January 27, 2000
Dear Stockholder:
The 2000 Annual Meeting of Stockholders of the Company will be held in the
Petroleum Room of the Ramada Inn in Laurel, Mississippi, at 10:00 A.M. on
Thursday, February 24, 2000. The purposes of the Annual Meeting are set forth in
the accompanying Notice and Proxy Statement.
The 1999 Annual Report, which is enclosed, contains financial and other
information concerning the Company and its business for the fiscal year ended
October 31, 1999. The Annual Report is not to be considered part of the proxy
solicitation materials.
We cordially invite you to attend the Annual Meeting. If you cannot
attend, please complete and return the enclosed Proxy so that your vote can be
recorded.
Cordially,
/s/Joe F. Sanderson, Jr.
Joe F. Sanderson, Jr.
Chairman of the Board
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held February 24, 2000
To the Stockholders:
The Annual Meeting of Stockholders of Sanderson Farms, Inc. (the
"Company") will be held in the Petroleum Room of the Ramada Inn in Laurel,
Mississippi at 10:00 A.M. (local time) on Thursday, February 24, 2000, for
the following purposes:
(1) To elect four Class B Directors to serve until the 2003 annual
meeting;
(2) To consider and act upon a proposal to ratify and approve the
selection of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending October 31, 2000; and
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The business to be transacted at the Annual Meeting is more fully
described in the accompanying Proxy Statement, to which reference is hereby
made.
The Board of Directors has fixed the close of business on January 11, 2000
as the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/James A. Grimes, Secretary
Dated: January 27, 2000
<PAGE>
PROXY STATEMENT
General
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Sanderson Farms, Inc. (the "Company"), P.O. Box 988, Laurel,
Mississippi 39441, in connection with the 2000 Annual Meeting of Stockholders to
be held February 24, 2000, and any adjournments of that meeting. Execution of
the Proxy will not in any way affect a stockholder's right to attend the meeting
and, upon revocation of the Proxy, to vote in person. Proxies may be revoked at
any time before they are voted by filing with the Secretary a written notice of
revocation or a duly executed Proxy bearing a later date. Unless they are
revoked, Proxies in the form enclosed, properly executed and received by the
Secretary of the Company prior to the Annual Meeting, will be voted at the
meeting as specified by the stockholder in the Proxy or, except with respect to
broker non-votes, if no specification is made in the Proxy, then FOR each of the
proposals set forth in the accompanying Notice of Annual Meeting of
Stockholders, and according to their discretion upon all other matters which may
properly come before the meeting. Broker non-votes will be treated as not
present for purposes of calculating the vote on a matter for which no
specification is made in the Proxy, and will not be counted either as a vote FOR
or AGAINST a proposal or as an ABSTENTION with respect thereto. Abstentions will
not be counted either as a vote FOR or as a vote AGAINST a proposal. The cost of
soliciting Proxies is being paid by the Company.
The Company's 1999 Annual Report accompanies this Proxy Statement, but is
not to be considered a part of the proxy solicitation materials. The record date
for the Annual Meeting is January 11, 2000. These materials are being mailed to
stockholders on or about January 27, 2000.
<PAGE>
Capital Stock
The authorized capital stock of the Company consists of 5,000,000 shares
of non-voting preferred stock, of which 500,000 shares have been designated
Series A Junior Participating Preferred Stock, par value $100.00 per share, none
of which shares have been issued, and 100,000,000 shares of voting Common Stock,
par value $1.00 per share, of which 13,787,455 shares had been issued and were
outstanding as of January 11, 2000, the record date for the Annual Meeting. Only
stockholders of record at the close of business on such date are entitled to
notice of and to vote at the Annual Meeting. Each such stockholder is entitled
to one vote for each share of common stock held at that date.
Beneficial Ownership
The following table sets forth information, as of January 11, 2000,
concerning (a) the only stockholders known by the Company to own beneficially
more than 5% of the common stock of the Company, which is the only class of
voting securities outstanding, (b) the beneficial ownership of common stock of
the executive officers named in the "Summary Compensation Table" below, and (c)
the beneficial ownership of common stock by all directors and executive officers
of the Company as a group.
<PAGE>
Amount
Beneficial Owner(s) Beneficially Percent
and Address Owned(1)(2) of Class
Estate of Joe Frank Sanderson (3) 3,229,672 shares 23.42%
Estate of Dewey R. Sanderson, Jr.(4)3,268,482 shares 23.71%
Joe F. Sanderson, Jr. (5) 3,535,782 shares 25.64%
William R. Sanderson (6) 3,578,303 shares 25.95%
D. Michael Cockrell (7) 32,375 shares (12)
Trustmark National Bank (8) 1,265,079 shares 9.18%
Lampkin Butts (2) (9) 1,300,777 shares 9.43%
Robin Robinson (2) (10) 1,265,079 shares 9.18%
All Directors and executive
officers as a
group (12 persons) (11) 8,789,129 shares 63.75%
(1) The shares are owned of record by the beneficial owners shown with
sole voting and investment power, except as set forth in the following notes.
(2) Lampkin Butts, Robin Robinson and Trustmark National Bank are the
trustees of the Employee Stock Ownership Plan and Trust of Sanderson Farms, Inc.
and Affiliates (the "ESOP"), which is the record owner of 1,265,079 shares of
common stock of the Company. Trustmark National Bank and Mr. Butts and Ms.
Robinson, in their respective capacities as trustees of the ESOP, share with
each other investment power with respect to those shares of common stock and
therefore are each deemed to beneficially own, under applicable regulations of
the Securities and Exchange Commission, the 1,265,079 shares of common stock
owned of record by the ESOP. With respect to the voting power of the 1,265,079
shares of common stock, the members of the Administrative Committee of the ESOP
share with each other voting power as to 115,000 shares, which are the shares of
common stock not allocated to participant accounts under the ESOP, and the
participants in the ESOP exercise sole voting power as to the 1,150,079 shares
allocated to their respective accounts under the ESOP.
<PAGE>
(3) On January 4, 1998, Joe Frank Sanderson died. The 3,229,672 shares
that Joe Frank Sanderson beneficially owned are now beneficially owned by the
Estate of Joe Frank Sanderson (the "Estate"). The co-executors of the Estate are
Joe Frank Sanderson's sons, Joe F. Sanderson, Jr. and William R. Sanderson. The
amount in the table includes 3,229,672 shares owned of record by the Estate.
Pursuant to a Pledge Agreement dated as of March 31, 1999, the Estate has
pledged all of the shares of common stock owned by it to secure its obligations
under its Loan Agreement dated as of March 31, 1999, with a bank. The Loan
Agreement pertains to borrowings of $13,500,000, the proceeds of which were used
primarily to pay estate taxes. The lender has notified the Estate that the
decline in market value of the Common Stock pledged as collateral for the Loan
Agreement has caused the Estate to have insufficient collateral for the loan, in
violation of the Loan Agreement, which provides that the amount of the loan may
not exceed a specified percentage of the value of the collateral. The Estate has
not been able to cure this violation. While no default has been declared by the
lender, the Estate is in the process of moving the loan to other lenders who are
offering a more favorable loan-to-collateral percentage.
(4) Address: P. O. Box 988, Laurel, Mississippi 39441. Mr. Dewey R.
Sanderson, Jr. died on December 2, 1999. The shares owned of record by Mr.
Sanderson are now owned by his estate, which at the date of this proxy statement
had not been probated. The table also includes 223,257 shares owned of record by
Dewey R. Sanderson, Jr.'s wife, as to which she exercises sole voting and
investment power, and as to which Dewey R. Sanderson, Jr.'s estate, pursuant to
Rule 13d-4 of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), disclaims beneficial ownership.
<PAGE>
(5) Address: P. O. Box 988, Laurel, Mississippi 39441. The amount shown in
the table includes 57,517 shares owned of record by Joe F. Sanderson, Jr., over
which he exercises sole voting and investment power, and 46,450 shares allocated
to Joe F. Sanderson, Jr.'s account in the Company's ESOP, with respect to which
he has sole voting power. The trustees of the ESOP share investment power over
the 46,450 shares allocated to Joe F. Sanderson, Jr.'s account under the ESOP.
The amount in the table includes the 3,229,672 shares beneficially owned by Joe
F. Sanderson, Jr. as co-executor of the Estate. The co-executors share voting
and investment power with respect to these shares. The amount shown in the table
also includes 6,539 shares owned of record by Joe F. Sanderson, Jr.'s wife, over
which she exercises sole voting and investment power. The amount in the table
also includes 150,604 shares owned of record by a charitable private foundation
established by Joe Frank Sanderson, for which Joe F. Sanderson, Jr. serves as a
director and as such, shares voting and investment power with the other
directors of the foundation with respect to such shares. Pursuant to Rule 13d-4
of the Exchange Act, Joe F. Sanderson, Jr. disclaims beneficial ownership of the
6,539 shares owned of record by his wife, the 3,229,672 shares owned of record
by the Estate, and the 150,604 shares owned of record by the foundation. The
amount in the table also includes 45,000 options to purchase shares owned by Mr.
Sanderson under the Company's Stock Option Plan, which options to purchase such
shares were exercisable on the date of the Proxy, although the exercise prices
of such options were higher than the market price on that date.
<PAGE>
(6) Address: P. O. Box 988, Laurel, Mississippi 39441. The amount in the
table includes 132,150 shares owned of record by William R. Sanderson, of which
he exercises sole voting and investment power, 8,561 shares allocated to his
account under the ESOP, 8,460 shares owned of record by William R. Sanderson's
wife, over which she exercises sole voting and investment power, and 23,856
shares owned by Mr. Sanderson as custodian for his minor children, over which he
exercises sole voting and investment power. The amount in the table includes
3,229,672 shares beneficially owned by William R. Sanderson as co-executor of
the Estate. The co-executors share voting and investment power with respect to
3,229,672 shares owned of record by the Estate. The amount in the table also
includes 150,604 shares owned of record by a charitable private foundation
established by Joe Frank Sanderson, for which William R. Sanderson serves as a
director and as such, shares voting and investment power with the other
directors of the foundation with respect to such shares. Pursuant to Rule 13d-4
of the Exchange Act, William R. Sanderson disclaims the beneficial ownership of
the 8,460 shares owned of record by his wife, the 3,229,672 shares owned of
record by the Estate, and the 150,604 shares owned of record by the foundation.
The amount in the table also includes 25,000 options to purchase shares owned by
William R. Sanderson under the Company's Stock Option Plan, which options to
purchase such shares were exercisable on the date of the Proxy, although the
exercise prices of such options were higher than the market price on that date.
(7) Address: P. O. Box 988, Laurel, Mississippi 39441. The amount shown in
the table includes 450 shares owned of record by Mr. Cockrell over which he
exercises sole voting and investment power, and 500 shares allocated to Mr.
Cockrell's account in the Company's ESOP, with respect to which Mr. Cockrell has
sole voting power. The trustees of the ESOP share investment power over the 500
shares allocated to Mr. Cockrell's account under the ESOP. The amount in the
table also includes 31,875 options to purchase shares owned by Mr. Cockrell
under the Company's Stock Option Plan, which options to purchase such shares
were exercisable on the date of this Proxy, although the exercise prices of such
options were higher than the market price on that date.
<PAGE>
(8) Address: 415 North Magnolia, Laurel, Mississippi 39940. See note (2)
above for a description of the nature of Trustmark National Bank's beneficial
ownership of the 1,265,079 shares of common stock owned of record by the ESOP.
Trustmark National Bank, pursuant to Rule 13d-4 of the Exchange Act, disclaims
beneficial ownership of all shares of common stock owned of record by the ESOP,
which constitute all shares reported as being beneficially owned by it.
(9) Address: P. O. Box 988, Laurel, Mississippi 39441. See note (2) for a
description of the nature of Mr. Butts' beneficial ownership of the 1,265,079
shares of common stock owned of record by the ESOP. The amount in the table also
includes 3,773 shares owned of record by Mr. Butts, and 50 shares held as
custodian for a minor child, over which he exercises sole voting and investment
power. With respect to the 22,740 shares allocated to his account under the
Company's ESOP, Mr. Butts has sole voting power, but shares investment power
with the other trustees of the ESOP. The amount in the table also includes
31,875 options to purchase shares owned by Mr. Butts under the Company's Stock
Option Plan, which options to purchase such shares were exercisable on the date
of this Proxy, although the exercise prices of such options were higher than the
market price of that date. Mr. Butts, pursuant to Rule 13d-4 of the Exchange
Act, disclaims beneficial ownership of all shares of common stock owned of
record by the ESOP, except the 22,740 shares allocated to his individual
account, and the 50 shares held as custodian.
(10) Address: P. O. Box 988, Laurel, Mississippi 39441. See note (2) above
for a description of the nature of Ms. Robinson's beneficial ownership of the
1,265,079 shares of common stock owned of record by the ESOP. Ms. Robinson,
pursuant to Rule 13d-4 of the Exchange Act, disclaims beneficial ownership of
all shares of common stock owned of record by the ESOP, except the 6,419 shares
allocated to her individual account. There are 6,419 shares allocated to Ms.
Robinson's account in the Company's ESOP, with respect to which Ms. Robinson has
sole voting power, but over which she shares investment power with the other
trustees of the ESOP.
<PAGE>
(11) Includes an aggregate of 80,553 shares allocated to the accounts of
all Directors and executive officers, as a group (13 persons, 5 participating)
under the ESOP. See note (2) above.
(12) Less than 1%.
ELECTION OF DIRECTORS
The amended Articles of Incorporation of the Company provide that the
Board of Directors shall be divided into three classes (Class A, Class B and
Class C), with each class containing one-third, or as close to one-third as
possible, of the total number of directors, and that the total number of
directors shall be fixed by the Board of Directors in the By-laws. At the
current time, the Board of Directors has fixed the number of directors at
twelve, resulting in there being four directors in each class. At each annual
meeting of stockholders, directors constituting one class are elected for a
three-year term. At the 2000 Annual Meeting, stockholders will elect four Class
B directors, whose terms will expire at the 2003 annual meeting.
One Class C director position is currently vacant.
Nominees for Class B Directors
The Board of Directors proposes for election as Class B Directors the four
nominees listed below, each to serve as a Class B Director until the 2003 annual
meeting or until his successor is elected and has qualified. Any vacancy on the
Board of Directors may be filled either by the Board of Directors or by the
stockholders, and any person elected to fill a vacancy will serve the remainder
of the term of the director whose position has become vacant.
<PAGE>
Proxies in the enclosed form may also be voted for the election as Class B
Directors of substitute nominees who may be named by the Board of Directors to
replace any of the four nominees who become unavailable to serve for any reason.
(No such unavailability is presently known to the Board of Directors.) In no
event, however, will the Proxies be voted for more than four persons. There are
no arrangements or understandings relating to any person's service or
prospective service as a Class B Director of the Company. No nominee listed
below will be elected as a Class B Director unless such nominee receives the
affirmative vote of the holders of a majority of the shares entitled to vote and
represented (whether in person or by proxy) at the Annual Meeting at which a
quorum is present. If more nominees than the number of Directors to be elected
receive a majority vote, then those nominees, up to four persons, receiving the
highest number of votes will be elected. Abstentions will not be counted either
as a vote FOR or as a vote AGAINST the nominees for Class B Directors. Broker
non-votes will be treated as not present for purposes of calculating the vote
with respect to the election of the Class B Directors, and will not be counted
either as a vote FOR or AGAINST or as an ABSTENTION with respect thereto.
The following table lists the nominees for Class B Director and shows, as
of January 11, 2000, their respective beneficial ownership of common stock of
the Company. Hugh V. Sanderson is the cousin of Joe F. Sanderson, Jr. (Class A
Director), the brother of Robert Buck Sanderson (Class C Director) and the
cousin of William R. Sanderson (Class C Director).
Shares
Nominees for Director Beneficially Percent
Class B Director Age Since Owned (1) of Class
- ---------------- --- ----- ---------- --------
Class B (Term expiring in 2003)
Hugh V. Sanderson (2) 38 2000 246,209 1.75%
Rowan H. Taylor 73 1989 5,500 (5)
John H. Baker, III (3) 57 1994 116,500 (5)
Mike Cockrell (4) 42 1998 32,375 (5)
<PAGE>
(1) The shares are owned of record by the beneficial owners shown with
sole voting and investment power, except as set forth in the notes below.
(2) Mr. Sanderson was elected by the Board of Directors on January 6, 2000
to fill the unexpired term of his father, Dewey R. Sanderson, Jr., who died on
December 2, 1999. The amount in the table includes 2,123 shares allocated to Mr.
Sanderson's account in the company's ESOP, with respect to which Mr. Sanderson
has sole voting power.
(3) The amount in the table includes 95,000 shares owned of record by a
family limited partnership in which Mr. Baker is a limited partner, and 21,500
shares owned of record by a trust for the benefit of Mr. Baker's wife, as to
which an institutional trustee exercises sole voting and investment power, and
as to all of which Mr. Baker, pursuant to Rule 13d-14 of the Exchange Act,
disclaims beneficial ownership.
(4) See note (7) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of the nature of Mr. Cockrell's
beneficial ownership.
(5) Less than 1%.
Directors Continuing in Office
<PAGE>
The following table lists the Class A and Class C Directors of the
Company, whose terms expire at the 2002 and 2001 annual meetings,
respectively, and shows, as of January 11, 2000, the beneficial ownership of
common stock by each of them. Robert Buck Sanderson (Class C Director) is
the cousin of Joe F. Sanderson, Jr. (Class A Director) and William R.
Sanderson (Class C Director), and the brother of Hugh V. Sanderson (Class B
Director). Joe F. Sanderson, Jr. (Class A Director) is the cousin of Robert
Buck Sanderson (Class C Director) and Hugh V. Sanderson (Class B Director)
and is the brother of William R. Sanderson (Class C Director). William R.
Sanderson (Class C Director) is the brother of Joe F. Sanderson, Jr. (Class A
Director), and the cousin of Robert Buck Sanderson (Class C Director) and
Hugh V. Sanderson (Class B Director).
Shares
Name of Director Beneficially Percent
Continuing Director Age Since Owned (1) of Class
- ------------------- ---- ----- --------- --------
Class A (Term expiring in 2002)
Joe F. Sanderson, Jr. (2) 52 1984 3,535,782 25.64%
Charles W. Ritter, Jr. 66 1988 12,000 (6)
Phil K. Livingston 56 1989 10,000 (6)
Lampkin Butts (3) 48 1998 1,300,777 9.43%
Class C (Term expiring in 2001)
William R. Sanderson (4) 43 1998 3,578,303 25.95%
Robert Buck Sanderson (5) 46 1992 254,420 1.82%
Donald W. Zacharias 64 1988 150 (6)
- --------------------------
(1) The shares are owned of record by the beneficial owners shown with
sole voting and investment power, except as set forth in the following notes.
(2) See note (5) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of the nature of Mr. Sanderson's
beneficial ownership.
(3) See note (9) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of Mr. Butts' beneficial ownership.
<PAGE>
(4) See note (6) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of the nature of Mr. Sanderson's
beneficial ownership.
(5) The amount in the table includes 179 shares allocated to Mr.
Sanderson's account in the company's ESOP, with respect to which he has sole
voting power.
(6 Less than 1%.
Principal Occupations and Certain Directorships
The following paragraphs identify the principal occupations of all
Directors of the Company and directorships they hold in other companies with
securities registered with the Securities and Exchange Commission. Except as
otherwise indicated, each Director has served for at least five years in the
position shown.
Joe F. Sanderson, Jr. has served as President and Chief Executive
Officer of the Company since November 1, 1989, and as Chairman of the Board
since January 8, 1998. Mr. Sanderson is a member of the Executive Committee
of the Company.
Charles W. Ritter, Jr. has served, since 1967, as President and a
Director of the Attala Company, which is principally engaged in the business
of milling and selling feed and corn meal. He has also served as President
of JRS, Inc., a family owned real estate investment firm, since 1973. Mr.
Ritter is a director of First M & F Corp. and Merchants & Farmers Bank,
Kosciusko, Mississippi.
<PAGE>
Phil K. Livingston served as President and Chief Executive Officer of
Citizens National Bancshares, Inc. in Hammond, Louisiana, from its organization
in 1983, until its merger into Deposit Guaranty Corporation on May 19, 1995.
Citizens National Bancshares, Inc., which was dissolved with the merger, was the
parent company of Citizens National Bank, which is now a wholly owned subsidiary
of Deposit Guaranty Corporation as a result of such merger. In July 1996, the
Citizens National Bank's charter was amended to change its name to Deposit
Guaranty National Bank of Louisiana. Mr. Livingston retired in 1998 as Chief
Executive Officer but continues to serve as Chairman of the Deposit Guaranty
National Bank of Louisiana.
Hugh V. Sanderson has been employed by the Company as a Corporate Sales
Manager for more than the past five years. At a special meeting called for that
purpose on January 6, 2000, Mr. Sanderson was elected by the Board of Directors
to fill the unexpired term of his father, Dewey R. Sanderson, Jr., who died on
December 2, 1999. Mr. Sanderson was also nominated by the Board of Directors on
that date for inclusion in this Proxy Statement as a nominee for Class B
director.
Rowan H. Taylor served as President of Mississippi Valley Title Insurance
Company from 1975 until 1989, and as Chairman of the Board and Chief Executive
Officer of that company from 1989 until 1992. Mr. Taylor currently serves as
counsel for First American Title Insurance Company of Santa Anna, California,
and as counsel to the Jackson, Mississippi law firm of Alston & Jones. Mr.
Taylor served as an advisory director of Trustmark Corporation and Trustmark
National Bank located in Jackson, Mississippi until his retirement from such
position in 1995.
<PAGE>
John H. Baker, III has been the sole proprietor of John H. Baker
Interests, a real estate and development company in Houston, Texas since 1968.
Donald W. Zacharias served as President of Mississippi State University
from 1985 until his retirement in December 1997.
Robert Buck Sanderson has been employed by the Company since January 1,
1993. From 1978 through 1992, Mr. Sanderson served as President of Pioneer
Hardware & Supply Co., Inc. in Laurel, Mississippi.
William R. Sanderson has served, since 1996, as Director of Marketing
for the Company. Prior to 1996, Mr. Sanderson served as Director of Prepared
Foods for the Company. Mr. Sanderson is a member of the Executive Committee
of the Company.
Lampkin Butts has served, since 1996, as Vice President-Sales for the
Company. Prior to 1996, Mr. Butts served as Director of Processing and Sales
for the Company. Mr. Butts is a member of the Executive Committee of the
Company.
Mike Cockrell has served, since 1993, as Treasurer and Chief Financial
Officer for the Company. Prior to 1993, Mr. Cockrell was a shareholder and
member of the law firm Wise Carter Child & Caraway of Jackson, Mississippi. Mr.
Cockrell is a member of the Executive Committee of the Company.
<PAGE>
Committees of the Board of Directors; Attendance at Meetings
The Company's Board of Directors has not appointed any standing committees
as of the date of this proxy statement, except an Audit Committee. The members
of the Audit Committee are Messrs. Ritter, Livingston and Zacharias. The
function of the Audit Committee is, among other things, to recommend the
independent auditors to the Board of Directors, to review the scope of the
independent auditors' audit, to review the Company's major accounting and
financial reporting policies and practices and systems for compliance with
applicable statutes and regulations, and to review the Company's internal
auditing functions. During the fiscal year ended October 31, 1999, the Board of
Directors met 6 times and the Audit Committee met 4 times. Each incumbent
Director attended at least 75% of the aggregate of (i) the total number of Board
of Directors meetings held during the period for which he was a director and
(ii) the total number of meetings held by the Audit Committee, as applicable.
Section 16(a) Beneficial Ownership Reporting Compliance
<PAGE>
Section 16(a) of the Exchange Act requires the Company's directors,
officers and persons who own more than 10% of the outstanding common stock of
the Company, to file with the Securities and Exchange Commission reports of
changes in ownership of the common stock of the Company held by such persons.
Officers, directors and greater than 10% stockholders are also required to
furnish the Company with copies of all forms they file under this regulation.
Based solely on a review of the copies of the reports furnished to the Company,
the officers and directors of the Company are in full compliance with all
Section 16(a) filing requirements, except that the necessary Form 4's required
in connection with certain transfers of stock by the family of John H. Baker, a
Class B Director, and certain purchases of stock by a family limited partnership
of which Mr. Baker is a limited partner, were not filed timely.
Executive Compensation
The following table sets forth the cash compensation paid or to be paid by
the Company, as well as certain other compensation paid or accrued, during the
fiscal years indicated, to the named executive officers.
<PAGE>
- -------------------------------------------------------------------------------
Summary Compensation Table
Annual Compensation
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Name and Salary All Other Securities
Principal Position Year ($) Compensation Underlying
($)(2) Options/SARs (#)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Joe F. Sanderson, Jr. 1999 533,328 21,203 -0-
Chief Executive Officer 1998 419,520 35,107 60,000
and President 1997 361,934 32,597 60,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
D. Michael Cockrell (1) 1999 202,336 -0- -0-
Treasurer and 1998 195,467 2,425 15,000
Chief Financial Officer 1997 151,430 320 15,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Lampkin Butts (1) 1999 184,896 946 -0-
Vice President - Sales 1998 171,765 520 15,000
1997 154,264 450 15,000
- -------------------------------------------------------------------------------
(1) Mr. Butts became an executive officer of the Company effective
November 1, 1996. Mr. Cockrell became an executive officer of the Company
effective November 1, 1993.
<PAGE>
(2) The amounts in this column represent the value of the contribution
made by the Company to the accounts of the named individuals under the Company's
Employee Stock Ownership Plan, and includes travel costs and amounts reimbursed
for estimated income tax liability related thereto. All employees of the
Company, including executive officers, participate in the Company's ESOP, and
the Company made no contribution to the ESOP in 1997, contributed $1.1 million
in fiscal 1998, and $840,000 in fiscal 1999. As of the date of this Proxy
Statement, no amounts had been allocated to the accounts of the named
individuals under the ESOP with respect to the fiscal year ended October 31,
1999. The ESOP covers all employees of the Company.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth the value at December 31, 1999 of
unexercised options for each of the named executive officers.
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Amount Paid
to Value of Unexercised
Redeem Stock Options at In-the-Money Options at
Name Appreciation Fiscal Year-End (#) December 31, 1999(4)
Rights Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joe F.
Sanderson, $0 45,000 75,000 $0 $0
Jr.(1)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
D. Michael $0 31,875 20,625 $0 $0
Cockrell(2)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Lampkin $36,225 31,875 20,625 $0 $0
Butts(3)
- -------------------------------------------------------------------------------
</TABLE>
(1) Mr. Sanderson's options consist of the following:
- 60,000 shares granted on July 24, 1997 at $15.00 per share, expiring
July 23, 2007, of which 30,000 are exercisable.
- 60,000 shares granted on April 23, 1998, at $13.00 per share,
expiring April 23, 2008, of which 15,000 are exercisable.
(2) Mr. Cockrell's options consist of the following:
- 7,500 shares granted on April 29, 1994, at $11.00 per share,
expiring April 29, 2000, of which 7,500 are exercisable.
<PAGE>
- 7,500 shares granted on April 27, 1995, at $11.25 per share,
expiring April 27, 2001, of which 7,500 are exercisable.
- 7,500 shares granted on July 25, 1996, at $10.87 per share, expiring
July 25, 2002, of which 5,625 are exercisable.
- 15,000 shares granted on July 24, 1997, at $15.00 per share,
expiring July 24, 2007, of which 7,500 are exercisable.
- 15,000 shares granted on April 23, 1998, at $13.00 per share,
expiring April 23, 2008, of which 3,750 are exercisable.
(3) Mr. Butts' options consist of the following:
- 7,500 shares granted on April 29, 1994, at $11.00 per share,
expiring April 29, 2000, of which 7,500 are exercisable.
- 7,500 shares granted on April 27, 1995, at $11.25 per share,
expiring April 27, 2001, of which 7,500 are exercisable.
- 7,500 shares granted on July 25, 1996, at $10.87 per share, expiring
July 25, 2002, of which 5,625 are exercisable.
- 15,000 shares granted on July 24, 1997, at $15.00 per share,
expiring July 24, 2007, of which 7,500 are exercisable.
- 15,000 shares granted on April 23, 1998, at $13.00 per share,
expiring April 23, 2008, of which 3,750 are exercisable.
(4) The market value at December 31, 1999 was less than the exercise price
of all outstanding options.
<PAGE>
Director's Fees
During fiscal 1999, Directors who were not also officers or employees of
the Company received a fee of $2,000 per meeting attended plus an annual stipend
of $10,000.
Board Report on Executive Compensation
The Company did not have a standing Compensation Committee for the fiscal
year ended 1999, and therefore the Board of Directors prepared the following
Report.
Generally, executive officer compensation is not directly related to
factors such as profitability, sales growth, return on equity or market share,
except to the extent that such factors impact the Company's overall ability to
satisfy its compensation obligations to all employees.
Annual compensation for the President, Chief Executive Officer and
Chairman of the Board ("CEO"), is determined by the full Board of Directors of
the Company. The annual compensation for the Treasurer and Chief Financial
Officer ("CFO") and the Vice President-Sales ("VP-Sales") is determined by the
President. The components of the annual compensation paid to the CEO, CFO and
VP-Sales are as follows: (i) base salary; (ii) a bonus calculated pursuant to
the provisions of the Company's Bonus Award Program; (iii) stock option awards
made under the Company's Stock Option Plan; and (iv) allocation of contributions
made by the Company to the respective accounts of the CEO, CFO and VP-Sales
under the ESOP.
<PAGE>
Base salaries for executive officers of the Company are originally fixed
using a comparison of similarly situated officers of other poultry companies.
Also taken into account are benefits, years of service, responsibilities,
Company growth, future plans and the Company's current ability to pay. Periodic
increases in base salary are based on evaluations of past and current
performance and current market conditions. In addition, in accordance with the
Company's Wage and Salary Administration manual in effect since 1979, the base
salary of each salaried employee of the Company, including the executive
officers, is increased on January 1 of each year to reflect cost of living
increases, provided that the Company is in a financial position to make an
increase. In January 1998, the base salary of all salaried employees of the
Company, including the executive officers, was increased by 1.5%. The cost of
living increase for 1999, which took effect January 1, 1999, was 1%. The cost of
living increase for 2000, which took effect January 1, 2000, was 2.0%.
<PAGE>
The CEO, CFO and VP are participants in the Company's Bonus Award
Program, which covers all salaried employees of the Company. The amounts payable
to all salaried employees, including the executive officers, are based on the
Company's financial performance and its operating performance relative to other
companies in the industry. The bonus for the CEO, CFO and VP-Sales is calculated
by multiplying such person's average monthly salary by 12 and multiplying that
product by a percentage ranging from 25% to 100% for the CEO, and from 17.5% to
70% for the CFO and VP-Sales, depending on the performance of the Company. No
bonuses were paid for fiscal 1997 or 1998, and no bonuses have been or will be
paid for fiscal 1999.
In addition, all executive officers participate in the Company's Employee
Stock Ownership Plan which covers all employees of the Company. Allocations to
the executive officers under this plan are made on the same basis as allocations
to all other participants. No contribution was made by the Company to the ESOP
during fiscal 1997. At its meeting held October 22, 1998, the Board of Directors
authorized a contribution to the ESOP in the amount of $1.1 million, which
contribution was made by the Company during fiscal 1998, and which contribution
was allocated to the participant's accounts during fiscal 1999. At its meeting
held October 21, 1999, the Board of Directors authorized a contribution to the
ESOP in the amount of $840,000, which contribution was made by the Company
during fiscal 1999. However, as of the date of this Proxy, such contribution had
not yet been allocated to the accounts of the participants.
Joe F. Sanderson, Jr. Donald W. Zacharias
William R. Sanderson Rowan H. Taylor
John H. Baker, III Mike Cockrell
Phil K. Livingston Lampkin Butts
Robert Buck Sanderson Hugh V. Sanderson
Charles W. Ritter, Jr.
<PAGE>
Performance Graph
The following graph presents a comparison of the five year cumulative
total stockholder return1 among the Company, the NASDAQ Composite Index, and a
new and old group of peer companies. Companies in the peer group consists of the
following companies: Cagles, Inc., Pilgrim's Pride, Inc., WLR Foods, Inc. and
Tyson Foods, Inc. (the "Peer Group Index"). The Company selected the Peer Group
Index because the return reflected in the Peer Group Index presents stockholders
with a comparison of total stockholder return with companies of similar size,
product and market capitalization.
YEARS2
- ------------------------------- ------- ------ ------ ------ ======= ======
1994 1995 1996 1997 1998 1999
- ------------------------------- ------- ------ ------ ------ ======= ======
- ------------------------------- ------- ------ ------ ------ ======= ======
Sanderson Farms, Inc. 100 83 106 105 122 82
- ------------------------------- ------- ------ ------ ------ ======= ======
- ------------------------------- ------- ------ ------ ------ ======= ======
NASDAQ Composite Index 100 135 159 209 234 364
- ------------------------------- ------- ------ ------ ------ ======= ======
- ------------------------------- ------- ------ ------ ------ ======= ======
Peer Group 100 97 115 115 148 95
- ------------------------------- ------- ------ ------ ------ ======= ======
- --------
1 Assumes $100 invested on November 1, 1993. Total return assumes
reinvestment of dividends.
2 Fiscal year ends October 31.
<PAGE>
INDEPENDENT AUDITORS
Ernst & Young LLP, Independent Auditors, Jackson, Mississippi, were the
independent auditors for the Company during the fiscal year ended October 31,
1999. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting. The representative will have the opportunity to make a statement
at the meeting if he desires to do so, and will be available to respond to any
appropriate questions.
<PAGE>
The Board of Directors of the Company has selected the firm of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
October 31, 2000. Stockholder approval and ratification of this selection is not
required by law or by the By-Laws of the Company. Nevertheless, the Board has
chosen to submit it to the stockholders for their approval and ratification. Of
the shares represented and entitled to vote at the Annual Meeting (whether in
person or by proxy), more votes must be cast in favor of than votes cast against
the proposal to ratify and approve the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending October 31, 2000, in
order for this proposal to be adopted. The Proxyholder named in the accompanying
proxy card will vote FOR the foregoing proposal unless otherwise directed
therein. Abstentions will not be counted either as a vote FOR or as a vote
AGAINST the proposal to ratify and approve the selection of Ernst & Young LLP as
the Company's independent auditors for the fiscal year ending October 31, 2000.
Broker non-votes will be treated as not present for purposes of calculating the
vote with respect to the foregoing proposal, and will not be counted either as a
vote FOR or AGAINST or as an ABSTENTION with respect thereto. If more votes are
cast AGAINST this proposal than FOR, the Board of Directors will take such
decision into consideration in selecting independent auditors for the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no matters likely to be brought before the Annual Meeting other than those set
forth in the Notice of the Meeting. If other matters properly come before the
Meeting, each Proxy will be voted in accordance with the discretion of the
Proxyholders named therein.
<PAGE>
STOCKHOLDER PROPOSALS
Procedure
The Company's By-laws provide that stockholders may nominate individuals
for election as directors from the floor at any annual or special meeting of
stockholders called for the election of directors only if timely written notice
of such nomination has been given to the Secretary of the Company. To be timely,
such notice must be received at the principal office of the Company no later
than the close of business on the 15th day following the day on which notice of
the date of the meeting is given or made to stockholders in accordance with the
By-laws. The By-laws specify what such a notice of such nomination must include.
In addition, the By-laws set forth the procedure that must be followed by
stockholders to properly bring a matter before a stockholders' meeting. If a
stockholder wishes to bring a matter before the meeting that has not been
specified in the notice of the meeting, the stockholder must deliver written
notice of said stockholder's intent to bring the matter before the meeting of
stockholders so that the notice is received by the Secretary of the Company no
later than the close of business on the 15th day following the date on which
notice of the day of the meeting is given or made to stockholders in accordance
with the By-laws. The By-laws also specify what such a notice must include.
<PAGE>
2001 Annual Meeting
A stockholder who intends to present a proposal, which relates to a
proper subject for stockholder action, at the 2001 Annual Meeting of
Stockholders and who wishes such proposal to be considered for inclusion in the
Company's proxy materials for such meeting must cause such proposal to be
received, in proper form, at the Company's principal executive offices no later
than September 24, 2000. Any such proposals, as well as any questions relating
thereto, should be directed to the Company to the attention of its President.
Any proposal submitted after September 24, 2000 shall be considered untimely and
will not be considered for inclusion in the Company's proxy material for the
2001 annual meeting.
METHODS AND COST OF SOLICITING PROXIES
The Proxy card enclosed with this Proxy Statement is solicited by and on
behalf of the Board of Directors of the Company. In addition to solicitation of
stockholders of record by mail, telephone or personal contact, arrangements will
be made with brokerage houses to furnish proxy materials to their principals,
and the Company will reimburse them for their mailing expenses. Custodians and
fiduciaries will be supplied with proxy materials to forward to beneficial
owners of common stock. Whether or not you expect to be present at the Annual
Meeting, please sign, date and return the enclosed Proxy card promptly. No
postage is necessary if mailed in the United States. The cost of solicitation,
including the preparation, printing and mailing, is being paid by the Company.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/James A. Grimes, Secretary
Dated: January 27, 2000
<PAGE>
APPENDIX "A"
SANDERSON FARMS, INC.
The undersigned hereby appoints Mike Cockrell as proxy for the
undersigned, with full power of substitution, to vote all of the undersigned's
shares of common stock, $1.00 per share par value, of Sanderson Farms, Inc. at
the Annual Meeting on February 24,2000 (and any adjournments thereof), as
instructed herein with respect to the matters herein set forth (and, to the
extent not so instructed, as set forth in the related Proxy Statement), and
according to his discretion upon all other matters which may properly come
before such Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED UPON THE
MATTERS SET FORTH ON THE REVERSE. IF NO DIRECTION IS INDICATED, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1 and 2. THIS PROXY CONFERS DISCRETIONARY VOTING
AUTHORITY AS TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL
MEETING. SEE ACCOMPANYING PROXY STATEMENT.
Dated: , 2000
Signature(s)
Executors, Administrators, Trustees, etc.
should give full title. This proxy should
be signed as name appears on certificate(s).
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF SANDERSON FARMS, INC.
(SEE BALLOT ON REVERSE)
<PAGE>
BALLOT
MANAGEMENT RECOMMENDS A VOTE
"FOR" THE FOLLOWING PROPOSALS
1. To elect four Class B Directors to serve until the 2003 annual meeting:
---- ----
/ / FOR all nominees / / WITHHOLD AUTHORITY
---- ----
listed below (except (to vote for all
as indicated to the nominees listed below)
contrary below)
Hugh V. Sanderson, Rowan H. Taylor, John H. Baker, III and Mike Cockrell
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the nominee's name here:
----------------------- ------------------------
2. To consider and act upon a proposal to ratify and approve the selection
of Ernst & Young LLP as the Company's independent auditors for the fiscal
year ending October 31, 2000:
---- ---- ----
/ / FOR / / AGAINST / / ABSTAIN
---- ---- ----
<PAGE>
SANDERSON FARMS, INC.
BALLOT
1. To elect four Class B Directors to serve until the 2003 annual meeting:
---- ----
/ / FOR all nominees / / WITHHOLD AUTHORITY
---- listed below (except ---- (to vote for all
as indicated to the nominees listed below)
contrary below)
Hugh V. Sanderson, Rowan H. Taylor, John H. Baker, III and Mike Cockrell
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the nominee's name here:
------------------- -------------------- --------------------
2. To consider and act upon a proposal to ratify and approve the
selection of Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending October 31, 2000.
---- ---- ----
/ / FOR / / AGAINST / / ABSTAIN
---- ---- ----
Dated:_____________________, 2000 ______________________
Participant
----------------------
(Print Name)
PLEASE DATE, SIGN AND RETURN THIS BALLOT IN THE ENCLOSED ADDRESSED AND POSTAGE
PREPAID ENVELOPE TO THE ADMINISTRATIVE COMMITTEE OF THE ESOP NO LATER THAN
FEBRUARY 15, 2000, THROUGH COMPANY MAIL OR BY UNITED STATES MAIL.
