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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
RALSTON PURINA COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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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 25, 2001 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 the 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 __, 2000
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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 25, 2001, at the St. Louis Marriott Pavilion
Downtown, One Broadway, St. Louis, Missouri.
The purpose of the meeting is to:
1. elect four directors to serve three-year terms ending at the annual
meeting held in 2004, 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, 2001;
3. approve the amendment of the Restated Articles of Incorporation to
limit the liability of directors;
4. approve the amendment of the Restated Articles of Incorporation to
delete obsolete references to ESOP Preferred Stock;
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 20, 2000. 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 __, 2000
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PROXY STATEMENT ------- VOTING PROCEDURES
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YOUR VOTE IS VERY IMPORTANT
The Board of Directors is soliciting proxies to be used at the 2001 annual
meeting. This proxy statement and the form of proxy will be mailed to
shareholders beginning December __, 2000.
Who Can Vote
Record holders of Ralston Purina Common Stock on November 20, 2000 may vote at
the meeting. On November 20, 2000, there were 309,838,349 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. Telephone voting is
available 24 hours a day.
. 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:
. giving 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
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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, Dividend
Reinvestment Plan and Stock Purchase Plan; and Participants in the Energizer
Holdings, Inc. Savings Investment Plan
. If you participate in the Company's Savings Investment Plan and had an
account in the Common Stock Fund on October 31, 2000, 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, it will vote those shares in the same
proportion as it votes 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 as of the record date (other than fractional
shares) unless contrary instructions are given by you.
. If you participate in the Company's Stock Purchase Plan, the proxy will
include all shares of Common Stock held for your account under that plan
and will serve as voting instructions to the plan administrator, Ralston
Purina Canada Inc., for shares of Common Stock credited to your account as
of the record date. If the plan administrator does not receive directions
with respect to shares credited to your account, it will not vote those
shares.
. If you participate in the Energizer Holdings, Inc. Savings Investment Plan,
and had an account in the Ralston Purina Company Common Stock Fund on
October 31, 2000, 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 Ralston Purina Company
Common Stock credited to your account on that date. You should contact
Vanguard or your employer to determine how your shares will be voted if you
do not vote your proxy.
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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 $13,000 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 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 fiscal year 2000.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors consists of twelve members and is divided into three
classes with four members each, with terms of service expiring at successive
annual meetings.
Four directors will be elected at the 2001 annual meeting to serve for a three-
year term expiring at our annual meeting in the year 2004. The Board has
nominated David R. Banks, M. Darrell Ingram, John F. McDonnell and W. Patrick
McGinnis 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.
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
directors.
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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, 2000.
================================================================================
[PHOTO] DAVID R. BANKS, Director Since 1985, Age 63
(Standing for election at this meeting for a term expiring 2004)
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.
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[PHOTO] M. DARRELL INGRAM, Director Since 1986, Age 68
(Standing for election at this meeting for a term expiring 2004)
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.
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[PHOTO] JOHN F. MCDONNELL, Director Since 1988, Age 62
(Standing for election at this meeting for a term expiring 2004)
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.
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[PHOTO] W. PATRICK MCGINNIS, Director Since 1997, Age 53
(Standing for election at this meeting for a term expiring 2004)
Chief Executive Officer and President, Ralston Purina Company.
Also a director of Brown Shoe Company, Inc.
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[PHOTO] DONALD DANFORTH, JR.*, Director Since 1961, Age 68
(Continuing in Office - Term Expiring 2002)
Chairman of the Board, Treasurer and former President, Kennelwood
Village, Inc. (pet care center).
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[PHOTO] WILLIAM H. DANFORTH*, Director Since 1969, Age 74
(Continuing in Office - Term Expiring 2002)
Chancellor Emeritus & Vice Chairman of the Board, Washington
University. Also a director of Energizer Holdings, Inc.
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*Donald Danforth, Jr. and William H. Danforth are brothers.
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[PHOTO] RICHARD A. LIDDY, Director Since 1995, Age 65
(Continuing in Office - Term Expiring 2002)
Chairman of the Board, GenAmerica Financial Corporation, General
American Life Insurance Company, (insurance products and
services) and Reinsurance Group of America, Incorporated
(insurance). Former President of GenAmerica Financial Corporation
and Chief Executive Officer of General American Life Insurance
Company. Also a director of Ameren Corporation, Brown Shoe
Company, Inc. and Energizer Holdings, Inc.
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[PHOTO] KATHERINE D. ORTEGA, Director Since 1992, Age 66
(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.
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[PHOTO] JOHN H. BIGGS, Director Since 1989, Age 64
(Continuing in Office - Term Expiring 2003)
Chairman, President and Chief Executive Officer, TIAA-CREF,
Teachers Insurance and Annuity Association-College Retirement
Equities Fund (pension fund management). Also a director of The
Boeing Company.
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[PHOTO] DAVID C. FARRELL, Director Since 1987, Age 67
(Continuing in Office - 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.
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[PHOTO] WILLIAM P. STIRITZ, Director Since 1981, Age 66
(Continuing in Office - Term Expiring 2003)
Chairman of the Board, and former Chief Executive Officer and
President, Ralston Purina Company. Also Chairman of the Board,
Chief Executive Officer and President, Agribrands International,
Inc. (animal feeds and agricultural products); and Chairman of
the Board Energizer Holdings, Inc. and Chairman of the Energizer
Holdings, Inc. Management Strategy and Finance Committee. Also a
director of American Freightways Corporation, Angelica
Corporation, Ball Corporation, The May Department Stores Company,
Ralcorp Holdings, Inc., Reinsurance Group of America,
Incorporated and Vail Resorts, Inc.
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[PHOTO] RONALD L. THOMPSON, Director Since March, 1999, Age 51
(Continuing in Office - 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 and Ryerson Tull.
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BOARD OF DIRECTORS STANDING COMMITTEES
<TABLE>
<CAPTION>
=============================================================================================================================
Board Member Board Audit Executive Finance Human Resources Nominating
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
David R. Banks X X X*
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John H. Biggs X X X
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Donald Danforth, Jr. X X X X*
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William H. Danforth X X X*
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David C. Farrell X X X
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M. Darrell Ingram X X* X X
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Richard A. Liddy X X
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John F. McDonnell X X X
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Katherine D. Ortega X X X
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William P. Stiritz X* X* X
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Ronald L. Thompson X X X
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W. Patrick McGinnis X X
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=============================================================================================================================
Meetings held in 6 2 2 3 4 2
fiscal year 2000
=============================================================================================================================
</TABLE>
*Chairperson
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Audit: Reviews auditing, accounting, financial reporting and internal control
functions. Recommends the Company's independent accountants and reviews their
services. All members are non-employee directors. Full text of the Audit
Committee Charter is set forth in Appendix A.
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.
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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 2000
----------------
During fiscal year 2000, non-employee directors received the following fees for
their service on the Board:
Annual Retainer............................................$30,000
Fee for Each Board Meeting..................................$1,500
Fee for Each Committee Meeting..............................$1,500
The chairpersons of the Committees also received an additional annual retainer
of $2,000 for each Committee that they chaired.
In September, 2000, 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
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resignation from the Board, or upon a change in control of the Company.
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 2000 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.
Stock Award to Chairman of the Board
------------------------------------
On November 16, 2000, at a regular meeting of the Board of Directors, the Board
awarded Mr. Stiritz 600,000 shares of restricted Common Stock of the Company
under the Company's 1999 Incentive Stock Plan. The purpose of the grant was to
provide an incentive to Mr. Stiritz to remain on the Board and to maximize
shareholder value. The shares are restricted against transfer or pledge until
the earliest of the following to occur:
[_] November 16, 2005
[_] A change in control of the Company
[_] Failure to be reelected to the Board by shareholders
[_] Death
[_] Total and permanent disability
Restricted shares are subject to forfeiture if Mr. Stiritz engages in
competition with the Company, acts contrary to the best interests of the
Company, or fails to agree to stand for reelection to the Board for terms
extending through November 16, 2005. The terms of the award provide that, for a
period of five years after a change in control of the Company, Mr. Stiritz may
not engage in competition with the Company with respect to any business
conducted by the Company or its affiliates immediately prior to such change in
control. A change in control is defined as (i) a change in the membership of the
Board such that continuing Directors cease to constitute at least a majority of
the Board; or (ii) the acquisition of beneficial ownership of 50% or more of the
outstanding shares of the Company.
Dividends paid on the restricted shares will be held in escrow subject to the
same restrictions applicable to the underlying shares, and will be credited with
interest equal to the prime rate. Mr. Stiritz will retain the right to vote the
shares during the period they remain restricted against transfer or pledge.
Attendance
----------
During fiscal year 2000, all directors attended 75% or more of the Board
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meetings and meetings of Committees 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 Life Insurance Company, a subsidiary
of GenAmerica Financial Corporation, 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 or its affiliates. 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.
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The Board of Directors has adopted a written charter for the Audit Committee
which is found in Appendix A of this proxy statement. The members of the Audit
Committee are independent as that term is defined in Section 303.01(B)(2)(a) and
303.01(B)(3) of the listing standards of the New York Stock Exchange.
RALSTON PURINA COMPANY AUDIT COMMITTEE REPORT
The Audit Committee of the Ralston Purina Company Board of Directors (the
Committee) is composed of five independent directors and operates under a
written charter adopted by the Board of Directors. The Committee recommends to
the Board of Directors, subject to stockholder ratification, the selection of
the Company's independent accountants.
Management is responsible for the Company's internal controls, financial
reporting process and compliance with laws and regulations and ethical business
standards. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Committee's responsibility is to monitor and oversee these
processes.
In this context, the Committee has met and held discussions with management and
the independent accountants. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
Based upon the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended September 30, 2000 filed with the Securities and Exchange Commission.
M. Darrell Ingram (Chair)
David R. Banks
John F. McDonnell
Katherine D. Ortega
Ronald L. Thompson
PAGE 12
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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, 2001. That firm has performed this function for
the Company since 1955. A partner of PricewaterhouseCoopers LLP will be present
at the 2001 annual meeting and will have the opportunity to make a statement and
respond to questions from shareholders.
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 passage of this item.
The Board of Directors recommends a vote FOR the ratification of the appointment
of PricewaterhouseCoopers LLP as independent accountants.
ITEM 3. PROPOSAL TO APPROVE THE AMENDMENT OF THE RESTATED ARTICLES OF
INCORPORATION TO LIMIT THE LIABILITY OF DIRECTORS
The Board of Directors recommends that Article 9 of the Company's Restated
Articles of Incorporation, regarding indemnification of Directors, officers and
others, be amended to add a provision concerning the liability of directors
authorized by a recent amendment to the Missouri General and Business
Corporations Law. The proposed provision would limit the personal liability of
directors for monetary damages under the circumstances permitted by the law.
Improves ability to attract and retain qualified directors. In recruiting new
directors, there is a concern that qualified persons might be reluctant to serve
as directors because of the liability exposure and the risk of substantial
personal expense incurred in defending meritless lawsuits. These lawsuits can be
expensive to defend and take considerable time and effort. In view of the costs
and uncertainties of litigation in general, it is often deemed prudent to settle
such proceedings in which claims against a director are made. Settlement
amounts, even if minor compared to the enormous amounts frequently claimed,
could easily exceed the personal assets of most individual director defendants.
As a result, an individual director might be justified in concluding that
potential exposure to the costs and risks of proceedings in which he or she may
become involved outweighs any benefit from serving as a director of a public
corporation. This is particularly true for directors who are not also officers
or employees of the corporation concerned.
New Missouri statute patterned after 1986 Delaware law. In recognition of the
need to provide adequate protection to individuals in order to persuade them
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to serve as directors, in 1986 the Delaware legislature adopted an amendment to
the Delaware corporation laws allowing shareholders to limit the personal
liability of directors of Delaware corporations under some circumstances. In
subsequent years, over thirty other states have adopted similar statutes.
The Missouri legislature in 2000 adopted a statute, R.S.Mo. Section 351.055(9),
that is similar to the Delaware law. The new law allows a Missouri corporation,
such as the Company, with shareholder approval, to amend its Articles of
Incorporation to eliminate or limit the personal liability of directors to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. Under the law, no such provision may eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
the corporation or its shareholders, (b) for acts or omissions not in subjective
good faith or which involve intentional misconduct or a knowing violation of
law, (c) pursuant to provisions of the law which make directors personally
liable for unlawful dividends, or (d) for any transaction from which the
director derived an improper personal benefit.
Amendment would supplement directors' existing rights of indemnification and
eliminate liability to the fullest extent permitted by Missouri law. Although
Ralston has been able to recruit and retain qualified directors, the Board
believes all appropriate steps should be taken to protect directors against
personal liability so that qualified persons will continue to be willing to
serve. The Board also believes that directors can best exercise their business
judgment in the interests of the Company if that judgment does not subject their
personal assets to claims simply because others, with the benefit of hindsight,
disagree with the directors' business judgment.
Accordingly, the Board is seeking shareholder approval to amend the Company's
Restated Articles of Incorporation to add a new sentence to Article 9 that would
eliminate directors' liability to the fullest extent permitted by Missouri law.
The Company's directors are already indemnified to the fullest extent permitted
by law pursuant to existing language in Article 9 as well as indemnity
agreements with each director which were authorized under Article 9. The
proposed limitation of liability provision will supplement existing
indemnification rights of directors under the Company's Articles and the
indemnification agreements.
Potential impact on directors' and officers' liability insurance obtained by
Company. Although the Company has been able to obtain directors' and officers'
liability insurance, the Company's current policies expire periodically. Since
the 1980s, there has been a significant increase in claims, suits and other
proceedings seeking to impose liability on directors of publicly held
corporations. At the outset of this period, there was a decrease in the
availability of directors' and officers' liability insurance to protect against
such liability as well as reductions in the scope of such insurance coverage.
While this market has since stabilized and improved, in any event, the cost of
such coverage can be high. The Company believes that the amendment to Article 9
may make it easier in the
PAGE 14
<PAGE>
future to obtain such insurance, possibly at lower premiums, particularly if the
markets for such insurance coverage should again become more difficult.
No alteration of duties of directors; limitation on financial liability. While,
to the knowledge of the Company, the new Missouri law has not yet been the
subject of any judicial interpretation, the Company believes that the proposed
addition to Article 9 will be effective to limit the financial liability of
directors if an action is brought asserting certain alleged breaches of their
duties as directors. However, this change would not alter the duties of a
director. Thus, Article 9, as amended, would have no effect on the availability
of equitable remedies such as injunction or rescission based upon a director's
breach of his or her duties. The new provision would also only affect the
monetary liability of directors to the Company and its shareholders.
Liabilities which may arise out of director conduct occurring prior to the
adoption of this new language would not be affected. In addition, the provision
would apply only to claims against directors arising out of an individual's role
as a director, and would not apply to liabilities arising out of that person's
role as an officer or in any other capacity other than as a director.
Impact of future changes in Missouri law. The amendment to Article 9 is intended
to provide the Company's directors with the maximum protection afforded by
Missouri law. Thus, if future changes in Missouri law permit further limitation
of such liability, those changes would become automatically effective under the
proposed new language in Article 9.
No notice of pending claims. The Company has not received any notice of any
claim or proceeding to which the new provision in Article 9 might apply. In
fact, no action has ever been brought against a director of the Company arising
out of the performance of his or her duties as a director. In addition, the
amendment is not being proposed in response to any specific resignation, threat
of resignation or refusal to serve by any director or potential director.
Impact of amendment on Company, shareholders and directors. The Board recognizes
that, if the proposed amendment is adopted, its principal effect would be that
the shareholders of the Company will be giving up potential future rights of
action against directors for some alleged breaches of duty. It should be noted
that the Board has a personal interest in having the shareholders approve the
proposed amendment, to the potential detriment of the Company and its
shareholders. However, given the potential liabilities which face the directors
of publicly held corporations, the Board believes that the proposed amendment is
in the best interests of the Company and its shareholders because it should
protect the Company's ability to continue to attract and retain qualified
directors and will reduce the Company's monetary exposure under its
indemnification obligations to directors.
The proposal would also include minor changes to the paragraph to update the
language in this Article to include references to the feminine gender as well as
the masculine.
PAGE 15
<PAGE>
The new language proposed to be added to the first paragraph of Article 9 of the
Restated Articles of Incorporation is noted below in boldface type.
"ARTICLE 9 - Indemnification of Directors, Officers and Others
Right to Indemnification
The Company shall indemnify any person who is or was a director, officer, or
employee of the Company, or is or was serving at the request of the Company as
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any and all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him or her in connection with any civil, criminal,
administrative or investigative action, proceeding or claim (including an action
by or in the right of the Company) by reason of the fact that he or she is or
was serving in such capacity, provided that such person's conduct is not finally
adjudged to have been knowingly fraudulent, deliberately dishonest or willful
misconduct. The liability of the Company's directors to the Company or any of
its shareholders for monetary damages for breach of fiduciary duty as a director
shall be eliminated to the fullest extent permitted under the Missouri General
and Business Corporations Law."
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 passage of this item.
The Board of Directors recommends a vote FOR the amendment of the Company's
Restated Articles of Incorporation to limit the liability of Directors.
ITEM 4. PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO DELETE
OBSOLETE REFERENCES TO ESOP PREFERRED STOCK
Effective December 31, 1998, the Company redeemed the outstanding shares of its
Series A ESOP Convertible Preferred Stock held in the Company's Savings
Investment Plan. After that date, no shares of the ESOP Preferred Stock remained
outstanding. The Board recommends that Article Three, Paragraph C of the
Company's Restated Articles of Incorporation be amended to eliminate language
setting forth certain provisions of default which are now obsolete because they
were related solely to the terms of such shares of ESOP Preferred Stock. All
other
PAGE 16
<PAGE>
provisions of Article Three, Paragraph C shall remain unchanged.
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 passage of this item.
The Board of Directors recommends a vote FOR the proposal to approve the
amendment of the Restated Articles of Incorporation to delete obsolete
references to ESOP Preferred Stock that has been redeemed.
OTHER BUSINESS
The Board knows of no business which will be presented at the 2001 annual
meeting other than that described above. The Company's Bylaws provided that
shareholders could bring matters before an annual meeting only if they gave
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 2001 annual meeting was
received by October 27, 2000, the deadline for the meeting.
PAGE 17
<PAGE>
STOCK OWNERSHIP INFORMATION
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, 2000.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of % Of Shares Explanatory
Of Beneficial Owner Title of Class Beneficial Ownership Outstanding(A) Notes
------------------- -------------- -------------------- -------------- -----
<S> <C> <C> <C> <C>
Bank of America Corporation Common Stock 16,499,335 5.35% (B)
Global Corporate & Investment
Banking Compliance
100 North Tryon Street
Charlotte, NC 28255
</TABLE>
(A) The number of shares outstanding used in this calculation was the number
actually outstanding on November 1, 2000.
(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 3,279,935 shares; shared voting
13,117,377 shares; sole investment 2,780,074 shares; and shared investment
13,256,189 shares. Of such shares, voting or investment power for 2,359,442
and 2,640,621 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).
PAGE 18
<PAGE>
The table below contains information regarding stock ownership of directors and
executive officers as of November 1, 2000. It does not reflect any changes in
ownership that may have occurred after that date.
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
==========================================================================
Shares held Options
Directors in Savings Exercisable Shares % of Shares
And Investment Within 60 Days Beneficially Outstanding
Executive Officers Plan (A) Owned (B)
======================================================================================================
<S> <C> <C> <C> <C>
David R. Banks 306 *
------------------------------------------------------------------------------------------------------
John H. Biggs 6,105 (C)(D) *
------------------------------------------------------------------------------------------------------
Donald Danforth, Jr. 3,496,555 (C)(D)(E) 1.10
------------------------------------------------------------------------------------------------------
William H. Danforth 2,783,799 (C)(D)(F) *
------------------------------------------------------------------------------------------------------
David C. Farrell 76,422 (D) *
------------------------------------------------------------------------------------------------------
M. Darrell Ingram 11,332 (G) *
------------------------------------------------------------------------------------------------------
Richard A. Liddy 3,000 *
------------------------------------------------------------------------------------------------------
John F. McDonnell 15,387 (D)(H) *
------------------------------------------------------------------------------------------------------
Katherine D. Ortega 5,094 *
------------------------------------------------------------------------------------------------------
William P. Stiritz 1,737,899 2,873,329 (I) *
------------------------------------------------------------------------------------------------------
Ronald L. Thompson 400 (D) *
------------------------------------------------------------------------------------------------------
W. Patrick McGinnis 16,969 691,615 954,005 (D)(J) *
------------------------------------------------------------------------------------------------------
Terence E. Block 15,223 202,713 219,059 *
------------------------------------------------------------------------------------------------------
James R. Elsesser 15,354 555,040 882,505 (K) *
------------------------------------------------------------------------------------------------------
Franklin W. Krum 2,940 23,310 26,250 *
------------------------------------------------------------------------------------------------------
William H. Sackett 22,393 95,586 133,057 *
------------------------------------------------------------------------------------------------------
All Officers and 108,250 3,684,423 11,768,778 3.77
Directors
======================================================================================================
</TABLE>
PAGE 19
<PAGE>
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. Unless otherwise
indicated below, directors and officers named in the table above have sole
voting and investment authority with respect to the shares set forth in the
table. 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, 2000, and (2) the number of shares of Common
Stock which would be issued if options exercisable within 60 days of that
date were exercised.
(C) Excludes 7,602,000 shares of Common Stock held by the Danforth Foundation,
St. Louis, Mo. Messrs. Biggs, Danforth and Dr. Danforth are three of the
ten trustees of the Foundation and disclaim beneficial ownership of its
shares.
(D) Excludes 3,338,262 shares of Common Stock held by Washington University,
St. Louis, Mo. Messrs. Biggs, Farrell, McDonnell, McGinnis, Thompson and
Dr. Danforth serve on the University's Board of Trustees, which consists of
54 members. All of the directors disclaim beneficial ownership of those
shares.
(E) Mr. Danforth has sole voting and investment powers respecting 776,315
shares of Common Stock. He shares voting and/or investment powers with
respect to 2,405,453 shares, and disclaims beneficial ownership of 46,011
of those shares held in a trust. Included are 314,787 shares of Common
Stock owned by his wife.
(F) Dr. Danforth has sole voting and investment powers respecting 155,295
shares of Common Stock. He shares voting and/or investment powers with
respect to 2,628,504 shares, but disclaims beneficial ownership of 143,178
of those shares held in a trust.
(G) Includes 814 shares of Common Stock owned by his wife.
(H) Mr. McDonnell has sole voting and investment powers respecting 6,105 shares
of Common Stock. He shares voting and investment powers respecting 9,282
shares of Common Stock.
(I) Included are 102,477 shares of Common Stock owned by his wife.
(J) Included are 5,607 shares of Common Stock owned by his wife.
(K) 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
PAGE 20
<PAGE>
voting and investment power. Mr. Elsesser disclaims beneficial ownership of
those shares.
PAGE 21
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation for each of the last three fiscal years
for the Chief Executive Officer and the Chief Financial Officer. The table shows
compensation for the last fiscal year for the other three most highly
compensated officers who were designated as executive officers in fiscal year
2000. These five officers are referred to as "Named Executive Officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- (Awards)
--------
Securities Leveraged
Other Annual Underlying Incentive All Other
Compensation Options Plan Compensation
Name and Principal Position Year Salary($) Bonus($) ($) (#) ($) ($)(1)
--------------------------- ---- --------- -------- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
W. P. McGinnis 2000 $800,000 $1,100,000 $18,786 900,000 $ 0 $66,616
Chief Executive Officer 1999 $650,000 $ 825,000 $18,410 225,000 $670,870 $276,244
& President 1998 $600,000 $ 638,400 $60,909 402,170 $ 0 $240,357
T. E. Block 2000 $237,083 $ 300,000 $14,027 200,000 $ 0 $84,953
Chief Operating Officer
North American Pet Foods
J. R. Elsesser 2000 $410,000 $ 350,000 $ 7,277 400,00 $ 0 $175,763
Vice President, Chief 1999 $365,000 $ 318,820 $ 6,894 100,000 $420,873 $176,766
Financial Officer and 1998 $350,000 $ 279,125 $ 6,992 203,825 $ 0 $170,879
Treasurer
F. W. Krum 2000 $386,500 $ 275,000 $ 0 66,700 $ 0 $ 0
Chairman, Pet Products
International
W. H. Sackett 2000 $231,917 $ 270,000 $ 7,113 200,000 $ 0 $ 45,898
Chief Administrative Officer
</TABLE>
(1) The amounts shown in this column with respect to fiscal year 2000 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. Block, $3,004
|_| Mr. Elsesser, $4,244
|_| Mr. Krum, $0
|_| Mr. Sackett, $2,903
(ii) the Savings Investment Plan and Executive Savings Investment Plan --
-----------------------------------------------------------------
Company matching contributions or accruals:
|_| Mr. McGinnis, $19,000
|_| Mr. Block, $2,371
|_| Mr. Elsesser, $4,100
|_| Mr. Krum, $0
|_| Mr. Sackett, $4,221
The amounts shown do not include benefits which were accrued by the Named
Executive Officers in the
PAGE 22
<PAGE>
Executive Savings Investment 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 ____.
(iii) the Deferred Compensation Plan for Key Employees -- a Company match of
------------------------------------------------
25% of amounts deferred under the Equity Option:
[_] Mr. McGinnis, $0
[_] Mr. Block, $75,000
[_] Mr. Elsesser, $87,500
[_] Mr. Krum, $0
[_] Mr. Sackett $33,750
(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. Block, $4,578
[_] Mr. Elsesser, $79,919
[_] Mr. Krum, $0
[_] Mr. Sackett, $5,024
PAGE 23
<PAGE>
Restricted Stock Award Granted in November, 2000
On November 16, 2000, the Committee approved an award to Mr. McGinnis of 600,000
shares of restricted Common Stock of the Company under the 1999 Incentive Stock
Plan. The Committee considered the award in light of its retention value as well
as incentive to maximize shareholder value.
The shares are restricted against transfer or pledge until the earliest of the
following to occur:
[_] November 16, 2005
[_] A change in control of the Company
[_] Involuntary termination of employment (other than for cause)
[_] Death
[_] Total and permanent disability
Restricted shares are subject to forfeiture if Mr. McGinnis is terminated for
cause, engages in competition with the Company, acts contrary to the best
interests of the Company or voluntarily terminates employment with the Company
prior to November 16, 2005. The terms of the award provide that, for a period of
five years after a change in control of the Company, Mr. McGinnis may not engage
in competition with the Company with respect to any business conducted by the
Company or its affiliates immediately prior to such change in control. A change
in control is defined as (i) a change in the membership of the Board such that
continuing Directors cease to constitute at least a majority of the Board; or
(ii) the acquisition of beneficial ownership of 50% or more of the outstanding
shares of the Company. Dividends paid on the restricted shares will be held in
escrow subject to the same restrictions applicable to the underlying shares, and
will be credited with interest equal to the prime rate. Mr. McGinnis will retain
the right to vote the shares during the period they remain restricted against
transfer or pledge.
PAGE 24
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
==================================================================================================================
(a) (b) (c) (d) (e) (f)
Number of % of Total Exercise or Expiration Grant Date
Securities Options Base Price Date Value ($)(6)
Underlying Options Granted to ($/Sh)
Name Granted (#) Employees in
Fiscal Year
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
W. P. McGinnis 500,000 (1)(2) 12.3% $18.25 4-17-10 $4,845,000
------------------------------------------------------------------------------------------------------------------
400,000 (1)(3) 9.8% $22.25 9-20-10 $4,652,000
------------------------------------------------------------------------------------------------------------------
T.E. Block 100,000 (1)(3) 2.5% $18.25 4-17-10 $ 969,000
------------------------------------------------------------------------------------------------------------------
100,000 (1)(3) 2.5% $22.25 9-20-10 $1,163,000
------------------------------------------------------------------------------------------------------------------
J. R. Elsesser 250,000 (1)(4) 6.2% $18.25 4-17-10 $2,422,500
------------------------------------------------------------------------------------------------------------------
150,000 (1)(5) 3.7% $22.25 9-20-10 $1,744,500
------------------------------------------------------------------------------------------------------------------
F. W. Krum 26,700 (1)(3) .65% $18.25 4-17-10 $ 258,723
------------------------------------------------------------------------------------------------------------------
40,000 (1)(3) 1.0% $22.25 9-20-10 $ 465,200
------------------------------------------------------------------------------------------------------------------
W. H. Sackett 100,000 (1)(3) 2.5% $18.25 4-17-10 $ 969,000
------------------------------------------------------------------------------------------------------------------
100,000(1)(3) 2.5% $22.25 9-20-10 $1,163,000
==================================================================================================================
</TABLE>
(1) Options to acquire shares of Common Stock were granted at market price
on date of grant. 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
that would have been available under the original option.
(2) Option becomes exercisable at the rate of 50% of total shares on the
anniversary of the date of grant in each of the years 2001 and 2002;
and becomes fully exercisable upon death, declaration of permanent and
total disability, change in control of the Company, or involuntary
termination of employment other than for cause.
(3) Options become exercisable at the rate of 25% of total shares on the
anniversary of the date of grant in each of the years 2002, 2003, 2004
and 2005; and become fully exercisable upon death, declaration of
permanent
PAGE 25
<PAGE>
and total disability, voluntary termination of employment at or after
age 55 with 15 years of service or at or after age 62, change in
control of the Company, or involuntary termination of employment other
than for cause.
(4) Option becomes exercisable at the rate of 33-1/3% of total shares on
the anniversary of the date of grant in each of the years 2003, 2004
and 2005; and becomes fully exercisable upon death, declaration of
permanent and total disability or change in control of the Company.
(5) Option becomes exercisable at the rate of 25% of total shares on the
anniversary of the date of grant in each of the years 2002, 2003, 2004
and 2005; and becomes fully exercisable upon death, declaration of
permanent and total disability, voluntary termination of employment at
or after April 1, 2003, change in control of the Company, or
involuntary termination of employment other than for cause.
(6) 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 $18.25 and $22.25 per share
for the 4/17/10 and 9/20/10 options respectively, a ten year volatility
assumption of 23.83% and 23.91% for the 4/17/10 and 9/20/10 options
respectively, a current dividend yield of 0% for both options and a
risk-free rate of return of 6.41% and 6.17% for the 4/17/10 and 9/20/10
options respectively, which was derived from the treasury zero-coupon
yield curve. The Company has elected to illustrate the potential
realizable value using the binomial option pricing model as permitted
by the rules of the Securities and Exchange Commission. This does not
represent the Company's estimate or projection of future stock price or
of the assumptions utilized; actual gains, if any, upon future exercise
of any of these options will depend on the actual performance of the
Common Stock.
PAGE 26
<PAGE>
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
====================================================================================================================================
Number of Unexercised Value of Unexercised In-the-Money
Options at FY-End(#) Options At FY-End($)
------------------------------------------------------------------------------------------------------------------------------------
Name Shares Value Exercisable Unexercisable Exercisable Unexercisable
Acquired on Realized ($)
Exercise (#)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. P. McGinnis 510,381 $5,009,146 610,151 1,928,784 $5,970,047 $7,935,902
------------------------------------------------------------------------------------------------------------------------------------
T. E. Block - - 188,741 417,825 $2,204,428 $1,554,594
------------------------------------------------------------------------------------------------------------------------------------
J. R. Elseasser 510,381 $4,991,160 511,592 986,633 $5,595,890 $4,654,516
------------------------------------------------------------------------------------------------------------------------------------
F. W. Krum - - 15,163 140,265 $ 31,852 $ 391,807
------------------------------------------------------------------------------------------------------------------------------------
W. H. Sackett - - 81,614 407,299 $ 781,059 $1,536,813
====================================================================================================================================
</TABLE>
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 Mr. Elsesser and Mr. Krum,
as well as other administrative employees who so elected, 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).
Account-Based Formula. Retirement benefits for Mr. McGinnis, Mr. Block and Mr.
Sackett were 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, these officers elected to earn their benefits 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
PAGE 27
<PAGE>
"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 2000, $35,100)
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 or her 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 respect to Mr. Elsessser and Mr. Krum, 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 these Named Executive Officers, who
elected to retain the Final Average Earnings Formula. To the extent Mr.
Elsesser'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. Mr. Krum does not
participate in the unfunded plan, and thus his benefits are accrued based only
on his compensation up to the limits imposed under the IRS rules. Those limits
were $150,000 in 1996, $160,000 in 1997 through 1999 and $170,000 in 2000. The
table reflects benefits prior to the reduction for social security benefits
described above.
RETIREMENT PLAN TABLE
Final Average Earnings Formula - Annuity Payments
<TABLE>
<CAPTION>
Years of Service
--------------------------------------------------------------------------
Final Average
Earnings 5 10 15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$150,000 $11,250 $22,500 $33,750 $45,000 $56,250 $67,500 $78,750 $90,000
$200,000 $15,000 $30,000 $45,000 $60,000 $75,000 $90,000 $105,000 $120,000
$300,000 $22,500 $45,000 $67,500 $90,000 $112,500 $135,000 $157,500 $180,000
$400,000 $30,000 $60,000 $90,000 $120,000 $150,000 $180,000 $210,000 $240,000
$500,000 $37,500 $75,000 $112,500 $150,000 $187,500 $225,000 $262,500 $300,000
$600,000 $45,000 $90,000 $135,000 $180,000 $225,000 $270,000 $315,000 $360,000
$700,000 $52,500 $105,000 $157,500 $210,000 $262,500 $315,000 $367,500 $420,000
$800,000 $60,000 $120,000 $180,000 $240,000 $300,000 $360,000 $420,000 $480,000
$1,000,000 $75,000 $150,000 $225,000 $300,000 $375,000 $450,000 $525,000 $600,000
$1,200,000 $90,000 $180,000 $270,000 $360,000 $450,000 $540,000 $630,000 $720,000
$1,400,000 $105,000 $210,000 $315,000 $420,000 $525,000 $630,000 $735,000 $840,000
$1,500,000 $112,500 $225,000 $337,500 $450,000 $562,500 $675,000 $787,500 $900,000
$1,600,000 $120,000 $240,000 $360,000 $480,000 $600,000 $720,000 $840,000 $960,000
$1,800,000 $135,000 $270,000 $405,000 $540,000 $675,000 $810,000 $945,000 $1,080,000
$2,000,000 $150,000 $300,000 $450,000 $600,000 $750,000 $900,000 $1,050,000 $1,200,000
$2,200,000 $165,000 $330,000 $495,000 $660,000 $825,000 $990,000 $1,155,000 $1,320,000
$2,400,000 $180,000 $360,000 $540,000 $720,000 $900,000 $1,080,000 $1,260,000 $1,440,000
$2,600,000 $195,000 $390,000 $585,000 $780,000 $975,000 $1,170,000 $1,365,000 $1,560,000
</TABLE>
PAGE 28
<PAGE>
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, Mr. Block, Mr. Sackett and other
administrative employees who elected the Account-Based Formula described above.
To the extent that their 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.
RETIREMENT PLAN TABLE
Account-Based Formula - Lump Sum Payment
Years of Service
-------------------------------------------------
Final Average
Earnings 15 20 25 30
$ 300,000 $ 373,000 $ 539,000 $ 736,000 $ 933,000
$ 400,000 $ 503,000 $ 727,000 $ 991,000 $1,255,000
$ 500,000 $ 633,000 $ 914,000 $1,246,000 $1,578,000
$ 600,000 $ 763,000 $1,102,000 $1,501,000 $1,900,000
$ 700,000 $ 893,000 $1,289,000 $1,756,000 $2,223,000
$ 800,000 $1,023,000 $1,477,000 $2,011,000 $2,545,000
$1,000,000 $1,283,000 $1,852,000 $2,521,000 $3,190,000
$1,200,000 $1,543,000 $2,227,000 $3,031,000 $3,835,000
$1,400,000 $1,803,000 $2,602,000 $3,541,000 $4,480,000
$1,500,000 $1,933,000 $2,789,000 $3,796,000 $4,803,000
$1,600,000 $2,063,000 $2,977,000 $4,051,000 $5,125,000
$1,800,000 $2,323,000 $3,352,000 $4,561,000 $5,770,000
$2,000,000 $2,583,000 $3,727,000 $5,071,000 $6,415,000
$2,200,000 $2,843,000 $4,102,000 $5,581,000 $7,060,000
$2,400,000 $3,103,000 $4,477,000 $6,091,000 $7,705,000
$2,600,000 $3,363,000 $4,852,000 $6,601,000 $8,350,000
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PensionPlus Match Account
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% or 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
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 2000, the following amounts were accrued in
the PensionPlus Match Accounts of the Named Executive Officers. With the
exception of Mr. Krum, 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.
Mr. McGinnis: $109,284
Mr. Block: $21,729
Mr. Elsesser: $31,695
Mr. Krum: $18,349
Mr. Sackett: $31,424
For the purpose of calculating retirement benefits, the Named Executive Officers
had, as of September 30, 2000, the following whole years of credited service:
Messrs. McGinnis - 28 years; Block - 22 years; Elsesser - 15 years; Krum - 4
years and Sackett - 29 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 ___.
GRANTOR TRUST
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.
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CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
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 May, 1999, the Company entered into Management Continuity Agreements with its
executive officers and certain other key employees, replacing agreements
previously in effect. In addition, a new Management Continuity Agreement was
entered into with Mr. McGinnis in _____, 2000.
The agreements have a term of five years from their effective date, and provide
that the executives will receive severance compensation in the event of their
qualifying termination after a change in control of the Company. A change in
control is defined as:
[_] A change in the membership of the Board such that continuing directors
cease to constitute at least a majority of the Board;
[_] The acquisition of beneficial ownership of 50% or more of the outstanding
shares of the Company; and
[_] In the case of Messrs. McGinnis, Block, Krum and Sackett, a sale of all or
substantially all of the pet products business; or in the case of Mr.
Elsesser, the disposition of more than 1/3 of the net earnings or net
assets of the Company within one year.
A qualifying termination is defined as a voluntary or involuntary termination of
employment within four years after a change in control, with respect to Mr.
McGinnis, and three years with respect to Mr. Elsesser. With respect to Messrs.
Block, Krum and Sackett, a qualifying termination includes voluntary or
involuntary termination within two years after a change in control, but excludes
voluntary termination if the executive retains substantially the same employment
after a change in control arising from the sale of substantially all of the pet
products assets of the Company.
The spin-off of Energizer Holdings, Inc. by the Company on April 1, 2000
constituted a change in control for purposes of Mr. Elsesser's Agreement, and
benefits under that Agreement would be payable upon his voluntary or involuntary
termination of employment from the Company.
The compensation payable under the Agreements would be equal to the present
value of the executive's "Base Compensation" calculated as if it were payable
monthly over a period of up to four years (for Mr. McGinnis), up to three years
(for Mr. Elsesser) or up to two years (for Messrs. Block, Krum and Sackett).
"Base Compensation" is defined as the sum of a one month's pro rata portion of
the executive's salary, most recent annual bonus and Leveraged Incentive Plan
awards earned or paid prior to the termination of employment. The applicable
four-, three- or two-year "Payment Periods" would be reduced for each complete
year the executive
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remains employed following the change in control.
Other payments include:
[_] A lump sum equal to the present value of defined benefit plan pension
benefits that would have been accrued had the executive remained employed
during the relevant Payment Period;
[_] Continuation, if applicable premiums are paid by the executive, of life,
health, accident and disability benefits for the same period; and
[_] Pension bridging payments for executives who are between the ages of 48 and
55 at the time of their qualifying termination. Those payments will be
calculated as if the executive were age 55 but with years of service equal
to the service credited in the Company's Retirement Plan as of the date of
the qualifying termination. The bridging payments will be paid in monthly
installments as of the later of the date of the qualifying termination or
the executive's 50/th/ birthday, and will continue until age 55.
No payments would be made if the executive terminates employment because of
death, disability or for cause, as defined in the Agreement.
The Company will reimburse the executive for reasonable attorneys' fees incurred
in enforcing payment of the benefits due under the Agreement.
Under Mr. McGinnis' Agreement, the Company has agreed to reimburse him for the
impact of excise taxes, if any, imposed under the Internal Revenue Code with
respect to payments which are contingent upon a change in control. In addition,
the Agreement provides that he will refrain from engaging in competition with
the Company's business for a period of time equal to the applicable Payment
Period after a change in control and qualifying termination.
The Company intends to make a similar offer to its executive officers and other
key executives, including Messrs. Elsesser, Block, Krum and Sackett, to
reimburse them for the impact of excise taxes that may be imposed upon a change
in control, subject to two conditions. As with Mr. McGinnis, such reimbursement
would be contingent on the executives' refraining from engaging in competition
with the Company's business after a change in control. In addition, the
definition of a qualifying termination would be modified, for all executive
officers other than Mr. McGinnis, to include voluntary or involuntary
termination after a change in control, but to exclude voluntary termination
after any change in control covered by the Management Continuity Agreement if
the executive retains substantially the same employment after such change in
control.
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HUMAN RESOURCES COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
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. The Committee
has continued its tradition of using performance-based pay to link the interests
of executives with those of shareholders. Under this approach, base pay is set
at average or below average levels for comparable executive positions at
comparison companies, while incentive programs are designed which can deliver
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,
in the food and household products sectors, with which the Company may compete
in recruiting and retaining 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 a combination of cash-and stock-based, are intended to foster
a management perspective that is in alignment with shareholders' interests.
Executive stock ownership is explicitly encouraged through the design of the
Company's incentive programs.
Salaries
The Committee establishes the salaries of key corporate executives based on its
assessment of the individual's responsibilities, expertise, 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 addition, in the case of Executive
Officers other than the Chief Executive Officer, the Committee reviewed an
assessment and recommendation from Mr. McGinnis. A more detailed summary of the
Committee's rationale for its decision regarding salary for Mr. McGinnis is set
forth below. The salaries for Named Executive Officers are set forth in the
Summary Compensation Table on page __.
Annual Cash Bonus Award Program
Named Executive Officers have an opportunity to receive an annual performance-
based cash incentive award under the Ralston Purina Company Executive Incentive
Compensation Plan (the "EICP"). This Plan, which was approved by shareholders at
the January, 2000 annual meeting, permits the Company to deduct annual
performance-
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based cash incentives without mandating their deferral in the event certain IRS-
imposed compensation limits are surpassed with respect to the Executive Officer.
Under the Plan, a bonus pool was calculated based on 2% of the greater of (i)
the Company's earnings from continuing operations before income taxes, equity
earnings and extraordinary items or (ii) net cash flow from operations, as
reported in the Company's audited financials for the fiscal year. The Committee
then allocated a portion of the bonus pool to each Named Executive Officer, and
exercised its discretion to award each a cash bonus based on an assessment of
his individual performance and on the overall performance of the Company. In no
event did any cash award exceed the recipient's allocated portion of the bonus
pool.
Mr. McGinnis. The Committee reviewed Mr. McGinnis' personal performance, as well
------------
as the performance of the Company as a whole, in determining his annual cash
bonus award. The subjective evaluation of his personal performance took into
account Mr. McGinnis' leadership in formulating and directing the Company's
response in the past fiscal year to significant increases in competitive
activity, difficult market dynamics affecting all channels of distribution, and
the complexities of managing the Company's growing international pet products
business. In addition, the Committee assessed Mr. McGinnis' role in leading the
Company through the spin-off of its worldwide battery products business, while
maintaining momentum in both the pet products and battery businesses. The
personal performance component was weighted at approximately 20% of the total
bonus award, and Company performance was weighted at approximately 80% of the
total bonus award. Company performance was measured as the Company's pro forma
earnings per share for fiscal year 2000 compared to the prior year.
Named Executive Officers. Bonuses for other Named Executive Officers were
------------------------
measured on a combination of Company performance and a subjective assessment of
individual performance. As with Mr. McGinnis, Company performance was determined
by measuring pro forma earnings per share for fiscal year 2000 compared to the
prior year. Individual performance evaluations were based on a subjective
assessment of factors including the quality and execution of strategic plans,
organizational and management development and ability to meet the challenges of
increased competition and consolidation at the retail and manufacturing level.
Intermediate Incentive Awards
Upon approval of the Executive Incentive Compensation Plan described above, Mr.
McGinnis and Mr. Elsesser agreed with the Company to amend their respective 1998
Leveraged Incentive Plan awards (the "1998 LIP") to make them subject to the
terms and conditions of the EICP governing intermediate incentive awards, while
remaining subject to the performance goals established for all outstanding 1998
LIP awards. Under the EICP, intermediate incentive awards potentially payable to
each Plan participant are capped at $4 million. The Committee has determined
that, subject to the dollar limit, the awards will be calculated based on the
same criteria set forth in the 1998 LIP.
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<PAGE>
The 1998 LIP may pay, at the end of its term, a cash award ("Base Award") equal
to a percentage of a participant's three years' aggregate base salary if certain
performance goals are reached. From the start of the LIP until after the spin-
off of the battery products business on April 1, 2000, the benchmarks were based
on total shareholder return ("TSR"), measuring Common Stock price appreciation
plus reinvested dividends and, potentially, certain business unit earnings
benchmarks. The Committee believed that the LIP measures should be adjusted in
light of the spin-off. Consequently, the Committee approved the amendment of all
outstanding 1998 LIP awards remaining after completion of the spin-off of the
battery products business, to calculate their Base Award over the entire term of
the LIP based on controllable earnings.
The 1998 LIP also provides for a "Peer Group" award if TSR during the
performance period meets or exceeds the 75th percentile of the TSR for a peer
competitor group of the Company. Prior to the spin-off, the peer group was
defined to include selected companies which were competitors of the battery
products business and the pet products business. After the spin-off, the
Committee also amended all outstanding LIP awards to define the peer group, for
the entire performance period, as the Standard & Poor's Food Index.
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 2000 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
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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 Named Executive Officers of the Company in
fiscal year 2000 are set forth on page __ of this Proxy Statement. The Committee
approved a special one-time "Founder's Grant" of options to certain key
executives, including the Named Executive Officers, in April, 2000 to provide a
special performance incentive to unite key pet products and corporate division
executives in focusing exclusively on the pet products business goals after the
spin-off of the battery products business. In addition, in September, 2000, the
Committee approved a grant of stock options to Named Executive Officers and
other key executives based on the criteria for stock awards noted above.
Compensation for the Chief Executive Officer
Salary. The Committee reviewed data compiled by independent consultants
------
regarding base pay and overall compensation of chief executive officers of other
food companies, and factored that information into its decision setting Mr.
McGinnis' salary for fiscal year 2000. The Committee also took into account its
assessment of Mr. McGinnis' past performance and the continuing importance of
Mr. McGinnis' role as Chief Executive Officer during a time of significant
transition for the Company as well as major changes in the competitive landscape
of the pet products business.
Annual Bonus. The Committee awarded an annual bonus to Mr. McGinnis based on
------------
qualitative and quantitative factors described under "Annual Cash Bonus Award
Program" above.
Intermediate Term Incentive Plans. As described above, Mr. McGinnis participated
---------------------------------
in the EICP during fiscal year 2000. Compensation to be awarded under this plan
will be determined based on Company performance through
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September 30, 2001, which is the end of the three-year performance period
established for the 1998 LIP award.
Stock Awards. In April, 2000, the Committee awarded Mr. McGinnis options to
------------
purchase 500,000 shares of the Company's common stock. In September, 2000,
options to purchase 400,000 additional shares were granted to him. As with other
grants under the Incentive Stock Plan, the options were granted at a price equal
to the market value of the stock as of the date of grant. Details of the terms
of those awards are found on page __.
The Committee authorized the April grant to Mr. McGinnis as a means of
appropriately rewarding him in light of his competitive pay position, the strong
performance of the pet products business under his leadership and his increased
responsibilities as Chief Executive Officer of the Company. The September award
was determined by reviewing current data derived from a survey of peer
companies, taking into account the economic value of the median award most
recently granted to the incumbent chief executive officers of those companies.
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, including the April grant, made to Mr.
McGinnis.
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 EICP
described above was implemented to further the deductibility of executive
compensation by allowing for the payment of performance-based compensation that
is exempt from this million dollar limit. Additionally, the Committee has
mandated or reserved the right to mandate the deferral of certain bonus and
salary payments to such officers. A portion of salary payable to Mr. McGinnis
for fiscal year 2001 has been mandatorily deferred until such time as it is
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.
W. H. Danforth - Chairman
J. H. Biggs
M. D. Ingram
K. D. Ortega
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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.
The line graph below compares cumulative total shareholder returns 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.
Comparison of Cumulative Total Return on $100 Invested in Ralston
Purina Company Common Stock on September 30, 1995 vs. S&P 500
And S&P Food Indices
[GRAPH]
Ralston S&P 500 S&P Food
09/30/1995 $100.00 $100.00 $100.00
09/30/1996 120.63 120.34 123.55
09/30/1997 158.13 169.00 163.56
03/31/1998 190.63 198.11 195.93
09/30/1998 158.81 184.29 173.42
09/30/1999 153.41 235.53 163.78
03/31/2000 152.34 276.78 136.69
09/30/2000 174.88 266.82 155.18
On April 1, 2000, the Company issued a dividend of one share of Common Stock of
Energizer Holdings, Inc. for every three shares of Company Common Stock then
held. On April 1, 1998, 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 Energizer and Agribrands shares received are assumed to be
liquidated with the proceeds from such sales 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, 1995 through September 30, 2000, with the value of
each index set to $100 on September 30, 1995. Total return assumes reinvestment
of dividends.
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SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
If you wish to submit proposals to be included in our 2001 proxy statement for
the 2002 annual meeting, they must be received by us on or before August 11,
2001. Please address your proposals to: Office of the Secretary, Ralston Purina
Company, Checkerboard Square, St. Louis, Missouri 63164. We will review any such
proposal to determine whether or not to include it in the proxy statement and
proxy in accordance with the regulations governing the solicitation of proxies.
Under our Bylaws, if you wish to nominate a director or bring other business
before the shareholders at an annual meeting, you must notify the Secretary in
writing between September 3, 2001 and October 3, 2001. Your notice must contain
the specific information required in our Bylaws. Please note that these
requirements relate only to matters you wish to bring before the shareholders at
an annual meeting. They do not apply to proposals that you wish to have included
in our proxy statement.
If you would like a copy of our Bylaws, we will send you one without charge.
Please write to the Secretary of Ralston Purina at the address set forth above.
A copy of the Bylaws will be filed as an exhibit to our Annual Report on Form
10-K for the 2000 fiscal year and will be available at the Securities and
Exchange web site (http://www.sec.gov).
By order of the Board of Directors,
Nancy E. Hamilton
Secretary
December __, 2000
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Appendix A
AUDIT COMMITTEE CHARTER
I. Purpose
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") serves as the representative of the Board for general
oversight of the financial accounting and reporting process, system of
internal control, audit process, and process for monitoring compliance
with laws and regulations and ethical business standards of the
Company.
Management is responsible for the Company's internal controls,
financial reporting process and compliance with laws and regulations
and ethical business standards. The independent accountants are
responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted
auditing standards and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes.
II. Membership and Qualifications
The Board of Directors shall appoint the Committee members, all of whom
shall be Directors. The Committee shall consist of at least three
Directors. The Committee shall meet the requirements of a Qualified
Audit Committee as set forth in the rules of the New York Stock
Exchange. The Board may also appoint an individual, who need not be a
Director, to serve as Secretary to the Committee.
III. Term
Each member of the Committee shall hold office until the earliest of
the following shall occur: his or her successor member is elected, or
he or she dies, resigns or is removed, or until he or she ceases to be
a Director.
IV. Duties
The Committee will meet at such times and from time to time as it deems
to be appropriate, but no less than two times a year with
representatives from the independent public accountant and appropriate
representatives of management. The Committee shall also provide the
independent accountants and internal auditors with appropriate
opportunities to meet privately with the Committee. Its duties are to:
1. Recommend annually to the Board of Directors the selection or
reappointment of the independent public accountant. The
independent accountant is ultimately accountable to the Committee
and Board;
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2. Review the audit scopes and plans, and the associated fees, of the
independent public accountant with management and the auditors;
3. Review with management and the independent public accountant, the
annual financial statements and results of the independent
accountants' audit, including the independent accountants' judgment on
the quality and consistent application of accounting principles,
disclosures and underlying estimates in the annual financial
statements, and such other communications as required by generally
accepted auditing standards prior to filing with the Securities and
Exchange Commission. Make recommendation to the Board as to whether
the audited financial statements should be included in the annual
report on Form 10-K;
4. Review with management and the independent accountants, either
telephonically or in person, the quarterly financial statements and
results of the independent accountants' review, including the
independent accountants' judgment on the quality and consistent
application of accounting principles, disclosures and underlying
estimates in the quarterly financial statements. The Chair of the
Committee may represent the entire Committee for purposes of this
review;
5. Review and discuss with the independent accountants their annual
written statement delineating all relationships or services between
the independent accountants and the Company and any other
relationships or services that may impact their objectivity and
independence;
6. Review with management and the independent accountants the quality and
adequacy of the Company's internal controls;
7. Review the proposed audit plans of internal audit with management and
the auditors;
8. Review Company policies on compliance with laws and regulations and
ethical and responsible business conduct, and the results of
monitoring of compliance with such policies;
9. Review and assess at least annually the adequacy of this charter and
submit the charter for approval to the Board at least every three
years;
10. Prepare an annual report as required by the rules of the Securities
and Exchange Commission and submit to the Board for inclusion in the
Company's annual proxy statement; and
11. Consider any other matters related to the oversight responsibilities
of the Committee, as deemed advisable or necessary by Company
management, the Board or the Committee.
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V. Quorum
A majority of the members of the Committee shall constitute a quorum
for all purposes and the act of a majority of the members present at
any meeting at which a quorum is present shall be the act of the
Committee.
November 16, 2000
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December 11, 2000
Dear Plan Participants:
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 25,
2001. The enclosed proxy relates to any shares of Ralston Common Stock of which
you are the record holder and the shares of Ralston Common Stock credited to
your account in any of these plans in which you are a participant: Ralston
Purina Company Savings Investment Plan, Energizer Holdings, Inc. Savings
Investment Plan, or Ralston Purina Company Stock Purchase Plan. Specific plan
information regarding voting of credited shares is as follows:
Ralston Purina Company Savings Investment Plan Information:
Shares credited to your plan account as of October 31, 2000, will be voted
by the Trustee of the Plan 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 of Ralston Common Stock that were
credited to your plan account between November 1, 2000 and November 20,
2000, will be voted by the Trustee in the same proportion as the shares for
which instructions were received from all participants in the Plan.
Energizer Holdings, Inc. Savings Investment Plan Information:
Shares credited to your Plan account as of October 31, 2000, will be voted
by the Trustee of the Plan in accordance with your instructions on the
enclosed proxy card. You should contact the Trustee, Vanguard Fiduciary
Trust Company, or your employer to determine how your shares will be voted
if you do not vote your proxy.
Ralston Purina Company Stock Purchase Plan Information:
Shares credited to your Plan account as of November 20, 2000, will be voted
by the plan administrator in accordance with your instructions on the
enclosed proxy card. If the plan administrator does not receive instructions
with respect to any credited shares, such shares will not be voted.
You may vote your proxy by mail, telephone or via the Internet. Whatever
method you decide to use, in order to provide sufficient time to tabulate the
votes so that the trustee/administrator of the Plan can vote in a timely manner
the proxies for shares held in each plan, it has been requested that all proxies
be returned, or votes be cast, as promptly as possible, but must be received no
later than the close of business on Monday, January 22, 2001 in order to be
voted in accordance with your instructions.
You may also have received additional proxy statements and proxies relating to
other shares of Ralston Common Stock held by you. These proxies are not
duplicates of the one enclosed and we ask that you also vote them in accordance
with the instructions enclosed with them.
W. PATRICK MCGINNIS
Chief Executive Officer
and President
<PAGE>
PLEASE DETACH AT PERFORATION BEFORE MAILING
--------------------------------------------------------------------------------
RALSTON PURINA COMPANY
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Shareholders on January 25, 2001 at 2:30 p.m.
St. Louis Marriott Pavilion Downtown, One Broadway, St. Louis, MO
The undersigned hereby appoints Messrs. W. Patrick McGinnis and Stanley M.
Rea, 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 25, 2001, 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 Ralston
Purina Company Savings Investment Plan, Ralston Purina Company Stock Purchase
Plan, or Energizer Holdings, Inc. 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. A proxy that is returned properly signed but
without direction as to voting will be voted "FOR" Proposals 1 through 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 THROUGH 4
(Important - To be signed and dated on reverse side)
RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE,
OR VOTE BY TELEPHONE OR INTERNET;
NO POSTAGE IS NECESSARY IF MAILED FROM THE UNITED STATES
<PAGE>
<TABLE>
<S> <C> <C>
Ralston Purina 2001 Annual Meeting of Shareholders 2001 ANNUAL MEETING
Company (LOGO) Thursday, January 25, 2001 ADMISSION TICKET
2:30 p.m. local time; seating begins at 1:30 p.m. If you require special arrangements to attend this meeting,
The St. Louis Marriott Pavilion Downtown please contact the Company at 314-982-2374 prior to the
One Broadway, St. Louis, MO meeting
</TABLE>
Please present this ticket for admittance of shareholder(s) named above.
Admittance will be based upon availability of seating.
--------------------------------------------------------------------------------
Instruction for Voting Your Proxy
This proxy covers all Ralston Purina Company shares you own in any of the
following ways, if the registrations are identical:
<TABLE>
<S> <C>
. Shares held of record, including Dividend Reinvestment Plan shares . Ralston Purina Company Savings Investment Plan
. Ralston Purina Company Stock Purchase Plan . Energizer Holdings, Inc. Savings Investment Plan
</TABLE>
We offer stockholders three alternative ways of voting this proxy: Telephone
(using a touch tone telephone), Internet or Mail
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you had returned your proxy card. We encourage you to
use these convenient ways of voting, 24 hours a day, 7 days a week.
TELEPHONE
---------
. This method of voting is available for residents of the U.S. and Canada
. On a touch tone telephone, call TOLL FREE 1-877-816-9736, 24 hours a day, 7
days a week
. You will be asked to enter ONLY the CONTROL NUMBER shown below
. Have your proxy card ready, then follow the prerecorded instructions
. Your vote will be confirmed and cast as you directed
INTERNET VOTING
---------------
. Visit the Internet voting website at http://proxy.georgeson.com
--------------------------
. Enter the COMPANY NUMER and CONTROL NUMBER shown below and follow the
instructions on your screen
. You will incur only your usual Internet charges
VOTING BY MAIL
--------------
. Simply mark, sign and date your proxy card and return it in the postage-paid
----------------
envelope CONTROL NUMBER
----------------
. If you are voting by telephone or the Internet, please do not mail
your proxy card ----------------
COMPANY NUMBER
----------------
--------------------------------------------------------------------------------
PLEASE DETACH AT PERFORATION BEFORE MAILING
Ralston Purina Company's Board of Directors recommends a vote "FOR" Proposals 1
through 4
1. Election of four (4) Directors to serve three-year terms ending at the
Annual Meeting held in 2004, or until their successors are elected and
qualified.
<TABLE>
<S> <C> <C> <C> <C>
(1) David R. Banks, (2) M. Darrell Ingram, (3) John F. McDonnell, (4) W. Patrick McGinnis
[_] FOR ALL NOMINEES LISTED [_] WITHHOLD AUTHORITY [_] FOR all nominees except
for all nominees as indicated below
(Instruction : to withhold authority to vote for any nominee(s) write the name(s) on the line provided) --------------------------
</TABLE>
2. Ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for the fiscal year ending September 30, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve the amendment of the Restated Articles of Incorporation
to limit the liability of directors.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Proposal to approve the amendment of the Restated Articles of Incorporation
to delete obsolete references to ESOP Preferred Stock.
[_] FOR [_] AGAINST [_] ABSTAIN
IMPORTANT: Please sign exactly as your name(s) appear(s). When shares are held
by joint Tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATE: _________________,
_______________________
_______________________
SIGNATURES
