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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:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (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
[RALSTON PURINA COMPANY LOGO]
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 11, 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,
/s/ Nancy E. Hamilton
Nancy E. Hamilton
Secretary
December 11, 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 11, 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, trustee 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 directing that a vote be withheld on any matter, will be considered
present at the meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have voted in favor of the
proposal. Therefore, any proxy marked "abstain" will have the effect of a vote
against the matter. Shares represented by a proxy as to which there is a
"broker non-vote" (for example, where a broker does not have discretionary
authority to vote the shares), will be considered present at the meeting for
purposes of determining a quorum, but will have no effect on the vote.
All proxies that have been properly executed and submitted (whether by
telephone, Internet or mail) and not revoked will be voted at the annual
meeting in accordance with your instructions. If you sign and return 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 did 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, your proxy will 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
<PAGE>
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, your proxy
will include all shares of Common Stock held for your account under that plan
as of the record date, other than fractional shares.
. If you participate in the Company's Stock Purchase Plan, your 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, your proxy will 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 to
determine how your shares will be voted if you do not vote your proxy.
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 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.
2
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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.
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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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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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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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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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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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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 Dr. William H. Danforth are brothers.
3
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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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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. Also 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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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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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.
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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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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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4
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BOARD OF DIRECTORS STANDING COMMITTEES
<TABLE>
<CAPTION>
Human
Board Member Board Audit Executive Finance Resources Nominating
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<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
fiscal year 2000 6 2 2 3 4 2
</TABLE>
*Chairperson
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 to the Board nominees for election as directors;
designation of Executive Officers; and 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.
5
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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:
<TABLE>
<S> <C>
Annual Retainer........................................................ $30,000
Fee for Each Board Meeting............................................. $ 1,500
Fee for Each Committee Meeting......................................... $ 1,500
</TABLE>
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
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
meetings and meetings of Committees on which they served.
6
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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.
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
7
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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 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
8
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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 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.
9
<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 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 the deadline of October 27, 2000.
10
<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 Title of Amount and Nature of % Of Shares Explanatory
Of Beneficial Owner Class Beneficial Ownership Outstanding(A) Notes
------------------- ------------ -------------------- -------------- -----------
<S> <C> <C> <C> <C>
Bank of America Corporation Common Stock 16,499,335 5.35% (B)
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).
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
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.
<TABLE>
<CAPTION>
Shares held
in Savings Options % of Shares
Directors And Investment Exercisable Shares Outstanding
Executive Officers Plan(A) Within 60 Days Beneficially 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)(E) 1.12
--------------------------------------------------------------------------------
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 2,975,806(I) *
--------------------------------------------------------------------------------
Ronald L. Thompson 400(D) *
--------------------------------------------------------------------------------
W. Patrick
McGinnis 16,962 691,615 959,605(D)(J) *
--------------------------------------------------------------------------------
Terence E. Block 15,217 202,713 219,053 *
--------------------------------------------------------------------------------
James R. Elsesser 15,347 555,040 882,498(K) *
--------------------------------------------------------------------------------
Franklin W. Krum 2,939 23,310 26,249 *
--------------------------------------------------------------------------------
William H. Sackett 22,383 95,586 133,047 *
--------------------------------------------------------------------------------
All Officers and
Directors 108,208 3,695,681 12,031,256 3.86
</TABLE>
11
<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 executive 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. An asterisk indicates beneficial
ownership of less than one percent of the outstanding Common Stock.
(A) 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/or 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/or 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) Includes 102,477 shares of Common Stock owned by his wife.
(J) Includes 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 voting and investment power.
Mr. Elsesser disclaims beneficial ownership of those shares.
12
<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
Compensation
Annual Compensation (Awards)
-------------------- --------------------
Securities
Other Annual Underlying Leveraged All Other
Name and Principal Compensation Options Incentive Compensation
Position Year Salary($) Bonus($) ($) (#) Plan ($) ($)(1)
------------------ ---- --------- ---------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. P. McGinnis 2000 $800,000 $1,100,000 $18,786 900,000 $ 0 $ 56,915
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 $ 80,538
Chief Operating Officer
North American Pet Foods
J. R. Elsesser 2000 $410,000 $ 350,000 $ 7,277 400,00 $ 0 $ 95,894
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 $ 46,980
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, $3,980
. Mr. Block, $3,167
. Mr. Elsesser, $4,294
. Mr. Krum, $0
. Mr. Sackett, $1,560
(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 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 benefits are disclosed in the information about the PensionPlus Match
Account found on page 19.
(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
13
<PAGE>
(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, $33,935
. Mr. Block, $0
. Mr. Elsesser, $0
. Mr. Krum, $0
. Mr. Sackett, $7,449
Restricted Stock Award Granted in November, 2000
On November 16, 2000, the Human Resources Committee approved an award to Mr.
McGinnis of 600,000 shares of restricted Common Stock of the Company under the
1999 Incentive Stock Plan. The Committee considered the award in light of its
retention value as well as incentive to maximize shareholder value.
The shares are restricted against transfer or pledge until the earliest of the
following to occur:
. November 16, 2005
. A change in control of the Company
. Involuntary termination of employment (other than for cause)
. Death
. Total and permanent disability
Restricted shares are subject to forfeiture if Mr. McGinnis is terminated for
cause, engages in competition with the Company, acts contrary to the best
interests of the Company or voluntarily terminates employment with the Company
prior to November 16, 2005. The terms of the award provide that, for a period
of five years after a change in control of the Company, Mr. McGinnis may not
engage in competition with the Company with respect to any business conducted
by the Company or its affiliates immediately prior to such change in control. A
change in control is defined as (i) a change in the membership of the Board
such that continuing Directors cease to constitute at least a majority of the
Board; or (ii) the acquisition of beneficial ownership of 50% or more of the
outstanding shares of the Company. Dividends paid on the restricted shares will
be held in escrow subject to the same restrictions applicable to the underlying
shares, and will be credited with interest equal to the prime rate. Mr.
McGinnis will retain the right to vote the shares during the period they remain
restricted against transfer or pledge.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base Grant Date
Granted in Fiscal Price Expiration Value
Name (#) (1) Year ($/Sh) Date ($)(6)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
W. P. McGinnis 500,000(2) 12.3% $18.25 4-17-10 $4,845,000
-------------------------------------------------------------------------------
400,000(3) 9.8% $22.25 9-20-10 $4,652,000
-------------------------------------------------------------------------------
T. E. Block 100,000(3) 2.5% $18.25 4-17-10 $ 969,000
-------------------------------------------------------------------------------
100,000(3) 2.5% $22.25 9-20-10 $1,163,000
-------------------------------------------------------------------------------
J. R. Elsesser 250,000(4) 6.2% $18.25 4-17-10 $2,422,500
-------------------------------------------------------------------------------
150,000(5) 3.7% $22.25 9-20-10 $1,744,500
-------------------------------------------------------------------------------
F. W. Krum 26,700(3) .65% $18.25 4-17-10 $ 258,723
-------------------------------------------------------------------------------
40,000(3) 1.0% $22.25 9-20-10 $ 465,200
-------------------------------------------------------------------------------
W. H. Sackett 100,000(3) 2.5% $18.25 4-17-10 $ 969,000
-------------------------------------------------------------------------------
100,000(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. The Human Resources Committee has discretion to
approve the transfer of options to a member of the optionee's immediate
family, family trust or family partnership.
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 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 $22.25 per share for the 4/17/10 and
9/20/10 options respectively, a ten year volatility assumption of 23.83%
and 23.91% for the 4/17/10 and 9/20/10 options respectively, a current
dividend yield of 0% for both options and a risk-free rate of return of
6.41% and 6.17% for the 4/17/10 and 9/20/10 options respectively, which was
derived from the treasury zero-coupon yield curve. The Company has elected
to illustrate the potential realizable value using the binomial option
pricing model as permitted by the rules of the Securities and Exchange
Commission. This does not represent the Company's estimate or projection of
future stock price or of the assumptions utilized; actual gains, if any,
upon future exercise of any of these options will depend on the actual
performance of the Common Stock.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES(1)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Value of Unexercised
Shares Number of Unexercised In-the-Money Options At
Acquired on Value Options at FY-End (#) FY-End ($)
Exercise Realized ---------------------------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. P.
McGinnis 510,381 $5,009,146 610,151 2,146,020 $6,011,165 $9,719,214
--------------------------------------------------------------------------------------
T. E.
Block -- -- 188,741 448,238 $2,204,428 $1,804,258
--------------------------------------------------------------------------------------
J. R.
Elsesser 510,381 $4,991,160 511,592 1,160,425 $5,595,890 $6,081,192
--------------------------------------------------------------------------------------
F. W.
Krum -- -- 15,163 140,265 $ 31,852 $ 391,921
--------------------------------------------------------------------------------------
W. H.
Sackett -- -- 81,614 437,712 $ 781,059 $1,786,476
--------------------------------------------------------------------------------------
</TABLE>
--------
(1) The number and exercise price of certain outstanding options were adjusted
to reflect the effect of the spin-off of Energizer Holdings, Inc. in
fiscal year 2000.
16
<PAGE>
RETIREMENT PLAN
The Ralston Purina Retirement Plan may provide pension benefits in the future
to the Named Executive Officers. Most regular U.S. employees that have
completed one year of employment with the Company or certain of its
subsidiaries are eligible to participate in the Retirement Plan. They become
vested after five years of service. Normal retirement is at age 65; however,
employees who work beyond age 65 may continue to accrue benefits.
Final Average Earnings Formula. Annual benefits for 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 "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. Elsesser 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.
17
<PAGE>
RETIREMENT PLAN TABLE
Final Average Earnings Formula--Annuity Payments
<TABLE>
<CAPTION>
Years of Service
---------------------------------------------------------------
Final Average
Earnings 5 10 15 20 25 30
------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 150,000 $ 11,250 $ 22,500 $ 33,750 $ 45,000 $ 56,250 $ 67,500
$ 200,000 $ 15,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000
$ 600,000 $ 45,000 $ 90,000 $135,000 $180,000 $225,000 $270,000
$ 700,000 $ 52,500 $105,000 $157,500 $210,000 $262,500 $315,000
$ 800,000 $ 60,000 $120,000 $180,000 $240,000 $300,000 $360,000
$1,000,000 $ 75,000 $150,000 $225,000 $300,000 $375,000 $450,000
$1,200,000 $ 90,000 $180,000 $270,000 $360,000 $450,000 $540,000
$1,400,000 $105,000 $210,000 $315,000 $420,000 $525,000 $630,000
</TABLE>
The following table shows the estimated retirement benefits, in the form of a
single sum amount, that would be payable from the Retirement Plan as of the
date of termination of employment to Mr. McGinnis, 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
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------
Final Average
Earnings 15 20 25 30
------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 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
$ 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
$1,600,000 $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
</TABLE>
18
<PAGE>
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 (PensionPlus Match Account) established for
each individual in the Retirement 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
PensionPlus Match 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 accounts
may be received by the participant upon termination of employment in the form
of a lump sum or an equivalent annuity. With the exception of Mr. Krum, if a
Named Executive Officer's compensation or benefits exceed certain limits
imposed by the Internal Revenue Code, the
300% match is credited to the PensionPlus Match Account in the unfunded
Executive Savings Investment Plan instead of the PensionPlus Match Account in
the Retirement Plan. Amounts below reflect balances in the PensionPlus Match
Accounts for the Named Executive Officers as of the end of fiscal year 2000:
Mr. McGinnis: $133,980
Mr. Block: $29,549
Mr. Elsesser: $63,792
Mr. Krum: $18,349
Mr. Sackett: $31,909
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 Plan are
approximately equal to amounts included in the Salary, Bonus and Leveraged
Incentive Plan columns in the Summary Compensation Table on page 13.
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.
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.
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
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. 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 three years after a change in control, with respect to
Mr. McGinnis and 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 three years (for Messrs. McGinnis and
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
three- or two-year "Payment Periods" would be reduced for each complete year
the executive 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 or a lump sum calculated as of the later of the date of the
qualifying termination or the executive's 50th 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.
In November, 2000, the Board approved new Management Continuity Agreements to
be offered to the Named Executive Officers and certain other executives of the
Company. The new Agreements for the named Executive Officers would continue to
offer substantially the same severance benefits payable upon a change in
control as under the existing Agreements, with the following key changes or
new provisions:
. Mr. McGinnis' new Agreement would increase the Payment Period over which his
"Base Compensation" would be calculated from three years to four years.
. Under all new Agreements except that offered to Mr. McGinnis, after any
transaction constituting a change in control, a qualifying termination would
not be deemed to occur if the executive voluntarily terminated while
retaining substantially the same employment after the change in control as
he or she had prior to the change in control.
. The Company would agree to reimburse the executive 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.
. The executive would agree to 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 definition of a change in control would remain substantially the same,
except that Mr. Elsesser's new Agreement would not define a change in
control to include the disposition of at least 1/3 of net earnings or net
assets of the Company.
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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 13.
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-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
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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.
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
discretion in view
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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 15 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
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 15.
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
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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--ChairmanJ. H. Biggs
M. D. IngramK. 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 13,
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 __11, 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;
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;
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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.
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.
/s/ W. P. McGinnis
W. PATRICK MCGINNIS
Chief Executive Officer and
President
<PAGE>
IF YOU REQUIRE SPECIAL ARRANGEMENTS TO ATTEND THIS MEETING, PLEASE CONTACT THE
COMPANY AT (314) 982-2374 PRIOR TO THE MEETING.
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.
The St. Louis Marriott Pavilion Downtown
One Broadway, St. Louis, MO
</TABLE>
Please present this ticket for admittance of shareholder(s) named above.
Admittance will be based upon availability of seating.
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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:
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<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>
THERE ARE THREE WAYS TO VOTE YOUR PROXY
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 VOTING
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
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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. If you are voting by telephone or the Internet, please do not mail
your proxy card.
----------------
CONTROL NUMBER
----------------
COMPANY NUMBER
----------------
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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.
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<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
</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
DATE: __________________________
__________________________
__________________________
SIGNATURE(S)
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.
