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:
(X) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SMITHFIELD FOODS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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>
SMITHFIELD FOODS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 2, 1999
As a shareholder of SMITHFIELD FOODS, INC., a Virginia corporation (the
"Company"), you are cordially invited to be present, either in person or by
proxy, at the Annual Meeting of Shareholders of the Company to be held at the
Sheraton Waterside Hotel, 777 Waterside Drive, Norfolk, Virginia at 2:00 p.m.,
local time, on September 2, 1999, for the following purposes:
1. To elect a Board of fourteen (14) directors of the Company to
serve until the next Annual Meeting and until their successors are duly
elected and qualified;
2. To ratify the selection of Arthur Andersen LLP as independent
public accountants of the Company for the fiscal year ending April 30,
2000; and
3. To transact such other business as may properly come before the
meeting or any continuation or adjournment thereof.
Only shareholders of record at the close of business on July 9, 1999 will
be entitled to vote at the Annual Meeting and any adjournment thereof. The
transfer books will not be closed.
We hope you can attend the Annual Meeting in person. However, even if you
plan to attend, we ask that you MARK, SIGN, DATE and RETURN the enclosed proxy
promptly in the enclosed self-addressed envelope, so that we may be assured of a
quorum to transact business. If you receive more than one proxy because you own
shares registered in different names or addresses, each proxy should be
completed and returned. Your proxy is revocable and will not affect your right
to vote in person in the event you are able to attend the meeting.
Your attention is directed to the attached Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS,
AARON D. TRUB
SECRETARY
Smithfield, Virginia
August 6, 1999
<PAGE>
SMITHFIELD FOODS, INC.
EXECUTIVE OFFICES
200 COMMERCE STREET
SMITHFIELD, VIRGINIA 23430
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 2, 1999
The Annual Meeting of Shareholders of SMITHFIELD FOODS, INC., a Virginia
corporation (the "Company"), will be held on September 2, 1999, at the time and
place and for the purposes set forth in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement. This Proxy Statement is
furnished in connection with the solicitation of proxies on behalf the Board of
Directors of the Company in connection with such meeting and any continuation or
adjournment thereof.
The costs of soliciting proxies will be borne by the Company. In addition
to solicitation by mail, certain directors, officers and employees of the
Company may solicit proxies in person or by telephone at no additional
compensation. The Company will also ask record holders of Common Stock who are
brokerage firms, custodians and fiduciaries to forward proxy material to the
beneficial owners of such shares and upon request will reimburse such record
holders for the costs of forwarding the material in accordance with customary
charges. The Company has retained Georgeson & Company Inc. to assist in the
solicitation of proxies at an anticipated cost to the Company of $7,500 plus
expenses.
Any proxy given pursuant to this solicitation may be revoked by the filing
with and receipt by the Secretary of the Company of a written revocation or duly
executed proxy bearing a later date and does not preclude the shareholder from
voting in person at the Annual Meeting if he or she so desires. The persons
named in the form of proxy solicited by the Board of Directors will vote all
proxies which have been properly executed. If a shareholder specifies on such
proxy a choice with respect to the proposal to be acted upon, the proxy will be
voted in accordance with such specification. IF NO DIRECTIONS TO THE CONTRARY
ARE INDICATED, THE PERSONS NAMED IN THE PROXY WILL VOTE THE SHARES REPRESENTED
THEREBY FOR THE ELECTION OF EACH OF THE NAMED NOMINEES FOR DIRECTOR AND FOR EACH
OF THE OTHER PROPOSALS LISTED ON THE PROXY CARD. If necessary, and unless the
shares represented by the proxy are voted against the proposals herein, the
persons named in the proxy may also vote in favor of a proposal to recess the
Annual Meeting and to reconvene it on a subsequent date or dates without further
notice, in order to solicit and obtain sufficient votes to approve or disapprove
any matters being considered at the Annual Meeting.
This Proxy Statement and the enclosed form of proxy are first being sent
to the shareholders on or about August 6, 1999.
VOTING SECURITIES
On July 9, 1999, the record date for determining shareholders entitled to
vote at the meeting, 44,935,448 shares of Common Stock and one Series B Special
Voting Preferred Share, par value $1.00 (the "Series B Share"), were outstanding
and entitled to vote. Each share of Common Stock entitles the holder thereof to
one vote; the Series B Share entitles the holder thereof to 1,174,219 votes, as
described further below; the total number of votes that shareholders may cast at
the meeting is therefore 46,109,667. The holders of Common Stock and the holder
of the Series B Share will vote together as a single group at the meeting. All
voting rights are non-cumulative, so that holders of shares representing a
majority of the votes cast at the Annual Meeting can elect all of the directors.
1
<PAGE>
The Series B Share is held by CIBC Mellon Trust Company, as trustee (the
"Trustee"). The aggregate number of votes entitled to be cast by the Trustee is
equal to the number of Exchangeable Shares of Smithfield Canada Limited, a
Canadian subsidiary of the Company, issued and outstanding on the record date
(excluding any Exchangeable Shares held by the Company or its subsidiaries). As
of the record date, there were 1,174,219 Exchangeable Shares issued and
outstanding. The Exchangeable Shares were issued in exchange for shares of
Schneider Corporation during the 1999 fiscal year and are exchangeable at any
time by the holders thereof for shares of the Company's Common Stock on a
one-for-one basis. Each holder of Exchangeable Shares is entitled to instruct
the Trustee to cast, in the manner instructed, one vote for each Exchangeable
Share held of record by such holder on the record date. To the extent no
instructions are received from a holder of Exchangeable Shares, the Trustee will
not exercise the voting rights relating to such holder's Exchangeable Shares.
Holders of Exchangeable Shares will receive from the Trustee these proxy
materials and directions as to the manner in which instructions may be given to
the Trustee with respect to the voting of the Series B Share (or alternatively,
for the granting of proxies to such holders or their designees to exercise the
voting rights relating to such holders' Exchangeable Shares).
A majority of the total votes entitled to be cast on matters to be
considered at the Annual Meeting constitutes a quorum. If a share is represented
for any purpose at the Annual Meeting, it is deemed to be present for quorum
purposes and for all other matters as well. Abstentions and shares held of
record by a broker or its nominee ("Broker Shares") that are voted on any matter
are included in determining the number of votes present or represented at the
Annual Meeting. However, Broker Shares that are not voted on any matter at the
Annual Meeting will not be included in determining whether a quorum is present
at such meeting.
The election of each nominee for director requires the affirmative vote of
the holders of shares representing a plurality of the votes cast in the
election of directors. Votes that are withheld and Broker Shares that are not
voted in the election of directors will not be included in determining the
number of votes cast and, therefore, will have no effect on the election of
directors. Actions on all other matters to come before the meeting will be
approved if the votes cast in favor of the action exceed the votes cast against
it. Abstentions and Broker Shares that are not voted are not considered cast
either for or against a matter and, therefore, will have no effect on the
outcome.
PRINCIPAL SHAREHOLDERS
The only persons known by the Company to beneficially own more than five
percent of the Company's Common Stock as of July 9, 1999, are as follows:
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(NUMBER OF SHARES) (1)
NAME AND ADDRESS OF ---------------------- PERCENT
BENEFICIAL OWNER DIRECT OTHER TOTAL OF
---------------- ------ ----- ----- CLASS (2)
--------
Joseph W. Luter, III
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430 3,716,618 850,064 (3) 4,566,682 (3) 9.9%
Carroll M. Baggett
James O. Matthews
Jeffrey S. Matthews
Post Office Box 707
Warsaw NC 28398 6,556,000(4) --- 6,556,000 (4) 14.2%
- ----------------------
(1) Pursuant to current regulations of the Securities and Exchange
Commission ("SEC"), securities must be listed as "beneficially owned" by a
person who directly or indirectly has or shares the power to vote ("voting
power") or the power to dispose of ("dispositive power") the securities, whether
or not the person has any economic interest in the securities. In addition, a
person is deemed a beneficial owner if he has the right to acquire beneficial
ownership within 60 days, whether upon the exercise of a stock option or
warrant, conversion of a convertible security or otherwise. Shares of Common
Stock listed under the "Direct" column are those which are owned and held as
outstanding shares and over which such person, except as noted below, has sole
voting power and sole dispositive power. Shares shown under the "Other" column
are those subject to other forms of deemed "beneficial ownership" pursuant to
the aforesaid regulations, as described in the indicated footnotes.
2
<PAGE>
(2) The Series B Share has voting and other rights substantially
equivalent to 1,174,219 shares of Common Stock. See "Voting Securities" above.
The percentages shown in this table have been calculated as if these 1,174,219
equivalent common shares were outstanding and part of the class of Common Stock.
None of the persons listed in the table owns any Exchangeable Shares which would
entitle him or her to direct the voting of the Series B Share.
(3) Includes 650,064 shares owned by a corporation of which Mr. Luter is
an officer, director and the owner of 81% of its capital stock and 200,000
shares which Mr. Luter has the right to acquire pursuant to the exercise of
presently exercisable stock options. Mr. Luter has sole voting power and sole
dispositive power with respect to the 650,064 shares owned by the corporation.
Mr. Luter may be deemed a control person of the Company.
(4) Each of the named individuals (who are siblings) has sole voting power
and sole dispositive power with respect to one-third of these shares. As a
result of certain agreements among the individuals and the Company relating to
the resale of these shares, and to facilitate any desired dispositions of their
separate shares, the individuals likely will, from time to time in the future,
act cooperatively in any such dispositions. For purposes of the reporting
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), these arrangements may cause the individuals to be deemed to
constitute a group; however, each of the individuals expressly disclaims the
existence of such a group. Information regarding shares beneficially owned by
these individuals was obtained from Schedules 13G dated May 12, 1999.
PROPOSAL 1
ELECTION OF DIRECTORS
The persons named below have been nominated for election to the Board of
Directors at the Annual Meeting. All of the nominees are currently directors and
were elected at the last Annual Meeting of Shareholders, except for Douglas W.
Dodds and Robert G. Hofmann, II who were elected to the Board of Directors on
January 21, 1999 and Ray A. Goldberg, who is a first time nominee for director.
Aaron D. Trub, currently a director and officer of the Company, is retiring from
the Company as of September 1, 1999 and will not stand for re-election. The
persons elected will hold office as directors of the Company until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified. It is expected that each of the nominees will be able to serve, but
in the event that any such nominee is unable to serve for any reason, the shares
represented by properly executed proxies may be voted at the discretion of the
persons named therein for a substitute nominee or nominees.
The following table sets forth the names, ages, and principal occupations
of the nominees and other information with respect to them:
<TABLE>
NAME--AGE--PRINCIPAL OCCUPATION--OTHER INFORMATION DIRECTOR SINCE
- -------------------------------------------------- --------------
<S> <C>
Joseph W. Luter, III (60) 1975
Chairman of the Board and Chief Executive Officer
of the Company since May 1995; Chairman of the Board,
President and Chief Executive Officer of the Company
prior to May 1995
Robert L. Burrus, Jr. (64) 1996
Partner in the law firm of McGuire, Woods, Battle & Boothe LLP,
Richmond, Virginia; Director, CSX Corporation, Heilig-Meyers
Company, Concepts Direct, Inc., S&K Famous Brands, Inc. and
O'Sullivan Corp.
Douglas W. Dodds (53) 1999
Chairman and Chief Executive Officer of Schneider Corporation
("Schneider"), a subsidiary of the Company
3
<PAGE>
NAME--AGE--PRINCIPAL OCCUPATION--OTHER INFORMATION DIRECTOR SINCE
- -------------------------------------------------- --------------
F. J. Faison, Jr. (65) 1991
President of Carroll's Foods, Inc., a wholly-owned subsidiary
of the Company
Ray A. Goldberg (72) ----
Moffett Professor of Agriculture and Business, Emeritus, Harvard
Business School; Director, RDO Farm Equipment Co.
Joel W. Greenberg (61) 1987
Commodity Analyst, Alaron Trading Corp., Chicago, Illinois, a
commodities brokerage firm
George E. Hamilton, Jr. (83) 1970
Retired; President and Chief Operating Officer of The Smithfield
Packing Company, Incorporated ("Smithfield Packing"), a wholly-
owned subsidiary of the Company, prior to June 1994
Robert G. Hofmann, II (49) 1999
President and Chief Executive Officer of North Side Foods Corp.
("North Side"), a wholly-owned subsidiary of the Company
Richard J. Holland (73) 1978
Chairman of the Board of The Farmers Bank, Windsor, Virginia
Roger R. Kapella (57) 1992
President and Chief Operating Officer of Patrick Cudahy Incorporated
("Patrick Cudahy"), a wholly-owned subsidiary of the Company
Lewis R. Little (55) 1993
President and Chief Operating Officer of the Company and Smithfield
Packing since November 1996; President and Chief Operating Officer of
Lykes Meat Group, Inc. ("Lykes"), a wholly-owned subsidiary of the
Company, since June 1998; President and Chief Operating Officer of
Gwaltney of Smithfield, Ltd. ("Gwaltney"), a wholly-owned subsidiary of
the Company, from May 1993 until November 1996
William H. Prestage (64) 1994
Chairman of the Board, President and Chief Executive Officer of Prestage
Farms, Inc., Clinton, North Carolina, a hog and turkey producer; Director,
North Carolina Natural Gas Corporation
Joseph B. Sebring (52) 1996
President and Chief Operating Officer of John Morrell & Co.
("John Morrell"), a wholly-owned subsidiary of the Company, since
May 1994; President and Chief Executive Officer of Indiana Packers
Company prior to May 1994
Timothy A. Seely (49) 1998
President and Chief Operating Officer of Gwaltney since November 1996;
Vice President, Sales and Marketing, Fresh Meats, of Gwaltney prior
to November 1996
</TABLE>
No family relationship exists between any of the nominees for election as
directors of the Company.
4
<PAGE>
In connection with its acquisition of a controlling interest in Schneider,
the Company agreed to use its reasonable commercial efforts to have a person
designated by certain selling shareholders of Schneider elected to the Board of
Directors at the 1999 Annual Meeting of Directors. Douglas W. Dodds was so
designated by the selling shareholders of Schneider and was elected to the Board
of Directors on January 21, 1999.
On July 30, 1998, the SEC instituted a cease and desist proceeding and
simultaneously accepted a settlement with Mr. Greenberg in a matter relating to
Incomnet, Inc., a publicly traded company of which Mr. Greenberg was an outside
director from 1988 through 1995. Without admitting or denying the SEC findings
and without a hearing, Mr. Greenberg consented to the entry ordering him to
cease and desist from committing or causing any violations under the federal
securities laws and regulations. The SEC's findings as to Mr. Greenberg were
that, as an outside director, Mr. Greenberg should have made independent inquiry
and not have relied on information and documents provided him by the former
chief executive officer of Incomnet, and that Mr. Greenberg failed to file with
the SEC an amended disclosure form concerning his collateralization of a
personal loan with the shares of Incomnet stock owned by him.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock to file with the SEC initial reports of ownership and reports of changes
in ownership of the Company's Common Stock and to provide copies of such reports
to the Company. Based solely on a review of the copies of such reports furnished
to the Company and written representations that no other reports were required
to be filed during the fiscal year ended May 2, 1999, the Company believes that,
except for one late filing of a Form 4 with respect to one transaction by Mr.
Luter, all filing requirements applicable to its officers, directors and
beneficial owners of greater than 10% of its Common Stock have been complied
with.
COMMON STOCK OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS
The following information with respect to beneficial ownership, as of July
9, 1999, of shares of Common Stock is furnished with respect to (i) each
director and nominee for director of the Company, (ii) each executive officer
named in the Summary Compensation Table appearing on page [__] of this Proxy
Statement, and (iii) all current directors and executive officers as a group,
together with their respective percentages:
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NUMBER OF SHARES (1)
---------------------
PERCENT
NAME DIRECT OTHER TOTAL OF CLASS (2)
---- ------ ----- ------ ------------
Robert L. Burrus, Jr. 1,000 -- 1,000 *
Douglas W. Dodds -- -- -- *
F. J. Faison, Jr. -- *
Ray A. Goldberg -- -- -- *
Joel W. Greenberg 6,000 2,000 (3) 8,000 (3) *
George E. Hamilton, Jr. 130,000 9,000 (4) 139,000 (4) *
Robert G. Hofmann, II -- 459,008 (5) 459,008 (5)
Richard J. Holland 18,800 -- 18,800 *
Roger R. Kapella 64,000 64,000 *
Lewis R. Little 15,000 -- 15,000 *
Joseph W. Luter, III 3,716,618 850,064 (6) 4,566,682 (6) 9.9%
William H. Prestage -- 120,000 (7) 120,000 (7) *
Joseph B. Sebring 10,450 -- -- *
Timothy A. Seely 3,400 -- 3,400 *
Aaron D. Trub 160,364 73,000 (8) 233,364 (8) *
5
<PAGE>
All current directors
and executive officers
as a group
(16 persons) 4,211,632 1,513,072 (9) 5,724,704 (9) 12.4%
- --------------------
* Less than 1% of class
(1) Pursuant to current regulations of the Securities and Exchange
Commission, securities must be listed as "beneficially owned" by a person who
directly or indirectly has or shares voting power or dispositive power with
respect to the securities, whether or not the person has any economic interest
in the securities. In addition, a person is deemed a beneficial owner if he has
the right to acquire beneficial ownership within 60 days, whether upon the
exercise of a stock option or warrant, conversion of a convertible security or
otherwise. Shares of Common Stock listed under the "Direct" column are those
which are owned and held as outstanding shares and over which such person,
except as noted below, has sole voting power and sole dispositive power. Shares
shown under the "Other" column include other forms of "beneficial ownership"
pursuant to the aforesaid regulations, as described in the indicated footnotes.
(2) The Series B Share has voting and other rights substantially
equivalent to 1,174,219 shares of Common Stock. See "Voting Securities" above.
The percentages shown in this table have been calculated as if these 1,174,219
equivalent common shares were outstanding and part of the class of Common Stock.
None of the persons listed in the table owns any Exchangeable Shares which would
entitle him to direct the voting of the Series B Share.
(3) Includes 2,000 shares owned by Mr. Greenberg's spouse with respect to
which Mr. Greenberg disclaims beneficial ownership.
(4) Includes 9,000 shares owned by Mr. Hamilton's son with respect to
which Mr. Hamilton disclaims beneficial ownership.
(5) Reflects 459,008 shares owned by a corporation of which Mr. Hofmann is
an officer, director and the owner of 50% of its capital stock.
(6) Reflects 650,064 shares owned by a corporation of which Mr. Luter is
an officer, director and the owner of 81% of its capital stock and 200,000
shares which Mr. Luter has the right to acquire pursuant to the exercise of
presently exercisable stock options. Mr. Luter has sole voting power and sole
dispositive power with respect to the 650,064 shares owned by the corporation.
Mr. Luter may be deemed a control person of the Company.
(7) Reflects 120,000 shares owned by Prestage Farms, Inc., of which Mr.
Prestage is an officer, director and the principal shareholder. Prestage Farms,
Inc. has sole voting power and sole dispositive power with respect to such
shares.
(8) Includes 47,000 shares owned by Mr. Trub's wife, 16,000 shares owned
by Mr. Trub's daughter and 10,000 shares owned by a foundation with respect to
which Mr. Trub and his wife share voting and dispositve power. Mr. Trub
disclaims beneficial ownership with respect to all such shares.
(9) Includes 1,180,000 shares subject to presently exercisable stock
options.
BOARD OF DIRECTORS AND COMMITTEES
The Company has an Executive Committee, an Audit Committee and a
Compensation Committee of the Board of Directors. The Company does not have a
Nominating Committee.
The Executive Committee is composed of Messrs. Holland, Little and Luter
and, with certain limitations, exercises the power of the Board of Directors
between Board meetings. The Executive Committee held no meetings in fiscal 1999.
6
<PAGE>
The Audit Committee is composed of Messrs. Burrus, Greenberg and Prestage.
The principal functions of the Audit Committee are the recommendation to the
Board of Directors of a firm to be engaged by the Company as its independent
public accountants, conferring with the independent public accountants selected
regarding the scope of the audit and services to be performed, and reviewing the
results of the independent public accountants' examination and recommendations
with respect to accounting practices and procedures and internal control. The
committee held one meeting in fiscal 1999.
The Compensation Committee is composed of Messrs. Burrus, Greenberg and
Holland. The principal functions of the Compensation Committee are to establish
overall compensation policies for the Company, to review recommendations
submitted to it by the Company's management with respect to the compensation of
the officers of the Company and its subsidiaries and the directors of the
Company, and to make such recommendations to the Board of Directors of the
Company as its review indicates. The committee held seven meetings in fiscal
1999.
The Board of Directors held six meetings during fiscal 1999, including
four regular meetings. All directors except Messrs. Faison, Little and Prestage
attended 75% or more of these meetings, including regularly scheduled and
special meetings, and the meetings of all committees of the Board on which they
served that were held in the past fiscal year during the periods in which they
were directors or served on such committees.
Directors who are not employees of the Company or any of its subsidiaries
received in fiscal 1999 an annual retainer of $5,000, $1,000 for each board
meeting attended, $500 for each committee meeting attended if the committee
meeting was not held in connection with, or on the same day as, a board meeting,
plus reimbursement of travel expenses incurred in connection with such
attendance.
EXECUTIVE COMPENSATION
The table below sets forth, for the fiscal years ended May 2, 1999, May 3,
1998 and April 27, 1997, the annual and long-term compensation for services in
all capacities to the Company and its subsidiaries of those persons who on May
2, 1999, were the Company's Chief Executive Officer and the next four most
highly compensated executive officers (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION (1)
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) COMPENSATION($)
- --------------------------- ---- ---------- --------- ---------------- ---------------
<S> <C>
Joseph W. Luter, III 1999 623,975 3,211,761 -- 274,771 (2)
Chairman of the Board 1998 628,077 1,680,833 -- 164,988
and Chief Executive 1997 420,000 1,400,078 -- 2,019
Officer of the Company
Lewis R. Little 1999 623,975 2,736,761 60,000 --
President and Chief 1998 628,077 915,416 -- --
Operating Officer of the 1997 355,385 724,635 70,000 --
Company, Lykes and
Smithfield Packing
Joseph B. Sebring 1999 620,000 1,988,916 60,000
President and Chief 1997 550,000 774,507 -- --
Operating Officer of 1997 400,000 344,103 -- --
John Morrell
Timothy A. Seely 1999 402,564 555,362 30,000 --
President and Chief 1998 305,770 387,403 50,000 --
Operating Officer of 1997 194,615 290,501 -- --
Gwaltney
Aaron D. Trub 1999 301,923 400,000 -- --
Vice President, 1998 280,288 200,000 -- --
Chief Financial Officer 1997 200,000 150,000 -- --
and Secretary
</TABLE>
7
<PAGE>
(1) While the Named Executive Officers received perquisites or other
personal benefits in the years shown, in accordance with SEC regulations, the
value of these benefits is not indicated since they did not exceed the lesser of
$50,000 or 10% of the individual's salary and bonus in any year.
(2) Reflects the economic benefit to Mr. Luter of the portion of the
premiums paid by the Company under a split dollar life insurance agreement
between the Company and an irrevocable trust established by Mr. Luter. This
arrangement is designed so that if certain assumptions made as to investment
performance, continuation of the agreement and other factors are realized, the
Company will fully recover all such premiums upon the earlier of Mr. Luter's
death or the termination of the agreement. However, the arrangement includes a
compensatory element attributable to the Company's costs for advancing the
premiums. The benefit for fiscal 1999 was determined by calculating the time
value of money (using the applicable short term federal funds rate) of the
premiums paid by the Company through May 2, 1999 for the period commencing on
the later of the date the premiums were paid and May 4, 1998 until May 2, 1999.
Under the terms of the agreement, the Company may terminate the agreement and
request a refund of the premiums paid at any time upon giving written notice to
the trust. The Company has been granted a security interest in the cash
surrender value and death benefits of the life insurance policies equal to the
sum of all premiums paid by the Company.
The following table sets forth additional information concerning
individual grants of stock options made under the Company's 1992 Stock Incentive
Plan during the last completed fiscal year to any of the Named Executive
Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS PER OPTION TERM(1)
PERCENT OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE OR
GRANTED(2) TO EMPLOYEES BASE PRICE EXPIRATION
NAME (#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
----- ------ -------------- ------ ---- ----- ------
<S> <C>
Lewis R. Little 60,000 21.1% 27.75 5/27/08 1,047,110 2,653,581
Joseph B. Sebring 60,000 21.1% 27.75 5/27/08 1,047,110 2,653,581
Timothy A. Seely 30,000 10.5% 27.75 5/27/08 523,555 1,326,791
</TABLE>
(1) The potential realizable values in the table assume that the market
price of the Company's Common Stock appreciates in value from the date of grant
to the end of the option term at the annualized rates of 5% and 10%,
respectively. The actual value, if any, an executive may realize will depend on
the excess, if any, of the stock price over the exercise price on the date the
option is exercised. There is no assurance that the value realized by an
executive will be at or near the value estimated in the table.
(2) The options awarded to Messrs. Little, Sebring and Seely were granted
on May 27, 1998 and will become exercisable on the fifth anniversary of the
grant date. The options were granted with an exercise price equal to the market
price of the Company's Common Stock on the grant date.
The table below sets forth information with respect to option exercises
during fiscal 1999 and the number and value of options held at May 2, 1999 by
each of the Named Executive Officers.
8
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END UNEXERCISED OPTION VALUES
(A) (B) (C) (D) (E)
VALUE (1) OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY (2)
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED VALUE (1) FY END (#) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ------------- -------------
<S> <C>
Joseph W. Luter, III 1,000,000 12,031,250 200,000 / 0 2,418,700 / 0
Lewis R. Little -- -- 130,000 / 70,000 1,572,155 / 500,920
Joseph B. Sebring -- -- 0 / 100,000 0 / 400,000
Timothy A. Seely -- -- 0 / 100,000 0 / 271,875
Aaron D. Trub 100,000 1,203,125 70,000 / 0 846,545 / 0
</TABLE>
(1) The dollar values referred to in columns (C) and (E) are calculated by
determining the difference between the fair market value of the securities
underlying the options and the exercise price of the options at exercise or
fiscal year-end, respectively. In each case, fair market value has been based on
the last sales price of the Common Stock as reported by The Nasdaq Stock Market
on the relevant date.
(2) Options are in-the-money if the fair market value of the underlying
securities exceeds the exercise price of the option.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Compensation Committee (the "Committee") believes that corporate
performance and, in turn, shareholder value are enhanced by an alignment between
the financial interests of shareholders and those of the Company's employees,
including its senior managers. Accordingly, the Committee and the Company adhere
to the concept of pay-for-performance. The Company relies on incentive
compensation programs to motivate employees. These programs are variable and
closely tied to corporate, business unit and/or individual performance. Under
these programs, a major portion of executive compensation is based on the
Company's performance in a manner that supports building shareholder value. The
Company encourages executives to hold significant interests in the Company's
Common Stock, and in part the compensation programs are designed to promote that
objective.
COMPONENTS OF THE COMPENSATION PROGRAM
Senior management compensation at the Company includes two components:
first, a base salary, and second, short- and long-term incentive compensation
programs. The incentive compensation programs, both cash and non-cash, are tied
to the financial performance of the Company or certain of its subsidiaries.
Base salaries are generally established at the minimum levels believed to
be necessary to attract and retain an effective management group when considered
with the performance-based components of the program. Except in the case of
executive officers who assumed significant new responsibilities, the base
salaries of the Chief Executive Officer and the Company's other executive
officers remained basically unchanged from fiscal 1992 through fiscal 1997. In
recognition of the outstanding performance during fiscal 1998 of the Company's
operating subsidiaries relative to other companies in the meat processing
industry and to insure that the Company continues to attract and retain high
quality senior management, the Committee approved increases in the base salaries
of the Company's executive officers, effective for fiscal 1998 and fiscal 1999.
A cash bonus is the principal short-term incentive. Bonus awards for most
executive officers are calculated pursuant to formulas based on pre-tax income,
either on a consolidated basis or for a particular subsidiary, as the Committee
finds most appropriate, and are subject to adjustment based on the officer's
individual performance. Bonus awards for the remaining executive officers are
based primarily on individual performance, as evaluated by the Chief Executive
Officer and Chief Operating Officer and reviewed by the Committee, with
consideration given to the Company's financial performance measured principally
in terms of its pre-tax income. Consistent with the Company's policy that a
substantial portion of executive compensation be "at risk," bonus awards for
executive officers in recent years have ranged from 35% to 84% of an executive
officer's total cash compensation depending on Company, relevant subsidiary and
individual performance. Bonus awards for fiscal 1999 averaged approximately 69%
of the total cash compensation paid to all executive officers as compared to 58%
in fiscal 1998 and 65% in fiscal 1997.
9
<PAGE>
Long-term incentives are provided by stock options, awarded from time to
time, whose ultimate value to the employee is tied to the market price of the
Company's Common Stock. The Company's stock option program ties the employee's
economic interests directly to those of the shareholders. In evaluating
management's recommendations for the recipients and size of stock option awards,
the Committee considers the level of incentive already provided by the size and
status of prior grants as well as a subjective evaluation of the employee's
potential contribution to the Company's future success. During fiscal 1999,
eight eligible employees (including four executive officers) were awarded stock
options to acquire a total of 285,000 shares of Common Stock. The Committee also
recommended adoption of the 1998 Stock Incentive Plan, which was approved by
shareholders at the 1998 Annual Meeting, to provide additional shares for future
awards under this program.
The Committee also recommended, and the Board of Directors adopted, the
Supplemental Pension Plan covering certain of the Company's employees, including
each of the executive officers. This plan restores benefits lost under the
Company's tax-qualified pension plans due to the compensation and benefit limits
imposed under the Internal Revenue Code. The Committee believes the addition of
this plan strengthens the competitiveness of the Company's compensation program
and will thus help to attract and retain an effective management group.
CEO COMPENSATION
The compensation of Joseph W. Luter, III, the Chairman of the Board and
Chief Executive Officer of the Company, for fiscal 1999 was determined in
accordance with the guidelines described above. Consistent with the Company's
policy that a major part of each executive officer's compensation be performance
based, Mr. Luter's base salary remained basically unchanged from fiscal 1992
through fiscal 1997. For the reasons previously discussed, the Committee
approved an increase to Mr. Luter's base salary for fiscal 1998 from $420,000 to
$620,000. Mr. Luter's base salary for fiscal 1999 remained unchanged from fiscal
1998.
Mr. Luter's bonus award for fiscal 1999 was paid under the 1998 Stock
Incentive Plan approved by shareholders. Under that plan, Mr. Luter was entitled
to 1% of the first $15 million of the Company's fiscal 1999 net income before
income taxes, incentive payments due to executives and accounting for minority
interests, and 2% of such net income in excess of $15 million. Mr. Luter's bonus
represented approximately 84% of his total cash compensation. Mr. Luter was not
awarded stock options during fiscal 1999.
ADMINISTRATION OF COMPENSATION PROGRAMS
Messrs. Burrus, Greenberg and Holland, none of whom has been or is an
officer or employee of the Company, are the members of the Committee. The
Committee principally formulates compensation policies and reviews
recommendations submitted to it by management with respect to the cash and
non-cash compensation of the officers of the Company and its subsidiaries, as
well as of Company directors. The Committee then takes, or specifically
recommends to the Board of Directors, such actions as its review indicates. The
Board of Directors has never modified or rejected in any material way any
recommendation of the Committee.
Section 162(m) of the Code imposes a $1 million limit on the amount of
annual compensation that can be deducted by the Company with respect to each of
the Chief Executive Officer and the four other most highly compensated executive
officers. Performance-based compensation that meets certain requirements will
not be subject to this deductibility limit. It is generally the Company's policy
to seek to qualify the performance-based components of its compensation program
for this exclusion from the Section 162(m) limitation as necessary to maximize
the deductibility of executive compensation.
Robert L. Burrus, Jr. Joel W. Greenberg Richard J. Holland
10
<PAGE>
PERFORMANCE GRAPH
The graph below presents a comparison of the Company's five-year
cumulative total return on its Common Stock with the Meat Packing Index (SIC
Code 2011) and the Nasdaq Market Value Index, each prepared by Media General
Financial Services, Inc., assuming that investments of $100 were made on April
29, 1994 and that dividends were reinvested.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SMITHFIELD FOODS, INC., NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPH]
<TABLE>
<S> <C>
1994 1995 1996 1997 1998 1999
SMITHFIELD FOODS, INC. 100.00 94.79 122.92 201.56 256.25 196.88
MEAT PACKING INDEX 100.00 124.14 146.49 194.80 207.78 183.20
NASDAQ MARKET VALUE INDEX 100.00 109.19 152.42 162.47 241.31 318.66
</TABLE>
ASSUMES $100 INVESTED APR. 30, 1994
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING MAY 2, 1999
PENSION PLANS
The Company and its subsidiaries sponsor three pension plans covering the
Company's salaried employees. The Company, Gwaltney, Patrick Cudahy, Smithfield
Packing and Brown's of Carolina, Inc. maintain a qualified non-contributory
pension plan covering their salaried employees (the "Company Plan"). A similar
plan covers salaried employees of John Morrell (the "John Morrell Plan"). The
salaried employees participating in the plans mentioned above whose salaries
exceed $160,000 per year are also covered by a nonqualified Supplemental Pension
Plan (the "Supplemental Plan").
The qualified plans provide for retirement benefits which are a function
of a participant's average remuneration during his or her highest five
consecutive calendar years of the last ten years of employment and aggregate
years of service. The Supplemental Plan replaces benefits lost under the
qualified plans due to the imposition of the Internal Revenue Code compensation
and benefit limits. These Supplemental Plan benefits are calculated using the
Company Plan's benefit formula, reduced by the benefits payable under the
Company Plan and/or the John Morrell Plan.
The following table shows the estimated annual straight-life annuity
benefit payable from all three pension plans combined, upon retirement at age 65
in 1999, based on the specific remuneration and years of service classifications
set forth below.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
SELECTED YEARS OF SERVICE
AVERAGE -------------------------
REMUNERATION 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C>
$ 250,000 $ 60,000 $ 80,000 $ 100,000 $ 120,000 $ 140,000
500,000 120,000 160,000 210,000 250,000 290,000
750,000 190,000 250,000 310,000 370,000 440,000
1,000,000 250,000 330,000 420,000 500,000 590,000
1,500,000 380,000 500,000 630,000 760,000 880,000
2,000,000 510,000 670,000 840,000 1,010,000 1,180,000
2,500,000 630,000 840,000 1,060,000 1,270,000 1,480,000
3,000,000 760,000 1,010,000 1,270,000 1,520,000 1,780,000
3,500,000 890,000 1,180,000 1,480,000 1,780,000 2,070,000
</TABLE>
The remuneration covered by the Supplemental Plan consists of the cash
compensation disclosed in the annual compensation reported in the Summary
Compensation Table, except that it is determined on a calendar year basis. The
average remuneration above is the average of the five highest calendar years'
cash compensation during the last ten years of a participant's career.
11
<PAGE>
As of May 2, 1999, Messrs. Luter, Little, Seely and Trub are credited with
32, 36, 5 and 29 years of service, respectively, under the Company Plan and the
Supplemental Plan. Mr. Sebring is credited with four years of service under the
John Morrell Plan and the Supplemental Plan. The benefits shown in the table are
not subject to any reduction for benefits paid from other sources, including
Social Security.
OTHER TRANSACTIONS
The daughter and son-in-law of Joseph W. Luter, III, the Chairman of the
Board and Chief Executive Officer of the Company, are the sole members of
Fishing Creek Farms LLC ("Fishing Creek"). Brown's of Carolina, Inc.
("Brown's"), an 86%-owned subsidiary of the Company, has arrangements with B&G
Farms LLC ("B&G"), a limited liability company in which Brown's and Fishing
Creek each have a 50% interest, for the production of hogs for the Company's
pork processing plants. The arrangements involve, inter alia, (i) the lease of
certain hog production facilities by B&G to Brown's until December 31, 2009 at
an annual rent of approximately $465,000 per year, and (ii) advances by B&G to
Brown's of cash for working capital. Working capital advances totaling $336,000
were outstanding as of May 2, 1999. All profits and losses from the hog
production operations are shared equally by Brown's and Fishing Creek. All
advances made pursuant to the arrangements accrue interest at a rate equal to
the prime rate charged by one of the Company's lending banks. Brown's hog
production operations on the B&G land generated $4,411,000 of sales to other
subsidiaries of the Company in fiscal 1999. The Company believes that the terms
of the foregoing arrangements are no less favorable to the Company than if
entered into with unaffiliated parties.
F. J. Faison, Jr., a director of the Company, was the president and a
director of Carroll's Foods, Inc. ("CFI") and its affiliates, Carroll's Farms of
Virginia, Inc. ("CFAV") and Carroll's Foods of Virginia, Inc. ("CFOV"). Prior to
the Company's purchase of CFI and certain related companies, including CFAV and
CFOV, the Company had arrangements with CFI and its affiliates for production of
hogs for the Company's meat processing plants. The arrangements involved, inter
alia, (i) Smithfield-Carroll's Farms, a partnership consisting of Smithfield Hog
Farms, Inc., a wholly-owned subsidiary of the Company, and CFAV, which
partnership owned hog raising facilities and leased them to CFOV, and (ii)
multi-year purchase agreements between the Company and CFOV and CFI which
obligated the Company to purchase hogs produced by CFOV and CFI. Substantially
all revenues of the Smithfield-Carroll's Farms partnership consisted of CFOV's
lease payments, which covered debt service, depreciation charges and other
operating expenses. Such revenues were $7,680,000 in fiscal 1999. Pursuant to
the purchase agreements, the Company purchased $53,282,000 and $161,965,000 of
live hogs from CFOV and CFI, respectively, in fiscal 1999. The Company believes
that the prices paid under the purchase agreement with CFI are equivalent to
market. The purchase agreement with CFOV resulted in decreased raw material
costs to the Company during periods when hog production was profitable and,
conversely, an increase in such costs when such production was unprofitable. The
agreement with CFOV resulted in increased raw material costs to the Company (as
compared to market costs) of $12,465,000 in fiscal 1999 compared to decreased
raw material costs of $359,000 in fiscal 1998.
In May, 1999, the Company purchased CFI and certain related companies and
assets for 4,200,000 shares of Common Stock (subject to post-closing
adjustment). As a result of this transaction, the former shareholders of CFI
(Carroll M. Baggett, James O. Matthews and Jeffrey S. Matthews) became the
beneficial owners, in the aggregate, of 6,556,000 shares of the Company's Common
Stock, which amount includes shares of Common Stock previously held by CFI or
its affiliates. In connection with the acquisition, the Company entered into a
registration rights agreement and a shareholders agreement with the former CFI
shareholders. Under the registration rights agreement, each of the former CFI
shareholders is entitled for a period of seven years to have the Company
register public resales of 500,000 or more shares of Common Stock, subject to
customary terms and conditions, on demand. The agreement also provides for
customary piggyback registration rights. The Company is not required under the
registration rights agreement to file or maintain a "shelf registration" with
respect to these shares. Under the shareholders agreement, each of the former
CFI shareholders agreed as to 700,000 of his or her shares not to sell them for
at least one year, and further agreed for one year following the acquisition not
to (i) initiate any solicitation of proxies from Company shareholders or
participate in any election contest or in any proposal made under Rule 14a-8
under the Exchange Act; (ii) participate in any group opposing any management
proposals presented at a shareholders meeting; or (iii) acquire or substantially
affect control of the Company, or seek to do so.
12
<PAGE>
William H. Prestage, a director of the Company, is the chairman of the
board, president and chief executive officer of Prestage Farms, Inc. ("PFI"), a
hog and turkey producer located in Clinton, North Carolina. The Company has a
market-indexed multi-year purchase agreement with PFI which obligates the
Company to purchase hogs produced by PFI in the states of Virginia, North
Carolina and South Carolina. Pursuant to the purchase agreement, the Company
purchased $106,365,000 of live hogs from PFI in fiscal 1999. The Company
believes that the prices paid under the purchase agreement with PFI are
equivalent to market.
Smithfield of Utah, Inc. ("Smithfield-Utah"), a wholly-owned subsidiary of
the Company, was a participant in a joint hog production arrangement with
certain other companies to produce hogs in the state of Utah for sale to an
unrelated party. During fiscal 1998, the other companies participating in the
joint hog production arrangement were (i) Carroll's Foods of Utah, Inc. ("CFU").
an affiliate of CFI, of which F. J. Faison, Jr., a director of the Company, was
the president and a director, (ii) West Isle Partners, Inc. ("WIPI"), of which
Wendell H. Murphy, a director of the Company until his resignation in May 1998,
is the president and a director and members of Mr. Murphy's family are the sole
stockholders, and (iii) Prestage Farms of Utah, Inc. ("PFUI"), of which William
H. Prestage, a director of the Company, is the president and a director and Mr.
Prestage and his wife are the sole shareholders. Smithfield-Utah contributed
$6,300,000 to the arrangement in fiscal 1998. In June 1998, the Company paid
$15,000,000 to WIPI in connection with WIPI's complete withdrawal from the
arrangement. In December 1998, the Company purchased PFUI's interest in the
arrangement for $700,000 The Company acquired CFU's interest in the arrangement
in May 1999 in connection with the Company's purchase of CFI. As a result of
these acquisitions, the Company now owns 100% of this hog production operation.
The Company believes that the terms of this former joint arrangement, as well as
the Company's purchase of the other companies' interests in the arrangement,
were no less favorable to the Company than if entered into with unaffiliated
parties.
On September 9, 1998, the Company made loans aggregating $9,450,000 to
seven of its officers and its subsidiaries. The loans were made to facilitate
the officers' payment of the purchase price and taxes upon the exercise of stock
options granted under the Company's 1984 Stock Option Plan. The options, which
would have expired in 1999, covered an aggregate of 1,260,000 shares. The loans
bear interest payable quarterly at a rate of 8% per annum and become due and
payable in full on April 30, 2000. Each officer's loan is secured by a pledge to
the Company of the shares acquired upon exercise of the options. The aggregate
amount of loan principal and accrued interest outstanding as of July 23, 1999
for each of the executive officers receiving loans was: Joseph W. Luter, III -
$7,576,832; C. Larry Pope - $303,074 and Aaron D. Trub - $757,683. Prior to such
date, Roger R. Kapella repaid his loan principal and accrued interest in full in
the amount of $306,239.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert L. Burrus, Jr., a director of the Company and a member of the
Compensation Committee, is a partner in the law firm of McGuire, Woods, Battle &
Boothe LLP, which has provided legal services to the Company on a regular basis
since 1985.
PROPOSAL 2
RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of its Audit Committee,
has selected Arthur Andersen LLP as independent public accountants to examine
and report upon the financial statements of the Company and its consolidated
subsidiaries for the year ending April 30, 2000, and is submitting this matter
to the shareholders for their ratification. Arthur Andersen LLP has served as
the Company's independent public accountants since 1981. One or more
representatives of Arthur Andersen LLP will be present at the Annual Meeting of
Shareholders to make a statement if they desire to do so and to be available to
respond to appropriate questions that may be asked by shareholders.
In the event the proposal to ratify the selection of Arthur Anderson LLP
is defeated, the adverse vote will be considered as a direction to the Board of
Directors to select other independent auditors for the next year. However,
because of the expense and difficulty in changing independent auditors after the
beginning of a year, the Board of Directors intends to allow the appointment for
fiscal 2000 to stand unless the Board of Directors finds other reasons for
making a change.
13
<PAGE>
The Board of Directors of the Company recommends that you vote FOR the
ratification of the selection of Arthur Andersen LLP as independent public
accountants to examine and report upon the financial statements of the Company
and its consolidated subsidiaries for the year ending April 30, 2000.
OTHER MATTERS
The Company has received notice from a shareholder that it intends to
introduce a resolution at the Annual Meeting that would call for the Board of
Directors to amend the Company's Bylaws to require a majority of the members of
the Board of Directors be comprised of "independent directors" at the earliest
practical date. The shareholder has also indicated its intent to conduct its own
proxy solicitation with respect to this matter. The Company may have
discretionary voting authority at the Annual Meeting on this matter as the
Company believes that the notice given by the shareholder may be deficient under
SEC Rule 14a-4(c)(2)(i). The Company also believes that it may have
discretionary voting authority on this matter if the shareholder hereafter fails
to fulfill certain other requirements under Rule 14a-4(c)(2) relating to the
solicitation of proxies. If the Company does have discretionary voting authority
at the Annual Meeting on this matter, the Company intends to vote against the
adoption of this resolution for several reasons. Individuals are selected for
nomination to serve on the Board of Directors of the Company based on their
experience, competence and integrity. The Board of Directors believes that a
proposal such as this one, which would establish an unduly rigid and restrictive
requirement to be met by a majority of the Board of Directors, is not in the
best interest of the Company or its shareholders. At the same time, the Board of
Directors recognizes the benefits of having independent, non-management Board
members, as well as management directors, serving on the Board of Directors. At
present, several of the members of the Board satisfy the shareholder's
definition of "independent" as does first time nominee Ray A. Goldberg. Thus,
the Board of Directors believes this proposal is unnecessary and unwise, is not
an appropriate or practical basis for regulating the composition of the Board,
and is not in the best interest of the Corporation or its shareholders. Prior
to the Annual Meeting, the Company may solicit proxies from certain or all
shareholders entitled to vote at the Annual Meeting in opposition to this
proposal.
The Board of Directors does not know of any matter to be brought before
the Annual Meeting other than the matters described in the Notice of Meeting or
discussed above. If any matters not set forth in the Notice of Meeting
accompanying this proxy statement or discussed above are properly brought before
the Annual Meeting, the persons named in the enclosed proxy will vote thereon in
accordance with their best judgment.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS FOR INCLUSION IN THE PROXY STATEMENT
Proposals of shareholders intended to be presented at the Company's 2000
Annual Meeting of Shareholders must be received by the Secretary of the Company
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting by April 8, 2000. Any such proposal must meet the applicable
requirements of the Exchange Act and the rules and regulations thereunder.
OTHER SHAREHOLDER PROPOSALS
The Company's Bylaws prescribe the procedures that a shareholder must
follow to nominate directors for election at an annual meeting or to bring other
business before an annual meeting or to bring other business before an annual
meeting (other than matters that have been included in the Company's proxy
statement for such meeting). The Chairman of the meeting may refuse to
acknowledge the nomination of any person as a director or any other proposal by
a shareholder not made in compliance with these procedures. The following
summary of these procedures is qualified by reference to the Company's Bylaws, a
copy of which may be obtained, without charge, upon written request to
Secretary, Smithfield Foods, Inc., 200 Commerce Street, Smithfield, Virginia
23430.
14
<PAGE>
A shareholder who desires to nominate a director for election at an annual
meeting must give timely written notice thereof to the Secretary of the Company
by personal delivery or by registered or certified mail, postage prepaid, at the
address shown above. To be timely, a shareholder's notice for nominations to be
made at the 2000 Annual Meeting must be received: (i) on or after June 1, 2000
and before July 1, 2000 if the annual meeting is to be held during the month of
August, 2000; or (ii) not less than 60 days before the annual meeting in all
other cases. The notice must contain the information specified in the Bylaws
regarding the shareholder giving the notice and each person whom the shareholder
wishes to nominate for election as a director. The notice must be accompanied by
the written consent of each proposed nominee to serve as a director of the
Company, if elected.
A shareholder who desires to bring any other business before an annual
meeting (other than business which the shareholder has sought to have included
in the Company's proxy statement for such meeting) must give timely written
notice thereof to the Secretary of the Company at the address shown above and be
a shareholder of record both at the time such notice is given and on the record
date of the meeting. To be timely, a shareholder's notice of such business to be
brought before the 2000 Annual Meeting must be received: (i) on or after June 1,
2000 and before July 1, 2000 if the annual meeting is to held during the month
of August, 2000; or (ii) not less than 60 days before the annual meeting in all
other cases. The notice must contain the information specified in the Bylaws
regarding the shareholder giving the notice and the business proposed to be
brought before the meeting.
With respect to shareholder proposals not included in the Company's proxy
statement for the 2000 Annual Meeting, the persons named in the Board's proxy
for the 2000 Annual Meeting will be entitled to exercise the discretionary
voting power conferred by such proxy under the circumstances specified in Rule
14a-4(c) under the Exchange Act.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MAY
2, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, CAN BE OBTAINED
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY, 200 COMMERCE STREET,
SMITHFIELD, VIRGINIA 23430, ATTENTION: AARON D. TRUB, SECRETARY.
BY ORDER OF THE BOARD OF DIRECTORS,
AARON D. TRUB
SECRETARY
August 6, 1999
15
<PAGE>
SMITHFIELD FOODS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard J. Holland, Joseph W. Luter, III,
Aaron D. Trub, and each of them, proxies with full power of substitution, to
vote the shares of Common Stock in Smithfield Foods, Inc. which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company to be held on September 2, 1999 or any adjournments
thereof.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
(except as indicated to the contrary vote for all nominees listed below
below)
Robert L. Burrus, Jr. Douglas W. Dodds F. J. Faison, Jr. Ray A. Goldberg
Joel W. Greenberg George E. Hamilton, Jr. Robert G. Hofmann Richard J. Holland
Roger R. Kapella Lewis R. Little Joseph W. Luter, III William H. Prestage
Joseph B. Sebring Timothy A. Seely
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
<PAGE>
2. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as the Company's
independent public accountants for the fiscal year ending May 1, 2000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND "FOR"
PROPOSAL 2.
The undersigned acknowledges receipt of the Notice of said Annual Meeting and of
the Proxy Statement attached thereto.
Dated: ______________________________, 1999
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., GIVE FULL TITLE AS SUCH.
Please mark, sign, date and return the proxy card using the enclosed envelope.
