<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
DEKALB GENETICS CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
5) Total fee paid:
-------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:________________________________________
2) Form, schedule or registration statement no.:__________________
3) Filing party:__________________________________________________
4) Date filed:____________________________________________________
<PAGE> 2
DEKALB GENETICS CORPORATION
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 20, 1998
The Annual Meeting of Stockholders of DEKALB Genetics Corporation (the
"Company") will be held at the DeKalb County Farm Bureau, 1350 West Prairie
Drive, Sycamore, Illinois 60178, on Tuesday, January 20, 1998 at 3:00 p.m.,
Central Standard Time, for the following purposes:
(1) To elect four directors.
(2) To approve a proposed amendment to the Restated Certificate of
Incorporation of DEKALB Genetics Corporation.
(3) To approve the amended and restated DEKALB Genetics Corporation
Long-Term Incentive Plan.
(4) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Enclosed herewith is a Proxy Statement setting forth information with
respect to the election of directors, the approval of an amendment to the
Restated Certificate of Incorporation, the approval of the amended and restated
Long-Term Incentive Plan and certain other information.
Only stockholders holding shares of Class A Common Stock of record at the
close of business on November 21, 1997 will be entitled to vote at the meeting.
Class A Stockholders, whether or not they expect to be present at the
meeting, are requested to sign and date the enclosed proxy and return it
promptly in the envelope enclosed for that purpose. Any person giving a proxy
has the power to revoke it at any time, and stockholders who are present at the
meeting may withdraw their proxies and vote in person.
By Order of the Board of Directors
John H. Witmer, Jr., Secretary
November 24, 1997
<PAGE> 3
DEKALB GENETICS CORPORATION
3100 SYCAMORE ROAD
DEKALB, ILLINOIS 60115
------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders of DEKALB Genetics
Corporation (the "Company") to be held on January 20, 1998, or at any
adjournment or adjournments thereof, at the time and place and for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. The
principal executive offices of the Company are located at 3100 Sycamore Road,
DeKalb, Illinois 60115.
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company and is revocable at any time before it is exercised by written
notice of revocation given to the Secretary of the Company or by filing with him
a later dated proxy. All shares of the Company's Class A Common Stock, without
par value, represented by properly executed and unrevoked proxies will be voted
if such proxies are received in time for the meeting. Such proxies and this
Proxy Statement are being sent to stockholders on or about November 24, 1997.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of shares of Class A Common Stock of record at the close of
business on November 21, 1997 will be entitled to vote at the meeting. At the
record date, there were outstanding 4,712,084 shares of Class A Common Stock. In
addition, the Company had outstanding on such date 29,864,852 shares of Class B
Common Stock which are not entitled generally to vote. Each share of Class A
Common Stock is entitled to one vote upon each matter to be voted on at the
meeting. Stockholders do not have the right to cumulate votes in the election of
directors and directors will be elected by a plurality of the votes cast.
Consequently, votes that are withheld in the election of directors and broker
non-votes will not affect the outcome of the election of directors.
COST AND METHOD OF PROXY SOLICITATION
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will supply banks, brokers, dealers and other
custodian nominees and fiduciaries with proxy materials to enable them to send a
copy of such material by mail to each beneficial owner of shares of the
Company's Class A Common Stock which they hold of record and will, upon request,
reimburse them for their reasonable expenses in so doing.
INFORMATION CONCERNING NOMINEES FOR DIRECTOR AND
OTHER DIRECTORS WHO WILL CONTINUE IN OFFICE
At the meeting, three directors (Bruce P. Bickner, Dr. Charles J. Arntzen
and Virginia Roberts Holt) are to be elected to hold office for a term of three
years or until his or her successor is duly elected and qualified. H. Blair
White became 70 years of age during August 1997. However, in accordance with the
provisions of the By-Laws of the Company, the Board of Directors waived the age
limitation to permit Mr. White to be
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nominated for, and if elected, to serve, an additional year. Accordingly, Mr.
White has been nominated to the class of directors whose terms will expire in
1999 and the Board has increased the size of such class by one and decreased by
one the size of the class of directors whose terms expire in 2001.
Proxies submitted pursuant to this solicitation will be voted, unless
specified otherwise, for the election of the four persons named as nominees,
each of whom has served continuously as a director of the Company since the date
indicated below. All nominees were elected as directors by vote of the
stockholders. In the event any of the nominees, all of whom have expressed an
intention to serve if elected, fail to stand for election, the persons named in
the enclosed form of proxy may vote for substitute nominees in their discretion.
There are eight directors whose present terms of office will continue after
the meeting until 1999 or 2000, as indicated below. Each has served continuously
as a director of the Company since the date indicated beside his or her name.
Also set forth below is the principal occupation of each nominee and
continuing director during the past five years.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
----------------------------- --- --------------
<S> <C> <C>
Nominee for Director Whose Term Will Expire in 1999:
H. Blair White.............................................. 70 August 29, 1988
Mr. White is Of Counsel to Sidley & Austin, a law firm
that provides legal services to the Company. Mr. White
is Chairman of the Compensation Committee and of the
Executive Committee.
Nominees for Director Whose Terms Will Expire in 2001:
Bruce P. Bickner............................................ 54 June 15, 1988
Mr. Bickner is Chairman and Chief Executive Officer of
the Company. Mr. Bickner was Chairman of the Board and
Chief Executive Officer of DEKALB Energy Company until
November 1992. He is a director of Castle BancGroup,
Inc. and NICOR Inc. Mr. Bickner is a member of the
Executive Committee.
Dr. Charles J. Arntzen...................................... 56 August 1, 1990
Dr. Arntzen is President and Chief Executive Officer of
the Boyce Thompson Institute for Plant Research, Inc.
He was Manager, Plant Biotechnology Program, Institute
of Biosciences and Technology of Texas A & M University
until he assumed his present position in August 1995.
He also serves on the University of Chicago's Board of
Governors for the Argonne National Laboratory. Dr.
Arntzen is Chairman of the Audit Committee.
Virginia Roberts Holt....................................... 42 January 16, 1996
Mrs. Holt was President of Charles A. Lowe &
Associates, an audiology practice, until May 1997.
Directors Whose Terms Will Expire in 1999:
Allan Aves.................................................. 66 August 29, 1988
Mr. Aves is a farmer and is a director of the Illinois
Farm Bureau, the former President and a director of the
DeKalb County Farm Bureau and the former President and
Chairman of the Board of the American Soybean
Association. He is a member of the Audit Committee.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
----------------------------- --- --------------
<S> <C> <C>
Douglas C. Roberts.......................................... 45 August 29, 1988
Mr. Roberts is Vice President-Marketing of the Company.
He held the position of Director, U.S. Business Units
of the Company's seed division from May 1993 until
February 1995 when he was elected to his present
position. He was Corn Product Director of the Company's
seed division until May 1993. Mr. Roberts is a member
of the Executive Committee.
Paul H. Hatfield............................................ 61 October 13, 1992
Mr. Hatfield is Chairman of Hatfield Capital Group, a
private investment company. He was Chairman, President
and Chief Executive Officer of Petrolite Corporation
from November 1995 until July 1997. He was Chairman of
Hatfield Capital Group from February 1995 until
November 1995. He was Vice President of Ralston Purina
Company and President and Chief Executive Officer of
Protein Technologies International until February 1995.
He is a director of PENWEST, Ltd. and Solutia Inc. Mr.
Hatfield is a member of the Audit Committee.
Dr. Robert T. Fraley........................................ 44 April 16, 1996
Dr. Fraley is Co-President, Ag Sector of Monsanto, one
of five sectors of Monsanto specializing in Life
Sciences. Until he assumed his present position in
March 1997, he was President of Ceregen, a unit of
Monsanto Company that develops chemical, biotechnology
and seed products for agriculture. He was Group Vice
President and General Manager of the New Products
Division of Monsanto Company until January 1995. He was
Vice President of Technology with responsibility for
crop chemical and plant biotechnology research and
development for The Agricultural Group of Monsanto
Company until February 1993. Dr. Fraley is a member of
the Executive Committee.
Directors Whose Terms Will Expire in 2000
Tod R. Hamachek............................................. 51 June 1, 1992
Mr. Hamachek is President and Chief Executive Officer
of PENWEST, Ltd., a leading supplier of corn-based
specialty products for the paper industry, food grade
starches for the food and confectionery industries, and
non-active ingredients for the pharmaceutical industry.
He is a director of PENWEST, Ltd., Northwest Natural
Gas Company and The Seattle Times Co. Mr. Hamachek is a
member of the Compensation Committee.
John T. Roberts............................................. 39 July 1, 1993
Mr. Roberts is a Private Investor. He was Chief
Financial Officer and Treasurer of Quest Environmental
Resources Corporation until July 1997. Mr. Roberts is a
member of the Compensation Committee.
Richard O. Ryan............................................. 55 June 15, 1988
Mr. Ryan is President and Chief Operating Officer of
the Company. Mr. Ryan is a member of the Executive
Committee.
William M. Ziegler.......................................... 40 January 13, 1997
Mr. Ziegler is Special Projects Director in the Ag
Sector of Monsanto Company. He was Special Projects
Director of Ceregen, a unit of Monsanto Company that
develops chemical, biotechnology and seed products for
agriculture until he assumed his present position in
March 1997. He was Business Director, Corn and Soybeans
of Ceregen until November 1996. He was with Booz, Allen
& Hamilton until March 1993.
</TABLE>
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BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed by or under the direction of the
Board of Directors. The Board has established several committees whose principal
functions are briefly described below. During fiscal 1997, the Board of
Directors held four meetings. All of the directors attended at least 75 percent
of the meetings of the Board and of the Committees on which they served during
the year. Directors who are not employees of the Company or nominees of Monsanto
Company are paid $14,000 annually, plus $1,000 per day for attending meetings of
the Board of Directors, meetings of the committees of the Board of Directors or
for attending other meetings at the request of the Company, plus expenses for
attending meetings. An additional fee of $1,000 per year is paid to each of the
Chairmen of the Executive, Compensation and Audit Committees.
Pursuant to the DEKALB Genetics Corporation Director Stock Option Plan (the
"Director Plan"), directors who are not officers or employees of the Company or
nominees of Monsanto Company may elect to receive options to purchase shares of
Class A Common Stock of the Company in lieu of cash compensation ("Director
Options"). The number of shares of Class A Common Stock subject to each Director
Option shall be equal to the nearest number of whole shares determined by
dividing the amount of the Annual Retainer and Meeting Fees by 25 percent of the
Fair Market Value (as defined below) of a share of Class A Common Stock on the
date of the annual meeting of stockholders of the Company. For purposes of the
Director Plan, the "Annual Retainer" is equal to the amount the director will be
entitled to receive for serving as a director in the relevant year and the
"Meeting Fees" are equal to the amounts the director will be entitled to receive
for attendance at all regularly scheduled meetings of the Board of Directors or
any committee of the Board of Directors of which he is a member in the relevant
year. If a director does not attend such a Board of Directors or committee
meeting (including non-attendance because any meeting was not held), the
director will forfeit that portion of the Director Options related to the
Meeting Fees for that meeting. The per share exercise price of the Class A
Common Stock subject to each Director Option will be 75 percent of the Fair
Market Value of a share of Class A Common Stock on the date prior to the date
such Director Option was granted. Under the Director Plan, the "Fair Market
Value" of a share of Class A Common Stock is the last price per share at which a
share of the Company's Class B Common Stock is sold in the regular way on the
New York Stock Exchange on the day prior to the day each Director Option is
granted, or, in the absence of any reported sales on such day, the first
preceding day on which there were such sales.
The Executive Committee is authorized to act in lieu of the Board between
meetings of the Board and recommends to the Board nominees for the Board. The
Executive Committee will consider suggestions for Board nominees by shareholders
if such suggestions are received in writing by the Secretary of the Company on
or before May 31 of each year. The Executive Committee held five meetings during
fiscal 1997.
The Audit Committee reviews periodically with independent auditors the
performance of the services for which such auditors are engaged, including
reviewing the scope of the annual audit and its results, reviewing the adequacy
of the Company's internal accounting controls with management and auditors, and
reviewing fees charged by the Company's independent auditors. The Audit
Committee held three meetings during fiscal 1997.
The Compensation Committee reviews and recommends to the Board of Directors
compensation to be paid to senior officers of the Company. During fiscal 1997,
the Compensation Committee held four meetings. Certain members of the Board of
Directors serve, along with officers of the Company, on committees administering
various employee benefit plans of the Company.
APPROVAL OF PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION
The Board of Directors has approved an amendment to the Company's Restated
Certificate of Incorporation (the "Proposed Amendment") to increase the number
of authorized shares of Class A Common Stock to 35,000,000 and to increase the
number of authorized shares of Class B Common Stock to 130,000,000. The Proposed
Amendment is set forth in Exhibit A to this Proxy Statement and the description
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<PAGE> 7
of the Proposed Amendment contained herein is qualified in its entirety by
reference to the full text of such Exhibit A.
PURPOSES AND EFFECT OF THE PROPOSED AMENDMENT
The Restated Certificate of Incorporation of the Company currently provides
that the total number of shares of Class A Common Stock that the Company is
authorized to issue is 15 million and that the total number of shares of Class B
Common Stock that the Company is authorized to issue is 45 million. In addition,
the Restated Certificate of Incorporation provides that the Company is
authorized to issue 500,000 shares of Preferred Stock.
At the Record Date, 8,809,414 shares of Class A Common Stock were issued
and outstanding and reserved for issuance. At the Record Date, 30,152,034 shares
of Class B Common Stock were issued and outstanding and reserved for issuance.
No shares of Preferred Stock of the Company were issued or outstanding or
reserved for issuance. Accordingly, at the Record Date the Company had available
for issuance an aggregate of only 6,190,586 shares of Class A Common Stock and
14,847,966 shares of Class B Common Stock.
The Proposed Amendment provides that the authorized capital stock of the
Company consists of a total of 165,000,000 shares, consisting of (i) 35,000,000
shares of Class A Common Stock, (ii) 130,000,000 shares of Class B Common Stock
and (iii) 500,000 shares of Preferred Stock.
The purpose of the proposed increase in the number of authorized shares of
Class A and Class B Common Stock of the Company is to ensure that additional
shares will be available, if and when needed, for issuance from time to time for
any proper purpose approved by the Board of Directors. Although there are no
present arrangements, agreements or understandings for the issuance of
additional shares of Class A or Class B Common Stock (other than the shares
previously reserved for issuance, which are included in the share numbers listed
above), the Board of Directors believes that the availability of the additional
authorized shares for issuance upon approval of the Board without the necessity
for, or the delay inherent in, a meeting of the stockholders of the Company will
be beneficial to the Company and its stockholders by providing the Company with
the flexibility required to promptly consider and respond to future business
opportunities and needs as they arise.
If the Proposed Amendment is approved by the holders of Class A Common
Stock, the Board of Directors does not presently intend to seek further
stockholder approval with respect to any particular issuance of shares, unless
required by applicable law, by regulatory authorities, or by the policies, rules
and regulations of the New York Stock Exchange or such other stock exchange on
which the securities of the Company may then be listed.
Stockholders of the Company do not have any preemptive or similar rights to
subscribe for or purchase any additional shares that may be issued in the future
and, therefore, future issuances, depending upon the circumstances, may have a
dilutive effect on the earnings per share, book value per share, voting power
and other interests of the existing stockholders.
The proposed increase in the authorized number of shares could have an
anti-takeover effect, although that is not its purpose. For example, if the
Company were the subject of a hostile takeover attempt, it could try to impede
the takeover by issuing shares of Class A Common Stock, thereby diluting the
voting power of the other outstanding shares of Class A Common Stock and
increasing the potential cost of the takeover. The availability of this
defensive strategy could discourage unsolicited takeover attempts, thereby
limiting the opportunity for the stockholders to realize a higher price for
their shares than might otherwise be available in the public markets. The Board
of Directors is not aware of any attempt, or contemplated attempt, to acquire
control of the Company, and this proposal is not being presented for the purpose
of creating an anti-takeover device.
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<PAGE> 8
VOTES REQUIRED FOR APPROVAL
Approval of the Proposed Amendment requires the affirmative vote of the
holders of a majority of the outstanding shares of Class A Common Stock entitled
to vote at the meeting. Consequently, shares of Class A Common Stock which are
voted to abstain from voting on the approval of the Proposed Amendment and
shares which are not voted with respect to such approval (including broker
non-votes) will have the effect of a vote against the Proposed Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT.
APPROVAL OF AMENDED AND RESTATED
LONG-TERM INCENTIVE PLAN
The Board of Directors has amended and restated the DEKALB Genetics
Corporation Long-Term Incentive Plan. Such Incentive Plan was originally
approved in 1988 by the then sole stockholder of the Company and was amended
with stockholder approval in 1992 to authorize certain grants thereunder and in
1996 to increase the number of shares available for grant thereunder and to
place limitations on the number of shares subject to awards and on the number of
shares subject to awards to any participant in any year. Such Incentive Plan, as
amended and restated (the "Plan"), is set forth in Exhibit B to this Proxy
Statement and the description of the Plan contained herein is qualified in its
entirety by reference to the full text of such Exhibit B.
The purpose of the Plan is to advance the interests of the Company, its
shareholders and its subsidiaries by attracting, retaining and stimulating the
performance of officers, other key employees, consultants, independent
contractors, agents and other advisors and to encourage and enable such
individuals to acquire and retain a proprietary interest in the Company. The
Plan provides that it is administered by the Stock Option Committee appointed by
the Board of Directors of the Company (the "Committee") and that the Committee
has sole discretion and authority to determine from among eligible persons to
whom and the time or times at which stock options ("Options"), restricted stock
("Restricted Stock") and stock appreciation rights ("SARs") under the Plan may
be granted or awarded, the number of shares of Class A or Class B Common Stock
to be subject to each Option, SAR or Restricted Stock award and all other
determinations necessary or advisable in the administration of the Plan. Each
grant of an Option or SAR and each award of Restricted Stock under the Plan
shall be on such terms and provisions consistent with the Plan as the Committee
may determine.
The maximum number of shares of Class A and Class B Common Stock of the
Company authorized and reserved for issuance under the Plan is equal to
4,405,830, subject to adjustment in the event of certain changes in the
Company's corporate structure or capital stock. If an Option or SAR terminates
for any reason without being wholly exercised or if Restricted Stock is
forfeited for any reason, the number of shares subject to such Option or SAR and
not purchased pursuant to such Option or SAR or the number of shares of such
forfeited Restricted Stock again becomes available for future grants under the
Plan.
The Plan provides that no Option, SAR or Restricted Stock may be granted or
awarded if and to the extent that such grant or award would cause the total
number of shares of Common Stock subject to then outstanding and unexercised
Options and SARs, plus the total number of shares of Restricted Stock awarded
under the Plan (other than shares no longer subject to restrictions under the
Plan) to exceed 8 1/2% of the total number of shares of Common Stock outstanding
at the time of such grant or award. In addition, the Plan provides that, to the
extent necessary for an award to be qualified performance-based compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), the maximum number of shares of Common Stock available for grants or
awards to any participant in any fiscal year shall not exceed 300,000 shares
(subject to adjustment as provided in the Plan).
Grants of Options and SARs. The Plan provides for the granting of Options
through either incentive stock options as defined under Section 422 of the Code
("ISOs") or nonqualified stock options.
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The per share exercise price of Common Stock subject to Options will be the
closing transaction price of a share of Class B Common Stock as reported in the
New York Stock Exchange Composite Transactions on the day the Option is granted,
or, if there is no reported transaction for such day, the next preceding day for
which a transaction was reported (the "Fair Market Value"); provided the Fair
Market Value may be determined by the Committee by whatever means or method as
the Committee, in its good faith discretion, deems appropriate.
The Plan provides that the Committee may grant an SAR with respect to an
Option (concurrently with the grant of such Option or, in certain cases, at a
later time and as to all or any portion of the shares subject to such Option) or
alone. An SAR is a right to receive, without payment to the Company, a number of
shares of Common Stock or cash or any combination thereof. The Plan provides
that upon the exercise of an SAR the number of shares of Common Stock which
shall be issuable shall be determined by dividing (i) the number of shares of
Common Stock as to which the SAR is exercised, multiplied by the amount by which
the Fair Market Value of the shares of Common Stock subject to the SAR on the
exercise date exceeds either (A) in the case of an SAR related to an Option, the
purchase price of the shares under such Option or (B) in the case of an SAR
which is not related to an Option, an amount equal to the Fair Market Value of
the Common Stock on the date of grant, by (ii) the Fair Market Value of a share
of Common Stock on the exercise date. The Plan provides that in lieu of issuing
shares of Common Stock upon the exercise of an SAR, the Committee may elect to
pay cash or any combination of cash and shares of Common Stock equal to the Fair
Market Value on the exercise date of any or all of the shares which would
otherwise be issuable.
The term of each Option or SAR granted shall be determined by the
Committee, provided that (i) except as otherwise provided in the Plan, the
Committee may, in its discretion, terminate outstanding Options or SARs or
accelerate the exercise dates thereunder, upon 60 days written notice to the
participant, (ii) the period during which each ISO shall be exercised shall be
not later than ten years from the date of grant and (iii) the term of each SAR
shall not exceed ten years and one day from the date of grant. The Committee may
establish performance measures which must be satisfied or met as a condition to
the grant of an Option or SAR or the exercisability of all or a portion of an
Option or SAR.
Options and SARs may not be exercised unless and until the participant has
remained in the employ of the Company or its subsidiaries for six months (or
such longer term as may be established by the Committee) from the date of grant,
except in the case of the participant's death, retirement on or after his
sixty-fifth birthday or permanent and total disability of the participant within
such six-month period. If a participant dies at any time after his Option or SAR
is granted and while in the employ of the Company or its subsidiaries or within
60 days after termination of such employment, the executor or administrator of
such participant's estate or a permitted transferee shall have the right, for a
three-year period after the date of the participant's death, to exercise the
Option or SAR, subject to the provisions described in the preceding paragraph.
If a participant dies within 60 days after the termination of his employment the
Option or SAR may be exercised only to the extent it was exercisable at the date
of termination of employment and not exercised. If a participant retires on or
after his sixty-fifth birthday or becomes permanently and totally disabled at
any time after an Option or SAR is granted, the participant shall have the
right, during the three-year period after such retirement or disability to
exercise the Option or SAR, subject to the provisions described in the preceding
paragraph.
If, on or after six months from the date of grant of an Option or SAR (or
such longer time as may be established by the Committee), the participant's
employment is terminated for any reason, other than (i) death, (ii) permanent
and total disability, (iii) retirement on or after age 65, (iv) retirement on or
after age 55, (v) retirement on or after age 50 but on or after a date on which
a participant's age plus years of service equals or exceeds 65, (vi) a
separation negotiated and agreed to between a participant and the Company, (vii)
elimination of a participant's position at the Company, or (viii) serious
misconduct, then the participant shall have the right, during the 60-day period
after such termination, to exercise the Option or SAR to the extent it was
exercisable and not exercised prior to the date of such termination; provided
that such time period may be shortened in accordance with the Plan if a
shortened exercise period is applied to optionees in general. If a participant's
employment with the Company or its subsidiaries is terminated for "serious
misconduct" (including, but not limited to, embezzlement or misappropriation of
corporate funds, other acts of dishonesty, significant activities harmful to the
reputation of the Company or its subsidiaries, a
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<PAGE> 10
significant violation of the Company or subsidiary policy, willful refusal to
perform, or substantial disregard of, the duties properly assigned to the
participant, or a significant violation of any contractual, statutory or common
law duty of loyalty to the Company or its subsidiaries), the right to exercise
the Option or SAR shall immediately terminate and all rights thereunder shall
cease.
If a participant's employment is terminated because either (i) the
participant retires on or after age 55, (ii) the participant retires on or after
age 50 but on or after a date on which such participant's age plus years of
service equals or exceeds 65 or (iii) the position held by the participant is
eliminated by the Company, then the participant will have the right, during the
one-year period after such termination to exercise the Option or SAR. If a
participant's employment is terminated on a basis negotiated and agreed to by
the Company and the participant, then the participant will have the right during
a period ending after such termination determined by the Committee or management
(not longer than three years or shorter than 60 days) to exercise the Option or
SAR.
No Option or SAR may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated except (i) by will or by the laws of descent and
distribution, (ii) pursuant to a domestic relations order, (iii) to one or more
of the participant's Immediate Family Members, (iv) to a trust or trusts for the
exclusive benefit of one or more of the participant's Immediate Family Members,
(v) to a partnership or limited liability company in which one or more of the
participant's Immediate Family Members are the only partners or members, (vi) to
a person for whom the participant is the legal guardian and (vii) to such other
persons or entities approved in advance by the Committee. An "Immediate Family
Member" is any child, stepchild, grandchild, sibling, spouse of any of the
foregoing, spouse, parent, stepparent, grandparent, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law,
niece, nephew, aunt or uncle and shall include adoptive relationships.
The Plan provides that a participant, whether or not his Options are
exercisable, shall, in the sole discretion of the Committee (determined either
at the date of grant of an Option or thereafter), be entitled to receive a cash
payment from the Company, as and when cash dividends are payable to holders of
Common Stock, in an amount equal to the cash dividend which would be paid to
such participant in respect of all shares subject to such Options were such
participant the holder of such shares on the record date for such cash dividend.
The Plan contains additional provisions restricting the grants of and the
terms of grants of ISOs.
Awards of Restricted Stock. The Plan provides that the Committee may grant
awards of shares of Restricted Stock in such amounts and on such terms and
conditions as it may determine. In addition to the restrictions on transfer
described below, the Committee may impose other restrictions on shares of
Restricted Stock, including restrictions under federal and state securities laws
and under the requirements of any stock exchange or association on which the
Common Stock is then listed. The Committee may also establish performance
measures which must be satisfied or met as a condition to the vesting of all or
a portion of the shares of Restricted Stock.
Shares of Restricted Stock may not be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated for such period of time, not exceeding
ten years, as the Committee shall determine (the "Restricted Period"), subject
to earlier satisfaction of other conditions as specified by the Committee. If
the holder of Restricted Stock retires on or after his sixty-fifth birthday or
if such a holder's employment terminates during the Restricted Period because of
his death or permanent and total disability, the Restricted Period shall lapse,
all related performance measures, if any, shall be deemed to have been satisfied
at the maximum level and, except for any other restrictions imposed on the
Restricted Stock by the Committee, the shares of Restricted Stock shall be free
of restrictions and freely transferable. If a holder of Restricted Stock
terminates his employment during the Restricted Period for any reason other than
as described in the preceding sentence, any shares of Restricted Stock subject
to restrictions at the date of such termination shall be forfeited and returned
to the Company. If a holder of Restricted Stock is involuntarily terminated by
the Company other than for serious misconduct (as defined in the Plan and
described above), the Committee may waive the automatic forfeiture of any or all
shares of Restricted Stock.
8
<PAGE> 11
General. The Board of Directors of the Company may amend, modify or
terminate the Plan, provided that no such amendment, modification or termination
may be made without the approval of the shareholders of the Company which (i)
increases the total number of shares of Common Stock subject to the Plan (except
as provided by certain terms of the Plan), (ii) changes the manner of
determining the Option or SAR price, (iii) withdraws the administration of the
Plan from the Committee or the Board of Directors of the Company, (iv) extends
the maximum period or reduces the minimum period during which Options or SARs
may be exercised or the maximum Restricted Period, or (v) changes the class of
persons who may become participants in the Plan. Further, no amendment,
modification or termination of the Plan may affect any Option or SAR theretofore
granted or Restricted Stock theretofore awarded without the consent of the
participant or a permitted transferee of the Option, SAR or Restricted Stock.
Federal Income Tax Consequences. The following is a brief summary of the U.
S. federal income tax consequences of awards made under the Plan.
A participant will not recognize any income upon the grant of an Option. A
participant will recognize compensation taxable as ordinary income (and subject
to income tax withholding) upon exercise of a non-qualified Option equal to the
excess of the fair market value of the shares purchased over the exercise price,
and the Company will be entitled to a corresponding deduction. A participant
will not recognize income (except for purposes of the alternative minimum tax)
upon exercise of an ISO. If the shares acquired by exercise of an ISO are held
for the longer of two years from the date the ISO was granted and one year from
the date it was exercised, any gain or loss arising from a subsequent
disposition of such shares will be taxed as long-term capital gain or loss, and
the Company will not be entitled to any deduction. If, however, such shares are
disposed of within the above-described period, then in the year of such
disposition the participant will recognize compensation taxable as ordinary
income equal to the excess of the lesser of (i) the amount realized upon such
disposition and (ii) the fair market value of such shares on the date of
exercise over the exercise price, and the Company will be entitled to a
corresponding deduction.
A participant who is granted SARs will not recognize any taxable income
upon the grant of the SARs. Upon exercise, the participant will recognize
taxable compensation in an amount equal to the fair market value of any shares
delivered and the amount of cash paid by the Company. This amount is deductible
by the Company as compensation expense.
A participant will not recognize taxable income at the time of the grant of
Restricted Stock, and the Company will not be entitled to a tax deduction at
such time, unless the participant makes an election to be taxed at the time such
Restricted Stock is granted. If such election is not made, the participant will
recognize taxable income at the time the restrictions lapse in an amount equal
to the excess of the fair market value of the shares of Restricted Stock at such
time over the amount, if any, paid for such shares. The amount of ordinary
income recognized by a participant by making the above-described election or
upon the lapse of the restrictions is deductible by the Company as compensation
expense, except to the extent the limit of Section 162(m) of the Code applies.
In addition, a participant receiving dividends with respect to shares of
Restricted Stock for which the above-described election has not been made and
prior to the time the restrictions lapse will recognize taxable compensation
(subject to income tax withholding), rather than dividend income, in an amount
equal to the dividends paid and the Company will be entitled to a corresponding
deduction, except to the extent the limit of Section 162(m) of the Code applies.
VOTES REQUIRED FOR APPROVAL
Approval of the Plan requires the affirmative vote of the holders of a
majority of the outstanding shares of Class A Common Stock entitled to vote at
the meeting. Consequently, shares of Class A Common Stock which are voted to
abstain from voting on the approval of the Plan and shares which are not voted
with respect to such approval (including broker non-votes) will have the effect
of a vote against the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE PLAN.
9
<PAGE> 12
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of November 21, 1997 the beneficial
ownership of the Class A and Class B Common Stock of the Company (including
shares as to which a right to acquire ownership exists (e.g., through the
exercise of stock options) within the meaning of Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934) of each director and director nominee, each
Named Executive Officer (as defined below) and all directors and executive
officers as a group. All share and per share numbers in this Proxy Statement
have been revised to reflect the two-for-one split of the Class A and Class B
Common Stock to shareholders of record on July 25, 1997:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
OWNED BENEFICIALLY AND PERCENTAGES
OF EACH CLASS OUTSTANDING ON
NOVEMBER 21, 1997(1)
--------------------------------------------
CLASS A % CLASS B %
------- - ------- -
<S> <C> <C> <C> <C>
Dr. Charles J. Arntzen(2).............................. 39,258 .826 -- --
Allan Aves(3).......................................... 82,877 1.729 -- --
Bruce P. Bickner(4).................................... 365,088 7.210 -- --
Richard T. Crowder(5).................................. 62,533 1.310 -- --
Dr. Robert T. Fraley................................... -- -- -- --
Tod R. Hamachek(6)..................................... 49,654 1.043 -- --
Paul H. Hatfield(7).................................... 65,018 1.361 -- --
Virginia Roberts Holt(8)(9)............................ 2,753,369 (17) 65,020 .218
Thomas R. Rauman(10)................................... 66,467 1.391 1,092 .004
Douglas C. Roberts(9)(11).............................. 2,753,369 (17) 71,870 .241
John T. Roberts(9)(12)................................. 2,753,369 (17) 57,446 .192
Richard O. Ryan(13).................................... 209,400 4.263 25,100 .084
H. Blair White(14)..................................... 127,392 2.663 -- --
John H. Witmer, Jr.(15)................................ 123,600 2.558 -- --
William M. Ziegler..................................... -- -- -- --
All of the above and all other executive officers as a
group (19 persons)(16)............................... 3,923,675(17) 65.283(17) 224,128 .750
</TABLE>
- ---------------
(1) The Securities and Exchange Commission defines the beneficial owner of a
security as including any person who has sole or shared voting or
investment power with respect to such security. Unless otherwise noted, the
named individual has sole voting and investment power with respect to the
shares of Class A (voting) Common Stock and sole investment power with
respect to the shares of Class B (non-voting) Common Stock listed.
(2) 39,258 shares of Class A Common Stock subject to options which may be
acquired on or prior to January 20, 1998.
(3) Includes 81,977 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 20, 1998.
(4) Includes 351,300 shares of Class A Common Stock subject to options which
may be acquired on or prior to January 20, 1998. 58,000 of such shares
subject to options are held in a family limited partnership in which Mr.
Bickner is the general partner.
(5) 62,533 shares of Class A Common Stock subject to options which may be
acquired on or prior to January 20, 1998.
(6) 49,654 shares of Class A Common Stock subject to options which may be
acquired on or prior to January 20, 1998.
(7) 65,018 shares of Class A Common Stock subject to options which may be
acquired on or prior to January 20, 1998.
(8) The number of shares of Class A Common Stock reported represents (i)
2,671,650 shares of Class A Common Stock held pursuant to a Voting Trust
Agreement of which Virginia Roberts Holt is a Voting Trustee, plus (ii)
81,719 shares of Class A Common Stock subject to options granted to
Virginia Roberts Holt, Douglas C. Roberts or John T. Roberts which may be
acquired on or prior to January 20, 1998 (12,950 of which shares relate to
options granted to Virginia Roberts Holt). All of such shares are
10
<PAGE> 13
also reported in this table as being beneficially owned by Douglas C.
Roberts and John T. Roberts. Of the 2,671,650 shares of Class A Common
Stock held pursuant to the Voting Trust Agreement, 860,216 shares are
represented by a Trust Certificate held by Virginia Roberts Holt. Included
are 118,184 shares of Class A Common Stock which (together with 52,760
shares of Class B Common Stock) are held in trusts for the benefit of the
children of Virginia Roberts Holt of which she or her spouse is the
trustee. The provisions of such Voting Trust Agreement and related
agreements are described under "Certain Shareholder Agreements." The shares
of Class B Common Stock listed above include 7,570 shares of Class B Common
Stock held by her spouse.
(9) Douglas C. Roberts, John T. Roberts and Virginia Roberts Holt are brothers
and sister.
(10) 66,467 shares of Class A Common Stock subject to options which may be
acquired on or prior to January 20, 1998.
(11) The number of shares of Class A Common Stock reported represents (i)
2,671,650 shares of Class A Common Stock held pursuant to a Voting Trust
Agreement of which Douglas C. Roberts is a Voting Trustee, plus (ii) 81,719
shares of Class A Common Stock subject to options granted to Virginia
Roberts Holt, Douglas C. Roberts or John T. Roberts which may be acquired
on or prior to January 20, 1998 (23,933 of which shares relate to options
granted to Douglas C. Roberts). All of such shares are also reported in
this table as being beneficially owned by Virginia Roberts Holt and John T.
Roberts. Of the 2,671,650 shares of Class A Common Stock held pursuant to
the Voting Trust Agreement, 836,322 shares are represented by a Trust
Certificate held by Douglas C. Roberts. Included are 135,708 shares of
Class A Common Stock which (together with 19,902 shares of Class B Common
Stock) are held in trusts for the benefit of the children of Douglas C.
Roberts of which he or his spouse is the trustee. The provisions of such
Voting Trust Agreement and related agreements are described under "Certain
Shareholder Agreements." The shares of Class B Common Stock listed above
include 3,370 shares of Class B Common Stock held by his spouse.
(12) The number of shares of Class A Common Stock reported represents (i)
2,671,650 shares of Class A Common Stock held pursuant to a Voting Trust
Agreement of which John T. Roberts is a Voting Trustee, plus (ii) 81,719
shares of Class A Common Stock subject to options granted to Virginia
Roberts Holt, Douglas C. Roberts or John T. Roberts which may be acquired
on or prior to January 20, 1998 (44,836 of which shares relate to options
granted to John T. Roberts). All of such shares are also reported in this
table as being beneficially owned by Virginia Roberts Holt and Douglas C.
Roberts. Of the 2,671,650 shares of Class A Common Stock held pursuant to
the Voting Trust Agreement, 846,678 shares are represented by a Trust
Certificate held by John T. Roberts. Included are 112,194 shares of Class A
Common Stock which (together with 42,306 shares of Class B Common Stock)
are held in trusts for the benefit of the children of John T. Roberts of
which he or his spouse is the trustee. The provisions of such Voting Trust
Agreement and related agreements are described under "Certain Shareholder
Agreements." The shares of Class B Common Stock listed above include 7,570
shares of Class B Common Stock held by his spouse.
(13) Includes 200,267 shares of Class A Common Stock subject to options which
may be acquired on or prior to January 20, 1998. 8,000 shares of Class B
Common Stock are held in the S. Orville Ryan Family Foundation of which Mr.
Ryan is the President.
(14) Includes 71,904 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 20, 1998.
(15) Includes 120,600 shares of Class A Common Stock subject to options which
may be acquired on or prior to January 20, 1998.
(16) Includes 1,298,150 shares of Class A Common Stock subject to options which
may be acquired on or before January 20, 1998.
(17) As shown in footnotes 8, 11 and 12 and as described under "Certain
Shareholder Agreements," Douglas C. Roberts, John T. Roberts and Virginia
Roberts Holt share voting power with respect to 2,671,650 shares of Class A
Common Stock. Accordingly, such shares (which represent 56.698% of the
outstanding shares of Class A Common Stock on November 21, 1997) are
accounted for in this table at three different places. So that the actual
impact of their ownership can be better understood, such multiple counting
has been eliminated in the total number reported as beneficially owned by
all directors and executive officers. The dispositive power and economic
benefits of each of them with respect to such shares, as a percent of the
total outstanding shares of Class A Common Stock, is Douglas C. Roberts
(18.164%), John T. Roberts (18.741%) and Virginia Roberts Holt (18.480%).
11
<PAGE> 14
PRINCIPAL STOCKHOLDERS
The following table sets forth as of November 21, 1997 the beneficial
ownership of the Company's Class A Common Stock of each person known by the
Company to own beneficially more than five percent of such Class of securities
and the percentage of all shares of Class A Common Stock that such number of
shares represents:
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES OF
SHARES OWNED CLASS A
NAME AND ADDRESS BENEFICIALLY(1) COMMON STOCK
---------------- --------------- -------------
<S> <C> <C>
John T. Roberts
Virginia Roberts Holt
Douglas C. Roberts
Charles C. Roberts
Mary R. Roberts
c/o Douglas C. Roberts................................ 2,753,369(2) 57.436%
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Monsanto Corporation(3)................................. 485,442 10.302%
800 North Lindbergh Blvd.
St. Louis, Missouri 63167
Bruce P. Bickner(4)..................................... 365,088 7.210%
11702 Deerpath Road
Sycamore, Illinois 60178
</TABLE>
- ---------------
(1) The Securities and Exchange Commission defines the beneficial owner of a
security as including any person who has sole or shared voting or investment
power with respect to such security.
(2) Charles C. Roberts and Mary R. Roberts are husband and wife and are the
father and mother of John T. Roberts, Virginia Roberts Holt and Douglas C.
Roberts. The shares reported represent shares held pursuant to a Voting
Trust Agreement of which each of them is a Voting Trustee, plus shares
subject to options held by them, which shares may be acquired on or prior to
January 20, 1998. See Notes 8, 11 and 12 on pages 10 and 11. The provisions
of such Voting Trust Agreement and related agreements are described under
"Certain Shareholder Agreements."
(3) Monsanto has entered into a Stockholders' Agreement, the provisions of which
are described under "Certain Shareholder Agreements."
(4) See Note 4 on page 10.
12
<PAGE> 15
CERTAIN SHAREHOLDER AGREEMENTS
The following describes certain provisions of (i) a Voting Trust Agreement
(the "Voting Trust Agreement") among each of Douglas C. Roberts, Virginia
Roberts Holt, John T. Roberts, Charles C. Roberts and Mary R. Roberts (the
"Voting Trustees"), individually and as trustees of trusts created for the
benefit of their spouses or children (the Voting Trustees and such trusts being
referred to as the "Shareholders"), (ii) a Roberts Family Shareholder Agreement
(the "Family Shareholder Agreement") among the Shareholders and (iii) a
Stockholders' Agreement (the "Monsanto Stockholders' Agreement") among the
Shareholders and Monsanto Company ("Monsanto"). Such description has been based
on information set forth in a Schedule 13D filed with the Securities and
Exchange Commission by the Voting Trustees.
VOTING TRUST AGREEMENT
Pursuant to the terms of the Voting Trust Agreement, the shares of Class A
Common Stock listed under "Principal Stockholders" as being beneficially owned
by the Voting Trustees were transferred to the Voting Trustees for deposit
pursuant to the Voting Trust Agreement, and the Voting Trustees issued trust
certificates ("Trust Certificates") in respect of such shares. The Voting Trust
Agreement provides that any Shareholder who subsequently acquires any shares of
Class A Common Stock of the Company will deposit such shares with the Voting
Trustees to be held pursuant to the Voting Trust Agreement (any shares deposited
with the Voting Trustees pursuant to the Voting Trust Agreement are referred to
as "Subject Shares").
The Voting Trust Agreement provides that the Voting Trustees have full
right and power to vote all Subject Shares upon all matters submitted to a vote
or consent of shareholders of the Company and that the Voting Trustees will vote
all Subject Shares as a unit in accordance with the determination of a majority
of the Voting Trustees, except that with respect to the Investment Agreement
Matters (as defined herein under "-- Monsanto Stockholders' Agreement") or
business combinations (as defined in the Monsanto Stockholders' Agreement)
involving the Company ("Company Business Combinations"), the Voting Trustees
will vote in accordance with the instructions of holders of Trust Certificates
or, if no instructions are given, in accordance with the recommendation of the
Board of Directors of the Company.
All dividends or distributions upon the Subject Shares will be paid by the
Voting Trustees to the holders of Trust Certificates ratably based on the number
of Subject Shares reflected on the Trust Certificates, except that any dividend
or distribution of voting stock of the Company will be deposited pursuant to the
Voting Trust Agreement.
The Voting Trustees have no power to sell or otherwise dispose of any
Subject Shares, except that the Voting Trustees are required to tender or
exchange Subject Shares in accordance with the terms of any tender or exchange
offer if (i) the Voting Trustees are so instructed by the holder of the Trust
Certificate for such Subject Shares and (ii) such tender or exchange offer, if
consummated, would result in the beneficial ownership by a group or person of
all of the shares of Class A and Class B Common Stock and the Company has
previously published its position or recommendation with respect to such tender
or exchange offer pursuant to applicable rules under the Securities Exchange Act
of 1934, as amended (any such tender or exchange offer described in this clause
(ii) being referred to as a "Qualifying Tender Offer").
The Voting Trust Agreement will terminate with respect to any Subject Share
on the earliest to occur of (i) the withdrawal of such Subject Share in
accordance with the provisions of the Family Shareholder Agreement, (ii) the
written agreement of all Voting Trustees and (iii) when the voting of such
Subject Share ceases to be vested in the Voting Trustees.
FAMILY SHAREHOLDER AGREEMENT
The Family Shareholder Agreement provides that no Shareholder will sell,
withdraw from the Voting Trust Agreement or otherwise dispose of any interest in
Subject Shares except as provided in the Family Shareholder Agreement. Each
Shareholder has agreed not to sell, convey, transfer, assign or otherwise
dispose of ("transfer") any interest in any Class A Common Stock or other voting
common or voting preferred stock of the Company, any option, warrant or other
right to acquire Class A Common Stock or such other voting
13
<PAGE> 16
stock or any security exchangeable for or convertible into Class A Common Stock
or such other voting stock (collectively, "Company Voting Stock"), unless such
Shareholder has withdrawn the Subject Shares from the Voting Trust Agreement
after compliance with the procedures described in the following paragraph.
Any Shareholder desiring to withdraw Subject Shares from the Voting Trust
Agreement must give written notice to the other Shareholders, each of whom will
then have an option to purchase his or her pro rata portion of such Subject
Shares at a market price based on a thirty day average of the daily closing
prices for the Class B Common Stock on the New York Stock Exchange (or, if there
is no such market price, an appraised value for such Subject Shares). If such
other Shareholders have not elected to acquire all of such Subject Shares, then
each Shareholder who elected to acquire Subject Shares will have a further
option to purchase his or her pro rata portion of the Subject Shares which such
other Shareholders have not elected to acquire. Any Subject Shares not acquired
by such other Shareholders after such further option may be withdrawn from the
Voting Trust Agreement and will no longer be subject to the Family Shareholder
Agreement.
The Family Shareholder Agreement provides that the restrictions on transfer
therein will not apply to certain permitted transfers ("Permitted Transfers")
specified therein, including (i) certain pledges of Company Voting Stock, (ii) a
transfer of Company Voting Stock to other Shareholders or their spouses,
descendants or certain other trusts or other entities, (iii) any exchange,
conversion or transfer of Company Voting Stock in connection with a Company
Business Combination, other than any agreement to transfer prior to the
Company's execution of an agreement with respect to such Company Business
Combination or (iv) any tender or exchange in accordance with the terms of a
Qualifying Tender Offer.
The Family Shareholder Agreement will terminate on January 31, 2006.
MONSANTO STOCKHOLDERS' AGREEMENT
The Monsanto Stockholders' Agreement was entered into in connection with a
series of agreements between the Company and Monsanto described under "Certain
Transactions", including an Investment Agreement between the Company and
Monsanto (the "Investment Agreement").
The Investment Agreement provides, among other things, that (i) Monsanto
was entitled to nominate one member to the Company's Board of Directors
(pursuant to such provision Robert T. Fraley was appointed to the Board on April
16, 1996) and that Monsanto could nominate for election at the Company's 1997
annual meeting of stockholders, an additional member (pursuant to such provision
William M. Ziegler was elected) to the Company's Board (any such nominee or
nominees being referred to as "Monsanto Nominees"), (ii) the By-Laws of the
Company were amended to (a) state that the primary business of the Company is
the research-based production, marketing, licensing and sale of agronomic seed,
including both technology related thereto and products derived therefrom, (b)
state that the use of voting securities by the Company to facilitate strategic
collaborations is in the Company's best interests (but as to any one strategic
collaboration the maximum amount of voting securities of the Company to be
issued to any individual, entity or group will not exceed 10% of the voting
securities of the Company then outstanding) and (c) prohibit the Company from
acquiring any business or assets outside of such primary business that would
constitute a substantial part (as defined in the Investment Agreement) of the
Company; provided that such By-Law amendments permit the Company to change its
primary business, issue voting securities to facilitate a strategic
collaboration or acquire any business outside of such primary business unless
three of the members of the Board vote against the resolution relating to such
change or transaction (such By-Law provisions described in this clause (ii)
being referred to as the "By-Law Provisions") and (iii) while Monsanto
beneficially owns either 5% of the Class A Common Stock or 20% of the Class B
Common Stock, if the Company proposes to issue for cash (subject to specified
limitations) any shares of Common Stock, securities convertible into such shares
or options, warrants or rights to acquire such shares ("Equity"), Monsanto will
have the right to purchase all or any portion of its pro rata share of such
Equity on the terms set forth in the Investment Agreement (the provisions
described in this clause (iii) being referred to as the "Equity Purchase
Provisions" and the provisions described in clauses (i), (ii) and (iii) being
referred to as the "Investment Agreement Matters").
14
<PAGE> 17
The Monsanto Stockholders' Agreement provides that each Shareholder will
use best efforts to attend each stockholder meeting for purposes of establishing
a quorum and will vote all of its shares of Company Voting Stock in favor of any
Monsanto Nominee recommended by the Board of Directors of the Company, provided
that such Monsanto Nominee is reasonably satisfactory to the Company. In
addition, the Monsanto Stockholders' Agreement provides that each Shareholder
will not, without the consent of Monsanto, initiate any action that would result
in the amendment of the By-Law Provisions and that each Shareholder will vote
its Company Voting Stock in favor of any proposed amendment to the Company's
certificate of incorporation to increase the Company's authorized capital stock,
which amendment is required in order for the Company to comply with the Equity
Purchase Provisions.
The Monsanto Stockholders' Agreement provides that except for Permitted
Transfers, no Shareholder may transfer any interest in its Company Voting Stock
except as provided by the Monsanto Stockholders' Agreement, and that, with
limited exceptions, no Shareholder will convert any Class A Common Stock to
Class B Common Stock until such time as such Shareholder has entered into a
binding agreement to sell or convey such Class B Common Stock to a third party.
If any Shareholder desires to transfer any interest in its Company Voting
Stock (other than a Permitted Transfer) such Shareholder will make a written
offer to Monsanto (a "Shareholder Offer") to purchase such Company Voting Stock
and Monsanto will have the option to purchase all but not less than all of such
Company Voting Stock for the price and upon the terms upon which such
Shareholder proposes to transfer such Company Voting Stock. If Monsanto rejects
the Shareholder Offer, Monsanto has the exclusive right for a period of time to
propose alternative terms for such purchase. If Monsanto does not accept the
Shareholder Offer and Monsanto and such Shareholder have not otherwise reached
an agreement regarding such purchase within such time period, then such
Shareholder may offer and sell such Company Voting Stock to any person or entity
on terms that are at least as favorable to such Shareholder as those set forth
in the Shareholder Offer or those offered by Monsanto in any counter offer.
In the event of any involuntary transfer of any Company Voting Stock (other
than a Permitted Transfer), Monsanto will have an exclusive option to purchase
all but not less than all of the Company Voting Stock subject to the involuntary
transfer in cash at a purchase price (i) based on a thirty day average of the
daily closing prices for the Class B Common Stock on the New York Stock Exchange
or (ii) if the Company Voting Stock is not Class A Common Stock or if the Class
B Common Stock is not publicly traded, based on the fair market value thereof
determined by an investment banking firm.
The Monsanto Stockholders' Agreement will be effective until the earlier of
(i) the termination of the collaboration agreement entered into between the
Company and Monsanto (except if it is terminated by reason of a material breach
thereof by the Company or by reason of a governmental decree caused by voluntary
action of the Company), (ii) Monsanto owning less than 5% of the outstanding
Class A Common Stock or less than 50% of the highest percent of the outstanding
Common Stock beneficially owned by Monsanto after completion of any purchases in
the market of Class B Common Stock by Monsanto as permitted under the Investment
Agreement during the one year period after the March 8, 1996 closing under the
Investment Agreement (the "Closing"), (iii) the termination of the Investment
Agreement or (iv) the eleventh anniversary of the Closing or any subsequent
anniversary of such Closing upon notice by Monsanto or a majority in interest of
the Company Voting Stock by persons who are then Shareholders.
15
<PAGE> 18
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company and its
subsidiaries for the fiscal years indicated to the Chief Executive Officer and
to the four most highly compensated executive officers, other than the Chief
Executive Officer, serving at the end of fiscal 1997 (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------------------
AWARDS PAYOUTS
---------- -----------
NUMBER OF
SECURITIES PERFORMANCE
NAME AND PRINCIPAL POSITION OTHER ANNUAL UNDERLYING UNIT ALL OTHER
AT AUGUST 31, 1997 YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2) PAYOUTS COMPENSATION(3)
- --------------------------- ---- ------ ----- --------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce P. Bickner........... 1997 $328,654 $341,250 $17,448 30,000 $93,800(5) $65,160
Chairman and Chief 1996 294,231 379,688 11,140 28,200 0 52,346
Executive Officer 1995 285,016 225,000 20,389 22,000 0 28,277
Richard O. Ryan............ 1997 249,616 226,875 14,547 18,800 56,000(5) 43,101
President and Chief 1996 239,423 276,094 6,836 48,000 0 31,103
Operating Officer 1995 231,369 119,250 7,952 36,000 0 16,860
Richard T. Crowder......... 1997 224,615 192,500 10,120 13,600 17,500(5) 34,869
Senior Vice President, 1996 214,635 136,000 0 42,000 0 25,253
International(4) 1995 171,514 52,400 0 30,000 0 94,893
Thomas R. Rauman........... 1997 164,808 105,000 12,903 8,000 28,000(5) 20,504
Vice President, Finance 1996 159,615 87,000 6,498 30,000 14,000 16,664
and CFO 1995 153,093 33,500 6,472 27,000 0 10,623
John H. Witmer, Jr. ....... 1997 169,809 78,375 5,200 6,000 23,800(5) 20,621
Senior Vice President 1996 164,080 77,125 1,235 6,000 0 15,992
& General Counsel 1995 164,885 43,000 331 0 0 14,135
</TABLE>
- ---------------
(1) Other Annual Compensation for fiscal 1997 arose from the following sources:
Taxable income for executive car participants (Mr. Bickner -- $2,942, Mr.
Ryan -- $8,271, Mr. Crowder -- $6,245, Mr. Rauman -- $7,803); Personal use
of company airplane (Mr. Bickner -- $11,997, Mr. Ryan -- $1,376); Financial
Planning (Mr. Ryan -- $4,900, Mr. Crowder -- $3,875, Mr. Rauman -- $5,100,
Mr. Witmer -- $5,200); and reimbursement to Mr. Bickner for income taxes
related to benefit plan of $2,509.
(2) No restricted stock or stock appreciation rights (SARs) were awarded to the
Named Executive Officers during fiscal 1995, 1996 or 1997.
(3) All Other Compensation for fiscal 1997 arose from the following sources:
Company contributions to the Company's Deferred Compensation Plan (Mr.
Bickner -- $44,667, Mr. Ryan -- $30,057, Mr. Crowder -- $16,849, Mr. Rauman
-- $8,145 and Mr. Witmer -- $7,755); Company contributions to the Company's
Savings and Investment Plan (Mr. Bickner -- $12,000, Mr. Ryan -- $12,000,
Mr. Crowder -- $12,000, Mr. Rauman -- $12,000 and Mr. Witmer -- $12,000);
and reimbursement for life insurance premiums (Mr. Bickner -- $8,493, Mr.
Ryan -- $1,044, Mr. Crowder -- $1,020, Mr. Rauman -- $359 and Mr. Witmer --
$866); and Company payment to Mr. Crowder of $5,000 for spouse international
travel benefit.
(4) Mr. Crowder's employment with the Company began October 26, 1994.
(5) The amount shown has been earned and the full amount will be paid so long as
the final one-third of the units vest on January 17, 1998.
16
<PAGE> 19
OPTION GRANTS DURING FISCAL 1997
The following table sets forth the number of shares of Class A Common Stock
that were granted subject to options during fiscal 1997 to each Named Executive
Officer receiving such a grant:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------
PERCENTAGE OF
TOTAL SHARES
NUMBER OF SECURITIES GRANTED TO EXERCISE
UNDERLYING OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL 1997 SHARE DATE PRESENT VALUE(2)
---- -------------------- -------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Bruce P. Bickner............. 30,000 11.2% $30.375 01/12/07 $587,700
Richard O. Ryan.............. 18,800 7.0% $30.375 01/12/07 $368,292
Richard T. Crowder........... 13,600 5.1% $30.375 01/12/07 $266,424
Thomas R. Rauman............. 8,000 3.0% $30.375 01/12/07 $156,720
John H. Witmer, Jr........... 6,000 2.3% $30.375 01/12/07 $117,540
</TABLE>
- ---------------
(1) These options to purchase Class A Common Stock of the Company were granted
under the Company's Long-Term Incentive Plan (LTIP) at an exercise price of
100 percent of fair market value on the date of grant. The options are
exercisable over a period of not more than ten years from the date of grant.
The stock option grants were made effective January 13, 1997. Vesting is
over a three-year period from the date of grant, with one-third of the
options vesting on January 13, 1998, one-third vesting on January 13, 1999,
and the final one-third vesting on January 13, 2000.
(2) Grant date present value is based on a Black-Scholes option pricing model
adapted for use in valuing executive stock options. In calculating the grant
present values set forth in the table, a factor of 40% has been assigned to
the volatility of the common stock, the annual dividend assumption is $0.14
per share, the interest rate has been fixed at 8.00% and the exercise of
options has been assumed to occur at the end of the actual option term of
ten years. There is no assurance that these assumptions will prove to be
true in the future. Consequently, the actual value, if any, an executive may
realize will depend on the common stock price on the date the option is
exercised, so that there is no assurance the value realized by an executive
will be at or near the value estimated by the Black-Scholes model.
AGGREGATED OPTION EXERCISES DURING FISCAL 1997 AND
FISCAL 1997 YEAR-END OPTION VALUES
The following table sets forth the number of shares of Class A and Class B
Common Stock that were purchased pursuant to options exercised, and the number
and value of shares subject to unexercised options at August 31, 1997, for each
of the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS AT
SHARES AUGUST 31, 1997(1) AUGUST 31, 1997(2)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce P. Bickner........ -0- -0- 324,400 56,300 $11,889,266 $1,113,595
Richard O. Ryan......... -0- -0- 166,000 62,800 $ 5,961,754 $1,582,522
Richard T. Crowder...... -0- -0- 34,000 51,600 $ 1,122,749 $1,337,453
Thomas R. Rauman........ -0- -0- 44,800 37,000 $ 1,521,482 $1,007,920
John H. Witmer, Jr. .... -0- -0- 116,600 10,000 $ 4,283,877 $ 178,084
</TABLE>
- ---------------
(1) No employee of the Company holds any SARs relating to Class A or Class B
Common Stock.
(2) Market value of underlying securities at exercise or year-end, minus the
exercise price. Market value is based on the $39.25 per share closing price
on the New York Stock Exchange of the Class B Common Stock on August 29,
1997.
17
<PAGE> 20
LONG-TERM INCENTIVE PLANS -- AWARDS DURING FISCAL 1997
The following table sets forth the long-term incentive awards made during
fiscal 1997 to each Named Executive Officer receiving such an award:
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE NON-STOCK PRICE BASED PLANS
PERFORMANCE UNITS PERIOD UNTIL ---------------------------------
NAME AWARDED(1) MATURATION THRESHOLD TARGET MAXIMUM
---- ----------------- ------------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
Bruce P. Bickner.................... 105,000 08/31/99 52,500 105,000 183,750
Richard O. Ryan..................... 65,800 08/31/99 32,900 65,800 115,150
Richard T. Crowder.................. 47,600 08/31/99 23,800 47,600 83,300
Thomas R. Rauman.................... 28,000 08/31/99 14,000 28,000 49,000
John H. Witmer, Jr. ................ 21,000 08/31/99 10,500 21,000 36,750
</TABLE>
- ---------------
(1) The targeted value of each performance unit is $1.00 with a maximum payout
of $1.75 per unit. The performance units vest over a three-year period with
one-third vesting at the end of the first year, one-third vesting at the end
of the second year and the final one-third vesting at the end of the third
year. For all Named Executive Officers, the payment is based on earnings per
share for fiscal year 1999.
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR YEARS OF SERVICE
The following table sets forth the estimated annual retirement benefits
payable upon retirement pursuant to the Company's retirement plans for the
indicated levels of remuneration and years of service for each Named Executive
Officer:
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE --------------------------------------------
COMPENSATION 5 10 15 20
- ------------- - -- -- --
<S> <C> <C> <C> <C> <C>
$200,000................................. $ 30,000 $ 60,000 $ 90,000 $120,000
$225,000................................. 33,750 67,500 101,250 135,000
$250,000................................. 37,500 75,000 112,500 150,000
$275,000................................. 41,250 82,500 123,750 165,000
$300,000................................. 45,000 90,000 135,000 180,000
$325,000................................. 48,750 97,500 146,250 195,000
$350,000................................. 52,500 105,000 157,500 210,000
$375,000................................. 56,250 112,500 168,750 225,000
$400,000................................. 60,000 120,000 180,000 240,000
$425,000................................. 63,750 127,500 191,250 255,000
$450,000................................. 67,500 135,000 202,500 270,000
$475,000................................. 71,250 142,500 213,750 285,000
$500,000................................. 75,000 150,000 225,000 300,000
$525,000................................. 78,750 157,500 236,250 315,000
$550,000................................. 82,500 165,000 247,500 330,000
$575,000................................. 86,250 172,500 258,750 345,000
$600,000................................. 90,000 180,000 270,000 360,000
$625,000................................. 93,750 187,500 281,250 375,000
$650,000................................. 97,500 195,000 292,500 390,000
$675,000................................. 101,250 202,500 303,750 405,000
$700,000................................. 105,000 210,000 315,000 420,000
$725,000................................. 108,750 217,500 326,250 435,000
$750,000................................. 112,500 225,000 337,500 450,000
</TABLE>
The defined benefit plan for executives was modified in 1997. Two
enhancements and two reductions in plan benefits were made. As to the first
enhancement, the benefit formula was changed from 2% times final three years
average pay times years of service (up to a maximum of 30 years) to 3% times
final three years
18
<PAGE> 21
average pay times years of service (up to a maximum of 20 years). Second, the
maximum annual benefit limit of $207,500 indexed at 3% per year from 1989 was
eliminated. As to the first reduction, the gross benefit for executives now will
be reduced by the regular match from the defined contribution plan in addition
to the other benefits more fully described below. Second, the early retirement
reduction factor was increased to 5% per year from 3%.
The credited years of service for each of the following Named Executive
Officers is:
<TABLE>
<S> <C>
Bruce P. Bickner............................................ 19
Richard O. Ryan............................................. 15
Thomas R. Rauman............................................ 24
John H. Witmer, Jr.......................................... 16
</TABLE>
The benefits are calculated by determining the average annualized earnings
(i.e., salary and bonus) of the applicable 36 months and multiplying this by the
number of years of service (up to a maximum of 20 years) times three percent.
These benefits will be reduced by social security benefits, the benefit from the
regular match of the defined contribution plan (starting on the date the defined
benefit plan for executives was modified), qualified pension plan benefits and
benefits from a profit sharing plan previously provided by the Company. The
benefit table assumes that the participant will retire at age 65. If the
participant retires at an earlier age, the benefit will be reduced by five
percent for every year retirement takes place before age 65.
Mr. Crowder is not eligible for the above retirement benefit. The Company
has guaranteed that his annual retirement benefit starting at age 65 (from
Social Security, the Company's qualified retirement plans (excluding the
Company's 401(k) plan as it was in effect in September 1994) and the Company's
non-qualified retirement plans) will equal or exceed an amount equal to two
percent times his years of service times his average annual compensation during
his last thirty-six months of employment. At August 31, 1997, Mr. Crowder's
years of credited service were two.
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with all of the
Named Executive Officers. Each employment agreement provides for a one-year term
and is subject to successive one-year extensions unless notice of termination is
given. The employment agreements provide for the following base salaries for
fiscal 1998 to be paid to the executive officers: Mr. Bickner ($350,000), Mr.
Ryan ($265,000), Mr. Crowder ($250,000), Mr. Rauman ($170,000) and Mr. Witmer
($170,000). Those executive officers will have Company performance-related bonus
opportunities which have been set for a target bonus of $277,000; $175,000;
$135,000; $85,000 and $80,000, respectively, which could be exceeded if
performance merits. Each employment agreement provides that if the executive
officer is terminated prior to the expiration of the term of the agreement, such
executive officer will also be entitled to termination pay equal to 24 months'
base salary and target bonus in the case of Messrs. Bickner and Ryan, 12 months'
base salary and target bonus in the case of Mr. Crowder and 12 months' base
salary in the case of Messrs. Witmer and Rauman. Messrs. Bickner, Ryan, and
Crowder are subject to noncompetition limitations for periods of time equaling
the length of their termination pay.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation (including the compensation of the
chief executive officer (the "CEO")):
With input on competitive and recommended practices from external
independent consultants, the Compensation Committee of the Board of Directors
has overseen the development and implementation of Company compensation programs
which seek to enhance Company profitability and shareholder value. The Company's
objective is to closely align the senior managers' (including the CEO) financial
interests with those of the Company's shareholders. The Company subscribes to a
total compensation theory in which base salary, annual bonus, benefits,
perquisites and long-term incentives as components of the compensation
19
<PAGE> 22
package are considered individually and in total. The Company considers three
factors in determining the levels and proportions of these compensation
components for executive managers (including the CEO).
The most important element is the Company's past and expected financial
performance and whether bonus payments are consistent with shareholder return.
Primary factors in determining shareholder return are net earnings and the
accomplishment of specific strategic objectives that will enhance earnings and
asset return. These specific strategic objectives include goals such as market
share gains, new product development, strategic plan development and marketing
plan accomplishment.
Secondly, consideration is given to the competitive practice of like-sized
companies and similar industries for paying positions with equivalent
responsibilities. The Company uses both a seed industry survey and general
industry surveys in determining external pay levels. The seed industry survey is
conducted by WMS and Co., Inc. and covers pay practices of 22 competitive seed
companies. The primary general industry compensation surveys used are conducted
by William M. Mercer, Inc., Hewitt Associates and Towers Perrin. Emphasis is
placed on companies comparable in size to the Company.
The Company's compensation goal is to target its executives (including the
CEO) to be paid competitive rates when performance expectations are met and
above competitive levels when expectations are exceeded. The Company targets its
executives (including the CEO) to be paid between the 50th and 75th percentile
of competitive rates when performance expectations are met and above competitive
levels (75th percentile or higher) when performance expectations are exceeded.
As a guideline, no bonus will be awarded until a significant portion (generally
70 to 90 percent)) of the related objective has been reached. At that level of
performance, approximately 50 percent of bonus target will be paid. Bonus
payments will increase until 100 percent of target is paid at 100 percent
objective accomplishment. Performance in excess of the objective will earn a
bonus payment over target. Where the circumstances warrant, the Committee
reserves the right to make special bonus awards. Base salaries are normally at
or about the 50th percentile of competitive practice. The portion of annual cash
compensation subject to performance bonus accomplishment is normally at or
greater than the competition.
Finally, internal pay equity within the Company between executive positions
is considered. Individual performance, responsibility level and length of time
in position are all factors in determining placement within the appropriate
salary range. Major determinants of responsibility level are size of assets
managed and the ability to influence profitability.
Based upon the Company's current level of compensation, it is not necessary
to adopt a policy at this time with respect to Section 162(m) of the Code. The
Committee will continue to monitor the Company's compensation levels and adopt
necessary policies as it deems appropriate.
Criteria for determining fiscal 1997 annual performance bonuses for the
Named Executive Officers (including the CEO) included earnings, profit
contribution, market share and specific individual objectives.
The following table summarizes fiscal 1997 bonus opportunities and criteria
for the Named Executive Officers:
<TABLE>
<CAPTION>
CRITERIA AS A PERCENT OF BONUS TARGET
1997 BONUS -----------------------------------------
TARGET AS NET
PERCENT OF TOTAL CORPORATE SEGMENT INDIVIDUAL
NAME CASH COMPENSATION PERFORMANCE PERFORMANCE PERFORMANCE
---- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bruce P. Bickner........................ 44% 75% 10% 15%(1)
Richard O. Ryan......................... 40% 50% 50% --
Richard T. Crowder...................... 33% 13% 87% --
Thomas R. Rauman........................ 33% 75% 25% --
John H. Witmer, Jr. .................... 25% 50% -- 50%(2)
</TABLE>
- ---------------
(1) Included an objective on a Strategic Research Plan.
(2) Included objectives on legal staffing as well as business review and
internal audit plans.
20
<PAGE> 23
Certain members of the Committee, in their capacity as the DEKALB Genetics
Corporation Long-Term Incentive Plan Administrative Committee, periodically
grant key employees, including the Named Executive Officers, awards under the
Company's Long-Term Incentive Plan ("LTIP"). The LTIP provides the flexibility
to grant longer term incentives in a variety of forms including stock options,
stock appreciation rights and restricted stock. The Committee currently views
stock options and performance unit grants, which the Committee also grants from
time to time, (the only awards currently outstanding) as the best long term
incentive vehicles to ally the interests of management and shareholders. In
awarding stock options and performance units, the Committee reviews and approves
individual recommendations made by the Chief Executive Officer and the
President. The Committee in turn determines the awards for the CEO and the
President.
Factors used in determining individual award size are competitive practice
(awards needed to attract and retain management talent), rank within the Company
(internal equity), responsibility for asset management (size of job) and ability
to affect profitability. In each individual case, previous option and
performance unit grants are considered in determining the size of new awards.
The Committee, as it deems appropriate, seeks outside professional counsel
on the value, size, term and criteria of awards. Towers Perrin was retained in
this capacity in fiscal 1997.
The foregoing Compensation Committee Report has been furnished by:
H. Blair White, Chairman
Tod R. Hamachek
John T. Roberts
COMPARISON OF CUMULATIVE FIVE-YEAR RETURNS
ASSUMES $100 INVESTED ON 9/1/92 AND DIVIDEND REINVESTMENT
<TABLE>
<CAPTION>
DEKALB PEER GROUP PEER GROUP BROAD BROAD
MEASUREMENT PERIOD GENETICS ($500- ($1-2 MARKET MARKET
(FISCAL YEAR COVERED) CORPORATION 1,000MM)(1) BB)(1) (NASDAQ)(2) (NYSE)(2)
<S> <C> <C> <C> <C> <C>
1992 100 100 100 100 100
1993 92.77 133.46 115.15 130.18 116.49
1994 121.93 135.68 121.55 142.24 124.24
1995 153.93 174.16 130.43 169.25 141.56
1996 381.35 186.42 141.02 190.05 166.71
1997 925.58 231.11 175.36 263.05 224.66
</TABLE>
(1) There are no published industry or line of business indices that parallel
the Company's primary business endeavors, nor is there a group of
publicly-traded companies in the same business lines. Therefore, an index of
all New York Stock Exchange traded companies with a market capitalization of
$1 billion to
21
<PAGE> 24
$2 billion (excluding financial institutions) was selected as the Peer Group
Index (268 companies). The index is weighted for relative market
capitalization. The Peer Group Index used in last year's Proxy Statement was
an index of all Nasdaq traded companies with a market capitalization of $500
million to $1 billion (excluding financial institutions) (198 companies).
Because the Company's market capitalization exceeded $1 billion on August
31, 1997, the table includes the new Peer Group Index and the old Peer Group
Index for comparative purposes.
(2) The Company is not part of the S&P 500 index and was traded on Nasdaq last
year and is now traded on the NYSE. Therefore, the Nasdaq Stock Index was
selected as the Broad-Based Index prior to this year and the NYSE Index is
now being used.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
H. Blair White, a director of the Company, is Of Counsel to the law firm of
Sidley & Austin. Sidley & Austin provided legal services to the Company during
the past year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and officers of the Company and persons having 10 percent or more
beneficial ownership of the Company's stock are required under Section 16 of the
Securities Exchange Act of 1934 to report to the Securities and Exchange
Commission their transactions in, and beneficial ownership of, the Company's
Class A Common Stock, Class B Common Stock and other equity securities of the
Company. Reports received by the Company during the last fiscal year indicate
that Monsanto Company, an owner of at least 10 percent of the Company's stock,
filed one late report relating to one transaction.
CERTAIN TRANSACTIONS
On January 31, 1996, the Company entered into a series of agreements with
Monsanto, including an investment agreement and a collaboration agreement which
provides for a long-term research and development collaboration with Monsanto in
the field of agricultural biotechnology, particularly corn seed. The Company and
Monsanto also entered into cross-licensing agreements covering insect-resistant
and herbicide-tolerant corn products targeted to reach the market over the next
few years.
The investment agreement provides that if the Company issues new shares of
its Class A or Class B Common Stock pursuant to any of the Company's employee
benefit plans, Monsanto may purchase from the Company a sufficient number of
shares to maintain its permitted percentage ownership of Class A and Class B
Common Stock. During the second quarter of fiscal 1997 and the first quarter of
fiscal 1998, the Company completed two sales of equity to Monsanto pursuant to
such provisions. Monsanto purchased from the Company 24,102 (after taking into
account the two for one stock split that was made to shareholders of record on
July 25, 1997) and 156,024 newly issued shares of Class B Common Stock at
aggregate prices of $590,725 and $6,299,957, respectively. As provided in the
investment agreement, the price for the shares was based upon a specified twenty
day average closing price on the applicable securities exchange for the
Company's Class B Common Stock.
During fiscal 1997, Monsanto paid $3,000,000 to the Company under the
companies' collaboration agreement that provides for total payments of
$19,500,000 over the term of the agreement.
As part of the cross license agreements entered into between Monsanto and
the Company, each party has an obligation to share with the other certain
royalties and technology fees it receives that are related to seed corn that
contains the applicable insect resistance or herbicide tolerance. The Company
received a net payment from Monsanto of about $3,000,000 under the licenses for
sales occurring during fiscal 1997.
The Company sold soybean products for which the Company collected a royalty
or technology fee on behalf of Monsanto from the ultimate purchaser of the
products, but was not entitled to share the net proceeds with Monsanto. For
sales occurring during fiscal 1997, the Company paid Monsanto approximately
$1,500,000
22
<PAGE> 25
for such products, net of certain services fees the Company was permitted to
retain. The Company also paid a subsidiary of Monsanto approximately $450,000 as
royalties or fees for germplasm and specialty corn products. The Company
believes that the terms of each of the agreements pursuant to which such
payments were made were at least comparable to the terms Monsanto provided to
other seed companies.
Also, in an effort to increase available supplies of certain seeds to
farmers in fiscal 1997, Monsanto paid to the Company approximately $1,200,000 to
help cover the Company's incremental winter production costs.
AUDITORS
Arthur Andersen LLP performed the audit of the fiscal 1997 financial
statements of the Company. Representatives of Arthur Andersen are expected to be
present at the Annual Meeting and will be provided an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate inquiries from stockholders.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE JANUARY 1999 ANNUAL MEETING
Stockholder proposals to be included in the proxy soliciting materials for
the Annual Meeting of Stockholders of the Company following the completion of
fiscal 1998 must be received by the Company no later than July 28, 1998.
In addition, the Company's By-Laws require that there be furnished to the
Company written notice with respect to the nomination of a person for election
as a director or the submission of a proposal (other than nominations and
proposals submitted at the direction of the Board) at a meeting of stockholders.
In order for any such nomination or submission to be proper, the notice must
contain certain information concerning the nominating or proposing stockholder
and the nominee or the proposal, as the case may be, and must be furnished to
the Company generally not less than 30 days prior to the meeting. A copy of the
applicable By-Law provision may be obtained, without charge, upon written
request to the Secretary of the Company at its principal executive offices.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the Annual Meeting any
matters other than those disclosed in the Notice of Annual Meeting of
Stockholders, and it does not know of any business which persons, other than
management, intend to present at the meeting. Should any other matters requiring
a vote of the stockholders arise, the proxies in the enclosed form confer upon
the person or persons entitled to vote the shares represented by such proxies
discretionary authority to vote the same in respect of any such other matter in
accordance with their best judgment.
By Order of the Board of Directors
John H. Witmer, Jr., Secretary
DeKalb, Illinois
November 24, 1997
23
<PAGE> 26
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
DEKALB GENETICS CORPORATION
DEKALB Genetics Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), pursuant to the provisions of
the General Corporation Law of the State of Delaware (the "DGCL"), DOES HEREBY
CERTIFY as follows:
FIRST: The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the first sentence of Article FOURTH of the Restated
Certificate of Incorporation in its present form and substituting in lieu
thereof the following:
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is one hundred sixty five million five
hundred thousand (165,500,000), of which five hundred thousand (500,000)
shares of the par value of One Dollar ($1.00) each shall be Preferred Stock
and one hundred sixty five million (165,000,000) shares, without par value,
shall be Common Stock divided into two classes, consisting of thirty five
million (35,000,000) shares of Class A Common Stock, without par value, and
one hundred thirty million (130,000,000) shares of Class B Common Stock,
without par value.
SECOND: The amendment to the Restated Certificate of Incorporation of the
Corporation set forth in this Certificate of Amendment was duly adopted by the
Board of Directors and the stockholders of the Corporation pursuant to the
requirements of Section 242 of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Senior Vice President, General Counsel and
Secretary and attested by its Assistant Secretary this day of January,
1998.
DEKALB GENETICS CORPORATION
By:
------------------------------------
John H. Witmer, Jr.
Senior Vice President, General
Counsel
and Secretary
ATTEST:
- ---------------------------------------------------------
Doris Riippi
Assistant Secretary
A-1
<PAGE> 27
EXHIBIT B
DEKALB GENETICS CORPORATION
LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 The DEKALB Genetics Corporation Long-Term Incentive Plan is intended to
advance the interests of the Company, its shareholders and its Subsidiaries by
attracting, retaining and stimulating the performance of officers, other key
employees, consultants, independent contractors, agents or other advisors upon
whose judgment, initiative and effort the Company is largely dependent for the
successful conduct of its business, and to encourage and enable such officers,
other key employees, consultants, independent contractors, agents or other
advisors to acquire and retain a proprietary interest in the Company by
ownership of its stock. Options granted may, if so intended by the Committee, be
designed to meet the requirements of Section 422 of the Code.
ARTICLE II
DEFINITIONS
2.1 "Board" means the Board of Directors of the Company.
2.2 "Class A Common Stock" means the Company's no par value Class A Common
Stock.
2.3 "Class B Common Stock" means the Company's no par value Class B Common
Stock.
2.4 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.
2.5 "Committee" means the Stock Option Committee appointed by the Board.
2.6 "Company" means DEKALB Genetics Corporation.
2.7 "Common Stock" means the Company's Class A Common Stock or Class B
Common Stock.
2.8 "Date of Grant" means the date on which an Option, SAR or Restricted
Stock is granted under the Plan.
2.9 "Fair Market Value" means the closing transaction price of a share of
Class B Common Stock as reported in the New York Stock Exchange Composite
Transactions on the date as of which such value is being determined or, if there
shall be no reported transaction for such date, on the next preceding date for
which a transaction was reported; provided, however, that Fair Market Value may
be determined by the Committee by whatever means or method as the Committee, in
the good faith exercise of its discretion, shall at such time deem appropriate.
2.10 "Incentive Stock Option" means a stock option granted under the Plan
which is intended to meet the requirements of Section 422 of the Code.
2.11 "Long-Term Incentive Plan Agreement" means any agreement between the
Company and a Participant under which the Participant may receive Restricted
Stock, may purchase Common Stock thereunder through stock options or may acquire
rights concerning SARs.
2.12 "Option" means a nonqualified stock option, an Incentive Stock Option
or a Stock Appreciation Right (whether granted with respect to another Option or
alone) granted under the Plan.
2.13 "Participant" means a person to whom Restricted Stock, an Option, or
an SAR which has not expired, has been granted under the Plan.
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2.14 "Performance Measures" means the criteria and objectives, established
by the Committee, which shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option or SAR, or (ii) during the
Period of Restriction as a condition to the holder's receipt of the shares of
Common Stock subject to a Restricted Stock award. In the sole discretion of the
Committee, the Committee may amend or adjust the Performance Measures or other
terms and conditions of an outstanding award in recognition of unusual or
nonrecurring events affecting the Company or its financial statements or changes
in law or accounting principles. Such criteria and objectives may include one or
more of the following: the attainment by a share of Common Stock of a specified
Fair Market Value for a specified period of time, earnings per share, return to
stockholders (including dividends), return on equity, earnings of the Company,
revenues, market share, cash flow or cost reduction goals, or any combination of
the foregoing. If the Committee desires that compensation payable pursuant to
any award subject to Performance Measures be "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code, the Performance
Measures (i) shall be established by the Committee no later than the end of the
first quarter of the Performance Period or Restriction Period, as applicable (or
such other time designated by the Internal Revenue Service) and (ii) shall
satisfy all other applicable requirements imposed under Treasury Regulations
promulgated under Section 162(m) of the Code, including the requirement that
such Performance Measures be stated in terms of an objective formula or
standard.
2.15 "Period of Restriction" means the period during which the transfer of
shares of Common Stock is restricted pursuant to Article IX of this Plan.
2.16 "Plan" means this DEKALB Genetics Corporation Long-Term Incentive
Plan.
2.17 "Restricted Stock" means Common Stock granted to a participant
pursuant to Article VIII of this Plan.
2.18 "Stock Appreciation Right" or "SAR" is a right to receive, without
payment to the Company, a number of shares of Common Stock, cash or any
combination thereof, the amount of which is determined pursuant to the formula
set forth in Section 7.5.
2.19 "Subsidiary" or "Subsidiaries" means, unless otherwise indicated,
direct and indirect subsidiaries of an entity, including any partnership or
other business entity in which the applicable company or one or more
Subsidiaries have a majority of the voting interest of the governing body of
such partnership or entity.
ARTICLE III
PARTICIPANTS
Restricted Stock, Options, or SARs may be granted under the Plan to any
person who is or who agrees to become an officer, key employee, consultant,
independent contractor, agent or other advisor of the Company or any of its
Subsidiaries. The Committee may grant Restricted Stock, Options, or SARs to such
persons in accordance with such determinations as the Committee from time to
time in its sole discretion may make.
ARTICLE IV
ADMINISTRATION
4.1 Committee. The Plan shall be administered by the Committee. Subject to
the express provisions of the Plan, the Committee shall have sole discretion and
authority to determine from among eligible persons those to whom and the time or
times at which Restricted Stock, Options or SARs may be granted and the number
of shares of Restricted Stock that may be awarded or the number of shares of
Common Stock to be subject to each Option or SAR. Subject to the express
provisions of the Plan, the Committee shall also have complete authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the details and provisions of each Long-Term
Incentive Plan Agreement, and to make all the determinations necessary or
advisable in the administration of the Plan. All such actions and determinations
by the Committee shall be conclusively binding for all purposes and upon all
persons.
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4.2 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority present at a meeting at
which a quorum is present or any action taken without a meeting evidenced by a
writing executed by a majority of the whole Committee shall constitute the
action of the Committee.
4.3 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible employees,
their employment, death, retirement, disability or other termination of
employment, and such other pertinent facts as the Committee may require. The
Company shall furnish the Committee with such clerical and other assistance as
is necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Common Stock which may be issued and
sold or granted hereunder shall be 2,305,830; provided that on and after
September 1, 1995, there shall be an additional 2,100,000 shares of Common Stock
(subject to adjustment pursuant to the provisions of Section 5.3 hereof) which
are available for grants of awards hereunder. The number of shares which may be
issued and sold or granted may be either authorized but unissued shares, shares
issued and reacquired by the Company or shares bought on the market for the
purposes of the Plan. SARs awarded and exercised pursuant to Article VII shall
be considered to be Common Stock for purposes of this Section 5.1, provided that
shares of Common Stock subject to an Option, and an SAR granted with respect
thereto, shall only be counted once.
Notwithstanding the foregoing, (a) no Option, SAR or Restricted Stock may
be granted or awarded hereunder if and to the extent that such grant or award
would cause the total number of shares of Common Stock subject to then
outstanding and unexercised Options and SARs, plus the total number of shares of
Restricted Stock awarded hereunder (other than shares of Registered Stock which
are no longer subject to restrictions under this Plan) to exceed eight and
one-half percent (8 1/2) of the total number of shares of Common Stock
outstanding at the time of such grant or award and (b) to the extent necessary
for an award to be qualified performance-based compensation under Section 162(m)
of the Code, the maximum number of shares of Common Stock available for grants
of awards hereunder to any Participant in any fiscal year of the Company shall
not exceed 300,000 shares (subject to adjustment pursuant to the provisions of
Section 5.3 hereof)
5.2 Restricted Stock, SARs and Options Granted Under Plan. Shares of Common
Stock with respect to which Restricted Stock shall have vested, or an Option or
SAR granted hereunder shall have been exercised, shall not again be available
for award hereunder. If Restricted Stock awarded hereunder shall be forfeited or
if an Option or SAR granted hereunder shall terminate for any reason without
being wholly exercised, the number of shares to which such Restricted Stock
forfeiture or Option or SAR termination relates shall again be available for
grant hereunder.
5.3 Antidilution. In the event that the outstanding shares of Common Stock
hereafter are changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason of
merger, consolidation, other reorganization, recapitalization, reclassification,
combination of shares, stock split-up, or stock dividend, or in the event that
there should be any other stock splits, stock dividends or other relevant
changes in capitalization occurring after the effective date of this Plan:
(a) The aggregate number and kind of Restricted Stock, SARs and shares
subject to Options which may be granted hereunder shall be adjusted
appropriately;
(b) Rights relating to outstanding Restricted Stock, SARs and Options
granted hereunder, both as to the number of subject shares and in the case
of Options and SARs, the exercise price, shall be adjusted appropriately;
and
(c) Where dissolution or liquidation of the Company or any merger or
combination in which the Company is not the surviving corporation is
involved, each outstanding Restricted Stock award and
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Option or SAR granted hereunder shall be forfeited or shall terminate, but
the Participant shall have the right, immediately prior to such
dissolution, liquidation, merger, or combination, to receive the Common
Stock subject to the Restricted Stock award or to exercise his Option or
SAR in whole or in part, to the extent that it shall not have been
exercised, without regard to any vesting or installment exercise
provisions.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined solely by the Committee, whose determination
shall be final, and any such adjustment may provide for the elimination of
fractional share interests.
ARTICLE VI
OPTIONS
6.1 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Long-Term Incentive Plan Agreement dated as of the Date of Grant and
executed by the Company and the Participant. The Committee may, in its
discretion, establish Performance Measures which shall be satisfied or met as a
condition to the grant of an Option or the exercisability of all or a portion of
an Option. The Long-Term Incentive Plan Agreement shall set forth such terms and
conditions as may be determined by the Committee to be consistent with the Plan,
but may include additional provisions and restrictions, provided that they are
not inconsistent with the Plan.
6.2 Option Price. The per share Option price of the Common Stock subject to
each Option shall be determined by the Committee, but, except as otherwise
provided in Article IX(a), the per share price shall not be less than the Fair
Market Value of the Common Stock on the date the Option is granted.
6.3 Option Period. Each Option granted hereunder may be granted at any time
after the effective date of the Plan and prior to the termination of the Plan,
provided that no Incentive Stock Option may be granted at any time more than ten
years after this Plan has been adopted by the stockholders of the Company. The
period for the exercise of each Option shall be determined by the Committee
provided, however, that (i) except as otherwise expressly provided in this Plan,
the Committee may, in its discretion, terminate outstanding Options or
accelerate the exercise dates thereunder, upon 60 days written notice given to
the Participant and (ii) the period during which each Incentive Stock Option may
be exercised shall be not later than ten years from the date such Incentive
Stock Option is granted, provided that Incentive Stock Options granted to a
"10-percent owner" (as defined in Article IX) must be exercised within five
years from the date thereof.
6.4 Option Exercise.
(a) Options granted hereunder may not be exercised unless and until
the Participant shall have been or remained in the employ of the Company or
its Subsidiaries for six months (or such longer time as may be established
by the Committee) from and after the date such Option was granted, except
as otherwise provided in Section 6.7 hereof.
(b) Options may be exercised in whole at any time, or in part from
time to time, with respect to whole shares only, within the period
permitted for the exercise thereof, and shall be exercised by written
notice of intent to exercise the Option with respect to a specified number
of shares delivered to the Company at its principal office, and payment in
full to the Company at said office of the amount of the Option price for
the number of shares of the Common Stock with respect to which the Option
is then being exercised. In addition to and at the time of payment of the
Option price, Participant shall pay to the Company in cash or in Common
Stock the full amount of all federal and state withholding or other
employment taxes applicable to the taxable income of such Participant
resulting from such exercise.
(c) The Committee may impose such restrictions on any shares of Common
Stock acquired pursuant to the exercise of an Option under this Plan as it
may deem advisable, including, without limitation, restrictions under
applicable federal securities laws, under the requirements of any stock
exchange or association upon the trading system of which such shares of
Common Stock are then listed or traded and under any state securities laws
applicable to such Common Stock.
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6.5 Payment. The purchase price for shares of Common Stock purchased upon
exercise of Options shall be paid in cash, in shares of Common Stock of the
Company (not subject to limitations on transfer) valued at the then Fair Market
Value of such shares, or a combination of cash and such Common Stock.
6.6 Transferability of Options. No Option granted under this Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated, in
whole or in part, except (a) by will or by the laws of descent and distribution,
(b) pursuant to a domestic relations order, (c) to one or more of the
Participant's Immediate Family Members (as defined below), (d) to a trust or
trusts for the exclusive benefit of one or more of the Participant's Immediate
Family Members, (e) to a partnership in which one or more of the Participant's
Immediate Family Members are the only partners, (f) to a limited liability
company in which one or more of the Participant's Immediate Family Members are
the only members, (g) to a person for whom the Participant is legal guardian,
(h) to such other persons or entities as may be approved in writing by the
Committee prior to such transfer. For purposes of this Section 6.6 and of
Section 7.9, the term "Immediate Family Member" shall mean any child, stepchild,
grandchild, sibling, spouse of any of the foregoing, spouse, parent, stepparent,
grandparent, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, sister-in-law, niece, nephew, aunt, or uncle and shall include
adoptive relationships. Subsequent transfers of an Option, or any portion
thereof, may only be made in accordance with the provisions of this Section 6.6
and may be made from a transferee back to the Participant. Following any
transfer of an Option or any portion thereof, such Option shall continue to be
subject to all of the terms and conditions to which it was subject immediately
prior to such transfer, including the terms and conditions relating to the
termination of such Option resulting from the Participant's death or other
termination of employment, and the Company shall have no obligation to notify
any transferee of such death or other termination of employment. Except as
otherwise provided in this Section 6.6, during the lifetime of a Participant the
Option shall be exercisable only by him, or, in the case of a Participant who is
mentally incapacitated, the Option shall be exercisable by his guardian or legal
representative. No transfer of an Option by a Participant pursuant to the
provisions of this Section 6.6 shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and such other
evidence as the Committee may deem necessary to establish the validity of the
transfer or transfers and the acceptance of the terms and conditions of such
Option.
6.7 Effect of Death or Other Termination of Employment.
(a) Except as otherwise provided in this Section 6.7, if, prior to a
date six months from the Date of Grant of an Option (or such longer time as
may be established by the Committee), the Participant's employment with the
Company and its Subsidiaries shall be terminated by the Company or
Subsidiary for any reason, or by the act of the Participant, the
Participant's right to exercise such Option shall terminate and all rights
thereunder shall cease.
(b) If, on or after six months from the Date of Grant (or such longer
time as may be established by the Committee), a Participant's employment
with the Company and its Subsidiaries shall be terminated for any reason
other than elimination of a Participant's position at the Company, death,
retirement on or after his sixty-fifth birthday, retirement on or after age
55, retirement on or after age 50 but on or after a date on which a
Participant's age plus years of service equals or exceeds 65, permanent and
total disability, serious misconduct, or a separation negotiated between a
Participant and the Company, the Participant shall have the right, during
the period ending 60 days after such termination, to exercise such Option
to the extent that it was exercisable at the date of such termination of
employment and shall not have been exercised provided, however, that such
time period may be shortened in accordance with the provisions of Section
6.3 if a shortened exercise period is applied to Optionees in general.
(c) If a Participant shall die at any time after the Date of Grant and
while in the employ of the Company or its Subsidiaries or within 60 days
after termination of such employment, the executor or administrator of the
estate of the decedent or the person or persons to whom an Option granted
hereunder shall have been validly transferred by the executor or the
administrator pursuant to will or the laws of descent and distribution
shall have the right, during the period ending three years after the date
of the Participant's death, to exercise the Participant's Option, provided,
however, such time period may be shortened in accordance with the
provisions of Section 6.3 if a shortened exercise period is applied to
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Participants in general, and further provided that if a Participant dies
within 60 days after termination of employment, the Option may be exercised
only to the extent that it was exercisable at the date of termination of
employment and shall not have been exercised.
(d) If a Participant's employment with the Company and its
Subsidiaries should terminate because the Participant shall retire on or
after his sixty-fifth birthday or become permanently and totally disabled
at any time after the Date of Grant, the Participant (or in the case of a
Participant who is mentally incapacitated, his guardian or legal
representative) shall have the right, during a period ending three years
after such retirement or disability, to exercise such Option, provided,
however, such time period may be shortened in accordance with the
provisions of Section 6.3 if a shortened exercise period is applied to
Optionees in general.
(e) If a Participant's employment with the Company and its
Subsidiaries should terminate because the Participant shall on or after his
fifty-fifth birthday or on or after his fiftieth birthday but on or after a
date on which the Participants age plus years of service equals or exceeds
65, the Participant shall have the right, during a period ending one year
after such retirement, to exercise such Option, provided, however, such
time period may be shortened in accordance with the provisions of Section
6.3 if a shortened time period is applied to Optionees in general.
(f) If a Participant's employment with the Company and its
Subsidiaries shall be terminated by the Company or a Subsidiary because the
position held by the Participant has been eliminated by the Company, the
Participant shall have the right, during a period ending one year after his
employment has been terminated, to exercise such Option, provided, however,
such time period may be shortened in accordance with the provisions of
Section 6.3 if a shortened time period is applied to Optionees in general.
(g) If a Participant's employment with the Company and its
Subsidiaries shall be terminated by the Company or a Subsidiary for serious
misconduct, the Participant's right to exercise such Option shall
immediately terminate and all rights thereunder shall cease. For purposes
of this Plan, the term "serious misconduct" shall include, but not be
limited to, embezzlement or misappropriation of corporate funds, other acts
of dishonesty, significant activities harmful to the reputation of the
Company or the Subsidiaries, a significant violation of Company or
Subsidiary policy, willful refusal to perform, or substantial disregard of,
the duties properly assigned to the Participant, or a significant violation
of any contractual, statutory or common law duty of loyalty to the Company
or the Subsidiaries.
(h) If a Participant's employment with the Company and its
Subsidiaries shall be terminated on a negotiated basis, the Participant
shall have the right, during a period of time ending on such date after
such termination as may be determined by the Committee (in the case of the
Participants subject to Section 16 of the Securities Exchange Act of 1934)
or by management (in the case of any other Participant), but in no event
longer than three years or shorter than 60 days, to exercise such Option.
6.8 Rights as Stockholder. Except as otherwise provided pursuant to Section
6.9, a Participant or a transferee of an Option shall have no rights as a
stockholder with respect to any shares subject to such Option prior to the
purchase of such shares by exercise of such Option as provided herein. Nothing
contained herein or in the Long-Term Incentive Plan Agreement shall create an
obligation on the part of the Company to repurchase any shares of Common Stock
purchased hereunder.
6.9 Dividend Equivalents. A Participant, whether or not his Options are
exercisable, shall, in the sole discretion of the Committee, as determined at
the Date of Grant or at any time thereafter, be entitled to receive a cash
payment from the Company, as and when cash dividends are payable to the holders
of the Common Stock of the Company, in an amount equal to the cash dividend
which would be paid to said Participant in respect of all shares subject to such
Options were such Participant the holder of such shares on the record date for
such cash dividend.
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ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 SAR Grants and Agreement. An SAR may be granted (a) with respect to any
nonqualified stock option or Incentive Stock Option granted under this Plan,
either concurrently with the grant of such option or (in the case of an Option
which is not intended to be qualified performance-based compensation under
Section 162(m) of the Code) at such later time as determined by the Committee
(as to all or any portion of the shares of Common Stock subject to the option),
or (b) alone, without reference to any related option. Each SAR granted
hereunder shall be evidenced by minutes of a meeting or the written consent of
the Committee and by a Long-Term Incentive Agreement dated as of the Date of
Grant and executed by the Company and the Participant. The Committee may, in its
discretion, establish Performance Measures which shall be satisfied or met as a
condition to the grant of an SAR or to the exercisability of all or a portion of
an SAR. The Long-Term Incentive Agreement shall set forth such terms and
conditions as may be determined by the Committee to be consistent with the Plan,
but may include additional provisions and restrictions, provided that they are
not inconsistent with the Plan.
7.2 Number. Each SAR granted to any Participant shall relate to such number
of shares of Common Stock as shall be determined by the Committee, subject to
adjustment as provided in Section 5.3. In the case of an SAR granted with
respect to a nonqualified stock option or Incentive Stock Option, the number of
shares of Common Stock to which the SAR pertains shall be reduced in the same
proportion that the Participant exercises the related option.
7.3 Duration. Subject to earlier termination in a manner similar to that
described in Section 6.3 or Section 6.7, the term of each SAR shall be
determined by the Committee, but shall not exceed ten years and one day from the
Date of Grant. Unless otherwise provided by the Committee, each SAR shall become
exercisable at such time or times, to such extent and upon such conditions as
the option, if any, to which it relates is exercisable. No SAR may be exercised
during the first six months of its term (or such longer period as may be
established by the Committee). Except as provided in the preceding sentence, the
Committee may in its discretion accelerate the exercisability of any SAR in a
manner similar to that described in Section 6.3.
7.4 Exercise. An SAR may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of SARs which the
Participant wishes to exercise. Upon receipt of such written notice, the Company
shall, within 90 days thereafter, deliver to the exercising Participant
certificates for the shares of Common Stock or cash or both, as determined by
the Committee, to which the holder is entitled pursuant to Section 7.5.
7.5 Payment. Subject to the right of the Committee to deliver cash in lieu
of shares of Common Stock (which, as it pertains to officers of the Company,
shall comply with all requirements of the Securities Exchange Act of 1934, as
amended, and regulations adopted thereunder), the number of shares of Common
Stock which shall be issuable upon the exercise of an SAR shall be determined by
dividing:
(a) the number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of the appreciation in such shares (for
this purpose, the "appreciation" shall be the amount by which the Fair
Market Value of the shares of Common Stock subject to the SAR on the
exercise date exceeds (1) in the case of an SAR related to a stock option,
the purchase price of the shares of Common Stock under the stock option or
(2) in the case of an SAR granted alone, without reference to a related
stock option, an amount which shall be determined by the Committee at the
time of grant, which amount shall equal the Fair Market Value of the Common
Stock on the Date of Grant; by
(b) the Fair Market Value of a share of Common Stock on the exercise
date.
In lieu of issuing only shares of Common Stock upon the exercise of an SAR, the
Committee may elect to pay the holder of the SAR cash or any combination of cash
or Common Stock equal to the Fair Market Value on the exercise date of any or
all of the shares which would otherwise be issuable. No fractional shares of
Common Stock shall be issued upon the exercise of an SAR; instead, the holder of
the SAR shall be entitled to receive a cash adjustment equal to the same
fraction of the Fair Market Value of a share of Common Stock
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on the exercise date or to purchase the portion necessary to make a whole share
at its Fair Market Value on the date of exercise.
7.6 Restrictions.
(a) SARs granted hereunder may not be exercised unless and until the
Participant shall have been or remained in the employ of the Company or its
Subsidiaries for six months (or such longer time as may be established by
the Committee) from and after the date such SAR was granted, except as
otherwise provided in Section 6.7 hereof.
(b) SARs may be exercised in whole at any time, or in part from time
to time, within the period permitted for the exercise thereof, and shall be
exercised by written notice of intent to exercise the SAR with respect to a
specified number of shares delivered to the Company at its principal
office. A Participant shall pay to the Company in cash or in Common Stock
the full amount of all federal and state withholding or other employment
taxes applicable to the taxable income of such Participant resulting from
such exercise.
(c) The Committee may impose such restrictions on any shares of Common
Stock acquired pursuant to the exercise of an SAR under this Plan as it may
deem advisable, including, without limitation, restrictions under
applicable federal securities law, under the requirements of any stock
exchange or association upon the trading system of which such shares of
Common Stock are then listed or traded and under any state securities laws
applicable to such Common Stock.
7.7 Effect of Death or Other Termination of Employment. All provisions
contained in Section 6.7 shall have equal applicability to SARs.
7.8 Employment Taxes. The Company shall retain the full amount of all
federal and state withholding or other employment taxes applicable to the
taxable income of the Participant resulting from the exercise of the SAR.
7.9 Transferability of SARs. No SAR granted under this Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, in whole
or in part, except (a) by will or by the laws of descent and distribution, (b)
pursuant to a domestic relations order, (c) to one or more of the Participant's
Immediate Family Members (as defined in Section 6.6), (d) to a trust or trusts
for the exclusive benefit of one or more of the Participant's Immediate Family
Members, (e) to a partnership in which one or more of the Participant's
Immediate Family Members are the only members, (f) to a limited partnership in
which one or more of the Participant's Immediate Family Members are the only
partners, (g) to a person for whom the Participant is legal guardian, (h) to
such other person or entities as may be approved in writing by the Committee
prior to such transfer. Subsequent transfers of an SAR, or any portion thereof,
may only be made in accordance with the provisions of this Section 7.9 and may
be made from a transferee back to the Participant. Following any transfer of an
SAR, or any portion thereof, such SAR shall continue to be subject to all of the
terms and conditions to which it was subject immediately prior to such transfer,
including the terms and conditions relating to the termination of such SAR
resulting from the Participant's death or other termination of employment, and
the Company shall have no obligation to notify any transferee of such death or
other termination of employment. Except as otherwise provided in this Section
7.9, during the lifetime of a Participant the SAR shall be exercisable only by
him, or, in the case of a Participant who is mentally incapacitated, the SAR
shall be exercisable by his guardian or legal representative. No transfer of an
SAR by a Participant pursuant to the provisions of this Section 7.9 shall be
effective to bind the Company unless the Company shall have been furnished with
written notice thereof and such other evidence as the Committee may deem
necessary to establish the validity of the transfer or transfers and the
acceptance of the terms and conditions of such SAR.
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ARTICLE VIII
RESTRICTED STOCK
8.1 Restricted Stock Grant and Agreement. The Committee, at any time and
from time to time, may grant shares of Restricted Stock under the Plan to such
Participants and in such amounts as it shall determine. Each grant of Restricted
Stock shall be evidenced by minutes of a meeting or the written consent of the
Committee and by a written Long-Term Incentive Plan Agreement dated as of the
Date of Grant and executed by the Company and the Participant. The Committee
may, in its discretion, establish Performance Measures which shall be satisfied
or met as a condition to the vesting of all or a portion of the shares of
Restricted Stock. The Long-Term Incentive Plan Agreement shall specify the
Period(s) of Restriction and the time or times at which such period(s) shall
lapse with respect to a specified number of shares of Restricted Stock and shall
set forth such other terms and conditions as may be determined by the Committee
to be consistent with the Plan, but may include additional provisions and
restrictions, provided that they are not inconsistent with the Plan. The Periods
of Restriction shall not exceed ten years from the Date of Grant of the
Restricted Stock.
8.2 Nontransferability. Except as provided in Section 8.8 hereof, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated for such period of
time as shall be determined by the Committee and shall be specified in the
Long-Term Incentive Plan Agreement, or upon earlier satisfaction of other
conditions as specified by the Committee in its sole discretion and set forth in
the Long-Term Incentive Plan Agreement.
8.3 Other Restrictions. The Committee may impose such restrictions on any
shares of Common Stock acquired pursuant to a grant of Restricted Stock under
this Plan as it may deem advisable, including, without limitation, restrictions
under applicable federal securities law, under the requirements of any stock
exchange or association upon the trading system of which such shares of Common
Stock are then listed or traded and under any state securities laws applicable
to such Common Stock.
8.4 Voting Rights. Participants holding shares of Restricted Stock granted
hereunder shall have voting rights with respect to those shares during the
Period of Restriction.
8.5 Dividends and Other Distributions. At the time of an award of shares of
Restricted Stock, the Committee may, in its discretion, determine that the
payment to the Participant of dividends declared or paid on such shares by the
Company, or a specified portion thereof, shall be deferred until the earlier to
occur of (i) the lapsing of the restrictions imposed on the underlying shares of
Common Stock under Sections 8.2 and 8.3 hereof or (ii) the forfeiture of such
shares, and shall be held by the Company for the account of the Participant
until such time. In the event of such deferral, there shall be credited at the
end of each year (or portion thereof) interest on the amount of the account at
the beginning of the year at a rate per annum to be determined by the Committee.
Payment of deferred dividends, together with interest accrued thereon as
aforesaid, shall be made upon the earlier to occur of the events specified in
(i) and (ii) of the immediately preceding sentence.
8.6 Termination of Employment Due to Retirement. If a Participant's
employment with the Company and its Subsidiaries terminates because the
Participant shall retire on or after his sixty-fifth birthday, the Period of
Restriction applicable to the Restricted Stock pursuant to Section 8.2 hereof
shall lapse automatically, all related Performance Measures, if any, shall be
deemed to have been satisfied at the maximum level and, except as otherwise
provided pursuant to the provisions contained in Section 8.3, the shares of
Restricted Stock shall thereby be free of restrictions and freely transferable.
In the event that a Participant terminates his employment with the Company or
its Subsidiaries by retiring prior to his sixty-fifth birthday, all shares of
Restricted Stock shall be forfeited and returned to the Company; provided,
however, that the Committee in its sole discretion may waive or modify the
restrictions remaining on any or all shares of Restricted Stock.
8.7 Termination of Employment Due to Death or Disability. If a
Participant's employment with the Company and its Subsidiaries terminates
because of his death or permanent total disability during the Period of
Restriction, the Period of Restriction applicable to the Restricted Stock
pursuant to Section 8.2 hereof shall
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<PAGE> 36
lapse automatically, all related Performance Measures, if any, shall be deemed
to have been satisfied at the maximum level and, except as otherwise provided
pursuant to the provisions contained in Section 8.3, the shares of Restricted
Stock shall thereby be free of restrictions and freely transferable.
8.8 Termination of Employment for Reasons Other Than Death, Disability or
Retirement. If a Participant's employment with the Company and its Subsidiaries
terminates for any reason other than those set forth in Sections 8.6 and 8.7
during the Period(s) of Restriction, any shares of Restricted Stock still
subject to restrictions at the date of such termination automatically shall be
forfeited and returned to the Company. In the event of an involuntary
termination of the employment of a Participant by the Company other than a
termination for serious misconduct as defined in Section 6.7(e), the Committee
in its sole discretion may waive the automatic forfeiture of any or all such
shares.
8.9 Employment Taxes. The Company shall withhold or the Participant shall
pay the Company the full amount of all federal, state and other employment taxes
applicable to the taxable income of the Participant at the earlier of (a) the
time such rights are not subject to a substantial risk of forfeiture, (b) the
time the Participant may transfer the stock free of any substantial risk of
forfeiture, or (c) the Participant elects to treat the Restricted Stock as
substantially vested pursuant to Section 83(b) of the Code. The Participant
shall be obligated to advise the Company of any such election.
ARTICLE IX
TEN-PERCENT OWNERS
Notwithstanding any other provisions of this Plan, the following terms and
conditions shall apply to Incentive Stock Options granted hereunder to a
"10-percent owner." For this purpose, a "10-percent owner" shall mean a
Participant who, at the time the Incentive Stock Option is granted, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or of any Subsidiary. With respect to a
10-percent owner:
(a) the price at which shares of stock may be purchased under an
Incentive Stock Option granted pursuant to this Plan shall be not less than
110 percent of the Fair Market Value thereof, said Fair Market Value being
determined in the manner described in Section 2.9, above; and
(b) the period during which any such Incentive Stock Option may be
exercised, to be fixed by the Committee in the manner described in Section
6.3, above, shall expire not later than five years from the date the
Incentive Stock Option is granted.
ARTICLE X
ANNUAL LIMITS
Incentive Stock Options shall not be granted to any individual pursuant to
this Plan, the effect of which would be to permit such person to first exercise
Incentive Stock Options, in any calendar year, for the purchase of shares having
a Fair Market Value in excess of $100,000 (determined at the time of grant of
the Incentive Stock Options). A Participant hereunder may exercise Incentive
Stock Options for the purchase of shares valued in excess of $100,000
(determined at the time of grant of the Incentive Stock Options) in a calendar
year, but only if the right to exercise such Incentive Stock Options shall have
first become available in prior calendar years.
ARTICLE XI
OTHER TERMS AND CONDITIONS
11.1 Any Incentive Stock Option granted hereunder shall contain such other
and additional terms, not inconsistent with the terms of this Plan, which are
deemed necessary or desirable by the Committee, which
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<PAGE> 37
such terms, together with the terms of this Plan, shall constitute such
Incentive Stock Option as an "Incentive Stock Option" within the meaning of
Section 422 of the Code.
11.2 Notwithstanding anything contained herein to the contrary, in the case
of any award subject to Performance Measures which is intended to be qualified
performance-based compensation under Section 162(m) of the Code, no payment
shall be made under any such award until the Committee certifies in writing that
the Performance Measures have in fact been achieved.
ARTICLE XII
STOCK CERTIFICATES
12.1 Conditions. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock received pursuant to a Restricted Stock
award or purchased upon the exercise of any Option or SAR granted hereunder or
any portion thereof prior to fulfillment of all of the following conditions:
(a) The completion of any registration or other qualification of such
shares under any federal or state law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall in its sole discretion deem
necessary or advisable;
(b) The obtaining of any approval or other clearance from any federal
or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable;
(c) The lapse of such reasonable period of time following the Period
of Restriction or the exercise of the Option as the Committee from time to
time may establish for reasons of administrative convenience; and
(d) Satisfaction by the Participant of all applicable withholding
taxes or other withholding liabilities.
12.2 Legends. The Company reserves the right to legend any certificate for
shares of Common Stock conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations.
ARTICLE XIII
TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee, terminate,
and may at any time and from time to time and in any respect amend or modify,
the Plan; provided, however, that no such action shall impair the rights of any
holder of an Option or SAR or of Restricted Stock theretofore granted; and
further provided, that no such action of the Board without approval of the
shareholders of the Company may:
(a) Increase the total number of shares of Common Stock subject to the
Plan, except as contemplated in Sections 5.1 and 5.3 hereof,
(b) Change the manner of determining the Option price,
(c) Withdraw the administration of the Plan from the Committee or the
Board;
(d) Extend the maximum Period of Restriction or extend the maximum
period or reduce the minimum period during which Options or SARs may be
exercised, or
(e) Change the Class of people who may become participants in the
Plan;
provided further, that, except to the extent otherwise permitted by Section 6.3,
no termination, amendment, or modification of the Plan shall in any manner
affect any Restricted Stock, Option or SAR theretofore awarded or granted under
the Plan without the consent of the Participant or permitted transferee of the
Option, SAR or Restricted Stock.
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<PAGE> 38
ARTICLE XIV
MISCELLANEOUS
14.1 Employment. Nothing in the Plan, in any Option, Restricted Stock or
SAR awarded or granted hereunder, or in any Long-Term Incentive Plan Agreement
relating thereto shall confer upon any employee the right to continue in the
employ of the Company or any Subsidiary.
14.2 Other Compensation Plans. The adoption of the Plan shall not affect
any other stock option or incentive or other compensation plans in effect for
the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company or any Subsidiary.
14.3 Plan Binding on Successors. The Plan shall be binding upon the
Company, its successors and assigns, and the Participant, his executor,
administrator and permitted transferees.
14.4 Singular, Plural- Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
14.5 Headings Not Part of Plan. Headings of Articles and Sections hereof
are inserted for convenience and reference; they constitute no part of the Plan.
14.6 Effective Date. The Plan shall become effective upon its approval by
the holders of a majority of the shares of Common Stock of the Company
represented at an annual or special meeting of the shareholders of the Company.
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<PAGE> 39
DEKALB GENETICS CORPORATION
PROXY - ANNUAL MEETING OF STOCKHOLDERS
January 20, 1998
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated November 24, 1997. Bruce P. Bickner and
H. Blair White, each with full power of substitution, and acting alone, are
hereby constituted proxies of the undersigned and authorized to attend the
Annual Meeting of Stockholders of DEKALB Genetics Corporation, a Delaware
corporation (the "Company"), to be held at the DeKalb County Farm Bureau, 1350
West Prairie Drive, Sycamore, Illinois 60178, on January 20, 1998 at 3:00 P.M.,
Central Standard Time, or any adjournment or adjournments of such meeting, and
to represent and vote all shares of Class A Common Stock of the Company which
the undersigned is entitled to vote:
(1) FOR [ ] election of the four (4) nominees for director named in the
accompanying Proxy Statement, namely: Bruce P. Bickner, Dr. Charles
J. Arntzen, Virginia Roberts Holt and H. Blair White and for the terms
described in the Proxy Statement.
INSTRUCTION: To withhold authority to vote for any individual nominee,
write each such nominee's name below.
------------------------------------------------------------------------
WITHHOLD [ ] authority to vote for all of the aforementioned nominees
as director.
(2) FOR [ ] AGAINST [ ] ABSTAIN [ ] Approval of the amendment to the
Restated Certificate of Incorporation of the Company set forth in the
Proxy Statement.
(3) FOR [ ] AGAINST [ ] ABSTAIN [ ] Approval of the [AMENDED AND RESTATED]
DEKALB Genetics Corporation Long-Term Incentive Plan set forth in the
Proxy Statement.
(4) In their discretion, upon any other business that may properly come
before the meeting or adjournment thereof.
This proxy is revocable. The undersigned hereby revokes any proxy or
proxies to vote or act with respect to such shares heretofore given by the
undersigned.
THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SPECIFIED
HEREIN AND, IN THE ABSENCE OF SUCH SPECIFICATIONS, WILL BE VOTED FOR PROPOSALS
(1), (2) AND (3).
PLEASE MARK, SIGN, DATE AND RETURN Date:_______________________________
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. [ ] I expect to attend this meeting.
[ ] I do not expect to attend this
meeting.
_________________________________
_________________________________
Please sign exactly as your stock
is registered. Joint owners should
each sign personally. Executors,
administrators, trustees, etc.
should so indicate when
signing.
<PAGE> 40
INSTRUCTIONS TO CITIBANK, F.S.B.
FOR VOTING OF PARTICIPANT'S INTEREST IN THE
DEKALB GENETICS CORPORATION SAVINGS AND INVESTMENT PLAN
The undersigned, as a participant in the Company Common Stock
Fund of the DEKALB Genetics Corporation Savings and Investment Plan,
acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement dated November 24, 1997. Furthermore, Bruce P. Bickner and H.
Blair White, each with full power of substitution, and acting the undersigned
hereby instructs Citibank, F.S.B., as Trustee, (a) to appoint alone, as proxies
of the undersigned; (b) to authorize such proxies to attend the Annual Meeting
of Stockholders of DEKALB Genetics Corporation, a Delaware corporation (the
"Company"), to be held at the Dekalb County Farm Bureau, 1350 West Prairie
Drive, Sycomore, Illinois 60178, on January 20, 1998 at 3:00 P.M., Central
Standard Time, or any adjournment or adjournments of such meeting; and (c) to
instruct such proxies to represent and vote all shares of Class A Common Stock
of the Company which the undersigned is entitled to vote:
(To be Signed on Reverse Side)
- --------------------------------------------------------------------------------
(1) FOR [ ] election of the four (4) nominees for director named in the
accompanying Proxy Statement, namely: Bruce P. Bickner, Dr. Charles
J. Arntzen, Virginia Roberts Holt and H. Blair White and for the
terms described in the Proxy Statement.
INSTRUCTION: To withhold authority to vote for any individual
nominee, write each such nominee's name below.
----------------------------------------------------------------------
WITHHOLD [ ] authority to vote for all of the aforementioned nominees
as director.
(2) FOR [ ] AGAINST [ ] ABSTAIN [ ] Approval of the amendment to the
Restated Certificate of Incorporation of the Company set forth in the
Proxy Statement.
(3) FOR [ ] AGAINST [ ] ABSTAIN [ ] Approval of the [AMENDED AND
RESTATED] DEKALB Genetics Corporation Long-Term Incentive Plan set
forth in the Proxy Statement.
(4) In their discretion, upon any other business that may properly come
before the meeting or adjournment thereof.
These instructions are revocable. The undersigned hereby revokes any
instructions to vote or act with respect to such interest in the Plan
heretofore given by the undersigned.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. IF THIS CARD IS NOT COMPLETED
AND RETURNED ON OR BEFORE JANUARY __, 1998,
THE SHARES REPRESENTING YOUR INTEREST IN THE PLAN WILL NOT BE VOTED.
Date: _________________________
[ ] I expect to attend this meeting.
[ ] I do not expect to attend this meeting.
_______________________________
Signature
