<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the registrant
[_] Filed by a party other than the registrant
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a--11(c) or Rule 14a-12
PILGRIM'S PRIDE CORPORATION
_______________________________________________________________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
_______________________________________________________________________________
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[X] No Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
_______________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________________
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________________
(3) Filing Party:
_______________________________________________________________________________
(4) Date Filed:
_______________________________________________________________________________
<PAGE>
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 30, 1998
AT
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Pilgrim's Pride Corporation, a Delaware corporation (the
"Company"), will be held on June 30, 1998 at 11:00 a.m., local time, at 110
South Texas Street, Pittsburg, Texas 75686 to consider the following matters:
1. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to (i) reclassify the existing common stock of
the Company as Class B Common Stock, (ii) authorize a new class of common
stock, designated as Class A Common Stock, (iii) increase the number of
authorized shares of capital stock from 50,000,000 shares to 165,000,000
shares, consisting of 5,000,000 shares of preferred stock, 100,000,000
shares of Class A Common Stock and 60,000,000 shares of Class B Common
Stock, and (iv) establish the rights, powers and limitations of the Class A
Common Stock and the Class B Common Stock, all as more specifically
described in the attached Proxy Statement; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 1, 1998 as
the record date for determining stockholders of record entitled to notice of,
and to vote at, the Special Meeting.
/s/ RICHARD A. COGDILL
RICHARD A. COGDILL
Executive Vice President, Chief
Financial Officer,
Secretary and Treasurer
Pittsburg, Texas
June 9, 1998
YOUR VOTE IS IMPORTANT!
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY.
<PAGE>
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
----------------
PROXY STATEMENT FOR SPECIAL MEETING
----------------
GENERAL INFORMATION
The Board of Directors of Pilgrim's Pride Corporation (the "Company")
solicits stockholders' proxies in the accompanying form for use at the Special
Meeting of Stockholders to be held on June 30, 1998, at 11:00 a.m., local
time, at 110 South Texas Street, Pittsburg, Texas 75686 (the "Special
Meeting"). This Proxy Statement and the accompanying proxy card are being
mailed, beginning on or about June 9, 1998, to all stockholders entitled to
receive notice of, and to vote at, the Special Meeting.
The principal executive offices of the Company are located at 110 South
Texas Street, Pittsburg, Texas 75686. Any writing required to be sent to the
Company should be mailed to this address.
OUTSTANDING VOTING SECURITIES
Each stockholder of record at the close of business on June 1, 1998 (the
"Record Date") will be entitled to one vote for each share of the Company's
common stock, par value $.01 per share, held on the Record Date. The
accompanying proxy card indicates the number of shares to be voted. On June 1,
1998, there were 27,589,250 shares of the Company's common stock issued and
outstanding.
VOTING OF PROXIES
Because many of the Company's stockholders are unable to attend the Special
Meeting, the Board of Directors solicits proxies by mail to give each
stockholder an opportunity to vote on all items of business scheduled to come
before the Special Meeting. Each stockholder is urged to:
(1) read carefully the material in this Proxy Statement;
(2) specify his or her voting instruction by marking the appropriate box on
the accompanying proxy card; and
(3) sign, date and return the card in the enclosed, postage prepaid
envelope.
The accompanying proxy card allows a stockholder to abstain from voting if
the stockholder chooses to do so.
When the accompanying proxy card is properly executed and returned with
voting instructions, the shares represented by the proxy will be voted in
accordance with the stockholder's direction by the persons named on the card
as proxies of the stockholders. If a proxy card is signed and returned, but no
specific voting instructions are given, the shares represented by the proxy
card will be voted for the amendment to the Company's Certificate of
Incorporation and at the proxies' discretion on any other matters that come
before the Special Meeting.
The proxy does not affect a stockholder's right to vote in person at the
Special Meeting. If a stockholder executes a proxy, he or she may revoke it at
any time before it is voted by submitting a new proxy card, by communicating
his or her revocation in writing to the Secretary of the Company or by voting
by ballot at the Special Meeting.
1
<PAGE>
VOTE REQUIRED
The holders of at least a majority of the shares of the Company's common
stock outstanding on the Record Date must be present in person or by proxy at
the Special Meeting for the Special Meeting to be held. Abstentions and broker
non-votes are counted in determining whether at least a majority of the shares
of the Company's common stock outstanding on the Record Date are present at
the Special Meeting. The affirmative vote of a majority of the outstanding
shares entitled to vote is required for approval of the amendment to the
Company's Certificate of Incorporation. Accordingly, abstentions and broker
non-votes will have the effect of a vote against the proposal to amend the
Company's Certificate of Incorporation. Lonnie "Bo" Pilgrim owned or
controlled 16,773,491 shares (60.8%) of the Company's common stock on the
Record Date and thus will be able to approve the amendment to the Company's
Certificate of Incorporation.
COST OF PROXY SOLICITATION
The Company will bear the cost of the Special Meeting and the cost of
soliciting proxies in the accompanying form, including the cost of mailing the
proxy material. In addition to solicitation by mail, directors, officers and
other employees of the Company may solicit proxies by telephone or otherwise.
They will not be specifically compensated for such services. The Company will
request brokers and other custodians, nominees and fiduciaries to forward
proxies and proxy soliciting material to the beneficial owners of the
Company's common stock and to secure their voting instructions, if necessary.
The Company will reimburse them for the expenses in so doing.
2
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of May 10, 1998, certain information with
respect to the beneficial ownership of the Company's common stock by (i) each
stockholder beneficially owning at least 5% of the Company's outstanding
common stock; (ii) each director of the Company who is a stockholder of the
Company; (iii) the Company's Chief Executive Officer; (iv) the Company's four
most highly compensated executive officers other than the Chief Executive
Officer; and (v) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNERS OWNERSHIP CLASS
------------------------- ---------- ----------
<S> <C> <C>
Lonnie "Bo" Pilgrim (a) (b)........................... 16,773,491 60.8%
110 South Texas Street
Pittsburg, Texas 75686
Lonnie Ken Pilgrim (b) (c)............................ 529,352 1.9
Clifford E. Butler (b)................................ 31,476 (d)
Lindy M. "Buddy" Pilgrim (b).......................... 23,750 (d)
Robert L. Hendrix (b)................................. 24,404 (d)
David Van Hoose (b)................................... 5,181 (d)
James J. Miner (b).................................... 11,631 (d)
James G. Vetter, Jr................................... 1,550 (d)
Donald L. Wass........................................ 300 (d)
All executive officers and directors as a group (17
persons)............................................. 17,435,080 63.2%
</TABLE>
- --------
(a) Includes 60,387 shares held of record by Pilgrim Family Trust I, an
irrevocable trust dated June 16, 1987, for the benefit of Lonnie "Bo"
Pilgrim's surviving spouse and children, of which Lonnie Ken Pilgrim and
Patty R. Pilgrim, Lonnie "Bo" Pilgrim's wife, are co-trustees, and 60,386
shares held of record by Pilgrim Family Trust II, an irrevocable trust
dated December 23, 1987, for the benefit of Lonnie "Bo" Pilgrim and his
children, of which Lonnie "Bo" Pilgrim and Lonnie Ken Pilgrim are co-
trustees. Mr. Lonnie "Bo" Pilgrim disclaims any beneficial interest in the
shares held by his children.
(b) Includes shares held in trust by the Company's 401(k) Salary Deferral
Plan.
(c) Includes 6,465 shares held by his wife, and 60,387 and 60,386 shares held
by Pilgrim Family Trust I and Pilgrim Family Trust II, respectively, for
both of which Lonnie Ken Pilgrim serves as a co-trustee. Also includes
25,350 shares held in two irrevocable trusts dated December 15, 1994 and
October 31, 1989, of which Lonnie Ken Pilgrim is a co-trustee for the
benefit of his children. Lonnie Ken Pilgrim disclaims any beneficial
interest in the foregoing shares.
(d) Less than 1%.
3
<PAGE>
PROPOSAL:
AMENDMENT TO COMPANY'S CERTIFICATE OF INCORPORATION
GENERAL
The Company's Certificate of Incorporation currently provides for the
issuance of up to 50,000,000 shares of capital stock, comprised of 5,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"), and
45,000,000 shares of common stock, par value $.01 per share. At the Special
Meeting, the Company's stockholders are being asked to consider and vote upon
a proposal to approve an amendment in the form attached hereto as Annex A (the
"Amendment" or the "Reclassification") to the Company's Certificate of
Incorporation which would (i) reclassify the existing common stock of the
Company (the "Existing Common Stock") as Class B Common Stock (the "Class B
Common Stock"), (ii) authorize a new class of common stock, designated as
Class A Common Stock (the "Class A Common Stock" and, together with the Class
B Common Stock, "Common Stock"), (iii) increase the number of authorized
shares of capital stock from fifty million (50,000,000) to one hundred sixty
five million (165,000,000), consisting of five million (5,000,000) shares of
preferred stock, one hundred million (100,000,000) shares of Class A Common
Stock and sixty million (60,000,000) shares of Class B Common Stock, and (iv)
establish the rights, powers and limitations of the Class A Common Stock and
the Class B Common Stock.
If the Amendment is approved by the stockholders, the Board of Directors
intends to file a Certificate of Amendment to the Certificate of Incorporation
of the Company in accordance with the Amendment. The Amendment will be
effective immediately upon acceptance of filing by the Secretary of State of
the State of Delaware (the "Effective Date"). The Board would then be free to
issue any class of the Company's authorized capital stock without any further
action on the part of the stockholders. Although the Board presently intends
to file the Certificate of Amendment, if the Amendment is approved by
stockholders, the resolution of stockholders will reserve to the Board of
Directors the right to defer or abandon the Amendment and not file such
Certificate of Amendment.
Upon effectiveness of the Amendment, each outstanding share of Existing
Common Stock will automatically be converted into, and the certificate
therefore will be deemed to represent, one share of Class B Common Stock. The
Existing Common Stock certificates will no longer specify the correct
designation but will represent an equal number of shares of Class B Common
Stock. New certificates representing the Class B Common Stock will not be
issued until further transfer of such shares to new holders or a request is
received from a stockholder to replace such stockholder's Existing Common
Stock certificate with a Class B Common Stock certificate.
Under the provisions of the Amendment, the currently outstanding shares of
Existing Common Stock would be reclassified as Class B Common Stock and would
continue to have substantially their present rights, powers and limitations,
except that each share of Class B Common Stock will entitle the holder thereof
to 20 votes except as otherwise provided by law. As more fully described
below, each share of the new Class A Common Stock would be substantially
identical to the shares of Class B Common Stock, except that each share of
Class A Common Stock will entitle the holder thereof to one vote per share on
any matter submitted for a stockholder vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Amendment has been unanimously approved by the Company's Board of
Directors. The Board believes that the Amendment is in the best interests of
the Company and its stockholders and recommends that you vote "FOR" the
adoption of the Amendment.
4
<PAGE>
REASON FOR THE AMENDMENT
The Company qualifies as a "family corporation" under Section 447 of the
Internal Revenue Code of 1986, as amended (the "Code"). Section 447 of the
Code provides that a corporation is a "family corporation" if at least 50% of
the total combined voting power of all classes of stock entitled to vote and
at least 50% of all other classes of stock of the corporation are owned by
members of the same family and certain other conditions are met. The Company
is controlled by Lonnie A. "Bo" Pilgrim (the "Founder") who owns over 60% of
its outstanding common stock and meets the other requirements of a "family
corporation."
Before July 2, 1988, the Company used the cash method of accounting for
federal income tax purposes. Pursuant to changes in the law enacted by the
Revenue Act of 1987, the Company (as a "family corporation") was required to
change its method of accounting to the accrual method for federal income tax
purposes. As a consequence of such change in accounting method, the Company
was permitted to create a "suspense account" in the amount of approximately
$89.7 million, which represents deferred income arising from the Company's
prior use of the cash method of accounting. Beginning fiscal 1997, the Company
is generally required to include 1/20th of this amount, or approximately $4.5
million, in taxable income each year for the next 20 years. However, the full
amount must be included in taxable income in any year that the Company ceases
to be a "family corporation." Accordingly, if the Founder's family ceases to
own at least 50% of the total combined voting power of all classes of the
Company's stock entitled to vote, the Company would cease to be a "family
corporation" and would be required to recognize the balance of the "suspense
account" in taxable income.
The Board of Directors believes that the continued success and growth of the
Company requires the flexibility to issue stock to raise capital and/or
acquire other companies. The Board of Directors believes that the Amendment
would promote both objectives, without causing the adverse tax consequences
described above or any disenfranchisement of existing stockholders. Further,
the Board of Directors believes the Amendment is consistent with dual class
capital structures which have been adopted by a number of publicly held
companies.
CERTAIN POTENTIAL BENEFITS OF THE AMENDMENT
After careful consideration, the Board has identified the following
potential benefits of the Amendment for the Company and its stockholders:
No Disenfranchisement of Existing Stockholders. The Board believes that the
Amendment is preferable to other dual class structures because it will not
reduce the voting power of existing stockholders. In particular, because each
holder of a share of Existing Common Stock will, immediately following the
amendment, hold one share of Class B Common Stock, the Reclassification will
have no immediate effect on the relative voting strength of existing
stockholders, including the Founder.
Increased Flexibility in Raising Capital and in Responding to Future
Acquisition Opportunities. The Company has followed, and continues to follow,
a long term strategy for growth. The Board of Directors believes that this
strategy will best maximize the value of the Company. The Board also believes
that implementation of the Amendment would provide the Company with increased
flexibility in the future to issue common equity in connection with
acquisitions and to raise equity capital or to issue convertible debt as a
means to finance future growth without triggering the adverse tax consequences
described above under "--Reason for the Amendment" and without significantly
diluting the voting strength of current stockholders, including the Founder.
The Board of Directors believes that this increased flexibility is important
because of its belief that consolidation is underway in the industry. The
Company believes that consummation of any strategic acquisitions that may
arise in the future may require the issuance of substantial amounts of capital
stock and/or cash payments. The availability of a pool of authorized but
unissued Class A Common Stock that can be issued without triggering the
adverse tax consequences described above will provide the Company with greater
flexibility in responding to acquisition opportunities that the Board of
Directors determines are in the Company's long term best interest.
5
<PAGE>
Business Relationships. Implementation of the Amendment may enhance the
existing and potential business relationships of the Company with suppliers,
customers, lenders and other parties who may become concerned about the
limitations on the Company's ability to raise equity capital without
triggering the adverse tax consequences described above or about changes in
control of the Company in the event the Founder's holdings are diluted as a
result of future issuances by the Company.
CERTAIN POTENTIAL DISADVANTAGES OF THE AMENDMENT
In addition to the potential benefits of the Amendment discussed above, the
Board also considered potential disadvantages of the Amendment, including the
following:
Uncertain Effect on Stock Price. Any issuance of shares of Class A Common
Stock could affect the price of the Class B Common Stock. However, many
factors, including general market conditions, future performance of the
Company and the performance of other companies in the industry, could cause
fluctuations in the prices for both the Class A Common Stock and Class B
Common Stock, and could cause the Class A Common Stock and Class B Common
Stock to trade at different prices. While the Company presently intends to
issue only Class A Common Stock in the future if the Amendment is adopted and
implemented, it may from time to time issue Class B Common Stock if necessary
to achieve strategic objectives of the Company. Future issuances of both Class
A Common Stock and Class B Common Stock could affect the price for either or
both classes of Common Stock. For the foregoing reasons, the Company cannot
predict the relative or absolute effect of the Amendment on the market price
for the Class B Common Stock. See "--Risk of Discounted Value of Class A
Common Stock in Future Acquisitions or Financings," "--Description of the
Amendment," and "--Certain Anti-Takeover Effects."
Potential Negative Response of Institutional Investors. Implementation of
the Amendment may affect the decision of certain institutional investors that
would otherwise consider investing in the Class B Common Stock but who object
to the Amendment. To the extent that institutional investors avoid purchasing
the Company's stock, the stock price may be negatively affected by the
decreased demand.
Risk of Discounted Value of Class A Common Stock in Future Acquisitions or
Financings. The Company presently plans to issue Class A Common Stock in
future acquisitions, financings or offerings. If the Class A Common Stock
trades at a discount to the Class B Common Stock, then acquisitions or
financings involving the issuance of Class A Common Stock will be economically
more dilutive to existing stockholders than such transactions would be if the
Company issued Class B Common Stock. This dilution, if it occurs, will result
in decreased earnings per share and lower stock prices for both the Class B
Common Stock and the Class A Common Stock. See "--Description of the
Amendment."
Complications for Future Business Combinations. The Board believes that the
creation of Class A Common Stock will allow the Company greater flexibility in
carrying out future acquisitions. However, the existence of two classes of
Common Stock will cause difficulties in accounting for such acquisitions using
the "pooling of interests" method for financial reporting purposes. This
factor could counteract the increase in flexibility in responding to
acquisition opportunities that is an anticipated result of the Amendment.
Potential Payment of Deferred Taxes. For the Company to remain a "family
corporation," at least 50% of the total combined voting power of all classes
of stock entitled to vote of the Company and at least 50% of all other classes
of stock of the Company must be owned by the Founder's family. Thus, if the
Class A Common Stock was deemed not to be a "class of stock entitled to vote"
and the Founder's family failed to own at least 50% of any outstanding Class A
Common Stock, the balance of the $89.7 million "suspense account" would be
immediately included in the taxable income of the Company. However, Baker &
McKenzie has advised the Company that, although no assurances can be given, in
its opinion the Class A Common Stock should be considered "a class of stock
entitled to vote." See "--Reason for the Amendment."
6
<PAGE>
Potential Changes in Law or Regulations. In recent years, bills have been
introduced in Congress that, if enacted, would have prohibited the
registration of common stock on a national securities exchange or the trading
of such common stock on Nasdaq if such common stock was part of a class of
securities which has no voting rights or carried disproportionate voting
rights. While these bills have not been acted upon by Congress, there can be
no assurance that such a bill (or a modified version thereof) will not be
introduced in Congress in the future. Legislation or other regulatory
developments could make the Class A Common Stock and Class B Common Stock
ineligible for trading on national securities exchanges and Nasdaq. Similarly,
rule changes adopted by the exchanges or the National Association of
Securities Dealers could also make the Class A Common Stock or Class B Common
Stock ineligible for trading on one or more of such exchanges or Nasdaq. The
Company is unable to predict whether any such regulatory proposals or rule
changes will be adopted or whether they will have such effect.
SECURITIES LAWS & REGULATIONS
Federal Securities Laws. Because the Existing Common Stock will be
reclassified as Class B Common Stock with essentially the same rights, powers
and limitations, the Reclassification is not an "offer," "offer to sell,"
"offer for sale" or "sale" of a security within the meaning of Section 2(3) of
the Securities Act of 1933, as amended (the "Securities Act"), and will not
involve the substitution of one security for another under Rule 145
thereunder. Because the Reclassification does not constitute a "sale" of Class
B Common Stock under the Securities Act, stockholders will not be deemed to
have purchased such shares separately from the Existing Common Stock under the
Securities Act and Rule 144 thereunder. Shares of Class B Common Stock held
immediately upon effectiveness of the Amendment may be offered for sale and
sold in the same manner as the Existing Common Stock. Any affiliate of the
Company under Rule 144 will be subject to the same restrictions in disposing
of Class B Common Stock as the affiliate presently is with respect to the
Existing Common Stock.
NYSE Criteria. The Existing Common Stock is currently listed on the New York
Stock Exchange ("NYSE"), and application is being made to trade the Class B
Common Stock on the NYSE as well. The Company has reviewed the terms of the
Amendment with the NYSE and has been advised by the NYSE that the
Reclassification would not violate the NYSE's voting rights policy.
DESCRIPTION OF THE AMENDMENT
As indicated above, the Amendment will reclassify the Existing Common Stock
into Class B Common Stock and create a new Class A Common Stock. The rights,
powers and limitations of the Class A Common Stock and the Class B Common
Stock are set forth in full in the proposed Article Fourth of the Company's
Certificate of Incorporation. The full text of Article Fourth as proposed to
be amended is set forth as Annex A to this Proxy Statement and incorporated
herein by reference. The following summary should be read in conjunction with,
and is qualified in its entirety to reference to, such Annex A.
Identical Rights. Except as otherwise expressly provided in the Company's
Certificate of Incorporation, all shares of the Common Stock will be identical
and will entitle the holders of the Common Stock to the same rights and
privileges.
Dividends. Subject to the prior rights and preferences of the Preferred
Stock, if any, the holders of record of the Common Stock will be entitled to
receive such dividends as may be declared by the Board of Directors out of any
funds of the Company, except that (i) if dividends are declared that are
payable in shares of Common Stock, such stock dividends will be payable at the
same rate on each class of Common Stock and will be payable in shares of Class
A Common Stock to holders of Class A Common Stock and in shares of Class B
Common Stock to holders of Class B Common Stock and (ii) if dividends are
declared that are payable in shares of common stock of another company, then
such shares may differ as to voting rights to the extent that voting rights
differ among the Class A Common Stock and the Class B Common Stock.
7
<PAGE>
Stock Splits. The Company will not subdivide, by stock split,
reclassification, stock dividend, recapitalization or other subdivision, or
combine the outstanding shares of one class of Common Stock unless the
outstanding shares of both classes of Common Stock are capable of being
proportionately subdivided or combined.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock or any series thereof, the
holders of shares of the Common Stock shall be entitled to receive all of the
remaining assets of the Company available for distribution to its
stockholders, ratably in proportion to the number of shares of the Common
Stock held by them. A liquidation, dissolution or winding-up of the Company,
as such terms are used herein, will not be deemed to be occasioned by or to
include any consolidation or merger of the Company with or into any other
company or companies or other entity or a sale, lease, exchange or conveyance
of all or a part of the assets of the Company.
Voting Rights. The holders of shares of the Class A Common Stock and the
Class B Common Stock will vote as a single class on all matters submitted to a
vote of the stockholders, with each share of Class A Common Stock entitled to
one vote and each share of Class B Common Stock entitled to 20 votes, except
as otherwise provided by law.
Consideration on Merger, Consolidation, Business Combination. In any merger,
consolidation, or business combination, the consideration to be received per
share by the holders of Class A Common Stock and Class B Common Stock will be
identical for each class of stock, except that in any such transaction in
which shares of common stock are to be distributed, such shares may differ as
to voting rights to the extent that voting rights differ among the Class A
Common Stock and the Class B Common Stock.
Preemptive Rights; Subscription Rights; Cumulative Voting. Stockholders of
the Company will not be entitled to preemptive or subscription rights or to
cumulative voting.
CERTAIN ANTI-TAKEOVER EFFECTS
The Amendment. The Amendment could result in certain anti-takeover effects.
Currently, a person cannot succeed in a takeover of the Company without making
an offer acceptable to the Founder, because of his substantial ownership of
voting stock. Implementation of the Amendment will not change the voting power
of the Founder, but it will give the Company more flexibility to issue Common
Stock without substantial diminution of the voting power of the existing
stockholders, including the Founder. If stockholders were to reject the
Amendment and if the Company were to sell a substantial amount of Existing
Common Stock, the chances of success might improve for a tender offer or other
takeover proposal or a proxy contest which would remove incumbent directors
notwithstanding the opposition of the Founder.
On the foregoing assumptions, the Amendment might be said to reduce the
possibility of the stockholders receiving and accepting hostile takeover bids,
which are often made at premiums over then-current market prices of the target
company's stock. The Amendment may also render more difficult or discourage
mergers, proxy contests, removal of current management or other changes in
control of the Company which may be desired by substantial holders of the
Company's equity securities, particularly if their holdings are primarily
Class A Common Stock.
Section 203 of the Delaware General Corporation Law. Because the Company has
not by a provision in its Certificate of Incorporation elected otherwise, it
is subject to Section 203 of the Delaware General Corporation Law ("Section
203"), which imposes certain restrictions, described below, on "business
combinations" with an "interested stockholder" that could produce anti-
takeover effects in certain circumstances. Section 203 defines a business
combination to include (i) any merger or consolidation involving the
corporation and the interested stockholder; (ii) any sale, lease, exchange,
mortgage, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation; (iii) subject to
certain exceptions, any transaction
8
<PAGE>
which results in the issuance or transfer by the corporation of any stock of
the corporation to the interested stockholder; (iv) any transaction involving
the corporation which has the effect of increasing the proportionate share of
the stock of any class or series of the corporation owned by the interested
stockholder; or (v) the receipt by the interested stockholder of the benefit
of any loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation. In general, Section 203 defines an
"interested stockholder" as any entity or person beneficially owning 15% or
more of the outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by such entity or person.
Subject to certain exceptions, Section 203 prohibits a Delaware corporation
from engaging in any business combination with any interested stockholder for
a period of three years following the time that such stockholder became an
interested stockholder, unless (i) prior to such time, the board of directors
of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder, (ii)
upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (not counting those shares owned by directors who are
also officers and by employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer), or (iii) at or
subsequent to such time, the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission, in order to be
included in the Company's Proxy Statement for the 1999 Annual Meeting of
Stockholders, a stockholder proposal must be received by the Secretary of the
Company no later than the close of business on September 10, 1998.
Please date, sign and return the proxy at your earliest convenience. A
prompt return of your proxy will be appreciated as it will save the expense of
further mailing.
By order of the Board of Directors,
/s/ RICHARD A. COGDILL
RICHARD A. COGDILL
Executive Vice President, Chief
Financial Officer,
Secretary and Treasurer
Pittsburg, Texas
June 9, 1998
9
<PAGE>
ANNEX A
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
PILGRIM'S PRIDE CORPORATION
Pilgrim's Pride Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
(a) The amendment to the Corporation's Certificate of Incorporation set
forth below was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
(b) Article Fourth of the Corporation's Certificate of Incorporation is
amended to read in its entirety as follows:
"FOURTH:
Authorized Shares
The total number of shares of stock which the Corporation shall have
authority to issue is 165,000,000 shares, consisting of the following:
(1) 100,000,000 shares of Class A common stock, par value $.01 per share
(the "Class A Common Stock");
(2) 60,000,000 shares of Class B common stock, par value $.01 per share
(the "Class B Common Stock" and, together with the Class A Common Stock,
the "Common Stock"); and
(3) 5,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock").
Upon the filing of this Certificate of Amendment of Certificate of
Incorporation with the Secretary of State of the State of Delaware (the
"Effective Time"), and without any further action on the part of the
Corporation or its stockholders, each share of the Corporation's common stock,
par value $.01 per share, issued and outstanding immediately prior to the
Effective Time (the "Existing Common Stock"), including shares held in the
treasury of the Corporation, shall be automatically reclassified, changed, and
converted into one fully paid and nonassessable share of Class B Common Stock,
par value $.01 per share. Any stock certificate that, immediately prior to the
Effective Time, represents shares of the Existing Common Stock will, from and
after the Effective Time, automatically and without the necessity of
presenting the same for exchange, represent that number of shares of Class B
Common Stock equal to the number of shares of the Existing Common Stock
represented by such certificate prior to the Effective Time.
Designations, Preferences, etc. of the Capital Stock
The designations, preferences, powers, qualifications, and special or
relative rights or privileges of the capital stock of the Corporation shall be
as set forth below.
Common Stock
(1) Identical Rights. Except as herein otherwise expressly provided, all
shares of Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
(2) Dividends on the Common Stock.
(a) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares
of Common Stock shall be entitled to receive such dividends (payable in
cash, stock, or otherwise) as may be declared thereon by the Corporation's
board of directors (the "Board of Directors") at any time and from time to
time out of any funds of the Corporation legally
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<PAGE>
available therefor, except that (i) if dividends are declared that are
payable in shares of Common Stock, then such stock dividends shall be
payable at the same rate on each class of Common Stock and shall be payable
only in shares of Class A Common Stock to holders of Class A Common Stock
and in shares of Class B Common Stock to holders of Class B Common Stock
and (ii) if dividends are declared that are payable in shares of common
stock of another corporation, then such shares may differ as to voting
rights to the extent that voting rights now differ among the Class A Common
Stock and the Class B Common Stock.
(b) Dividends payable under this subparagraph (2) shall be paid to the
holders of record of the outstanding shares of Common Stock as their names
shall appear on the stock register of the Corporation on the record date
fixed by the Board of Directors in advance of declaration and payment of
each dividend. Any shares of Common Stock issued as a dividend pursuant to
this subparagraph (2) shall, when so issued, be duly authorized, validly
issued, fully paid and non-assessable, and free of all liens and charges.
(c) Notwithstanding anything contained herein to the contrary, no
dividends on shares of Common Stock shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation at any time
that such declaration, payment or setting apart is prohibited by applicable
law.
(3) Stock Splits Relating to the Common Stock. The Corporation shall not in
any manner subdivide (by any stock split, reclassification, stock dividend,
recapitalization or otherwise) or combine the outstanding shares of one class
of Common Stock unless the outstanding shares of both classes of Common Stock
shall be proportionately subdivided or combined.
(4) Liquidation Rights of the Common Stock. In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock or any series thereof, the
holders of shares of Common Stock shall be entitled to receive all of the
remaining assets of the Corporation available for distribution to its
stockholders, ratably in proportion to the number of shares of Common Stock
held by them. A liquidation, dissolution, or winding-up of the Corporation, as
such terms are used in this subparagraph (4), shall not be deemed to be
occasioned by or to include any consolidation or merger of the Corporation
with or into any other corporation or corporations or other entity or a sale,
lease, exchange, or conveyance of all or a part of the assets of the
Corporation.
(5) Voting Rights of the Common Stock.
(a) The holders of the Class A Common Stock and the Class B Common Stock
shall vote as a single class on all matters submitted to a vote of the
stockholders, with each share of Class A Common Stock being entitled to one
(1) vote and each share of Class B Common Stock being entitled to twenty
(20) votes, except as otherwise provided by law.
(b) No holder of Common Stock shall be entitled to preemptive or
subscription rights.
(6) Consideration on Merger, Consolidation, etc. In any merger,
consolidation, or business combination, the consideration to be received per
share by the holders of Class A Common Stock and Class B Common Stock must be
identical for each class of stock, except that in any such transaction in
which shares of common stock are to be distributed, such shares may differ as
to voting rights to the extent that voting rights now differ among the Class A
Common Stock and the Class B Common Stock.
Preferred Stock
Shares of the Preferred Stock may be issued from time to time in one or more
series, the shares of each series to have such voting powers, full or limited,
or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in a
resolution or resolutions providing for the issue of such series adopted by
the Board of Directors of the Corporation. The Board of Directors of the
Corporation is hereby expressly authorized,
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<PAGE>
subject to the limitations provided by law, to establish and designate series
of the Preferred Stock, to fix the number of shares constituting each series,
and to fix the designations and the relative powers, rights, preferences and
limitations of the shares of each series and the variations in the relative
powers, rights, preferences and limitations as between series, and to increase
and to decrease the number of shares constituting each series."
IN WITNESS WHEREOF, Pilgrim's Pride Corporation has caused this Certificate
to be executed by Lonnie A. Pilgrim, its authorized officer, on this day
of , 1998.
PILGRIM'S PRIDE CORPORATION
_____________________________________
Lonnie A. Pilgrim, Chairman of the
Board of Directors and Chief
Executive Officer
A-3
<PAGE>
Please date this proxy and sign your name exactly as it
appears hereon. Persons signing in a representative
capacity should indicate their capacity. A proxy for shares
held in joint ownership should be signed by each owner.
Please Execute This Proxy and Return Promptly in the
Enclosed Self-Addressed Stamped Envelope.
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lonnie "Bo" Pilgrim and Clifford E. Butler,
and each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them, and each of them, to represent and to vote, as
designated below, all the shares of Common Stock of Pilgrim's Pride Corporation
(the "Company") held of record by the undersigned at the close of business on
June 1, 1998 at the Special Meeting of Stockholders to be held on June 30, 1998
or any adjournment thereof.
(continued on other side)
<PAGE>
[ x ] Please mark your votes as this
--------------------
AMENDMENT TO COMPANY'S CERTIFICATE OF INCORPORATION
1. Amend the Company's Certificate of Incorporation to (i) reclassify the
existing common stock of the Company as Class B Common Stock, (ii)
authorize a new class of common stock, designated as Class A Common Stock,
(iii) increase the number of authorized shares of capital stock from
50,000,000 shares to 165,000,000 shares, consisting of 5,000,000 shares of
preferred stock, 100,000,000 shares of Class A Common Stock and 60,000,000
shares of Class B Common Stock, and (iv) establish the rights, powers and
limitations of the Class A Common Stock and the Class B Common Stock.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion such other business as may properly come before the
Special Meeting.
- --------------------------------------------------------------------------------
UNLESS OTHERWISE SPECIFIED ON THIS PROXY, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
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Date
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Signature of Stockholder
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Signature if held jointly
