABLE>
<PAGE>
The following table sets forth stock option grants for fiscal year 1996:
<TABLE>
<CAPTION>
STOCK OPTION/SAR GRANTS IN FISCAL YEAR 1996
----------------------------------------------------------------------------------------------
Individual Grants
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Name Number of Percent of Exercise or Expiration Grant date
securities total base price date present value
underlying options/SARs ($/share) $2
options/SARs granted to
granted (#)1 employees in
fiscal year
1996
(a) (b) (c) (d) (e) (f)
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles S. Johnson 304,000 31.2% $43.125 09/12/05 4,526,560
Jerry L. Chicoine 103,000 10.6% $43.125 09/12/05 1,533,670
Richard L. McConnell 103,000 10.6% $43.125 09/12/05 1,533,670
John D. James 103,000 10.6% $43.125 09/12/05 1,533,670
Robert K. Wichmann 40,000 4.1% $43.125 09/12/05 595,600
----------------------------------------------------------------------------------------------
<FN>
1 Although many other companies grant stock options annually, it is
currently anticipated that options will be granted only once every five
years to eligible employees because of the long-term nature of the seed
business. The options granted in September, 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 were granted with an exercise price equal to
the fair market value of the underlying stock at the date of grant. In
addition, the options will vest upon a change in control, death, permanent
disability or retirement.
2 Since options will likely be granted only once every five years, the
present value reflects options intended to be granted for a five-year
period. Value of $14.89 per share underlying the option is derived through
application of the Black-Scholes option pricing model calculation as of the
date of the 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. Creation of shareholder value will be the key to the
actual value realized.
The variables required by the Black-Scholes model to estimate the
present value of a stock option include the: grant price of the stock
option, exercise price of the option, length the stock option is held,
risk-free interest rate over the stock option term, estimated stock price
volatility, and estimated dividend yield of the stock. For the purpose of
determining the value on an option of the Company's stock the following
values were assumed: exercise price of $43.125, option held for five years,
interest rate of 6.4% based on a treasury strip due in ten years quoted in
the 9/12/95 Wall Street Journal, volatility based on stock price
fluctuation assessed over the three year period ending 8/95 and estimated
dividend yield of 1.9% as quoted in the 9/12/95 Wall Street Journal.
</FN>
</TABLE>
The following table sets forth option exercises and holdings:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR-END OPTION/SAR VALUES
----------------------------------------------------------------------------------------------------
Name Shares Value Number of securities Value of unexercised
acquired realized underlying unexercised options/SARs at FY-end ($)
on ($) options/SARs at FY-end (#) Exerciseable/Unexerciseable1
exercise Exerciseable/Unexerciseable
(#)
(a) (b) (c) (d)
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles S. Johnson N/A N/A 0/304,000 $0/3,648,000
Jerry L. Chicoine N/A N/A 0/103,000 $0/1,236,000
Dr. Richard L. McConnell N/A N/A 0/103,000 $0/1,236,000
John D. James N/A N/A 0/103,000 $0/1,236,000
Robert K. Wichmann N/A N/A 0/40,000 $0/480,000
----------------------------------------------------------------------------------------------------
<FN>
1 Value determined from market price at fiscal year end ($55.125) less
exercise price ($43.125). The actual value, if any, an executive may realize
will depend on the stock price on the date of exercise, so there is no
assurance the value stated will be equal to the value realized by the
executive.
</FN>
</TABLE>
<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 life and 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, 1996 for Named Executive Officers are as follows: Mr.
Charles S. Johnson: 31 years; Mr. Jerry L. Chicoine: 11 years; Dr. Richard L.
McConnell: 22 years; Mr. John D. James: 12 years; and Mr. Robert K. Wichmann: 37
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 life and 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 includes salary, bonus and Restricted Stock. Covered compensation
as of August 31, 1996 for the Named Executive Officers is as follows: Charles S.
Johnson: $2,727,396; Jerry L. Chicoine: $1,271,460; Richard L. McConnell:
$1,017,185; John D. James: $999,007; and Robert K. Wichmann: $767,716.
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 received monthly
payments of $25,833.33 commencing September, 1995 and ending December, 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. Dr. Ray A. Goldberg
is paid a fee of $2,083.33 per month for certain consulting services for a three
year period beginning in July, 1995.
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 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. In addition, they have been granted
stock options with a ten (10) year term. The Restricted Stock and Stock Options
vest 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.
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>
<CAPTION>
------------- ---------- --------- -------- -------- --------- ---------
1991 1992 1993 1994 1995 1996
------------- ---------- --------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PHB $100.00 $154.87 $195.07 $189.37 $265.77 $346.22
------------- ---------- --------- -------- -------- --------- ---------
------------- ---------- --------- -------- -------- --------- ---------
S & P 500 $100.00 $108.00 $124.53 $131.66 $160.06 $188.20
------------- ---------- --------- -------- -------- --------- ---------
------------- ---------- --------- -------- -------- --------- ---------
Peer Group $100.00 $104.52 $101.34 $108.78 $127.56 $146.44
------------- ---------- --------- -------- -------- --------- ---------
<FN>
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.
</FN>
</TABLE>
PROPOSAL 2
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 2.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report to Shareholders for the fiscal year ended August 31,
1996 is enclosed. The Annual Report is not to be regarded as Proxy solicitation
material.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
The Board of Directors presently expects that the 1998 Annual Meeting will be
held on January 27, 1998. A shareholder intending to present a proposal to the
1998 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 1998 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 August 12, 1997 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.
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EXHIBIT A
December 10, 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
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PIONEER HI-BRED INTERNATIONAL, INC.
SHAREHOLDER CERTIFICATION FORM
FOR
ANNUAL MEETING OF SHAREHOLDERS
ON
JANUARY 28, 1997
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 November 29, 1996,
________________ shares have been beneficially owned continuously by the same
person since November 29, 1993; 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.
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