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 PERSONS{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:
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, FEBRUARY 2, 2000
The Annual Meeting of Stockholders of Pilgrim's Pride Corporation (the
"Company") will be held at the Company's headquarters building, 110 South Texas
Street, Pittsburg, Texas, Wednesday, February 2, 2000, at 11:00 a.m., local
time, to consider the following matters:
1. The election of ten Directors for the ensuing year;
2. The approval of the Company's Senior Executive Performance Bonus Plan;
3. The appointment of Ernst & Young LLP as the Company's independent
auditors for the
fiscal year ending September 30, 2000; and
4. To transact such other business as may be properly brought before the
meeting or any
adjournment. No other matters are expected to be voted on at the
meeting.
The Board of Directors has fixed the close of business on December 6,
1999, as the record date for determining stockholders of record entitled to
notice of, and to vote at, the meeting.
RICHARD A. COGDILL
Pittsburg, Texas EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
December 13, 1999 SECRETARY AND TREASURER
YOUR VOTE IS IMPORTANT!
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY.
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
PROXY STATEMENT
GENERAL INFORMATION
The Board of Directors of Pilgrim's Pride Corporation (the "Company")
solicits stockholders' proxies in the accompanying form for use at the Annual
Meeting of Stockholders to be held on February 2, 2000, at 11:00 a.m., local
time, at the Company's headquarters at 110 South Texas Street, Pittsburg, Texas
and at any adjournments thereof (the "Meeting"). This Proxy Statement, the
accompanying proxy card and the Company's 1999 Annual Report to Stockholders
are being mailed, beginning on or about December 13, 1999, to all stockholders
entitled to receive notice of, and to vote at, the 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 December 6, 1999
(the "Record Date"), will be entitled to one vote for each share of the
Company's Class A common stock, $.01 par value per share, and twenty votes for
each share of the Company's Class B common stock, $.01 par value per share,
held on the Record Date. The accompanying proxy card indicates the number of
shares to be voted. On December 6, 1999, there were 13,794,529 shares of the
Company's Class A common stock issued and outstanding and there were 27,589,250
shares of the Company's Class B common stock issued and outstanding. For all
proposals at the Meeting, the votes of holders of Class A common stock and
Class B common stock will be counted together as a single class.
VOTING OF PROXIES
Because many of the Company's stockholders are unable to attend the
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 Meeting. Each stockholder is urged to:
(1) read carefully the material in this Proxy Statement;
(2) specify his or her voting instruction on each item by marking the
appropriate boxes on the
accompanying proxy card; and
(3) sign, date and return the card in the enclosed, postage prepaid
envelope.
The accompanying proxy card provides a space, with respect to the election
of Directors, for a stockholder to withhold voting for any or all nominees for
the Board of Directors, but does not permit a stockholder to vote for any
nominee not named on the proxy card. The card also allows a stockholder to
abstain from voting on any other item if the stockholder chooses to do so.
When the accompanying proxy card is properly executed and returned with
voting instructions with respect to any of the items to be voted upon, the
shares represented by the proxy will be voted in accordance with the
stockholder's directions by the persons named on the proxy 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 election of the ten nominees for Directors named on the
accompanying proxy card, for approval of the Company's Senior Executive
Performance Bonus Plan (the "Plan") and for the appointment of Ernst & Young
LLP as the Company's independent auditors.
Unless otherwise indicated by the stockholder, returned proxy cards also
confer upon the persons named on the card, as proxies for the stockholder,
discretionary authority to vote all shares of stock represented by the proxy
card on any item of business that is properly presented for action at the
Meeting, even if not described in this Proxy Statement. If any of the nominees
for Director named below should be unable or unwilling to accept nomination,
the proxies will be voted for the election of such other person as may be
recommended by the Board of Directors. The Board of Directors, however, has no
reason to believe that any item of business not set forth in this Proxy
Statement will come before the Meeting or that any of the nominees for Director
will be unavailable for election.
The proxy does not affect a stockholder's right to vote in person at the
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, or by communicating his
or her revocation in writing to the Secretary of the Company or by voting by
ballot at the Meeting.
VOTES REQUIRED
The holders of at least a majority of the combined voting power of the
Company's Class A common stock and Class B common stock outstanding on the
Record Date must be present in person or by proxy at the Meeting for the
Meeting to be held. Abstentions and broker non-votes are counted in
determining whether at least a majority of the voting power of the Company's
Class A common stock and Class B common stock outstanding on the Record Date
are present at the Meeting.
Directors will be elected by a plurality of the votes cast at the Meeting.
The affirmative vote of a majority of the voting power of each class of the
Company's common stock outstanding on the Record Date is required to approve
the Plan. The affirmative vote of a majority of the voting power of the
Company's Class A common stock and Class B common stock represented and
entitled to vote at the Meeting is required for the appointment of the
Company's independent auditors and approval of any other item of business to be
voted upon at the Meeting. Abstentions from voting on any matter will be
included in the voting tally. Abstentions will have no effect on the election
of Directors. Abstentions will have the same effect as votes against the
proposal to approve the Plan and the proposal to appoint the Company's
independent auditors. Broker non-votes are shares held by a broker or nominee
which are represented at the Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal. Broker non-votes
will have no effect on the election of Directors or the proposal to appoint the
Company's independent auditors. Broker non-votes will have the same effect as
votes against the proposal to approve the Plan. Lonnie "Bo" Pilgrim owned or
controlled 8,390,318 shares (60.8%) of the Company's Class A common stock and
16,773,492 shares (60.8%) of the Company's Class B common stock on the Record
Date, or 60.8% of the combined voting power of both classes of stock, and thus
will be able to elect all of the nominees for Directors, approve the Plan and
approve Ernst & Young LLP as independent auditors for the Company.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
The Company's Amended and Restated Corporate Bylaws state that a
stockholder must give the Secretary of the Company written notice, at the
Company's principal executive offices, of its intent to present a proposal at
the Company's 2001 Annual Meeting of Stockholders by October 5, 2000, but not
before May 8, 2000. Additionally, in order for stockholder proposals which are
submitted pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 (the
"Exchange Act") to be considered by the Company for inclusion in the Company's
proxy materials for the 2001 Annual Meeting of Stockholders, they must be
received by the Secretary of the Company no later than the close of business on
August 15, 2000 and no earlier than May 8, 2000.
COST OF PROXY SOLICITATION
The Company will bear the cost of the 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
Class A common stock and Class B common stock and to secure their voting
instructions, if necessary. The Company will reimburse them for the expenses
in so doing.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. However, it
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business through discussions with the Chairman and
other officers, by reviewing analyses and reports sent to them each month, as
well as by participating in Board and committee meetings.
BOARD COMMITTEES
To assist in carrying out its duties, the Board of Directors has delegated
certain authority to the Audit and Compensation Committees. The Board of
Directors does not maintain a Nominating Committee. The members of the Audit
Committee are Charles L. Black, Robert E. Hilgenfeld, Vance C. Miller, Sr.,
James G. Vetter, Jr., and Donald L. Wass. The members of the Compensation
Committee are Lonnie "Bo" Pilgrim, Robert E. Hilgenfeld, Vance C. Miller, Sr.,
Lonnie Ken Pilgrim, James G. Vetter, Jr., and Charles L. Black. Each Committee
meets to examine various facets of the Company's operations and take
appropriate action or make recommendations to the Board of Directors. The
Audit Committee's responsibilities include making recommendations to the Board
of Directors regarding the selection of independent public accountants and
reviewing the plan and results of the audit performed by the public accountants
of the Company and the adequacy of the Company's systems of internal accounting
controls, and monitoring compliance with the Company's conflicts of interest
and business ethics policies. The Compensation Committee reviews the Company's
remuneration policies and practices and establishes the salaries of the
Company's officers. In connection with its adoption of the Plan, for which the
Company is seeking stockholder approval at the Meeting, a subcommittee of the
Compensation Committee consisting of Charles L. Black and Vance C. Miller, Sr.,
was established. This subcommittee will be responsible for administering
certain aspects of the Plan, as more fully described under the caption "Item 2.
Proposal to Approve the Senior Executive Performance Bonus Plan."
MEETINGS
During the Company's fiscal year ending October 2, 1999, there were nine
meetings of the Board of Directors, two meetings of the Audit Committee, and
one meeting of the Compensation Committee. During fiscal 1999, each member of
the Board of Directors attended at least 75% of the aggregate number of
meetings of the Board and Board Committees on which the Director served.
ELECTION OF DIRECTORS
At the Meeting, ten Directors are to be elected, each to hold office for
one year or until his successor is duly elected and qualified. Unless otherwise
specified on the proxy card, the shares represented by the enclosed proxy will
be voted for the election of the ten nominees named below. The Board of
Directors has no reason to believe that any nominee will be unable to serve if
elected. In the event any nominee shall become unavailable for election, it is
intended that such shares will be voted for the election of a substitute
nominee selected by the Board of Directors.
NOMINEES FOR DIRECTOR
LONNIE "BO" PILGRIM, 71, has served as Chairman of the Board since the
organization of the Company in July 1968. He was previously Chief Executive
Officer from July 1968 to June 1998. Prior to the incorporation of the
Company, Mr. Pilgrim was a partner in the Company's predecessor partnership
business founded in 1946.
CLIFFORD E. BUTLER, 57, serves as Vice Chairman of the Board. He joined the
Company as Controller and Director in 1969, was named Senior Vice President of
Finance in 1973, became Chief Financial Officer and Vice Chairman of the Board
in July 1983, became Executive President in January 1997 and served in such
capacity through July 1998.
DAVID VAN HOOSE, 58, serves as Chief Executive Officer, President and Chief
Operating Officer (Principal Executive Officer) of the Company. He became a
Director in July 1998. He was named Chief Executive Officer and Chief Operating
Officer in June 1998 and President in July 1998. He was previously President
of Mexico Operations from April 1993 to June 1998 and Senior Vice President,
Director General, Mexico Operations from August 1990 to April 1993. Mr. Van
Hoose was employed by the Company in September 1988 as Senior Vice President,
Texas Processing. Prior to that, Mr. Van Hoose was employed by Cargill, Inc.
as General Manager of one of its chicken operations.
RICHARD A. COGDILL, 39, has served as Executive Vice President, Chief
Financial Officer, Secretary and Treasurer (Principal Financial and Accounting
Officer) since January 1997. He became a Director in September 1998.
Previously he served as Senior Vice President, Corporate Controller, from
August 1992 through December 1996 and as Vice President, Corporate Controller,
from October 1991 through August 1992. Prior to October 1991 he was a Senior
Manager with Ernst & Young LLP. He is a Certified Public Accountant.
LONNIE KEN PILGRIM, 41, has been employed by the Company since 1977 and has
been Senior Vice President, Transportation since August 1997. Prior to that he
served the Company as its Vice President, Director of Transportation. He has
been a member of the Board of Directors since March 1985. He is a son of
Lonnie "Bo" Pilgrim.
Charles L. Black, 70, was Senior Vice President, Branch President of
NationsBank, Mt. Pleasant, Texas, from December 1981 to his retirement in
February 1995. He previously was a Director of the Company from 1968 to August
1992 and has served as a Director since his re-election in February 1995.
ROBERT E. HILGENFELD, 74, was elected a Director in September 1986. Mr.
Hilgenfeld was Senior Vice President-Marketing-Processing for the Company from
1969 to 1972 and for seventeen years prior to that worked in various sales and
management positions for the Quaker Oats Company. From 1972 until April 1986,
he was employed by Church's Fried Chicken Company ("Church's") as Vice
President-Purchasing Group, Vice President and Senior Vice President. He was
elected a Director of Church's in 1985 and retired from Church's in April 1986.
Since retirement he has served as a consultant to various companies including
the Company.
VANCE C. MILLER, SR., 65, was elected a Director in September 1986. Mr.
Miller has been Chairman of Vance C. Miller Interests, a real estate
development company formed in 1977, and has served as the Chairman of the Board
and Chief Executive Officer of Henry S. Miller Cos., a Dallas, Texas, real
estate services firm, since 1991. Mr. Miller also serves as a director of
Resurgence Properties, Inc.
JAMES G. VETTER, JR., 65, has practiced law in Dallas, Texas, since 1966. He
is a shareholder of the Dallas law firm of Godwin, White & Gruber, P.C.
(formerly Godwin & Carlton, P.C.), and has served as general counsel and a
Director since 1981. Mr. Vetter is a Board Certified-Tax Law Specialist and
serves as a lecturer and author in tax matters.
DONALD L. WASS, PH. D., 67, was elected a Director of the Company in May
1987. He has been President of the William Oncken Company of Texas, a time
management consulting company, since 1970.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, the members of the Company's Compensation Committee
were Lonnie "Bo" Pilgrim, Robert E. Hilgenfeld, Vance C. Miller, Sr., Lonnie
Ken Pilgrim, James G. Vetter, Jr., and Charles L. Black.
The Company has been and continues to be a party to certain transactions
with Lonnie "Bo" Pilgrim and a law firm affiliated with James G. Vetter, Jr.
These transactions, along with all other transactions between the Company and
affiliated persons, require the prior approval of the Audit Committee of the
Board of Directors.
The Company's transactions with Lonnie "Bo" Pilgrim, Chairman of the Board
of the Company, have allowed the Company to obtain the use of required
production facilities and equipment on terms which management believes are not
less favorable to the Company than could have been arranged with unaffiliated
persons. Since 1985, Lonnie "Bo" Pilgrim, Chairman of the Board of the
Company, has engaged in chicken grow-out operations with the Company which
involve the purchase of chicks, feed and veterinary and technical services from
the Company and the growing-out of chickens to maturity at which time they are
purchased by the Company. Chicks, feed and services are purchased from the
Company for their fair market value, and the Company purchases the mature
chickens from Mr. Pilgrim at market-quoted prices at the time of purchase.
Management of the Company believes that this operation is conducted on terms
not less favorable to the Company than those which could be arranged with
unaffiliated persons. During fiscal year 1999, the Company paid Mr. Pilgrim,
doing business as Pilgrim Poultry G.P. ("PPGP"), $26,899,000 for chickens
produced in his grow-out operations, and PPGP paid the Company $25,076,000 for
chicks, feed and services. Lonnie "Bo" Pilgrim is the sole proprietor of PPGP.
PPGP also produces eggs for the Company. In addition to the chicken grow-
out operations described above, PPGP contracts with the Company to house and
care for Company flocks used for egg production and is paid an egg grower fee
based on actual production. The egg grower contract between PPGP and the
Company renews automatically as each expended flock of laying hens is replaced
by a new flock. The contract is cancelable by either party at any time prior
to the time when the then current producing flock is 48 weeks old. Flocks are
normally replaced every 14 months. Management of the Company believes that
these relationships are on terms not less favorable to the Company than those
which could be arranged with unaffiliated persons. During fiscal year 1999, the
Company paid contract egg grower's fees to PPGP of $4,501,000.
Since 1985, the Company has leased an airplane from Lonnie "Bo" Pilgrim
under a lease agreement which provides for monthly lease payments of $33,000
plus operating expenses, which terms management of the Company believes to be
substantially similar to those obtainable from unaffiliated parties. During
fiscal 1999, the Company had lease expenses of $396,000 and operating expenses
of $136,000 associated with the use of this airplane.
Historically, much of the Company's debt has been guaranteed by the major
stockholders of the Company. In consideration of such guarantees, the Company
has paid such stockholders a quarterly fee equal to .25% of the average
aggregate outstanding balance of such guaranteed debt. During fiscal 1999, the
Company incurred $771,000 for such guarantees and paid $759,000 to Lonnie "Bo"
Pilgrim and $40,000 to Lonnie Ken Pilgrim, a Director of the Company. During
fiscal 1999, Lonnie "Bo" Pilgrim and his three children created a new entity
named Pilgrim Interests, Ltd. and beginning in the fourth quarter of fiscal
1999, Pilgrim Interests, Ltd., began guaranteeing certain debt of the Company.
This new entity will take the place of and will be paid on the same basis as
the stockholders were above.
Godwin, White & Gruber, P.C., has represented and currently represents the
Company in connection with a variety of legal matters. James G. Vetter, Jr.,
is a Director of the Company and is a shareholder of Godwin, White & Gruber,
P.C. During fiscal year 1999, the Company paid Godwin, White & Gruber, P.C.,
legal fees of $164,501 in connection with such matters.
Mr. Hilgenfeld, a member of the Company's Compensation Committee, served as
an officer of the Company prior to 1973.
COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth a summary of compensation paid to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Other All
Fiscal Annual Other
NAME AND PRINCIPAL POSITION Year SALARY BONUS COMPENSATION COMPENSATION(1)
<S> <C> <C> <C> <C> <C>
Lonnie "Bo" Pilgrim 1999 $717,191 $748,417 $22,594 $8,349
Chairman of the Board 1998 501,314 210,975 36,558 11,430
1997 487,672 139,571 28,127 11,123
David Van Hoose 1999 419,468 503,921 10,486 9,689
Chief Executive Officer, 1998 283,395 200,000 6,579 6,704
President and 1997 254,992 72,978 6,000 7,042
Chief Operating Officer
Clifford E. Butler 1999 395,819 386,722 9,868 3,032
Vice Chairman of the Board 1998 372,267 156,666 9,304 3,213
1997 344,679 98,647 14,651 2,596
Robert L. Hendrix 1999 280,364 336,813 6,987 6,570
Executive Vice President- 1998 262,119 110,356 6,523 4,801
Growout and Processing 1997 254,992 72,978 15,200 7,276
Richard A. Cogdill 1999 220,328 310,000 5,489 1,075
Executive Vice President 1998 204,905 100,000 5,115 776
Chief Financial Officer 1997 190,575 54,542 10,540 458
Secretary and Treasurer
</TABLE>
_____________________
(1) Includes the following items of compensation:
a. Company's contributions to the named individual under its 401(k) Salary
Deferral Plan in the following amounts: Lonnie "Bo" Pilgrim, $52 (1999,
1998 & 1997); Clifford E. Butler, $318 (1999), $312 (1998), $792 (1997);
David Van Hoose, $318 (1999), $312 (1998), $707 (1997); Robert L. Hendrix,
$318 (1999), $318 (1998), $792 (1997); and Richard A. Cogdill, $318
(1999), $312 (1998), $260 (1997); and
b. Section 79 income to the named individual due to group term life insurance
in excess of $50,000 in the following amounts: Lonnie "Bo" Pilgrim,
$8,296 (1999), $11,379 (1998), $11,071 (1997); Clifford E. Butler, $2,714
(1999), $2,901 (1998), $1,804 (1997); David Van Hoose, $6,392 (1999),
$6,392 (1998), $6,335 (1997); Robert L. Hendrix, $6,252 (1999), $4,482
(1998), $6,484 (1997); Richard A. Cogdill, $757 (1999), $464 (1998), $198
(1997).
DIRECTORS' FEES
The Company pays its Directors who are not employees of the Company $4,000
per meeting attended, plus expenses.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee establishes executive compensation and oversees
the administration of the bonus plan for key members of management and the
Company's employee benefit plans.
The following is a report submitted by the Compensation Committee members
in their capacity as the Board's Compensation Committee, addressing the
Company's compensation policy as it related to the named executive officers for
fiscal 1999.
PERFORMANCE MEASURES
The Compensation Committee's establishment of annual executive
compensation is a subjective process in which the Committee considers many
factors including the Company's performance as measured by earnings for the
year, each executive's specific responsibilities, the contribution to the
Company's profitability by each executive's specific areas of responsibility,
the level of compensation believed necessary to motivate and retain qualified
executives, and the executive's length of time with the Company.
FISCAL COMPENSATION
For fiscal 1999, the Company's executive compensation program consisted of
(a) base salary, (b) a discretionary bonus based upon the factors described
above, (c) the bonus plan described below, (d) Company contributions to the
Company's 401(k) salary deferral plan which are made up of mandatory
contributions of one dollar per week and matching contributions of up to five
dollars per week and additional matching contributions of up to four percent of
an executive's compensation subject to an overall Company contribution limit of
five percent of domestic income before taxes, and (e) Company contributions to
the Employee Stock Investment Plan in an amount equal to 33 1/3 percent of the
officers' payroll deduction for purchases of the Company's common stock under
the plan, which deductions are limited to 7 1/2 percent of the officer's base
pay.
In establishing the fiscal 1999 compensation for Lonnie "Bo" Pilgrim, the
Company's Chairman of the Board, the Compensation Committee adjusted Mr.
Pilgrim's annual base salary from $501,549 to $1,040,000 to reflect his
contribution to the Company's excellent performance in fiscal 1998 and fiscal
1999 and his bonus was determined pursuant to the bonus plan discussed below.
No discretionary bonuses were awarded to Mr. Pilgrim for fiscal 1999.
In establishing the fiscal 1999 compensation for David Van Hoose as the
Company's Chief Executive Officer, President and Chief Operating Officer, the
Compensation Committee adjusted Mr. Van Hoose's annual base salary from
$400,000 to $412,000 to reflect changes in the cost of living. Mr. Van Hoose's
bonus for fiscal 1999 consisted of a bonus awarded pursuant to the bonus plan
discussed below, plus a discretionary bonus of $26,553. This discretionary
bonus was made in response to the Compensation Committee's subjective
assessment of Mr. Van Hoose's contribution to the Company's performance in
fiscal 1999.
The Company's objective is to obtain financial performance that achieves
increased return on equity, sales volume, earnings per share and net income.
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate goals
and stockholder interests.
The Company has maintained a bonus plan which provides for five percent of
the Company's U.S. income before income taxes{ } to be allocated among certain
key members of management. Such amount is allocated among all plan
participants based upon the ratio of each participant's eligible salary to the
aggregate salaries of all participants and the number of months of the fiscal
year the participant was approved for participation, subject to such
adjustments as the Compensation Committee deems appropriate. In fiscal 1999,
there were 16 participants in the plan, including the Chairman of the Board,
the Vice Chairman of the Board, the Chief Executive Officer, President and
Chief Operating Officer, the four Executive Vice Presidents, the six Senior
Vice Presidents and three other employees. This bonus plan has been terminated
with respect to fiscal years ending after October 2, 1999, and, subject to
stockholder approval at the Meeting, will be replaced by the Plan described
elsewhere in this Proxy Statement.
Lonnie "Bo" Pilgrim
Robert E. Hilgenfeld
Vance C. Miller, Sr.
Lonnie Ken Pilgrim
James G. Vetter, Jr.
Charles L. Black
<PAGE>
COMPANY PERFORMANCE
The following graph shows a five year comparison of cumulative total
returns for the Company, the Russell 2000 composite index and a peer group
selected by the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE RUSSELL 2000 INDEX AND A PEER GROUP
Cumulative Total Return
<TABLE>
<CAPTION>
10/1/94 9/30/95 9/28/96 9/27/97 9/26/98 10/2/99
<S> <C> <C> <C> <C> <C> <C>
PILGRIM'S PRIDE
CORPORATION-CLASS A(1) - - - - 100 58
PILGRIM'S PRIDE
CORPORATION-CLASS B(1) 100 82 91 163 204 92
PEER GROUP 100 104 96 135 133 89
RUSSELL 2000 100 123 140 186 154 177
</TABLE>
(1)On July 30, 1999, the Company issued a stock dividend of one share of
Class A common stock for every two shares of Class B common stock held to
stockholders of record on June 30, 1999. This was the first issuance of the
Company's Class A common stock. The above results for the Company's Class B
common stock were adjusted for the Class A common stock dividend. The Company's
Class A common stock was not outstanding at the beginning of fiscal 1999 and is
presented on a separate line of the graph.
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company, the
Russell 2000 composite index and the peer group is based on the stock price or
composite index at the end of fiscal 1995.
The above graph compares the performance of the Company with that of the
Russell 2000 composite index and a group of peer companies with the investment
weighted on market capitalization. Companies in the peer group are Sanderson
Farms, Inc., WLR Foods, Inc., Cagles, Inc., Seaboard Corporation and the
Company. These companies were selected because of their similar operations and
market capitalizations relative to the Company and were approved by the
Compensation Committee.
CERTAIN OTHER TRANSACTIONS
The Company has entered into chicken grower contracts involving farms
owned by certain of its officers, providing the placement of Company-owned
flocks on their farms during the grow-out phase of production. The contracts
are on terms substantially the same as contracts entered into by the Company
with unaffiliated parties and can be terminated by either party upon completion
of the grow-out of each flock. The aggregate amounts paid by the Company to
its officers and Directors under grower contracts during the fiscal year 1999
were as follows: Clifford E. Butler--$180,476, O.B. Goolsby--$139,656, and
James J. Miner--$208,194. See "Compensation Committee Interlocks and Insider
Participation" for a discussion of the Company's transactions with Lonnie "Bo"
Pilgrim, Lonnie Ken Pilgrim and James G. Vetter, Jr.
SECURITY OWNERSHIP
The following table sets forth, as of December 7, 1999, certain
information with respect to the beneficial ownership of the Company's Class A
common stock and Class B common stock by (a) each stockholder beneficially
owning at least 5% of the Company's outstanding Class A common stock and Class
B common stock; (b) each Director of the Company who is a stockholder of the
Company; (c) each of the executive officers listed in the executive
compensation table who is a stockholder of the Company; and (d) all executive
officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and Amount and
Nature of Nature of
Beneficial Percent Beneficial Percent
Ownership of of Ownership of of
Class A Class A Class B Class B
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
<S> <C> <C> <C> <C>
Pilgrim Interests, Ltd. 7,200,474 52.2% 14,395,385 52.2%
110 South Texas Street
Pittsburg, Texas 75686
Lonnie "Bo" Pilgrim 8,390,313 60.8% 16,773,492 60.8%
110 South Texas Street
Pittsburg, Texas 75686
Lonnie Ken Pilgrim(a)(b)(c) 7,490,141 54.3% 14,951,372 54.2%
110 South Texas Street
Pittsburg, Texas 75686
Clifford E. Butler(b) 21,041 (d) 35,121 (d)
Robert L. Hendrix(b) 13,596 (d) 27,153 (d)
Richard A. Cogdill(b) 7,009 (d) 9,167 (d)
David Van Hoose(b) 33,888 (d) 8,195 (d)
James G. Vetter, Jr. 975 (d) 1,550 (d)
Donald L. Wass 150 (d) 300 (d)
Robert Hilgenfeld 9,100 (d) - -
All executive officers and
Directors as a group
(18 persons) 8,730,114 62.9% 17,337,268 62.8%
</TABLE>
___________________
(a) Includes 7,200,474 shares of Class A common stock and 14,395,385 shares of
Class B common stock held of record by Pilgrim Interests, Ltd., a
partnership formed by Mr. Pilgrim's family of which Lonnie A. Pilgrim and
Lonnie Ken Pilgrim are managing partners. Also includes 30,193 shares of
Class A common stock and 60,387 shares of Class B common stock 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 30,193 shares of Class A common stock
and 60,386 shares of Class B common stock 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. Each of Lonnie A. Pilgrim and Lonnie
Ken Pilgrim disclaim beneficial ownership of the Company's Class A common
stock and Class B common stock held by Pilgrim Interests, Ltd., except to
the extent of their respective pecuniary interest therein.
(b) Includes shares held in trust by the Company's 401(k) Salary Deferral
Plan.
(a) Includes 3,232 shares of Class A common stock and 6,465 shares of Class B
common stock held by his wife. Also includes 12,674 shares of Class A
common stock and 25,350 shares of Class B common stock 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.
(b) Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
Directors, and persons who own more than ten percent of the Company's Class A
common stock and Class B common stock, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission ("SEC") and the New
York Stock Exchange. Officers, Directors and greater than ten-percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the
Company believes that all filing requirements applicable to its officers,
Directors and greater than ten-percent stockholders for fiscal 1999 were
complied with.
ITEM 2. PROPOSAL TO APPROVE
SENIOR EXECUTIVE PERFORMANCE BONUS PLAN
The Pilgrim's Pride Corporation Senior Executive Performance Bonus Plan is
being submitted for stockholder approval pursuant to requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), and specifically those
amendments to the Code added by the Omnibus Budget Reconciliation Act of 1993
("OBRA") regarding executive compensation. Under OBRA, which became law in
August 1993, publicly-held companies may be limited as to income tax deductions
to the extent total remuneration (including cash and/or stock bonuses) for
certain executive officers exceeds $1 million in any one year. However, OBRA
provides an exception for "performance-based" remuneration, including amounts
paid under qualifying bonus plans. OBRA requires that certain actions be taken
by a compensation committee of two or more outside directors and that the
material terms of such remuneration be approved by a majority vote of the
stockholders in order for compensation paid under bonus plans to qualify as
"performance-based" remuneration. After such approval, no additional approval
is required unless the compensation committee changes the material terms of the
performance goal. If, however, the compensation committee has authority to
change the targets under a performance goal after stockholder approval of the
goal, material terms of the performance goal must be disclosed to and
reapproved by stockholders no later than the first stockholder meeting that
occurs in the fifth year following the year in which stockholders previously
approved the performance goal.
The Plan is similar to and replaces the Company's previously adopted
senior executive bonus plan (the "Predecessor Plan") which has been terminated
with respect to all fiscal years ending after October 2, 1999. A copy of the
Plan is attached hereto as Exhibit A and is incorporated herein by reference.
The following summary of the Plan is subject to and qualified in its entirety
by the Plan.
GENERAL
The Plan is designed to promote the interests of the Company and its
stockholders by stimulating the efforts of the Participants (as defined below)
on behalf of the Company by establishing a direct relationship between the
payment of cash bonuses to certain of the Company's officers and the
profitability of the Company.
ADMINISTRATION
Except as provided below, the Plan will be administered by the Company's
Compensation Committee (the "Committee"); provided that any determination of
which Participants will participate in the Plan and any reductions in the bonus
amounts payable to the Section 162(m) Participants (as defined below) will be
determined solely by a special subcommittee (the "Subcommittee") of the
Committee, which will at all times consist solely of at least two "outside
directors" as such phrase is defined by Section 162(m) ("Section 162(m)") of
the Code, and the rules and regulations promulgated pursuant thereto. The
Subcommittee currently consists of Charles L. Black and Vance C. Miller, Sr.
The Subcommittee will have the authority, subject to the limitations set
forth in the Plan or otherwise imposed by Section 162(m), to interpret the Plan
and to adopt, amend and rescind such rules and regulations as, in its opinion,
are necessary for the administration of the Plan and to make such other
determinations deemed necessary or advisable for the administration of the
Plan. All decisions, determinations and interpretations of the Committee or
the Subcommittee relating to the Plan will be final and conclusive on the
Company and all Participants under the Plan.
Each of the Committee and the Subcommittee may employ such accountants,
legal counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any
counsel or consultant and any computation received from any consultant or
agent. Expenses incurred by the Committee and the Subcommittee in the
engagement of such counsel, consultants or agents will be paid by the Company.
No member or former member of the Committee or Subcommittee will be liable for
any action or determination made in good faith with respect to the Plan.
PARTICIPANTS
The persons eligible to participate in the Plan in any given fiscal year
("Fiscal Year") of the Company will be comprised of two groups: (a) the
Company's Chairman of the Board, Chief Executive Officer, if any, and President
and such other officers of the Company as the Subcommittee may specify as
Section 162(m) Participants on or before the 90th day following the
commencement of such Fiscal Year (the "Section 162(m) Participants"); and (b)
such other officers of the Company as the Subcommittee may specify on or before
the 90th day following the commencement of such Fiscal Year, including, unless
otherwise specified by the Subcommittee as aforesaid, the Company's Vice
Chairman, Executive Vice Presidents and Senior Vice Presidents (the "Non-
Section 162(m) Participants") (collectively, the "Participants"). The Company
currently has 14 officers, all of which have been designated as Participants in
the Plan (2 as Section 162(m) Participants and 12 as Non-Section 162(m)
Participants).
CALCULATION OF BONUS AMOUNT
Each Fiscal Year, commencing with the Fiscal Year ending September 30,
2000, each Participant who is employed by the Company or one of its
subsidiaries on the January 1 immediately following the Fiscal Year with
respect to which the bonus is being determined will be entitled to receive a
cash bonus with respect to such Fiscal Year equal to (a) the sum of (i) the
amount of such Participant's base salary accrued with respect to the period
commencing on the first day of such Fiscal Year and ending on the 90th day
following the commencement of such Fiscal Year plus (ii) the amount of such
Participant's base salary that would accrue with respect to the period
commencing on the 91st day of such Fiscal Year and ending on the last day of
such Fiscal Year assuming that such Participant's base salary did not increase
or decrease from such Participant's base salary as in effect on the 90th day
following the commencement of such Fiscal Year divided by (b) the sum of the
amounts calculated in accordance with clause (a) immediately above for all of
the Participants multiplied by (c) 5% of the Company's pre-tax income from U.S.
operations, excluding extraordinary charges, for the Fiscal Year with respect
to which the bonus is being calculated (the "Bonus Pool Amount").
Notwithstanding the Plan's provisions, (a) the Committee will retain the
right, in its sole discretion, to reduce, increase or eliminate, prior to the
payment thereof, the amount of any bonus that would otherwise be due under the
Plan to a Non-Section 162(m) Participant and (b) the Subcommittee will retain
the right, in its sole discretion, to reduce or eliminate (but not increase),
prior to the payment thereof, the amount of any bonus that would otherwise be
due under the Plan to a Section 162(m) Participant, but under no circumstances
may any such reduction or elimination under clause (a) or (b) increase the
bonus otherwise payable to a Section 162(m) Participant or cause the aggregate
amount of such bonuses to exceed the Bonus Pool Amount for such Fiscal Year.
The following table summarizes the cash bonuses that would have been
granted under the Plan with respect to the Fiscal Year ended October 2, 1999,
if the Plan had been in effect for such fiscal year and the adjustments in the
bonuses under the Predecessor Plan were to have been made under the Plan (which
adjustments would reduce the aggregate amount otherwise payable under the Plan
by $280,432):
SENIOR EXECUTIVE PERFORMANCE BONUS PLAN
NAME AND POSITION CASH BONUS
Lonnie "Bo" Pilgrim
Chairman of the Board $748,417
David Van Hoose
Chief Executive Officer, President and Chief Operating Officer 477,368
Clifford E. Butler
Vice Chairman of the Board 386,722
Robert L. Hendrix
Executive Vice President-Grow Out and Processing 336,813
Richard A. Cogdill
Executive Vice President, Chief Financial Officer,
Secretary and Treasurer 310,000
All Executive Officers as a Group (14 persons) 3,783,418
All Non-Executive Officer Directors as a Group (0 persons) -
All Non-Executive Officer Employees as a Group (0 persons) -
PAYMENT OF BONUSES
Each bonus awarded to a Participant under the Plan will be payable to such
Participant no later than the end of the first quarter of the succeeding Fiscal
Year; provided, however, that no payment will be made under the Plan until the
Subcommittee certifies in writing that the Company achieved the amount of pre-
tax income from U.S. operations, excluding extraordinary charges, used to
calculate the Bonus Pool Amount and that the determination of the amount of
bonus to be paid to each Participant was correct.
EFFECTIVE DATE; TERM; AND AMENDMENT
Subject to approval of the Plan by the holders of a majority of the
outstanding shares of each class of the Company's common stock at the Meeting,
the Plan will be effective with respect to the Company's Fiscal Year ending
September 30, 2000, and will continue in effect for each Fiscal Year thereafter
until terminated by the Board of Directors. The Board of Directors will have
the power to amend, modify or terminate the Plan, in its sole discretion.
TAX CONSEQUENCES
Under federal tax law, taxable income will be realized by each eligible
Participant upon the payment of cash bonuses to each such employee in the
taxable year of the payment. The taxable income will be equal to the cash
payment. The Company will be entitled to a deduction in an amount equal to the
cash payments.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND MAY NOT BE APPLICABLE TO ALL
INDIVIDUALS. PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS FOR A
DETERMINATION AS TO THE SPECIFIC TAX CONSEQUENCES APPLICABLE TO THEM.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the voting power of each class of
the Company's common stock outstanding on the Record Date is required to
approve the Plan and the performance goal included therein. No bonus payments
will be made under the Plan unless and until such stockholder approval is
obtained. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
THE PLAN.
ITEM 3. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends the appointment of Ernst & Young LLP as
the Company's independent auditors for the 2000 fiscal year. This firm of
certified public accountants has served as independent auditors of the Company
pursuant to annual appointment by the Board of Directors since 1969 except for
1982 and 1983.
Representatives of Ernst & Young are expected to be present at the Meeting
and to be available to respond to appropriate questions. They will be given
the opportunity to make a statement if they wish to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 2000.
FINANCIAL STATEMENTS AVAILABLE
FINANCIAL STATEMENTS FOR THE COMPANY ARE INCLUDED IN THE ANNUAL REPORT TO
STOCKHOLDERS FOR THE YEAR 1999. ADDITIONAL COPIES OF THESE STATEMENTS, AS WELL
AS FINANCIAL STATEMENTS FOR PRIOR YEARS AND THE ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K, MAY BE OBTAINED WITHOUT CHARGE FROM THE
SECRETARY OF THE COMPANY, 110 SOUTH TEXAS STREET, PITTSBURG, TEXAS 75686.
FINANCIAL STATEMENTS ARE ALSO ON FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION, WASHINGTON, D.C. 20549, AND THE NEW YORK STOCK EXCHANGE.
OTHER BUSINESS
The Board of Directors is not aware of, and it is not anticipated that
there will be presented to the Meeting, any business other than the election of
the Directors, the proposal to approve the Plan and the proposal to appoint
Ernst & Young independent auditors described above. If other matters properly
come before the Meeting, the persons named on the accompanying proxy card will
vote the returned proxies as the Board of Directors recommends.
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 mailings.
By order of the Board of Directors,
RICHARD A. COGDILL
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER
Pittsburg, Texas
December 13, 1999
EXHIBIT A
PILGRIM'S PRIDE CORPORATION
SENIOR EXECUTIVE PERFORMANCE BONUS PLAN
Pilgrim's Pride Corporation (the "Company") hereby establishes the
Pilgrim's Pride Corporation Senior Executive Performance Bonus Plan (the
"Plan"). The purpose of the Plan is to advance the interests of Pilgrim's
Pride Corporation and its stockholders by establishing a direct relationship
between the payment of cash bonuses to certain of the Company's officers and
the profitability of the Company.
1. ADMINISTRATION.
(a) Except as provided below, the Plan shall be administered by the
Company's Compensation Committee (the "Committee"); provided that any
determination of which Participants (as defined below) will participate in the
Plan and any reductions in the bonus amounts payable to the Section 162(m)
Participants (as defined below) shall be determined solely by a special
subcommittee (the "Subcommittee") of the Committee, which shall at all times
consist solely of two or more "outside directors" as such phrase is defined by
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated pursuant thereto.
(b) The Subcommittee shall have the authority, subject to the
limitations set forth in the Plan or otherwise imposed by Section 162(m), to
interpret the Plan and to adopt, amend and rescind such rules and regulations
as, in its opinion, are necessary for the administration of the Plan and to
make such other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations and interpretations
of the Committee or the Subcommittee relating to the Plan shall be final and
conclusive on the Company and all Participants under the Plan.
(c) Each of the Committee and the Subcommittee may employ such
accountants, legal counsel, consultants and agents as it may deem desirable for
the administration of the Plan and may rely upon any opinion received from any
counsel or consultant and any computation received from any consultant or
agent. Expenses incurred by the Committee and the Subcommittee in the
engagement of such counsel, consultants or agents shall be paid by the Company.
No member or former member of the Committee or Subcommittee shall be liable for
any action or determination made in good faith with respect to the Plan.
2. PARTICIPANTS AND BONUSES.
(a) The persons eligible to participate in the Plan in any given fiscal
year ("Fiscal Year") of the Company shall be comprised of two groups: (i) the
Company's Chairman of the Board, Chief Executive Officer, if any, and President
and such other officers of the Company as the Subcommittee may specify as
Section 162(m) Participants on or before the 90th day following the
commencement of such Fiscal Year (the "Section 162(m) Participants"); and (ii)
such other officers of the Company as the Subcommittee may specify on or before
the 90th day following the commencement of such Fiscal Year, including, unless
otherwise specified by the Subcommittee as aforesaid, the Company's Vice
Chairman, Executive Vice Presidents, and Senior Vice Presidents (the "Non-
Section 162(m) Participants") (collectively, the "Participants").
(b) Each Fiscal Year, commencing with the Fiscal Year ending September
30, 2000, each Participant who is employed by the Company or one of its
subsidiaries on the January 1 immediately following the Fiscal Year with
respect to which the bonus is being determined shall be entitled to receive a
cash bonus with respect to such Fiscal Year equal to (i) the sum of (x) the
amount of such Participant's base salary accrued with respect to the period
commencing on the first day of such Fiscal Year and ending on the 90th day
following the commencement of such Fiscal Year plus (y) the amount of such
Participant's base salary that would accrue with respect to the period
commencing on the 91st day of such Fiscal Year and ending on the last day of
such Fiscal Year assuming that such Participant's base salary did not increase
or decrease from such Participant's base salary as in effect on the 90th day
following the commencement of such Fiscal Year divided by (ii) the sum of the
amounts calculated in accordance with clause (i) immediately above for all of
the Participants multiplied by (iii) 5% of the Company's pre-tax income from
U.S. operations, excluding extraordinary charges, for the Fiscal Year with
respect to which the bonus is being calculated (the "Bonus Pool Amount").
(c) Notwithstanding the provisions of Sections 2(b) hereof, (i) the
Committee shall retain the right, in its sole discretion, to reduce, increase
or eliminate, prior to the payment thereof, the amount of any bonus that would
otherwise be due hereunder to a Non-Section 162(m) Participant and (ii) the
Subcommittee shall retain the right, in its sole discretion, to reduce or
eliminate (but not increase), prior to the payment thereof, the amount of any
bonus that would otherwise be due hereunder to a Section 162(m) Participant,
but under no circumstances may any such reduction or elimination under clause
(i) or (ii) increase the bonus otherwise payable to a Section 162(m)
Participant or cause the aggregate amount of such bonuses to exceed the Bonus
Pool Amount for such Fiscal Year.
3. PAYMENT OF BONUSES.
Each bonus awarded to a Participant hereunder shall be payable to such
Participant no later than the end of the first quarter of the succeeding Fiscal
Year; provided, however, that no payment shall be made hereunder until the
Subcommittee certifies in writing that the Company achieved the amount of pre-
tax income from U.S. operations, excluding extraordinary charges, used to
calculate the Bonus Pool Amount and that the determination of the amount of
bonus to be paid to each Participant was correct.
4. EFFECTIVE DATE; TERM; AND AMENDMENT.
(a) Subject to approval of the Plan by the holders of a majority of the
outstanding shares of each class of the Company's common stock at the annual
meeting of the Company's stockholders to be held in February 2000, the Plan
shall be effective with respect to the Company's Fiscal Year ending September
30, 2000, and shall continue in effect for each Fiscal Year thereafter until
terminated by the Board of Directors of the Company. The Board of Directors of
the Company shall have the power to amend, modify or terminate the Plan, in its
sole discretion.
5. NON-TRANSFERABILITY.
No rights or benefits granted in the Plan may be transferred, assigned,
pledged or hypothecated in any manner, by operation of law or otherwise, other
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended ("Internal Revenue Code"), or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder,
and shall not be subject to execution, attachment or similar process.
6. NO FIDUCIARY RELATIONSHIP.
The Board of Directors and the officers of the Company shall have no duty
to manage or operate in order to maximize the benefits granted to the
Participants hereunder, but rather shall have full discretionary power to make
all management and operational decisions based on their determination of their
respective best interests. This Plan shall not be construed to create a
fiduciary relationship between such Board or the officers of the Company and
the Participants.
7. GOVERNING LAW.
This Plan shall be governed by and construed in accordance with the laws
of the State of Texas.
8. NO EMPLOYMENT GUARANTEE.
Nothing in this Plan shall be construed as an employment contract or a
guarantee of continued employment. The rights of any Participant shall only be
those as are expressly set forth in this Plan.
9. TAXES.
The Company shall be entitled to deduct from amounts payable hereunder any
sums required by federal, state or local tax law to be withheld with respect to
such payments.
10. GENERAL CREDITOR STATUS.
The Participants shall, in no event, be regarded as standing in any
position, if at all, other than as a general creditor of the Company with
respect to any rights derived from the existence of the Plan and shall receive
only the Company's unfunded and unsecured promise to pay benefits under the
Plan.
11. CAPTIONS.
The captions in the Plan are inserted for convenience of reference only
and in no way define, describe or limit the scope or intent of this Plan or any
of the provisions hereof.
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 Class A common stock and Class B
common stock of Pilgrim's Pride Corporation held of record by the undersigned
on December 6, 1999, at the Annual Meeting of Stockholders to be held on
February 2, 2000, or any adjournment thereof.
PLEASE EXECUTE THIS PROXY AND RETURN PROMPTLY IN THE
Enclosed Self-Addressed Stamped Envelope
(CONTINUED ON OTHER SIDE)
PILGRIMS PRIDE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
---------------------------------
CLASS A AND/OR CLASS B COMMON STOCK
1. ELECTION OF DIRECTORS:
FOR all nominees TO WITHHOLD AUTHORITY
Listed to vote for all
(except as marked nominees listed
to the contrary)
Lonnie "Bo" Pilgrim Lonnie Ken Pilgrim Vance C. Miller, Sr.
Clifford E. Butler James G. Vetter, Jr. Donald L. Wass
David Van Hoose Charles L. Black
Richard A. Cogdill Robert E. Hilgenfeld
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name
on the line provided below.)
------------------------------------------------------------
2. The approval of the Company's Senior Executive Performance Bonus Plan:
FOR AGAINST ABSTAIN
- -------------------------------------------------------------
3. The appointment of Ernst & Young LLP as independent auditors for the
Company for the fiscal year ending
September 30, 2000:
FOR AGAINST ABSTAIN
- -------------------------------------------------------------------------------
4. In their discretion such other business as may properly come before the
Annual Meeting.
UNLESS OTHERWISE SPECIFIED ON THIS PROXY, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF MANAGEMENT'S NOMINEES FOR DIRECTORS
AND "FOR" PROPOSALS 2 AND 3 ABOVE. DISCRETION WILL BE USED WITH RESPECT TO
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
____________________________________________________________________
Date
____________________________________________________________________
Signature of Stockholder
____________________________________________________________________
Signature if held jointly
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.
