RALSTON PURINA COMPANY
CHECKERBOARD SQUARE
ST. LOUIS, MISSOURI 63164
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Ralston Purina Company to be held at 2:30 p.m. on Thursday, January 27, 2000 at
the St. Louis Marriott Pavilion Downtown, One Broadway, St. Louis, Missouri.
We hope you will attend in person. If you plan to do so, please bring the
enclosed Shareholder Admittance Ticket with you.
Whether you plan to attend the meeting or not, we encourage you to read this
Proxy Statement and vote your shares. You may sign, date and return the
enclosed proxy as soon as possible in the postage-paid envelope provided, or you
may vote by telephone or via Internet. However you decide to vote, we would
appreciate your voting as soon as possible.
We look forward to seeing you at the Annual Meeting!
W. PATRICK MCGINNIS
Chief Executive Officer and President
December 10, 1999
<PAGE>
RALSTON PURINA COMPANY
CHECKERBOARD SQUARE
ST. LOUIS, MISSOURI 63164
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Ralston Purina Company will be held at
2:30 p.m. on Thursday, January 27, 2000, at the St. Louis Marriott Pavilion
Downtown, One Broadway, St. Louis, Missouri.
The purpose of the meeting is to:
1. elect five directors to serve three-year terms ending at the annual
meeting held in 2003, or until their successors are elected and qualified;
2. ratify the Board of Directors' appointment of PricewaterhouseCoopers LLP
as independent accountants for the Company for the fiscal year ending September
30, 2000;
3. approve and adopt the Ralston Purina Company Executive Incentive
Compensation Plan;
and to act upon such other matters as may properly come before the meeting.
You may vote if you are a shareholder of record on November 22, 1999. It is
important that your shares be represented and voted at the Meeting. Please vote
in one of these ways:
- - USE THE TOLL-FREE TELEPHONE NUMBER shown on the proxy card;
- - VISIT THE WEB SITE noted on your proxy card to vote via the Internet; OR
- - MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the
postage-paid envelope.
By Order of the Board of Directors,
Nancy E. Hamilton
Secretary
December 10, 1999
<PAGE>
- ------
PROXY STATEMENT ------- VOTING PROCEDURES
- ---------------------------------------------
YOUR VOTE IS VERY IMPORTANT
The Board of Directors is soliciting proxies to be used at the 2000 annual
meeting. This proxy statement and the form of proxy will be mailed to
shareholders beginning December 10, 1999.
WHO CAN VOTE
Record holders of Ralston Purina Common Stock on November 22, 1999 may vote at
the meeting. On November 22, 1999, there were 305,154,268 shares of Common
Stock outstanding. The shares of Common Stock held in the Company's treasury
will not be voted.
HOW YOU CAN VOTE
There are three voting methods:
- - Voting by Mail. If you choose to vote by mail, simply mark your proxy,
date and sign it, and return it in the postage-paid envelope provided.
- - Voting by Telephone. You can vote your shares by telephone by calling the
toll-free telephone number on your proxy card.
- - Voting by Internet. You can also vote via the Internet. The web site for
Internet voting is on your proxy card, and voting is also available 24 hours a
day.
If you vote by telephone or via the Internet you should not return your proxy
---
card.
HOW YOU MAY REVOKE OR CHANGE YOUR VOTE
You can revoke your proxy at any time before it is voted at the meeting by:
- - sending written notice of revocation to the Secretary;
- - submitting another proper proxy by telephone, Internet or paper ballot; or
- - attending the annual meeting and voting in person. If your shares are
held in the name of a bank, broker or other holder of record, you must obtain a
proxy, executed in your favor, from the holder of record to be able to vote at
the meeting.
GENERAL INFORMATION ON VOTING
You are entitled to cast one vote for each share of Common Stock you own on the
record date. Shareholders do not have the right to vote cumulatively in
electing directors. The election of each director nominee, and each of the
other items submitted for a vote of shareholders, must be approved by a majority
of shares entitled to vote and represented at the annual meeting in person or by
proxy. Shares represented by a proxy marked "abstain" on any matter, or that
provide that a vote be withheld on any matter, will be considered present at the
meeting for purposes of determining a quorum and for purposes of calculating the
vote, but will not be considered to have voted in favor of the proposal.
Therefore, any proxy marked "abstain" will have the effect of a vote against the
matter. Shares represented by a proxy as to which there is a "broker non-vote"
(for example, where a broker does not have discretionary authority to vote the
shares), will be considered present at the meeting for purposes of determining a
quorum, but will have no effect on the vote.
All shares that have been properly voted - whether by telephone, Internet or
mail - and not revoked will be voted at the annual meeting in accordance with
your instructions. If you sign your proxy card but do not give voting
instructions, the shares represented by that proxy will be voted as recommended
by the Board of Directors.
If any other matters are properly presented at the annual meeting for
consideration, the persons named in the enclosed proxy card will have the
discretion to vote on those matters for you. At the date this proxy statement
went to press, we do not know of any other matter to be raised at the annual
meeting.
VOTING BY PARTICIPANTS IN THE COMPANY'S SAVINGS INVESTMENT PLAN AND DIVIDEND
REINVESTMENT PLAN
- - If you participate in the Company's Savings Investment Plan and had an
account in the Common Stock Fund on October 29, 1999, the proxy will also serve
as voting instructions to the trustee, Vanguard Fiduciary Trust Company, an
affiliate of The Vanguard Group of Investment Companies, for the shares of
Common Stock credited to your account on that date. If the trustee does not
receive directions with respect to certain shares of Common Stock held in the
Plan, they will vote those shares in the same proportion as they vote shares for
which directions were received.
- - If you participate in the Company's Dividend Reinvestment Plan, any proxy
given by you will also include all shares of Common Stock held for your account
under that plan (other than fractional shares) unless contrary instructions are
given by you.
COSTS OF SOLICITATION
The Company will pay for preparing, printing and mailing this proxy statement.
We have engaged Georgeson & Company, Inc. to help solicit proxies from
shareholders for a fee of $11,000 plus its expenses. Proxies may also be
solicited personally or by telephone by regular employees of the Company without
additional compensation, as well as by employees of Georgeson. The Company will
reimburse banks, brokers and other custodians, nominees and fiduciaries for
their costs of sending the proxy materials to our beneficial owners.
COMPLIANCE WITH SECTION 16(A) REPORTING
The rules of the Securities and Exchange Commission require that the Company
disclose late filings of reports of stock ownership and changes in stock
ownership by its directors and executive officers. To the best of the Company's
knowledge, all of the filings for the Company's executive officers and directors
were made on a timely basis in 1999.
ITEM 1. ELECTION OF DIRECTORS
<PAGE>
The Board of Directors consists of thirteen members and is divided into three
classes, with one class consisting of five members and two classes consisting of
four members, with terms of service expiring at successive annual meetings.
Five directors will be elected at the 2000 annual meeting to serve for a
three-year term expiring at our annual meeting in the year 2003. The Board has
nominated John H. Biggs, David C. Farrell, J. Patrick Mulcahy, William P.
Stiritz and Ronald L. Thompson for election as directors at this meeting. Each
nominee is currently serving as a director and has consented to serve for a new
term. Each nominee elected as a director will continue in office until his
successor has been elected and qualified. If any nominee is unable to serve as
a director at the time of the annual meeting, your proxy may be voted for the
election of another person the Board may nominate in his or her place, unless
you indicate otherwise.
<PAGE>
VOTE REQUIRED. The affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote and represented in person or by proxy is required
for the election of each director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES FOR
ELECTION AS DIRECTORS.
INFORMATION ABOUT NOMINEES AND OTHER DIRECTORS
Please review the following information about the nominees and other directors
- --------------------------------------------------------------------------------
continuing in office. The ages shown are as of December 31, 1999.
- ----------------------------------------------------------------------------
[PHOTO] JOHN H. BIGGS, Director Since 1989, Age 63
(Standing for election at this meeting for a term expiring 2003)
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer, TIAA-CREF, Teachers Insurance
and Annuity Association-College Retirement Equities Fund (pension fund
management). Former Chairman of the Board and Chief Executive Officer of
Centerre Trust Co. of St. Louis. Also a director of The Boeing Company.
- --------------------------------------------------------------------------------
[PHOTO] DAVID C. FARRELL, Director Since 1987, Age 66
(Standing for election at this meeting for a term expiring 2003)
Former Chairman of the Board and Chief Executive Officer, The May Department
Stores Company (department store retailing). Also a director of Emerson Electric
Company.
- --------------------------------------------------------------------------------
[PHOTO] J. PATRICK MULCAHY, Director Since 1997, Age 55
(Standing for election at this meeting for a term expiring 2003)
Chairman of the Board and Chief Executive Officer, Eveready Battery Company,
Inc., a subsidiary of Ralston Purina Company. Also a director of Solutia, Inc.
- --------------------------------------------------------------------------------
[PHOTO] WILLIAM P. STIRITZ, Director Since 1981, Age 65
(Standing for election at this meeting for a term expiring 2003)
Chairman of the Board, and former Chief Executive Officer and President, Ralston
Purina Company. Chairman of the Board, Chief Executive Officer and President,
Agribrands International, Inc. (animal feeds and agricultural products). Also a
director of American Freightways, Angelica Corporation, Ball Corporation, The
May Department Stores Company, Ralcorp Holdings, Inc., Reinsurance Group of
America, Incorporated and Vail Resorts, Inc.
- --------------------------------------------------------------------------------
[PHOTO] RONALD L. THOMPSON, Director Since March, 1999, Age 50
(Standing for election at this meeting for a term expiring 2003)
Chairman of the Board, President and Chief Executive Officer of Midwest Stamping
and Manufacturing Company (automotive component manufacturing). Also a director
of Teachers Insurance and Annuity Association, Ryerson Tull and Illinova
Corporation.
- --------------------------------------------------------------------------------
[PHOTO] DAVID R. BANKS, Director Since 1985, Age 62
(Continuing in Office - Term Expiring in 2001)
Chairman of the Board and Chief Executive Officer, and former President, Beverly
Enterprises, Inc. (health care services). Also a director of Nationwide Health
Properties, Inc. and Agribrands International, Inc.
- --------------------------------------------------------------------------------
[PHOTO] M. DARRELL INGRAM, Director Since 1986, Age 67
(Continuing in Office - Term Expiring in 2001)
Former Chairman of the Board, Red Fox Environmental Services, Inc. (pollution
control services). Retired President and Chief Executive Officer, Petrolite
Corporation 1985-1988. Also a director of Agribrands International, Inc. and
Chairman of the Board of First Financial Planners.
- --------------------------------------------------------------------------------
[PHOTO] JOHN F. MCDONNELL, Director Since 1988, Age 61
(Continuing in Office - Term Expiring in 2001)
Former Chairman of the Board and Chief Executive Officer, McDonnell Douglas
Corporation (aerospace technology and complementary businesses). Also a director
of The Boeing Company and Zoltek Companies, Inc.
- --------------------------------------------------------------------------------
[PHOTO] W. PATRICK MCGINNIS, Director Since 1997, Age 52
(Continuing in Office - Term Expiring in 2001)
Chief Executive Officer and President, Ralston Purina Company; and President and
Chief Executive Officer, Pet Products Group, a division of Ralston Purina
Company. Also a director of Brown Shoe Company, Inc.
- --------------------------------------------------------------------------------
[PHOTO] DONALD DANFORTH, JR.*, Director Since 1961, Age 67
(Continuing in Office - Term Expiring 2002)
Chairman of the Board, Treasurer and former President, Kennelwood Village, Inc.
(pet care center).
- --------------------------------------------------------------------------------
[PHOTO] WILLIAM H. DANFORTH*, Director Since 1969, Age 73
(Continuing in Office - Term Expiring 2002)
Trustee and former Chancellor, Washington University.
- --------------------------------------------------------------------------------
[PHOTO] RICHARD A. LIDDY, Director Since 1995, Age 64
(Continuing in Office - Term Expiring 2002)
Chairman of the Board, President and Chief Executive Officer, General American
Life Insurance Company (insurance). Chairman of the Board of the Reinsurance
Group of America, Incorporated (insurance), and of General American Capital
Company, a registered investment company (investments). Also a director of
Brown Shoe Company, Inc. and Ameren Corporation.
- --------------------------------------------------------------------------------
[PHOTO] KATHERINE D. ORTEGA, Director Since 1992, Age 65
(Continuing in Office - Term Expiring 2002)
Former Alternate Representative of the United States to the 45th General
Assembly of the United Nations during 1990-1991; Former Treasurer of the United
States from September 1983-June 1989. A director of The Kroger Company,
Rayonier, Inc., Ultramar Diamond Shamrock Corporation and member of Washington
Mutual Investors Fund Advisory Board.
- --------------------------------------------------------------------------------
*Donald Danforth, Jr. and William H. Danforth are brothers.
<TABLE>
<CAPTION>
BOARD OF DIRECTORS STANDING COMMITTEES
--------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Human
Board Member. . . . . Board Audit Executive Finance Resources Nominating
- --------------------------------------------------------------------------------
David R. Banks. . . . X X X*
- --------------------------------------------------------------------------------
John H. Biggs . . . . X X X
- --------------------------------------------------------------------------------
Donald Danforth, Jr.. X X X X*
- --------------------------------------------------------------------------------
William H. Danforth . X X X*
- --------------------------------------------------------------------------------
David C. Farrell. . . X X X
- --------------------------------------------------------------------------------
M. Darrell Ingram . . X X* X X
- --------------------------------------------------------------------------------
Richard A. Liddy. . . X X
- --------------------------------------------------------------------------------
John F. McDonnell . . X X X
- --------------------------------------------------------------------------------
Katherine D. Ortega . X X X
- --------------------------------------------------------------------------------
William P. Stiritz. . X* X* X
- --------------------------------------------------------------------------------
Ronald L. Thompson. . X X X
- --------------------------------------------------------------------------------
W. Patrick McGinnis . X X
- --------------------------------------------------------------------------------
J. Patrick Mulcahy. . X X
- --------------------------------------------------------------------------------
Meetings held in 1999 8 2 3 1 5 2
===================== ===== ===== ========= ======= ========= ==========
</TABLE>
*Chairperson
<PAGE>
AUDIT: Reviews auditing, accounting, financial reporting and internal control
functions. Recommends our independent accountants and reviews their services.
All members are non-employee directors.
EXECUTIVE: May act on behalf of the Board in the intervals between Board
meetings.
FINANCE: Reviews the Company's financial condition, objectives and strategies
and makes recommendations to the Board concerning financing requirements,
dividend policy, foreign currency management and pension fund performance.
HUMAN RESOURCES: Sets compensation of Executive Officers, approves deferrals
under the Company's Deferred Compensation Plan for Key Employees, administers
the Company's Incentive Stock Plans and grants stock options and other awards
under those plans. Monitors management compensation and benefit programs, and
reviews principal employee relations policies. All members are non-employee
directors.
NOMINATING: Recommends nominees for election as directors or Executive Officers
to the Board. Also recommends committee memberships and compensation and
benefits for directors. Will consider director candidates suggested by
shareholders if name of candidate and appropriate biographical information is
submitted to the Secretary of the Company. All members are non-employee
directors.
<PAGE>
<PAGE>
_______________________________________________________________________
<PAGE>
DIRECTOR COMPENSATION
Employee directors receive no compensation for serving on the Board or its
Committees other than their compensation received for their services as
employees of the Company.
Fiscal Year 1999
- ------------------
During fiscal year 1999, non-employee directors received the following fees for
their service on the Board:
Annual Retainer $30,000
Fee for Each Board Meeting $1,000
Fee for Each Committee Meeting $1,000
The chairpersons of the Committees also received an additional annual retainer
of $2,000 for each Committee that they chaired.
In September, 1999, each non-employee director received an option to purchase
2,500 shares of Common Stock of the Company at the closing price for such shares
as disclosed on the New York Stock Exchange composite index. The options, which
were granted under the Company's 1999 Incentive Stock Plan and have a ten year
term, will be exercisable beginning on the second anniversary of the date of
grant. They are exercisable prior to that date upon an optionee's death,
declaration of total and permanent disability, retirement or resignation from
the Board, or upon a change in control of the Company.
Fiscal Year 2000
- ------------------
Beginning October 1, 1999, non-employee directors will receive $1,500 per
meeting for each Board and Committee meeting he or she attends. The annual
retainer remains at $30,000.
Deferred Compensation Plan for Non-Management Directors
- ------------------------------------------------------------
Directors can elect to have their retainer and meeting fees paid quarterly in
cash, or defer payment until their retirement under the terms of the Deferred
Compensation Plan for Non-Management Directors. Under that Plan, they can defer
in the form of stock equivalents under the Equity Option, which tracks the value
of the Company's Common Stock, or they can defer into the Variable Interest
Option and receive interest at Morgan Guaranty Trust Company of New York's prime
rate. Deferrals in the Equity Option in 1999 were increased by a 33-1/3% match
by the Company. Deferrals under these Options are paid out in a lump sum in
cash, or, for accounts in the Equity Option, in shares of Common Stock, if so
elected by the director. Deferrals in the Fixed Benefit Option of the Plan,
which was closed to future deferrals in 1994, are paid in the form of an annuity
or, if the Director so elects, in a lump sum upon termination from the Board
after a change in control of the Company.
During fiscal year 1999, all directors attended 75% or more of the Board
meetings and Committee meetings on which they served.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has for many years purchased insurance and insurance-related
products and services from General American, as well as other major insurance
companies. These purchases are made in the ordinary course of business and on
competitive terms. Insurance policies with General American have principally
included coverage for health, life and disability benefits. Certain of them are
whole life or universal life policies in which premiums are intended to cover
the cost of insurance as well as to increase the cash surrender value of such
policies. The Company from time to time borrows against the cash surrender
value of those policies and repays the borrowings at rates determined under the
terms of the policies. Certain of the whole life policies purchased by the
Company were contributed to the Company's grantor trust in 1994, and the Company
retains the right to borrow against the cash value of those policies.
Substantially all of these insurance arrangements were entered into prior to Mr.
Liddy's election to the Company's Board of Directors in 1995. To the Company's
best knowledge, Mr. Liddy does not receive direct or indirect compensation
related to these policies or the Company's ongoing transactions with respect to
the policies. Mr. Liddy has also disclaimed any material interest in the
transactions between the Company and General American. The Company expects that
its business relationship with General American will continue and, as in the
past, any transactions will be conducted in the ordinary course and on
competitive terms.
<PAGE>
ITEM 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The shares represented by your proxy will be voted (unless you indicate to the
contrary) to ratify the selection of PricewaterhouseCoopers LLP, independent
public accountants, to examine the financial statements of the Company for the
fiscal year ending September 30, 2000. That firm has performed this function
for the Company since 1955. A partner of PricewaterhouseCoopers LLP will be
present at the 2000 annual meeting and will have the opportunity to make a
statement and respond to questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS.
ITEM 3. PROPOSAL TO ADOPT THE RALSTON PURINA COMPANY EXECUTIVE INCENTIVE
COMPENSATION PLAN
You are asked to consider and approve adoption of the Ralston Purina Company
Executive Incentive Compensation Plan. The Board of Directors adopted this Plan
on November 18, 1999, subject to approval by shareholders at the annual meeting.
<PAGE>
REASON FOR ADOPTION OF THE PLAN
Section 162(m) of the Internal Revenue Code limits the Company's ability to
deduct compensation paid to the executives designated as "Named Executive
Officers" on page 14 of this Proxy Statement unless the compensation meets the
statutory definition of "performance-based" compensation which has been approved
by a majority of shareholders. In order to maximize its ability to take tax
deductions for the compensation which it pays to these executives by complying
with Section 162(m), the Company is submitting the Executive Incentive
Compensation Plan for shareholder approval. If the Plan is approved, it will
permit the Company to deduct, when earned, annual performance-based cash
incentive awards during and after fiscal year 2000 and intermediate
performance-based incentive awards the performance periods for which begin on or
after October 1, 1999, or with respect to intermediate incentive awards granted
to the Chief Executive Officer and Chief Financial Officer of the Company, the
performance periods for which began on or after October 1, 1998.
In addition, it is believed that the Executive Incentive Compensation Plan will
strongly link the interests of these executives to the interests of shareholders
by conditioning a significant portion of their compensation on the achievement
of objective performance goals for the Company.
If the Plan is approved, any Named Executive Officers chosen by the Committee to
receive annual performance-based cash incentive awards under the Plan for a
fiscal year will not be eligible to receive bonuses under the Company's other
annual cash bonus award programs during that year. Similarly, Named Executive
Officers chosen by the Committee to receive intermediate performance-based
incentive awards under the Plan will not participate in the Company's
intermediate term bonus plans for the same performance period.
A copy of the Plan is attached to this Proxy Statement as Appendix A. You
should refer to the Plan document for authoritative details of the terms of the
Plan. The following summary is qualified by reference to the full text of the
attached Plan.
SUMMARY OF THE PLAN
The Human Resources Committee of the Board, which is composed entirely of
non-employee Directors, will administer the Plan and select executives to
receive annual or intermediate incentive awards under the Plan. The executives
selected will be limited to those constituting the Company's "Named Executive
Officers" at the end of the fiscal year in which the award was earned or in
which a performance period ended. Such executives are considered "covered
employees" as defined in Section 162(m) of the Internal Revenue Code. The
Committee may select all, or fewer than all, of the Named Executive Officers for
a particular year to receive awards under the Plan.
With respect to annual performance-based cash incentive awards under the Plan,
the Committee will allocate percentages of the " bonus pool" among the Named
Executive Officers selected to participate in a particular fiscal year, subject
to the limitations in the Plan. The Committee will also exercise its discretion
to reduce such awards as it deems appropriate, consistent with its philosophy on
compensation for these executives.
The Committee will establish objective performance goals which must be met as a
condition to the payment of intermediate performance-based incentive awards
under the Plan for a particular performance period.
The Committee has the authority to establish rules for the administration of the
Plan, and its determinations and interpretations are binding.
ANNUAL INCENTIVE AWARDS
Executives selected by the Committee for a particular fiscal year will receive
annual performance-based cash incentive awards under the Plan if they qualify as
a Named Executive Officer at the time that payment is made. Within 90 days
after the beginning of each fiscal year, the Committee will make an allocation
of percentages of the " bonus pool" amount for the fiscal year among the
executives who may receive annual awards for that year. No more than 40% of the
bonus pool may be allocated to any individual executive, and the sum of all
executives' allocated percentages cannot be greater than 100%.
The bonus pool for each fiscal year shall be equal to 2% of the greater of the
Company's
- - Earnings from Continuing Operations before Income Taxes, Equity Earnings
and Extraordinary Items, or
- - Net Cash Flow from Operations,
each as reported in the Company's audited financials for the fiscal year, as set
forth in its Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
The Committee will determine each Named Executive Officer's allocated portion of
the bonus pool by multiplying the total pool by the applicable allocated
percentage for that fiscal year. The Committee may, in its sole discretion,
reduce an executive's allocated portion of the bonus pool, but it may not
increase another executive's allocated portion as a result of any such
reduction, or for any other reason. The maximum amount that can be paid to a
Named Executive Officer as an annual performance-based incentive award under the
Plan is 40% of the bonus pool. However, the Committee may exercise its
discretion and take into account any factors it deems appropriate to reduce the
total award paid to any executive for any fiscal year. The actual amount
awarded by the Committee will be consistent with its philosophy on compensation
for these executives.
The Committee has discretion to pay an executive a pro-rata portion of an annual
incentive award if he or she terminates employment with the Company before the
end of the applicable fiscal year.
INTERMEDIATE INCENTIVE AWARDS
The Committee may also designate Named Executive Officers to receive
intermediate incentive awards under the Plan. Within 90 days after the
beginning of a particular performance period, the Committee will determine:
- - performance goals chosen from among the objective criteria set forth in
the Plan, and the level of achievement related to the goals which will determine
the amount of the award earned. Achievement of the goals must be substantially
uncertain at the inception of the performance period;
- - the performance period, which will be no less than two years;
- - forfeiture provisions; and
- - other terms and conditions of the award determined by the Committee that
are not inconsistent with the terms of the Plan or the "performance-based
exception" from the income tax deductibility limitations of Section 162(m) of
the Code.
The maximum amount payable to any executive under an intermediate
performance-based incentive award is four million dollars ($4,000,000). The
Committee is required to determine each executive's award based on the
established goals and the level of achievement of those goals. The Committee
has discretion to pay an executive a pro-rata portion of an intermediate
incentive award if he or she terminates employment with the Company before the
end of the applicable performance period.
The Committee may make adjustments to the Performance Goals to account for the
effects of any stock dividends, stock splits, corporate transactions, including
the spinoff of a business unit, or similar events described in the Plan.
OTHER PROVISIONS
CHANGE IN CONTROL
Unless the Committee elects otherwise, upon a change in control of the Company
all annual incentive awards for the current fiscal year will be paid out on a
pro-rata basis through the date of the change in control to the selected
executives. In addition, unless the Committee determines otherwise, all
intermediate incentive awards then outstanding will be paid out to the selected
executives as if the performance goals for the performance period had been
achieved, prorated through the date of the change in control.
DEFERRAL OF AWARDS
The Committee may permit or require an executive to defer receipt of cash award
payments that would otherwise be due under the Plan.
TRANSFERABILITY
Awards granted under the Plan may not be transferred by the executive except:
- - by beneficiary designation
- - by will or the laws of descent and distribution.
No interest under the Plan is assignable, transferable or subject to any lien by
an executive.
AMENDMENTS
The Committee may amend the Plan at any time. No amendment, however, may:
- - increase the maximum limits on annual incentive awards and intermediate
incentive awards set forth in the Plan, change the class of employees subject to
such awards, create additional performance goals not currently set forth in the
Plan, or redefine the bonus pool, without shareholder approval;
- - withdraw the authority of the Committee to administer the Plan; or
- - change the terms of any awards granted before the amendment in an adverse
manner without the consent of the executives receiving the awards.
The Committee may elect to suspend or terminate the Plan at any time.
NEW PLAN BENEFITS
Because awards under the Plan are based upon financial results of the Company in
future years, and performance goals for performance periods which have not yet
been determined by the Committee, amounts which may be payable to Named
Executive Officers under the Plan cannot be determined at this time. However,
the Committee has determined that the provisions of the 1998 Leveraged Incentive
Plan will no longer be applicable to the intermediate incentive awards
originally granted to Messrs. McGinnis and Elsesser under that plan. Instead,
those awards have been redesignated by the Committee as intermediate
performance-based incentive awards granted under and subject to the provisions
of the Plan. The amounts potentially payable to those executives under those
awards are described in the Long-Term Incentive Plans table on page 17 of this
Proxy Statement.
If the Plan had been in effect for fiscal year 1999, the bonus pool amount
available for annual incentive awards to all of the Named Executive Officers
would have been $14,316,000, no more than 40% of which, or $5,726,400, could
have been awarded to any one individual. These amounts, of course, would have
been subject to the Committee's discretion to reduce such annual incentive
awards, and if the Plan had been in effect for that year, the Committee would
have awarded annual performance-based incentive awards in an amount equal to the
1999 annual bonuses awarded to the Named Executive Officers as set forth in the
Summary Compensation Table on page 14 of this Proxy Statement. Amounts awarded
to the Named Executive Officers under the Company's 1996 Leveraged Incentive
Plan are described in the Summary Compensation Table on page 14 of this Proxy
Statement, and potential awards under the 1998 Leveraged Incentive Plan are
described in the Long-Term Incentive Plans Table on page 17 of this Proxy
Statement.
<PAGE>
VOTE REQUIRED. The affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote and represented in person or by proxy is required
for approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE RALSTON PURINA
COMPANY EXECUTIVE INCENTIVE COMPENSATION PLAN.
<PAGE>
OTHER BUSINESS
The Board knows of no business which will be presented at the 2000 annual
meeting other than that described above. The Company's Bylaws provide that
shareholders may bring matters before an annual meeting only if they give timely
written notice of the matter to be brought at least 45 days before the month and
day that the Company's proxy statement for the prior year's annual meeting was
mailed. No such notice with respect to the 2000 annual meeting was received by
October 27, 1999, the deadline for the meeting.
STOCK OWNERSHIP INFORMATION
<PAGE>
FIVE PERCENT OWNERS OF COMMON STOCK. The table below lists the persons known by
the Company to beneficially own at least 5% of the Company's Common Stock as of
November 1, 1999.
<TABLE>
<CAPTION>
<PAGE>
Name and Address Amount and Nature of % Of Shares Explanatory
Of Beneficial Owner Title of Class BeneficialOwnership Outstanding(A) Notes
- -------------- -------------- --------------------- ------------- ----------
<S> <C> <C> <C> <C>
Bank of America Corporation Common Stock 16,986,792 5.57% (B)
Global Corporate &
Investment Banking
Compliance
100 North Tryon Street
Charlotte, NC 28255
- ----------------------
<PAGE>
</TABLE>
(A) The number of shares outstanding used in this calculation was the number
actually outstanding on November 1, 1999.
(B) Based on a written statement from the shareholder, this amount includes
shares of Common Stock owned by subsidiaries of Bank of America Corporation
("Bank of America"). Of these shares, Bank of America has voting and investment
powers as follows: sole voting - 4,148,412; shared voting 11,808,908 shares;
sole investment - 2,716,104 shares; and shared investment -13,732,381. Of such
shares, voting or investment power for 2,360,468 and 2,664,494 shares are shared
with Donald Danforth, Jr. and William H. Danforth, respectively, both of whom
are Directors of the Company (see Common Stock Ownership of Directors and
Executive Officers table).
<TABLE>
<CAPTION>
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<PAGE>
<S> <C> <C> <C> <C> <C>
<PAGE>
SHARES HELD OPTIONS
DIRECTORS. . . . . . SHARES IN SAVINGS EXERCISABLE % OF SHARES
AND. . . . . . . . . BENEFICIALLY INVESTMENT WITHIN 60 OUTSTAND
EXECUTIVE OFFICERS . OWNED PLAN (A) DAYS TOTAL -ING (B)
David R. Banks . . . 306 306 *
- -------------------- ------------------- ----------- ----------- ------------ ----
John H. Biggs. . . . 6,105 (C) (D) - 6,105 *
- -------------------- ------------------- ----------- ----------- ------------ ----
Donald Danforth, Jr. 3,508,076 (C)(E) - - 3,508,076 1.14
- -------------------- ------------------- ----------- ----------- ------------ ----
William H. Danforth. 2,664,494 (C)(D)(F) - - 2,664,494 *
- -------------------- ------------------- ----------- ----------- ------------ ----
David C. Farrell . . 76,422 (D) - - 76,422 *
- -------------------- ------------------- ----------- ----------- ------------ ----
M. Darrell Ingram. . 11,177 - - 11,177 *
- -------------------- ------------------- ----------- ----------- ------------ ----
Richard A. Liddy . . 3,000 - - 3,000 *
- -------------------- ------------------- ----------- ----------- ------------ ----
John F. McDonnell. . 15,387 (D) - - 15,387 *
- -------------------- ------------------- ----------- ----------- ------------ ----
Katherine D. Ortega. 5,094 - - 5,094 *
- -------------------- ------------------- ----------- ----------- ------------ ----
William P. Stiritz . 1,148,930 (G) - 19,200 1,168,130 *
- -------------------- ------------------- ----------- ----------- ------------ ----
Ronald L. Thompson . 400 (D) - - 400 *
- -------------------- ------------------- ----------- ----------- ------------ ----
W. Patrick McGinnis. 245,421(D) (H) 16,929 749,745 1,012,095 *
- -------------------- ------------------- ----------- ----------- ------------ ----
J. Patrick Mulcahy . 207,697 (I) 13,951 749,745 971,393 *
- -------------------- ------------------- ----------- ----------- ------------ ----
James R. Elsesser. . 262,764 (J) 15,330 702,023 980,117 *
- -------------------- ------------------- ----------- ----------- ------------ ----
Patrick Mannix . . . 47,358 10,437 399,290 457,085 *
- -------------------- ------------------- ----------- ----------- ------------ ----
James M. Neville . . 79,455 14,427 227,247 321,129 *
- -------------------- ------------------- ----------- ----------- ------------ ----
All Officers and
Directors. . . . . . 8,341,188 108,329 3,031,764 11,655,281 -
==================== =================== =========== =========== ============ =======
</TABLE>
In general, "beneficial ownership" includes those shares a director or executive
officer has the power to vote or transfer, as well as shares owned by immediate
family members that reside with the director or officer. The table above also
indicates shares that may be obtained within 60 days upon the exercise of
options.
(A) Column indicates the most recent approximation of the number of shares
of Common Stock as to which participants in the Company's Savings Investment
Plan have voting and transfer rights. Shares of Common Stock which are held in
the Plan are not directly allocated to individual participants but instead are
held in separate funds in which participants acquire units. Such funds also
hold varying amounts of cash and short-term investments. The number of shares
allocable to a participant will vary on a daily basis based upon the cash
position of the funds and the market price of the stock.
(B) The number of shares outstanding is the sum of (1) the number actually
outstanding on November 1, 1999, and (2) the number of shares of Common Stock
which would be issued if all options listed in Column 4 were exercised
(C) Excludes 8,147,000 shares of Common Stock held by the Danforth
Foundation, St. Louis, Mo. Messrs. Biggs, Danforth and Danforth are three of
the ten trustees of the Foundation and disclaim beneficial ownership of its
shares
(D) Excludes 4,041,662 shares of Common Stock held by Washington University,
St. Louis, Mo. Messrs. Biggs, Farrell McDonnell, McGinnis, Thompson and Dr. W.
Danforth serve on the University's Board of Trustees, which consists of 49
members. All of the directors disclaim beneficial ownership of those shares.
(E) Mr. Danforth has sole voting and investment powers respecting 787,836
shares of Common Stock. He shares voting and investment powers with respect to
2,720,240 shares, and disclaims beneficial ownership of 46,011 of those shares.
Included are 314,787 shares of Common Stock owned by his wife.
(F) Dr. Danforth has sole voting and investment powers respecting 171,257
shares of Common Stock. He shares voting and investment powers with respect to
2,636,415 shares, and disclaims beneficial ownership of 143,178 of those shares
held in a trust.
(G) Mr. Stiritz disclaims beneficial ownership of 102,477 shares of Common
Stock owned by his wife.
(H) Mr. McGinnis disclaims beneficial ownership of 5,607 shares of Common
Stock owned by his wife.
(I) Mr. Mulcahy disclaims beneficial ownership of 37,831 shares of Common
Stock owned by his wife.
(J) Excludes 5,193,015 shares of Common Stock held to fund retirement
benefits by the Ralston Purina Retirement Plan Trust of which Mr. Elsesser is
one of four trustees who collectively exercise voting and investment power. Mr.
Elsesser disclaims beneficial ownership of those shares.
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation for each of the last three fiscal years
of the Chief Executive Officer and the other four most highly compensated
executive officers ("Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
(Awards)
--------
Other Securi- Lever-
Annual ties aged All
Annual Compen- Under- Incent- Other
Compensation sation lying tive Compen-
------------ Options Plan sation
Name and Principal Position Year Salary($) Bonus($) ($) (#) ($) ($)(1)
--------------------------- ---- --------- ------- --- --- --- ------
<S> <C> <C> <C> <C> <C> <C> <C>
W. P. McGinnis . . . . . . . . . 1999 $650,000 $825,000 $18,410 225,000 $ 670,870 $ 276,244
Chief Executive Officer. . . . . 1998 $600,000 $638,400 $60,909 402,170 0 $ 240,357
& President; and President. . . 1997 $407,625 $360,000 $11,156 0 $1,062,625 $ 218,636
and Chief Executive Officer, Pet
Products Group
J. P. Mulcahy. . . . . . . . . . 1999 $650,000 $638,400 $23,542 0 $ 415,499 $ 196,431
Chairman of the Board. . . . . . 1998 $600,000 $638,400 $50,567 402,170 0 $ 220,907
& Chief Executive Officer. . . . 1997 $407,625 $360,000 $ 9,036 0 $1,062,625 $ 189,202
Eveready Battery Company, Inc.
J. R. Elsesser . . . . . . . . . 1999 $365,000 $318,820 $ 6,894 100,000 $ 420,873 $176,766(2)
Vice President and Chief . . . . 1998 $350,000 $279,125 $ 6,992 203,825 0 $ 170,879
Financial Officer. . . . . . . . 1997 $331,700 $262,706 $ 7,468 0 $ 919,200 $ 212,182
P.C. Mannix. . . . . . . . . . . 1999 $330,000 $148,913 $ 9,779 0 0 $ 43,304(3)
President. . . . . . . . . . . . 1998 $310,000 $164,300 $12,743 91,434 0 $ 63,235
Eveready Battery Company, Inc. . 1997 $290,000 $145,725 $10,944 0 $ 810,500 $ 53,425
J. M. Neville. . . . . . . . . . 1999 $287,000 $202,335 $ 6,351 30,000 $ 331,809 $ 90,676
Vice President and General . . . 1998 $275,700 $188,000 $ 6,462 76,434 0 $ 94,369
Counsel. . . . . . . . . . . . . 1997 $262,500 $168,000 $ 6,643 0 $ 751,400 $ 88,163
</TABLE>
<PAGE>
(1) The amounts shown in this column with respect to fiscal year 1999 consist of
the following:
(i) Above market interest accrued with respect to deferrals under the Fixed
-----------------------
Benefit Option of the Deferred Compensation Plan for Key Employees:
Mr. McGinnis, $3,943
Mr. Mulcahy, $3,460
Mr. Elsesser, $4,244
Mr. Mannix, $3,227
Mr. Neville, $3,169
(ii) the Savings Investment Plan and Executive Savings Investment Plan Company
-----------------------------------------------------------------
matching contributions or accruals:
Mr. McGinnis, $22,378
Mr. Mulcahy, $19,332
Mr. Elsesser, $12,898
Mr. Mannix, $7,849
Mr. Neville, $8,311
The amounts shown do not include benefits which were accrued by the Named
Executive Officers in this Plan in lieu of the PensionPlus Match Account in the
Retirement Plan due to certain limits imposed by the Internal Revenue Code on
accruals in the Retirement Plan. Such additional amounts are disclosed in the
information about the PensionPlus Match Account found on page 20.
(iii) the Deferred Compensation Plan for Key Employees a Company match of 25% of
------------------------------------------------
amounts deferred under the Equity Option:
Mr. McGinnis, $206,250
Mr. Mulcahy, $109,600
Mr. Elsesser, $79,705
Mr. Mannix, $32,228
Mr. Neville, $50,584
(iv) Split-dollar life insurance premiums paid by the Company, which will be
-----------------------------------------------------------
repaid on a specified future date, valued by multiplying the premiums
outstanding during the fiscal year by the Company's weighted average short-term
borrowing rate during the year:
Mr. McGinnis, $43,673
Mr. Mulcahy, $64,039
Mr. Elsesser, $79,919
Mr. Mannix, $0
Mr. Neville, $28,612
(2) The amount shown in this item does not include compensation paid or
payable by Interstate Bakeries Corporation ("IBC") to Mr. Elsesser, who served
as a director of IBC during the last fiscal year at the request of the Company
pursuant to the terms of the Shareholder Agreement between the Company and IBC.
(3) Mr. Mannix holds 15,000 shares of restricted stock, valued at $418,125
as of September 30, 1999, plus restricted cash dividends and accumulated
interest in the amount of $38,916.
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
(A) (B) (C) (D) (E) (F)
% OF TOTAL
OPTIONS
GRANTED
NUMBER OF TO EXERCISE
SECURITIES EMPLOYEES OR
UNDERLYING IN BASE
OPTIONS FISCAL PRICE EXPIRATION GRANT DATE
NAME GRANTED (#) YEAR ($/sh) DATE VALUE(S)
<S> <C> <C> <C> <C> <C>
W. Patrick McGinnis 225,000 (1) (2) 11.9% $28.5625 (3) 9-22-09 $3,296,250 (4)
- ------------------- --------------- ----- ------------ ------- --------------
J. Patrick Mulcahy. - - - - -
- ------------------- --------------- ----- ------------ ------- --------------
James R. Elsesser . 100,000 (1) (2) 5.3% $28.5625 (3) 9-22-09 $1,465,000 (4)
- ------------------- --------------- ----- ------------ ------- --------------
Patrick C. Mannix . - - - - -
- ------------------- --------------- ----- ------------ ------- --------------
James M. Neville. . 30,000 (1) (2) 1.6% $28.5625 (3) 9-22-09 $ 439,500 (4)
=================== =============== ===== ============ ======= ==============
<PAGE>
</TABLE>
(1) Options granted were options to acquire shares of Common Stock.
(2) Options become exercisable at the rate of 25% of total shares on the
anniversary of the date of grant in each of the years 2001, 2002, 2003 and 2004,
and upon death, declaration of permanent and total disability, voluntary
termination of employment at or after age 55 with 15 years of service, or at or
after age 62, involuntary termination other than for cause, or upon a change in
control of the Company. The options have a reload feature in which the optionee
who, prior to termination of employment, exercises an option with shares of
Company stock held at least six months will receive a new option for the same
number of shares surrendered. The reload option will be granted at the
then-current market price, will be exercisable after one year and will have a
term equal to the balance of the term of the original option.
(3) Market price on date of grant.
(4) Calculated using the binomial option pricing model. Underlying
assumptions used in the calculation include a ten-year expiration, a current
market price and strike price of $28.5625 per share, a ten year volatility
assumption of 22.814%, a current dividend yield of 0.0% and a risk-free rate of
return of 6.27%, which was derived from the treasury zero-coupon yield curve.
The Company has elected to illustrate the potential realizable value using the
binomial option pricing model as permitted by the rules of the Securities and
Exchange Commission. This does not represent the Company's estimate or
projection of future stock price or of the assumptions utilized; actual gains,
if any, upon future exercise of any of these options will depend on the actual
performance of the Common Stock.
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
--------------------- ---------------------
<S> <C> <C> <C> <C>
NAME . . . . EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ------------- ----------- ------------- -------------
W. P. McGinnis 654,789 1,036,844 9,147,327 3,186,619
- -------------- ------------- ----------- ------------- -------------
J. P. Mulcahy. 654,789 811,844 9,147,327 3,186,619
- -------------- ------------- ----------- ------------- -------------
J. R. Elsesser 634,153 641,273 8,989,573 2,680,725
- -------------- ------------- ----------- ------------- -------------
P. C. Mannix . 350,768 258,622 4,916,398 1,490,195
- -------------- ------------- ----------- ------------- -------------
J. M. Neville. 197,181 239,430 2,668,021 1,092,191
============== ============= =========== ============= =========----
</TABLE>
None of the Named Executive Officers exercised options during fiscal year 1999.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Estimated Future Payments
Under Non-Stock Price-Based Plans
----------------------------------
<S> <C> <C> <C> <C> <C>
(a) . . . . . . . . . . (b) (c) (d) (e) (f)
Number Performance
Of Shares, or Other Period
Units or Other Until Maturation Threshold Target Maximum
Name. . . . . . . . . . Rights (#) or Payout ($) ($) ($)
- --------------- ----------------- ----------------- ---------------- ------- ---------------
W. P. McGinnis. . . . . N/A 9/30/01 25% of 3 years' N/A 150% of 3 years'
aggregate salary. aggregate salary
J. P. Mulcahy . . . . . N/A 9/30/01 25% of 3 years' N/A 150% of 3 years'
aggregate salary. aggregate salary
J. R. Elsesser. . . . . N/A 9/30/01 25% of 3 years' N/A 150% of 3 years'
aggregate salary. aggregate salary
P. C. Mannix. . . . . . N/A 9/30/01 25% of 3 years' N/A 150% of 3 years'
aggregate salary. aggregate salary
J. M. Neville . . . . . N/A 9/30/01 25% of 3 years' N/A 150% of 3 years'
aggregate salary. aggregate salary
</TABLE>
<PAGE>
The Committee approved the adoption of a Leveraged Incentive Plan, effective
October 1, 1998, for a select group of executives of the Company including the
Named Executive Officers. The plan is designed to pay a cash bonus to
participants if, during the three-year period commencing on that date, total
shareholder return (defined as stock price appreciation including reinvestment
of dividends) equals or exceeds certain thresholds for average annual
shareholder return set by the Committee. Each of the Named Executive Officers
who participate in the Plan will be entitled to a payment under this portion of
the Plan ranging from 25% of aggregate salary for the three-year period if the
average annual shareholder return for the period equals or exceeds certain
goals: for an employee of the corporate division of the Company, 8%, and for an
employee of a business unit, 7% (which reflects a blend of total shareholder
return and controllable earnings of the business unit). Such payment targets
increase ratably to a maximum of 100% of aggregate salary for the period if the
annual return averages 18% for the corporate division and 17% for a business
unit. No payments will be made under this portion of the Plan if the average
annual return for the period is less than 8% for the corporate division or 7%
for a business unit. Mr. Mulcahy's award will be measured as a combination of
the business unit and corporate performance goals in proportion to his service
during the term of the Plan as co-Chief Executive Officer until June, 1999, and
as Chairman of the Board and Chief Executive Officer of Eveready Battery Company
on and after that date. If the Company's total shareholder return for the
three-year period is at or above that of the 75th percentile of a group of peer
competitors, the Named Executive Officers who participate in the Plan will be
entitled to receive a payment equal to 50% of aggregate salary for the
three-year period. Such payment would be mandatorily deferred until retirement,
termination, death or long-term disability in the Equity Option of the Deferred
Compensation Plan for Key Employees. No Company match would be credited to such
deferrals. A participant must remain employed by the Company through the end of
the three-year period to be eligible for a payment, except that prorata payments
would be made in the case of retirement, long-term disability, death,
involuntary termination (including the sale or other disposition of the
participant's business unit), or if the Company should cease to be publicly
traded. In such cases, the prorata payments would be based on performance of
the Company, business units and peer group to date. Payments that otherwise
would not be deductible under Section 162(m) of the Internal Revenue Code may,
at the sole discretion of the Committee, be deferred in whole or in part until
such time as they are deductible by the Company.
The Committee has determined that the provisions of the Plan will no longer be
applicable to the intermediate incentive awards originally granted under the
Plan to Messrs. McGinnis and Elsesser, as described above. Instead, those
awards have been redesignated by the Committee as intermediate performance-based
incentive awards granted under and subject to the provisions of the Ralston
Purina Company Executive Incentive Compensation Plan which is being submitted to
shareholders for approval, as described on page 28 of this Proxy Statement.
<PAGE>
RETIREMENT PLAN
The Ralston Purina Retirement Plan may provide pension benefits in the future to
the Named Executive Officers. Most regular U.S. employees that have completed
one year of employment with the Company or certain of its subsidiaries are
eligible to participate in the Retirement Plan. They become vested after five
years of service. Normal retirement is at age 65; however, employees who work
beyond age 65 may continue to accrue benefits.
FINAL AVERAGE EARNINGS FORMULA. Annual benefits for the Named Executive
Officers, excluding Mr. McGinnis, and other administrative employees are
computed by multiplying their Final Average Earnings (the average of their five
highest consecutive annual earnings during the ten years prior to their
termination of employment) by a number which is 1.5% of their actual years of
service (to a maximum of 40 years). That amount is then reduced by up to
one-half of their primary social security benefit at retirement (with the actual
amount of offset determined by their age and years of service at retirement).
In the case of Mr. Mannix, that amount is further reduced to reflect an offset
for benefits he has accrued in the Company's Australian Superannuation Plan No.
3, a funded plan sponsored by one of the Company's foreign affiliates.
ACCOUNT-BASED FORMULA. In the case of Mr. McGinnis, his retirement benefit was
accumulated under the Final Average Earnings formula described above until
December 31, 1998. At that time, as a result of a one-time election opportunity
offered to all administrative employees participating in the Retirement Plan,
Mr. McGinnis elected to earn his benefit under a new "account based" benefit
formula. Under this benefit formula, a participant's "base" single sum
retirement benefit is calculated by multiplying the participant's Final Average
Earnings by a gross percentage that is accumulated over a participant's working
lifetime. The first five years of participant's employment each credit a rate
of 4.0% towards that gross percentage. The next five years credit 5.0% each,
the next five 6.5% each, the next five 8.0% each and each year in excess of 20
years credits 10% per year. In addition to this "base" single sum benefit, an
additional "excess" single sum benefit is calculated as the amount of the
participant's Final Average Earnings that is in excess of the Social Security
Covered Compensation level in the year of calculation (i.e., in 1999, $33,060)
multiplied by a percentage calculated as 3.5% of the participant's actual years
of service. The participant also has the option of receiving his pension
benefit in the form of an annuity which is the actuarial equivalent of the
single sum amount. In no event, however, can the amount of this annuity be less
than the annuity that the participant earned as of December 31, 1998 under the
Final Average Earnings benefit formula described in the preceding paragraph.
With the exception of Messrs. McGinnis and Mannix, the following table shows the
estimated annual retirement benefits, in the form of a single life, 5-year
certain annuity beginning at age 65, that would be payable from the Retirement
Plan to salaried employees, including the Named Executive Officers, who elected
to retain the Final Average Earnings Formula. To the extent a Named Executive
Officer's compensation or benefits exceed certain limits imposed by the Internal
Revenue Code of 1986, as amended, the table also includes benefits payable from
an unfunded supplemental retirement plan. The table reflects benefits prior to
the reduction for social security benefits described above.
<TABLE>
<CAPTION>
RETIREMENT PLAN TABLE
FINAL AVERAGE EARNINGS FORMULA - ANNUITY PAYMENTS
Years of Service
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Final Average
Earnings . 10 15 20 25 30 35 40
$ 300,000 $ 45,000 $ 67,500 $ 90,000 $112,500 $ 135,000 $ 157,500 $ 180,000
$ 400,000 $ 60,000 $ 90,000 $120,000 $150,000 $ 180,000 $ 210,000 $ 240,000
$ 500,000 $ 75,000 $112,500 $150,000 $187,500 $ 225,000 $ 262,500 $ 300,000
$ 600,000 $ 90,000 $135,000 $180,000 $225,000 $ 270,000 $ 315,000 $ 360,000
$ 700,000 $105,000 $157,500 $210,000 $262,500 $ 315,000 $ 367,500 $ 420,000
$ 800,000 $120,000 $180,000 $240,000 $300,000 $ 360,000 $ 420,000 $ 480,000
$1,000,000 $150,000 $225,000 $300,000 $375,000 $ 450,000 $ 525,000 $ 600,000
$1,200,000 $180,000 $270,000 $360,000 $450,000 $ 540,000 $ 630,000 $ 720,000
$1,400,000 $210,000 $315,000 $420,000 $525,000 $ 630,000 $ 735,000 $ 840,000
$1,500,000 $225,000 $337,500 $450,000 $562,500 $ 675,000 $ 787,500 $ 900,000
$1,600,000 $240,000 $360,000 $480,000 $600,000 $ 720,000 $ 840,000 $ 960,000
$1,800,000 $270,000 $405,000 $540,000 $675,000 $ 810,000 $ 945,000 $1,080,000
$2,000,000 $300,000 $450,000 $600,000 $750,000 $ 900,000 $1,050,000 $1,200,000
$2,200,000 $330,000 $495,000 $660,000 $825,000 $ 990,000 $1,155,000 $1,320,000
$2,400,000 $360,000 $540,000 $720,000 $900,000 $1,080,000 $1,260,000 $1,440,000
$2,600,000 $390,000 $585,000 $780,000 $975,000 $1,170,000 $1,365,000 $1,560,000
</TABLE>
The following table shows the estimated retirement benefits, in the form of a
single sum amount, that would be payable from the Retirement Plan as of the date
of termination of employment to Mr. McGinnis and other administrative employees
who elected the account option described above. To the extent that Mr.
McGinnis' compensation or benefits exceed certain limits imposed by the Internal
Revenue Code of 1986, as amended, the table also includes benefits payable from
an unfunded supplemental retirement plan. The annuity amount that would be
payable as of a participant's Normal Retirement Age (65) based on the indicated
single sum amounts would be determined as 9.3% of the participant's stated
single sum balance credited with compound interest at a rate of 3.0% per annum
from the participant's date of termination to the participant's 65th birthday.
<TABLE>
<CAPTION>
RETIREMENT PLAN TABLE
ACCOUNT-BASED FORMULA - LUMP SUM PAYMENT
<S> <C> <C> <C> <C> <C> <C> <C>
Final Average Years of Service
Earnings. . . 10 15 20 25 30 35 40
$300,000 $ 228,000 $ 373,000 $ 539,000 $ 736,000 $ 933,000 $ 1,130,000 $ 1,326,000
$400,000 $ 308,000 $ 503,000 $ 727,000 $ 991,000 $1,255,000 $ 1,520,000 $ 1,784,000
$500,000 $ 388,000 $ 633,000 $ 914,000 $1,246,000 $1,578,000 $ 1,910,000 $ 2,241,000
$600,000 $ 468,000 $ 763,000 $1,102,000 $1,501,000 $1,900,000 $ 2,300,000 $ 2,699,000
$700,000 $ 548,000 $ 893,000 $1,289,000 $1,756,000 $2,223,000 $ 2,690,000 $ 3,156,000
$800,000 $ 628,000 $1,023,000 $1,477,000 $2,011,000 $2,545,000 $ 3,080,000 $ 3,614,000
$1,000,000 $ 788,000 $1,283,000 $1,852,000 $2,521,000 $3,190,000 $ 3,860,000 $ 4,529,000
$1,200,000 $ 948,000 $1,543,000 $2,227,000 $3,031,000 $3,835,000 $ 4,640,000 $ 5,444,000
$1,400,000 $1,108,000 $1,803,000 $2,602,000 $3,541,000 $4,480,000 $ 5,420,000 $ 6,359,000
$1,500,000 $1,188,000 $1,933,000 $2,789,000 $3,796,000 $4,803,000 $ 5,810,000 $ 6,816,000
$1,600,000 $1,268,000 $2,063,000 $2,977,000 $4,051,000 $5,125,000 $ 6,200,000 $ 7,274,000
$1,800,000 $1,428,000 $2,323,000 $3,352,000 $4,561,000 $5,770,000 $ 6,980,000 $ 8,189,000
$2,000,000 $1,588,000 $2,583,000 $3,727,000 $5,071,000 $6,415,000 $ 7,760,000 $ 9,104,000
$2,200,000 $1,748,000 $2,843,000 $4,102,000 $5,581,000 $7,060,000 $ 8,540,000 $10,019,000
$2,400,000 $1,908,000 $3,103,000 $4,477,000 $6,091,000 $7,705,000 $ 9,320,000 $10,934,000
$2,600,000 $2,068,000 $3,363,000 $4,852,000 $6,601,000 $8,350,000 $10,100,000 $11,849,000
</TABLE>
INTERNATIONALIST PLAN. In addition to the Final Average Earnings Formula
described above, Mr. Mannix participates in the Company's Internationalist Plan,
which is unfunded. Internationalist Plan benefits for Mr. Mannix are computed by
multiplying his Final Average Earnings (the average of his five highest
consecutive annual earnings during the ten years prior to his termination of
employment) by a number which is 1.7% of his actual years of service (to a
maximum of 40 years).
Mr. Mannix's benefits under the Internationalist Plan are offset by benefits
payable to him under the Ralston Purina Retirement Plan, the supplemental
retirement plan, and the Superannuation Plan. Mr. Mannix's benefit, payable
under the Superannuation Plan as a single sum payment, is computed by
multiplying his Final Average Base Earnings (the average of his five highest
consecutive base annual earnings during the ten years prior to his termination
of employment) by a number which is 15% of his actual years of service (to a
maximum of 40 years). Based upon prevailing long term bond rates, this single
sum amount would then be converted to an equivalent annuity payable to Mr.
Mannix, with that annuity being used to offset the benefits payable under the
Ralston Purina retirement plans. The actual amount of each pension plan's
offset will be determined by Mr. Mannix's age and years of service at his
retirement.
The following table shows the estimated annual retirement benefits, in the form
of a single life, 5-year certain annuity, that would be payable to Mr. Mannix
from the Internationalist Plan, assuming age 62 retirement and including the
equivalent value of amounts payable to him from the other offsetting Company
retirement plans.
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONALIST PLAN TABLE*
FINAL AVERAGE EARNINGS FORMULA - ANNUITY PAYMENTS
<S> <C> <C> <C>
Final Average. Years of Service
Earnings
- --------------
30 35 40
------- -------- --------
$475,000 . . . $242,250 $282,625 $323,000
$525,000 . . . $267,750 $312,375 $357,000
$575,000 . . . $293,250 $342,125 $391,000
$625,000 . . . $318,750 $371,875 $425,000
$675,000 . . . $344,250 $401,625 $459,000
$725,000 . . . $369,750 $431,375 $493,000
</TABLE>
*1.7% accrual rate
PENSIONPLUS MATCH ACCOUNT
<PAGE>
Beginning on January 1, 1999, to the extent that each of the Named Executive
Officers has elected to contribute compensation on an after-tax basis to the
Company-sponsored Savings Investment Plan (SIP), a matching single sum amount is
credited to a nominal account balance established for each individual in the
pension plan. The single sum amount credited to the individual's account each
year is equal to 300% of the first 1.75% of pay (up to a certain limit imposed
on pay by the Internal Revenue Code) contributed by the individual to the SIP.
The amounts so credited each year to the nominal account are further annually
credited each plan year with interest at a rate equal to the average 30-year
U.S. Treasury bond rate in effect during the August preceding the October 1
beginning of each plan year. These nominal accounts may be received by the
participant upon termination of employment in the form of a lump sum or an
equivalent annuity. For fiscal year 1999, the following amounts were accrued in
the PensionPlus Match Accounts of the Named Executive Officers. To the extent a
Named Executive Officer's compensation or benefits exceed certain limits imposed
by the Internal Revenue Code of 1986, as amended, amounts below also include
benefits payable from the unfunded Executive Savings Investment Plan.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Mr. McGinnis: $61,092
Mr. Mulcahy: $46,871
Mr. Elsesser: $36,699
Mr. Mannix: $14,265
Mr. Neville: $20,214
</TABLE>
For the purpose of calculating retirement benefits, the Named Executive Officers
had, as of September 30, 1999, the following whole years of credited service:
Messrs. McGinnis-27 years; Mulcahy-31 years; Elsesser-14 years; Neville-15
years; and Mannix-36 years. Earnings used in calculating benefits (other than
the PensionPlus Match Account) under the retirement plans are approximately
equal to amounts included in the Salary, Bonus and Leveraged Incentive Plan
columns in the Summary Compensation Table on page 14.
DEATH BENEFIT PLAN
<PAGE>
The Company maintains, at no cost to the participants, an unfunded Executive
Life Plan to provide supplemental benefits to certain key members of management,
generally at the level of division vice president and above. The Plan provides
a death benefit, after retirement of the participant, to his or her named
beneficiary in an amount equal, on an after-tax basis, to 50% of the
participant's last full year's salary and bonus prior to retirement. To be
eligible for the benefit, a participant must at the time of retirement meet
certain conditions, including (1) being enrolled in the Company's Partnership
Life Plan, which is available to almost all non-union administrative and
production employees in the United States, with coverage of at least one times
earnings; and (2) being age 55 with at least two years of service, or having a
combination of age and years of service equal to at least 80. Messrs. Mannix
and Neville participated in the Executive Life Plan during fiscal year 1999.
<PAGE>
GRANTOR TRUST
<PAGE>
The Company has established and funded an irrevocable grantor trust to provide a
source of funds to assist the Company in meeting its obligations under certain
employee benefit plans and programs in which the Named Executive Officers, as
well as other employees, participate. At the present time, assets of the trust
consist of the Company's Common Stock and life insurance policies. In the event
that the Company is in default of its funding obligations under the trust,
payment of obligations under those plans and programs will immediately
accelerate unless the employee elects to defer payment.
<PAGE>
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
<PAGE>
Stock options and restricted stock awards granted from time to time to
employees, including the Named Executive Officers, under the Company's Incentive
Stock Plans generally provide for acceleration of vesting in the event of a
change in control of the Company.
In addition, the Company entered into Management Continuity Agreements with each
of the Named Executive Officers in fiscal year 1999 which replaced agreements
previously in effect. The new Agreements have a term of five years from their
effective date, and provide that the Officers will receive severance
compensation in the event of their voluntary or involuntary termination after a
change in control of the Company, as defined in the Agreement.
In addition, Mr. McGinnis' Agreement would also be triggered upon the sale of
the Company's Pet Products unit, but would terminate if the Company spun off the
Pet Products business. Similarly, Agreements for Messrs. Mulcahy and Mannix
would terminate upon the spin-off of the Company's Battery Products business
(which is planned for April, 2000 subject to regulatory and Board approval), but
would be triggered in certain circumstances upon the sale of the Battery
Products business. Agreements for Messrs. Elsesser and Neville would also be
triggered upon their termination of employment after the Company's sale or
spin-off of either the Pet Products or Battery Products business.
The compensation payable under the Agreements would be equal to the present
value of up to three years' of the Officer's salary, most recent annual bonus
and Leveraged Incentive Plan payment earned or paid prior to the termination of
employment, with the three-year payment period being reduced for each complete
year the Officer remains employed following the specified event. Other payments
include a lump sum equal to the present value of defined benefit plan pension
benefits that would have been accrued during the relevant payment period;
continuation, if appropriate premiums are paid by the Officer, of certain
welfare plan benefits for the same period; and certain pension bridging payments
for executives who are under the age of 55 at the time of the specified event.
No payments would be made if the Officer terminates employment because of death,
disability or for cause, as defined in the Agreement.
<PAGE>
HUMAN RESOURCES COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
<PAGE>
The Human Resources Committee (the "Committee") consists entirely of
non-employee directors free from relationships with the Company that might be
considered a conflict of interest. It approves direct and indirect compensation
of Executive Officers and administers and makes awards under the Company's
shareholder-approved Incentive Stock Plan.
COMPENSATION PHILOSOPHY
The Company's executive compensation program is designed to provide total
compensation that can attract, retain and motivate key employees. To do this,
the Company uses a "pay-at-risk" approach in which base pay is kept below
average levels for comparable executive positions at comparison companies, while
incentive programs are offered which provide such employees an opportunity to
achieve total compensation considerably above average in the case of
exceptional performance. In determining competitive pay standards, the
Committee reviews data from published surveys of pay practices of other
U.S.-based corporations of similar size with which the Company may compete in
recruiting executive talent.
The Committee has established compensation incentives to compensate its key
executives in the form of annual, intermediate term and long term awards. The
awards which are stock-based are designed to encourage Company stock ownership
by executives and to foster a management perspective that is in alignment with
shareholders' interests.
SALARIES
The Committee establishes the salaries of key corporate executives based on its
assessment of the individual's responsibilities, experience, individual
performance and contribution to the Company's performance. The Committee also
takes into account compensation data from other companies as described above;
historical compensation levels at the Company; and the competitive environment
for attracting and retaining executives. In the case of Executive Officers of
the Corporate Division, the Committee received a recommendation from Mr.
McGinnis as Chief Executive Officer and, in the case of Mr. Mannix, from Mr.
Mulcahy as Chairman and Chief Executive Officer of Eveready. A more detailed
discussion of the Committee's decisions regarding salaries for Messrs. McGinnis
and Mulcahy is set forth below. The salaries for Named Executive Officers are
set forth in the Summary Compensation Table on page 14.
ANNUAL CASH BONUS AWARD PROGRAMS
Annual cash bonuses are set each year at, or shortly after, the end of the
Company's fiscal year. Executive Officers have an opportunity to earn an award
based on a combination of individual performance and the overall performance of
the Company and/or the performance of a particular operating unit. Individual
performance is rated based on a subjective assessment of factors including
quality and execution of strategic plans, organizational and management
development and special project leadership. For fiscal year 1999, the following
bonus programs applied with respect to the Executive Officers:
MR. MCGINNIS. Mr. McGinnis' annual cash bonus award was based on a combination
of both personal performance and performance of both the Company as a whole and
the Pet Products business. The Committee subjectively evaluated his personal
performance, taking into account both his service as Chief Executive Officer as
well as his leadership of the Pet Products operating unit during a period of
impressive growth. The personal performance component was weighted at
approximately 35% of the total bonus award. Company performance was weighted at
approximately 65% of the total bonus award, and was based on a combination of
corporate fully diluted earnings per share growth versus prior year and Pet
Products operating profit versus prior year.
MR. MULCAHY. Mr. Mulcahy's annual cash bonus was based on a combination of
personal performance and performance of both the Company as a whole and the
Eveready battery business. The Committee, after considering a recommendation
which it sought from the Chairman of the Board, subjectively evaluated his
performance during the past fiscal year as co-Chief Executive Officer through
June 10, 1999, as well as his performance for the entire fiscal year as Chairman
and Chief Executive Officer of Eveready. This personal performance component
was weighted at approximately 60% of the total bonus award. Company performance
was weighted at approximately 40% of the award. It was based on earnings before
interest and taxes for the battery business in fiscal year 1999 compared to
fiscal year 1998.
CORPORATE DIVISION EXECUTIVE OFFICERS.
Bonuses for Executive Officers employed in the Corporate Division of the Company
were measured on Company performance (50%) and a subjective assessment of
individual performance (50%). Company performance was determined by measuring
fully-diluted earnings per share ("EPS") growth, adjusted for unusual items, for
fiscal year 1999 compared to the prior year EPS.
EVEREADY BATTERY COMPANY. The annual bonus for Mr. Mannix was based on
Eveready's performance and a subjective assessment of his individual
performance. Eveready's performance was measured based on its earnings before
income taxes, adjusted for unusual items, compared to a similar calculation of
the prior year's earnings. Eveready performance accounted for 70% of the bonus
and individual performance for 30%.
The Committee expects to continue to utilize executive bonus plans with varying
measures of individual and/or corporate performance for determining all or part
of bonuses for Executive Officers.
INTERMEDIATE TERM BONUS PLANS
A 1996 Leveraged Incentive Plan and a 1998 Leveraged Incentive Plan (referred to
as the 1996 LIP or 1998 LIP) were in effect during fiscal year 1999, covering a
select group of key executives including the Named Executive Officers.
Executives were included based on an assessment that the group would be able to
significantly and positively enhance shareholder value. Each of the Plans was
designed to operate over a three-year term. A Plan may pay, at the end of its
term, a cash award equal to a percentage of a participant's three years'
aggregate base salary if certain Common Stock performance benchmarks are
reached. The benchmarks are based on total shareholder return, or "TSR". This
measures Common Stock price appreciation plus reinvested dividends or, for
executives of operating units, certain business unit earnings benchmarks. In
addition, if the TSR over the three-year term meets or exceeds the 75th
percentile of the TSR for a peer competitor group of the Company, an additional
percentage of aggregate base salary for the three year period may be earned.
The peer group evaluated for this purpose is not identical to the peer group
reflected in the Performance Graph on page 26. The Committee believes that
tying payment under the plan to increases in shareholder value and business unit
performance is consistent with its philosophy of maintaining a relatively high
portion of pay at risk.
DEFERRALS OF BONUS AWARDS
The Committee exercises its discretion in determining whether to permit eligible
employees, including Executive Officers, to defer payment of their cash bonus or
other cash compensation under the terms of the Deferred Compensation Plan for
Key Employees. The terms of that Plan may include, in any particular year, an
additional Company match on deferrals in the Equity Option of the Plan. It has
been determined that deferrals into the Equity Option of all or part of annual
cash bonuses earned in fiscal year 1999 will be credited with a 25% Company
match which is subject to certain vesting requirements. The Committee believes
that this provision of the Plan further aligns the executive's interests with
those of shareholders of the Company by encouraging an investment in Company
stock equivalents and adds a retention feature through the vesting requirement.
STOCK AWARDS
Stock-based incentive awards consist principally of stock options and restricted
stock awards which are granted from time to time under plans which have been
approved by shareholders of the Company. The plan most recently submitted for
shareholder approval is the 1999 Incentive Stock Plan. In general, the
Committee bases its decisions to grant stock-based incentives on the number of
shares of Common Stock outstanding, the number of shares of Common Stock
authorized by shareholders under the current Incentive Stock Plan, the number of
options and shares of restricted Common Stock held by the executive for whom an
award is being considered and the other elements of the executive's
compensation, as well as the Company's compensation objectives and policies
described above. As with the determination of base salaries and a portion of
bonus awards, the Committee exercises subjective judgment and discretion in view
of the above criteria and its general policies.
Stock options granted by the Committee entitle the recipient to purchase a
specified number of shares of the Company's Common Stock, after certain vesting
provisions have been met, at an option price which is equal to the fair market
value of the Common Stock at the time of grant. They provide executives with an
opportunity to buy and maintain an equity interest in the Company while linking
the executive's compensation directly to shareholder value since the executive
receives no benefit from the option unless all shareholders have benefited from
an appreciation in the value of the Company's Common Stock. In addition, since
the options "vest" serially, generally in three or four segments over a period
of three to ten years after the date of grant, they function as a retention
device while encouraging the executive to take a longer-term view about
decisions impacting the Company.
Restricted stock awards consist of grants of the Company's Common Stock subject
to certain restrictions. The restricted shares may not be sold, pledged or
otherwise transferred until the restrictions lapse. Dividends, and interest on
the dividends, accumulate until distributed when restrictions on the underlying
shares lapse. Restricted stock awards further the goal of retaining key
executives by encouraging stock ownership while linking executive performance
with shareholder value.
Details of stock options awarded to Executive Officers of the Company in fiscal
year 1999 are set forth on page 16 of this Proxy Statement.
COMPENSATION FOR MESSRS. MCGINNIS AND MULCAHY
SALARIES. The Committee had determined, at the start of fiscal year 1999, that
base salaries for Messrs. McGinnis and Mulcahy would be based on an assessment
of their joint performance as co-Chief Executive Officers. Their base pay was
identical, in accordance with this approach. The Committee reviewed their
salaries when Mr. Mulcahy resigned as co-Chief Executive Officer in June, 1999
so that he could focus exclusively on the Company's battery business in
preparation for the spin-off of Eveready in fiscal year 2000. The Committee
found that it was appropriate to maintain each executive's salary at the same
level for the balance of fiscal year 1999. The Committee based this decision on
the continuing importance of Mr. McGinnis' role as sole Chief Executive Officer
of the Company and the significance of Mr. Mulcahy's position in leading
Eveready through the transition period prior to the spin-off.
ANNUAL BONUSES. The Committee awarded an annual bonus to Messrs. McGinnis and
Mulcahy based on qualitative and quantitative factors described under "Annual
Cash Bonus Award Programs" above. With respect to both Mr. McGinnis' and Mr.
Mulcahy's awards, the Committee took into account their ability to work
effectively to coordinate their shared responsibilities as co-Chief Executive
Officers during the period prior to Mr. Mulcahy's resignation from this post.
As noted above, the Committee also subjectively evaluated each executive's
performance as head of their respective business units.
INTERMEDIATE TERM INCENTIVE PLANS. As described above, Messrs. McGinnis and
Mulcahy participated in the 1996 LIP, and continue to participate in the 1998
LIP. Mr. McGinnis' payment under the 1996 LIP was based in part on TSR for the
Pet Products unit pro-rated for the period he was President of that unit before
being named co-Chief Executive Officer of the Company. The balance of the
payment was based on TSR for the Company pro-rated for the portion of the LIP
period he served as co-Chief Executive Officer and, beginning in June, 1999,
sole Chief Executive Officer. The Committee used the same methodology to
determine Mr. Mulcahy's award, taking into account TSR for Eveready pro-rated
for the periods at the beginning and end of the 1996 LIP term during which he
served as Chairman and Chief Executive Officer of Eveready, and TSR for the
Company pro-rated for his period of service as co-Chief Executive Officer of the
Company.
STOCK AWARDS. In September, 1999, the Committee awarded Mr. McGinnis options to
purchase Company stock. Details of that award are found on page 16. In
determining the size of the award, the Committee reviewed current data derived
from a survey of peer companies and reviewed the economic value of the median
award most recently granted to the incumbent chief executive officers. With the
advice of outside consultants, this economic value was translated into
equivalent value in options to purchase Company stock. The results were then
evaluated in the context of competitive market pay and historical option grants
made to Mr. McGinnis.
In light of the anticipated spin-off of Eveready in fiscal year 2000, the
Committee did not grant options to any employees of Eveready in September, 1999,
including Mr. Mulcahy. The Committee determined that it was appropriate that
such a significant equity-linked compensation decision would best be made by the
board of directors of Eveready after it was spun off, so that Eveready employees
would be able to participate directly in the performance of the Battery Products
business.
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION
A feature of the Omnibus Budget Reconciliation Act of 1993 sets a limit on
deductible compensation of $1,000,000 per year per person for those executives
designated as named executive officers in the Proxy Statement. The Committee
has mandated or reserved the right to mandate the deferral of certain bonus and
salary payments to such officers. A portion of amounts payable to Messrs.
McGinnis, Mulcahy and Elsesser under the 1996 Leveraged Incentive Plan have been
mandatorily deferred until such time as they are deductible by the Company.
While it is the general intention of the Committee to meet the requirements for
deductibility, the Committee may approve payment of non-deductible compensation
from time to time if unusual circumstances warrant it. The Committee will
continue to review and monitor its policy with respect to the deductibility of
compensation.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
W. H. Danforth-Chairman J. H. Biggs
M. D. Ingram K. D. Ortega
</TABLE>
PERFORMANCE GRAPH
The graph below is presented in accordance with SEC requirements. You are
cautioned against drawing any conclusions from the data in the graph, as past
results do not necessarily indicate future performance. The graph does not
reflect the Company's forecast of future financial performance.
Despite anything to the contrary in any of the Company's previous SEC filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following graph and the Human Resources
Committee Report on Executive Compensation set forth above will not be
incorporated by reference into any such filings.
The line graph below compares the annual percentage change in cumulative total
shareholder return for Ralston Purina Company's Common Stock with the cumulative
total return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Food Index.
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN ON $100 INVESTED IN RALSTON
PURINA COMPANY COMMON STOCK ON SEPTEMBER 30, 1994 VS. S&P 500
AND S&P FOOD INDICES
(insert graph)
On April 1, 1998 (as depicted by a solid vertical line), the Company issued a
dividend of one share of Common Stock of Agribrands International, Inc. for
every ten shares of Company Common Stock then held. The Agribrands shares
received are assumed to be liquidated with the proceeds from the sale being
reinvested in Company Common Stock. For the S&P 500 and the S&P Food Indices,
cumulative returns are measured for the period September 30, 1994 through
September 30, 1999, with the value of each index set to $100 on September 30,
1994. Total return assumes reinvestment of dividends.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposals to be presented at the 2001 Annual Meeting of Shareholders must
be received by the Company, directed to the attention of the Secretary, no later
than August 13, 2000 in order to be included in the Company's proxy statement
and form of proxy for that meeting. The proposal must comply in all respects
with the rules and regulations of the Securities and Exchange Commission and the
Bylaws of the Company. Under the Company's Bylaws, other proposals which are
not included in the proxy statement will be considered untimely and will not be
presented at that meeting unless they are received by the Company, directed to
the attention of the Secretary, no later than October 27, 2000.
By order of the Board of Directors,
Nancy E. Hamilton
Secretary
December 10, 1999
<PAGE>
APPENDIX A
Ralston Purina Company
Executive Incentive Compensation Plan
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
<S> <C> <C>
Article 1. Establishment, Purpose, and Duration 30
Article 2. Definitions 30
Article 3. Administration 32
Article 4. Eligibility and Participation 32
Article 5. Annual Incentive Award Opportunity 32
Article 6. Intermediate Incentive Award Opportunity 33
Article 7. Performance Goals 33
Article 8. Beneficiary Designation 34
Article 9. Change in Control 34
Article 10. Amendments 34
Article 11. Miscellaneous 35
</TABLE>
<PAGE>
RALSTON PURINA COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
-------------------------------------
<PAGE>
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Ralston Purina Company, a Missouri
corporation (the "Company"), hereby establishes an incentive compensation plan
to be known as "The Ralston Purina Company Executive Incentive Compensation
Plan" (the "Plan"), as set forth in this document. The Plan permits the awarding
of annual and intermediate term cash bonuses to executive officers of the
Company.
Upon approval by the Board of Directors of the Company, the Plan shall become
effective as of October 1, 1999, or with respect to Intermediate Incentive
Awards granted the Chief Executive Officer and Chief Financial Officer of the
Company, as of October 1, 1998 (the "Effective Date") and shall remain in effect
as provided in Article 1.3 hereof.
1.2 PURPOSE. The Plan is intended to enhance the profitability and value of
the Company for the benefit of its shareholders by providing for the grant of
Incentive Awards to attract, retain and motivate certain executive officers who
make important contributions to the success of the Company, and to assure
deductibility of such Incentive Awards by the Company by complying with the
requirements of Code Section 162(m).
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Article 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend the Plan at any time, pursuant to
Article 10 hereof, until terminated by the Board of Directors in accordance with
Article 10.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the defined meaning is intended, the term is capitalized:
2.1 "AFFILIATE" shall mean any subsidiary, whether directly or indirectly
owned, or parent of the Company, or any other entity designated by the
Committee.
2.2 "ANNUAL INCENTIVE AWARD" shall mean an Incentive Award granted to a
Participant as described in Article 5 hereof.
2.3 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.4 "BOARD" OR "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
2.5 "BONUS POOL" shall mean the pool of funds described in Article 5.2
hereof from which Annual Incentive Awards shall be paid.
2.6 "BONUS POOL PERCENTAGE" shall mean the percentage ascribed to each
Participant under Article 5.1.
2.7 "CAUSE" shall mean a Covered Employee's termination of employment
with the Company or an Affiliate because of act(s) of gross misconduct
attributed to the Covered Employee provided, however, that a termination for
Cause shall not include termination attributable to:
(a) Unsatisfactory work performance or unsatisfactory work development, on
the part of the Covered Employee; or
(b) An act or omission that a reasonable employee would have believed to be
lawful and which such an employee would reasonably believe to have been in, or
not opposed to, the best interests of the Company and that was reasonably
believed by the Covered Employee to be lawful; or
(c) The good faith conduct of the Covered Employee in connection with a
Change in Control of the Company (including opposition to or support of such
Change in Control); or
(d) The elimination of the Covered Employee's position.
2.8 "CHANGE IN CONTROL" shall occur when:
(a) A person, as defined under the securities laws of the United States,
acquires Beneficial Ownership of more than fifty percent (50%) of the
outstanding voting securities of the Company (other than acquisitions by the
Company, an Affiliate, any person acting on behalf of the Company as an
underwriter pursuant to an offering, or any trustee or other fiduciary holding
Company Common Stock pursuant to the terms of any Company benefit plan), or
(b) The Directors of the Company immediately before a business combination
between the Company and another entity, or a proxy contest for the election of
Directors shall as a result thereof cease to constitute a majority of the Board
of Directors of the Company or of any successor to the Company.
2.9 "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.
2.10 "COMMITTEE" shall mean the Human Resources Committee of the Board,
or any successor committee the Board may designate to administer the Plan. Each
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Code and regulations thereunder.
2.11 "COMPANY" shall mean Ralston Purina Company, a Missouri corporation,
including any and all Subsidiaries and Affiliates, and any successor thereto as
provided in Article 11 hereof.
2.12 "COVERED EMPLOYEE" shall mean an employee of the Company (a) who, as of
the close of the Company's fiscal year coinciding with the applicable Plan Year
or within which the applicable Performance Period ends, is the Company's chief
executive officer or is an individual acting in such a capacity, or (b) whose
total compensation is required to be reported to shareholders under the Exchange
Act by reason of such employee being among the four highest compensated officers
(other than the chief executive officer) for the Company's fiscal year
coinciding with the applicable Plan Year, or within which the applicable
Performance Period ends.
2.13 "DIRECTOR" shall mean any individual who is a member of the Board of
Directors of the Company; provided, however, that any Director who is employed
by the Company or any Subsidiary or Affiliate shall not be considered a Director
under the Plan.
2.14 "DISABILITY" shall mean a disability as determined by the Committee in
its sole discretion.
2.15 "EFFECTIVE DATE" shall mean the date the Plan becomes effective, as set
forth in Section 1.1 hereof.
2.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.17 "INCENTIVE AWARD" shall mean, individually or collectively, the grant
of an Annual Incentive Award or Intermediate Incentive Award.
2.18 "INTERMEDIATE INCENTIVE AWARD" shall mean an Incentive Award granted to
a Participant as described in Article 6 hereof.
2.19 "NET CASH FLOW" shall mean the Company's net cash flow from operations
as reported in the Company's Annual Report on Form 10-K, filed under the
Exchange Act.
2.20 "OPERATING EARNINGS" shall mean the Company's earnings from
Continuing Operations before Income Taxes, Equity Earnings, and Extraordinary
Items as reported in the Company's Annual Report on Form 10-K filed under the
Exchange Act.
2.21 "PARTICIPANT" shall mean any Covered Employee who is selected by the
Committee to participate in the Plan.
2.22 "PERFORMANCE-BASED EXCEPTION" shall mean the performance-based
exception from the Federal income tax deductibility limitations of Code Section
162(m).
2.23 "PERFORMANCE GOALS" shall mean any of the goals set forth in Article 7
hereof which are established by the Committee to qualify an Intermediate
Incentive Award for the Performance-Based Exception.
2.24 "PERFORMANCE PERIOD" shall mean the period of time designated by the
Committee over which Intermediate Incentive Awards may be earned in whole or in
part if certain Performance Goals established by the Committee are achieved.
2.25 "PLAN" shall mean the Ralston Purina Company Executive Incentive
Compensation Plan as set forth herein.
2.26 "PLAN YEAR" shall mean the Company's fiscal year, unless otherwise
designated by the Committee.
2.27 "SUBSIDIARY" shall mean any corporation (other than the Company) in
which the Company owns fifty percent (50%) or more of the total combined voting
power of all classes of stock.
ARTICLE 3. ADMINISTRATION
3.1 GENERAL. The Plan shall be administered by the Committee.
3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions herein, the
Committee shall have full power to determine the terms and conditions of
Incentive Award opportunities in a manner consistent with the Plan; construe and
interpret the Plan and any agreement or instrument entered into under the Plan;
establish, amend, or waive rules and regulations for the Plan's administration;
and amend the terms and conditions of any outstanding Incentive Award
opportunity to the extent such terms and conditions are within the discretion of
the Committee as provided in the Plan. Further, the Committee shall make all
other determinations which may be necessary or advisable for the administration
of the Plan. The Committee may delegate its authorities as identified
hereunder, but no delegation shall violate the "outside director" requirement of
the Performance-Based Exception.
3.3 DECISIONS BINDING. All determinations and decisions of the Committee as
to any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding, and conclusive upon
all parties.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. Only Covered Employees shall be eligible to participate in
the Plan, if selected by the Committee.
4.2 PARTICIPATION. Participation in the Plan shall be determined by the
Committee.
4.3 NO RIGHT TO PARTICIPATE. No Covered Employee shall at any time have a
right to be selected for participation in the Plan, despite having previously
participated in the Plan.
ARTICLE 5. ANNUAL INCENTIVE AWARD OPPORTUNITY
5.1 GRANT OF ANNUAL INCENTIVE AWARDS. Annual Incentive Awards shall be
made from a Bonus Pool for each Plan Year, determined in accordance with Section
5.2. The Committee shall allocate a Bonus Pool Percentage to each selected
Participant for each Plan Year. Such allocation shall be made within ninety (90)
days of the commencement of the Plan Year. In no event may the Bonus Pool
Percentage allocated to any one individual Participant exceed forty percent
(40%) of the total Bonus Pool for that Plan Year. In addition, the sum of all
Participants' applicable Bonus Pool Percentages in any Plan Year shall total no
more than one hundred percent (100%) of the Bonus Pool.
5.2 DETERMINATION OF BONUS POOL. The Bonus Pool shall be an amount equal to
two percent (2%) of the greater of : (i) the Company's Operating Earnings for
the Plan Year, or (ii) the Company's Net Cash Flow for the Plan Year.
5.3 DETERMINATION OF ANNUAL INCENTIVE AWARDS. As soon as practicable after
the Bonus Pool amount for any Plan Year is determinable, the Committee shall
calculate each Participant's allocated amount of the Bonus Pool by multiplying
the final Bonus Pool amount for the Plan Year by each Participant's Bonus Pool
Percentage. A Participant's Annual Incentive Award shall then be determined
based on the Participant's allocated portion of the Bonus Pool, reduced in such
manner as the Committee in its sole discretion, may determine. In no event,
however, may a Participant's allocated portion of the Bonus Pool be increased,
whether as a result of a reduction of any other Participant's allocated portion
or for any other reason. In reducing a Participant's Annual Incentive Award, the
Committee may consider any such factors it determines applicable or appropriate.
5.4 PAYMENT OF ANNUAL INCENTIVE AWARDS. Payment of Annual Incentive
Awards shall be made in such form and at such time as determined by the
Committee.
5.5 TERMINATION OF EMPLOYMENT. Unless determined otherwise by the
Committee in its sole discretion, upon a Participant's termination of employment
by reason of death, Disability, voluntary termination at or after age fifty
(50), sale or other disposition of a business unit that employs the Participant,
or other involuntary termination (other than for Cause), the Participant shall
be entitled to a pro rata portion of his or her Annual Incentive Award. Such pro
rata portion shall be determined as of the date of termination of employment in
the manner described in Section 5.3, based on such Participant's Bonus Pool
Percentage Allocation for that Plan Year and a Bonus Pool determined as though
the Plan Year had ended on the last day of the full quarter immediately
preceding the Participant's termination of employment. Upon a termination of
employment for any other reason and unless the Committee determines otherwise in
its sole discretion, the right to any Annual Incentive Award shall be forfeited.
ARTICLE 6. INTERMEDIATE INCENTIVE AWARD OPPORTUNITY
6.1 GRANT OF INTERMEDIATE INCENTIVE AWARDS. Subject to the terms of the
Plan, the Committee may designate Participants to receive Intermediate Incentive
Awards under the Plan. The Committee shall determine within ninety (90) days of
the commencement of the Performance Period:
(a) The Performance Goals and level of achievement related to these goals
which shall determine the Intermediate Incentive Award earned;
(b) The Performance Period, which period may, in no event, be less than two
(2) years;
(c) Forfeiture provisions; and
(d) Such further terms and conditions, in each case not inconsistent with
the Plan or with the requirements of the Performance-Based Exception, as may be
determined from time to time by the Committee.
The maximum amount payable to any Participant with respect to an
Intermediate Incentive Award established for a Performance Period shall not
exceed four million dollars ($4,000,000).
6.2 PERFORMANCE GOALS. The Performance Goals for any Intermediate Incentive
Awards that are intended by the Committee to satisfy the requirements for the
Performance-Based Exception under Code Section 162(m) shall be a goal based
solely on one or more Performance Goals (as defined in Article 7) selected by
the Committee. The Committee shall determine the extent to which any Performance
Goal has been satisfied, and the amount payable as a result thereof, prior to
payment.
6.3 DETERMINATION OF INTERMEDIATE INCENTIVE AWARDS. As soon as practicable
after the end of the Performance Period, the Committee shall determine each
Participant's Intermediate Incentive Award based on the extent to which the
established Performance Goals were achieved.
6.4 PAYMENT OF INTERMEDIATE INCENTIVE AWARDS. Payment of Intermediate
Incentive Awards shall be made in such form and at such time as designated by
the Committee.
6.5 TERMINATION OF EMPLOYMENT. Unless determined otherwise by the
Committee in its sole discretion, upon a Participant's termination of employment
by reason of death, Disability, voluntary termination of employment at or after
age fifty (50), the sale or other disposition of a business unit that employs
the Participant, or other involuntary termination (other than for Cause), the
Participant shall be entitled to a pro rata portion of the Intermediate
Incentive Award, as though the Performance Period had ended as of the last day
of the full quarter immediately preceding the Participant's termination of
employment. In determining such pro rata Intermediate Incentive Award, the
Committee shall make any adjustments to the Performance Goals that it may deem
appropriate in its sole discretion, to take into account the deemed shorter
Performance Period. Upon a termination of employment for any other reason and
unless the Committee determines otherwise in its sole discretion, the right to
any Intermediate Incentive Award shall be forfeited.
ARTICLE 7. PERFORMANCE GOALS
Unless and until the Board proposes for shareholder vote and shareholders
approve a change in the general Performance Goals set forth in this Article 7,
the attainment of which may determine the amount payable with respect to
Intermediate Incentive Awards to Covered Employees which are designed to qualify
for the Performance-Based Exception, the Performance Goals to be used for
purposes of such grants shall be chosen from among:
(a) Earnings per share;
(b) Income or Net income;
(c) Return measures (including, but not limited to, return on assets,
capital, equity, or sales);
(d) Cash flow return on investments which equals net cash flows divided by
owners equity;
(e) Controllable earnings (a division's operating profit, excluding the
amortization of goodwill and intangible assets, less a charge for the interest
cost for the average working capital investment by the division);
(f) Operating earnings or net operating earnings;
(g) Cost control;
(h) Share price (including, but not limited to, growth measures);
(i) Total shareholder return (stock price appreciation plus dividends);
(j) Economic value added;
(k) EBITDA;
(l) Operating margin;
(m) Market share; and
(n) Cash Flow from Operations.
Performance may be measured on an individual, corporate group, business
unit, or consolidated basis and may be measured absolutely or relatively to the
Company's peers. In establishing the Performance Goals, the Committee may
account for the effects of acquisitions, divestitures, extraordinary dividends,
stock split-ups, stock dividends or distributions, issuances of any targeted
stock, recapitalizations, warrants or rights issuances or combinations,
exchanges or reclassifications with respect to any outstanding class or series
of Stock, or a corporate transaction, such as any merger of the Company with
another corporation, any consolidation of the Company and another corporation
into another corporation, any separation of the Company or its business units
(including a spinoff or other distribution of stock or property by the Company),
any reorganization of the Company (whether or not such reorganization comes
within the definition of such term in Code Section 368) or any partial or
complete liquidation by the Company, or sale of all or substantially all of the
assets of the Company, or other extraordinary items.
ARTICLE 8. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his death before he
receives any or all of such benefit. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
ARTICLE 9. CHANGE IN CONTROL
Except as otherwise provided by the Committee with respect to an Incentive
Award, upon a Change in Control of the Company, all Annual Incentive Awards
shall be determined by the Committee, in the manner described in Section 5.3,
based on the Bonus Pool Percentage established for each Participant, determined
as though the Plan Year had ended on the date of the Change in Control and a
Bonus Pool determined as of such date. All Intermediate Incentive Awards shall
be paid out on a prorated basis, determined as if all Performance Goals for the
applicable Performance Period had been achieved as of the date of the Change in
Control and the applicable Performance Period had ended on the date of the
Change of Control. Payment of Incentive Awards shall be made as soon as
practicable following the Change in Control.
ARTICLE 10. AMENDMENTS
The Committee, in its sole discretion, without notice, at any time and from
time to time, may modify or amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely; provided, however,
that (i) no such amendment or modification may (a) increase the maximum limits
on Annual Incentive Awards or Intermediate Incentive Awards as set forth in
Sections 5.1 and 6.1 respectively, (b) change the class of Participants, (c)
create additional Performance Goals, or (d) change the definition of the Bonus
Pool, without approval of the Company's shareholders; (ii) no such modification,
amendment, suspension, or termination may, without the consent of a Participant
(or his or her beneficiary in the case of the death of the Participant),
materially reduce the right of a Participant (or his or her beneficiary as the
case may be) to a payment or distribution hereunder to which he or she may
otherwise be entitled; and (iii) no such amendment or modification may have the
effect of eliminating the authority of the Committee to administer the Plan.
ARTICLE 11. MISCELLANEOUS
11.1 DEFERRALS. The Committee may permit or require a Participant to
defer such Participant's receipt of the payment of cash that would otherwise be
due pursuant to his or her Incentive Award. If any such deferral election is
required or permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
11.2 CHANGE IN TAX LAWS. In the event that applicable tax laws change to
permit Committee discretion to alter the governing Performance Goals without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Incentive Awards which shall not qualify for the Performance-Based
Exception, the Committee may make such grants without satisfying the
requirements of Code Section 162(m).
11.3 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
11.4 NONTRANSFERABILITY. A Participant may not assign, transfer, pledge or
otherwise encumber his or her right or interest in the Plan. In addition, such
right or interest in the Plan shall not be subject to any lien (directly, by
operation of law or otherwise), nor shall it be subject to execution, levy,
garnishment, attachment, pledge or bankruptcy.
11.5 UNSECURED INTEREST. No Participant or any other party claiming an
interest in amounts earned under the Plan shall have any interest whatsoever in
any specific asset of the Company. To the extent that any party acquires a right
to receive payments under the Plan, such right shall be equivalent to that of an
unsecured general creditor of the Company.
11.6 WITHHOLDING TAXES. The Company shall have the right to deduct from all
payments under the Plan any Federal, state, or local taxes required by law to be
withheld with respect to such payments.
11.7 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular, and the singular shall include the plural.
11.8 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.
11.9 COSTS OF THE PLAN. All costs of implementing and administering the Plan
shall be borne by the Company.
11.10 SUCCESSORS. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
11.11 REQUIREMENTS OF LAW. The granting of Incentive Awards under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
11.12 GOVERNING LAW. The Plan, and all agreements hereunder, shall be
governed by and construed in accordance with the laws of the state of Missouri.
<PAGE>
LANGUAGE ON FRONT OF PROXY CARD
Ralston Purina PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Company FOR ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 27, 2000 AT
2:30 P.M.ST. LOUIS MARRIOTT PAVILION DOWNTOWN,
ONE BROADWAY, ST. LOUIS, MO
The undersigned hereby appoints Messrs. W. Patrick McGinnis and James M.
Neville, and each of them, as lawful proxies, with full power of substitution,
for and in the name of the undersigned, to vote on behalf of the undersigned,
with all the powers the undersigned would possess if personally present at the
Annual Meeting of Shareholders of Ralston Purina Company on January 27, 2000,
and any adjournment thereof. The above named proxies are instructed to vote all
the undersigned's shares of stock on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified and are authorized in their
discretion to vote upon such other business as may properly come before the
meeting or any adjournment thereof.
THIS PROXY RELATES TO SHARES OWNED BY THE UNDERSIGNED, INCLUDING ANY COMMON
STOCK HELD IN THE UNDERSIGNED'S ACCOUNT UNDER THE DIVIDEND REINVESTMENT PLAN AND
ANY COMMON STOCK SHARES CREDITED TO THE UNDERSIGNED'S ACCOUNT UNDER THE SAVINGS
INVESTMENT PLAN. EACH SHARE OF COMMON STOCK IS ENTITLED TO ONE VOTE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
Proxy # Shares Owned SIP Shares
RAL
IMPORTANT-PLEASE SIGN AND DATE ON BACK OF CARD. RETURN PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE; NO POSTAGE NECESSARY
(please detach at perforation before mailing)
- -----------------------------------------------------------------
RALSTON PURINA COMPANY
2000 ANNUAL MEETING OF SHAREHOLDERS
AT THE ST. LOUIS MARRIOTT PAVILION DOWNTOWN
ONE BROADWAY
THURSDAY, JANUARY 27, 2000
2:30 P.M.
Seating Begins at 1:30 p.m.
SHAREHOLDER ADMITTANCE TICKET
(PLEASE BRING THIS TICKET WITH YOU TO THE MEETING)
This ticket entitles you, the shareholder(s), to attend the 2000 Annual Meeting
If you require special arrangements to attend this meeting,
-----------------------------------------------------------
please contact the Company at (314) 982-2374 prior to the meeting.
<PAGE>
LANGUAGE ON BACK OF PROXY CARD
Ralston Purina PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Company FOR ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 27, 2000 AT
2:30 P.M.ST. LOUIS MARRIOTT PAVILION DOWNTOWN, ONE
BROADWAY, ST. LOUIS, MO
The undersigned hereby appoints Messrs. W. Patrick McGinnis and James M.
Neville, and each of them, as lawful proxies, with full power of substitution,
for and in the name of the undersigned, to vote on behalf of the undersigned,
with all the powers the undersigned would possess if personally present at the
Annual Meeting of Shareholders of Ralston Purina Company on January 27, 2000,
and any adjournment thereof. The above named proxies are instructed to vote all
the undersigned's shares of stock on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified and are authorized in their
discretion to vote upon such other business as may properly come before the
meeting or any adjournment thereof.
THIS PROXY RELATES TO SHARES OWNED BY THE UNDERSIGNED, INCLUDING ANY COMMON
STOCK HELD IN THE UNDERSIGNED'S ACCOUNT UNDER THE DIVIDEND REINVESTMENT PLAN.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
Proxy # Shares Owned
RAL
IMPORTANT-PLEASE SIGN AND DATE ON BACK OF CARD. RETURN PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE; NO POSTAGE NECESSARY
(please detach at perforation before mailing)
- -----------------------------------------------------------------
RALSTON PURINA COMPANY
2000 ANNUAL MEETING OF SHAREHOLDERS
AT THE ST. LOUIS MARRIOTT PAVILION DOWNTOWN
ONE BROADWAY
THURSDAY, JANUARY 27, 2000
2:30 P.M.
Seating Begins at 1:30 p.m.
SHAREHOLDER ADMITTANCE TICKET
(PLEASE BRING THIS TICKET WITH YOU TO THE MEETING)
This ticket entitles you, the shareholder(s), to attend the 2000 Annual Meeting
If you require special arrangements to attend this meeting,
-----------------------------------------------------------
contact the Company at (314) 982-2374 prior to the meeting.
<PAGE>
LANGUAGE ON BACK OF PROXY CARD
1. Election of five Directors to serve three-year terms ending at the annual
meeting held in 2003, or until their successors
are elected and qualified: 01-John H. Biggs, 02-David C. Farrell, 03-J.
Patrick Mulcahy, 04-William P. Stiritz and
05-Ronald L. Thompson.
FOR all nominees listed
FOR all nominees listed except
--------------------------------
WITHHOLD AUTHORITY to vote for all nominees listed
2. Ratification of the appointment of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending September 30, 2000.
FOR AGAINST ABSTAIN
3. Proposal to adopt the Ralston Purina Company Executive Incentive
Compensation Plan.
FOR AGAINST ABSTAIN
Shareholder(s), please sign below exactly as
name(s) appears on front of card; in the
case of joint holders, all should sign.
--------------------------------------------
-------------------------------------------
Signature(s)
Date:
--------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 ABOVE.
(please detach at perforation before mailing)
- -----------------------------------------------------------------
VOTE BY TELEPHONE OR INTERNET
QUICK *** EASY *** IMMEDIATE
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE 1-888-297-9553
(AVAILABLE 24 HOURS A DAY)
THERE IS NO CHARGE FOR THIS CALL.
YOU WILL BE ASKED TO ENTER A CONTROL NUMBER LOCATED IN THE
BOX IN THE LOWER RIGHT OF THIS FORM.
OPTION A: To vote as the Board of Directors recommends on ALL proposals:
Press 1
OPTION B: If you choose to vote on each proposal separately, press 0. You
will hear these instructions:
Proposal 1: To vote FOR ALL nominees, press 1; TO WITHHOLD FOR
ALL nominees, press 9
TO WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to
The instructions.
For Proposals 2 and 3: To vote FOR, press 1; AGAINST,
press 9; ABSTAIN, press 0.
When asked, you must confirm your vote by pressing 1.
VOTE BY INTERNET: THE WEB ADDRESS IS WWW.RALSTON.PROXYVOTING.COM
---------------------------
IF YOU VOTE BY TELEPHONE OR INTERNET - DO NOT MAIL THE PROXY CARD
------
THANK YOU FOR VOTING
CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE
1-888-297-9553 123 456 789 123
AVAILABLE 24 HOURS A DAY CONTROL NUMBER FOR
There is NO CHARGE to you for this call TELEPHONE OR INTERNET VOTING
<PAGE>
LANGUAGE ON FRONT OF PROXY CARD
Ralston Purina PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Company FOR ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 27, 2000 AT
2:30 P.M. ST. LOUIS MARRIOTT PAVILION DOWNTOWN,
ONE BROADWAY, ST. LOUIS, MO
The undersigned hereby appoints Messrs. W. Patrick McGinnis and James M.
Neville, and each of them, as lawful proxies, with full power of substitution,
for and in the name of the undersigned, to vote on behalf of the undersigned,
with all the powers the undersigned would possess if personally present at the
Annual Meeting of Shareholders of Ralston Purina Company on January 27, 2000,
and any adjournment thereof. The above named proxies are instructed to vote all
the undersigned's shares of stock on the proposals set forth in the Notice of
Annual Meeting and Proxy Statement as specified and are authorized in their
discretion to vote upon such other business as may properly come before the
meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
Proxy # Shares Owned
RAL
IMPORTANT-PLEASE SIGN AND DATE ON BACK OF CARD. RETURN PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE; NO POSTAGE NECESSARY
<PAGE>
LANGUAGE ON BACK OF PROXY CARD
1. Election of five Directors to serve three-year terms ending at the annual
meeting held in 2003, or until their successors
are elected and qualified: 01-John H. Biggs, 02-David C. Farrell, 03-J.
Patrick Mulcahy, 04-William P. Stiritz and
05-Ronald L. Thompson.
FOR all nominees listed
FOR all nominees listed except
---------------------------------
WITHHOLD AUTHORITY to vote for all nominees listed
2. Ratification of the appointment of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending September 30, 2000.
FOR AGAINST ABSTAIN
3. Proposal to adopt the Ralston Purina Company Executive Incentive
Compensation Plan.
FOR AGAINST ABSTAIN
Shareholder(s), please sign below exactly as
name(s) appears on front of card; in
the case of joint holders, all should sign.
---------------------------------------------
---------------------------------------------
Signature(s)
Date:-----------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 ABOVE.
December 13, 1999
Dear Savings Investment Plan Participant:
Enclosed are a proxy statement, a proxy, and an Annual Report for the Annual
Meeting of Shareholders of Ralston Purina Company to be held on January 27,
2000. The enclosed proxy relates to shares of Ralston Common Stock of which you
are the record holder and the shares of Ralston Common Stock credited to your
account in the Ralston Purina Savings Investment Plan ("Plan").
The Trustees of the Plan will vote all shares of Common Stock held in the Plan
as of November 22, 1999. Shares credited to your account as of October 29,
1999, will be voted in accordance with your instructions on the enclosed proxy
card. Any credited shares for which no instructions are received by the
Trustee, and any shares in the fund that were credited between October 30, 1999
and November 22, 1999, will be voted by the Trustee in the same proportion as
the shares for which instructions were received from all participants.
Please complete, sign and date the enclosed proxy. It should be returned, in
the post-paid envelope provided, to the Corporation Trust Company, which acts as
Tabulator. Alternatively, you may vote by telephone or via Internet. However
you decide to vote, in order to provide the Tabulator sufficient time to
tabulate the votes, it has been requested that all proxies be returned, or votes
be cast, as promptly as possible, but no later than January 25, 2000.
You may also have received additional proxy statements and proxies relating to
other shares of stock held by you. These proxies are not duplicates of the one
enclosed and we ask that they also be voted pursuant to the instructions
enclosed with them.
W. PATRICK MCGINNIS
Chief Executive Officer
and President
<PAGE>
APPENDIX
1. The Stock Price Performance Graphs on page 26 of the printed document
--
are being transmitted in a format which cannot be processed by Edgar. A paper
copy of the proxy statement containing these graphs will be mailed to
registrant's branch chief. The Graph titled 'Comparison of Cumulative
Total Return on $100 Invested in Ralston Purina Company Common Stock
on September 30, 1994 vs S & P 500 and S & P Food Indices' depicts
the following returns:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Measurement Point Ralston S&P 500 S&P Food
- ----------------- ------- ------- --------
9/30/94 100.00 100.00 100.00
9/30/95 143.45 129.74 124.12
9/30/96 173.05 156.13 153.35
9/30/97 226.84 219.27 203.01
3/31/98 273.47 257.03 243.19
9/30/98 227.81 239.10 215.24
9/30/99 220.07 305.58 203.29
</TABLE>
