SMITHFIELD FOODS INC, PRE 14A, 2000-07-10

SMITHFIELD FOODS INC
PRE 14A, 2000-07-10
MEAT PACKING PLANTS

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [_]

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 the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

<PAGE>

SMITHFIELD FOODS, INC.
_________________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD AUGUST 29, 2000

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
Jefferson Hotel, Franklin and Adams Streets, Richmond, Virginia, at 2:00 p.m.,
local time, on August 29, 2000, for the following purposes:

1. To elect a Board of eight (8) directors of the Company;

2. To approve an amendment to the Company's Articles of Incorporation
providing, among other things, (i) for the classification of the Board of
Directors into three classes, (ii) that directors may be removed only with
cause and (iii) that vacancies occurring on the Board of Directors may be
filled only by the remaining directors;

3. To approve an amendment to the Smithfield Foods, Inc. 1998 Stock
Incentive Plan providing, among other things, for an increase by 1,500,000
in the number of shares of the Company's Common Stock reserved for issuance
thereunder;

4. To ratify the selection of Arthur Andersen LLP as independent public
accountants of the Company for the fiscal year ending April 29, 2001; and

5. 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 12, 2000 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,

MICHAEL H. COLE
SECRETARY

Smithfield, Virginia
July [28], 2000
<PAGE>

SMITHFIELD FOODS, INC.
EXECUTIVE OFFICES
200 COMMERCE STREET
SMITHFIELD, VIRGINIA 23430

PROXY STATEMENT

FOR

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD AUGUST 29, 2000

The Annual Meeting of Shareholders of SMITHFIELD FOODS, INC., a Virginia
corporation (the "Company"), will be held on August 29, 2000, 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 of 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 July [28], 2000.

VOTING SECURITIES

On July 12, 2000, the record date for determining shareholders entitled to
vote at the meeting, [__________] 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
[___________] votes, as described further below; the total number of votes that
shareholders may cast at the meeting is therefore [___________]. 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 [___________] 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.
The proposal to amend the Company's Articles of Incorporation requires the
affirmative vote of the holders of a majority of the total votes entitled to be
cast. Votes that are withheld and Broker Shares that are not voted on this
proposal will count as votes against such proposal. 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 on such matters.

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 12, 2000, are as follows:

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(NUMBER OF SHARES) (1)
----------------------
PERCENT
NAME AND ADDRESS OF OF
BENEFICIAL OWNER DIRECT OTHER TOTAL CLASS (2)
--------------------------- --------------- ----------- --------------- ---------
<S> <C> <C> <C> <C>
Joseph W. Luter, III
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430 3,681,418 850,064(3) 4,531,482(3) 8.2%

Carroll M. Baggett
James O. Matthews
Jeffrey S. Matthews
Post Office Box 707
Warsaw NC 28398 5,400,083(4) --- 5,400,083(4) 9.8%

Wendell H. Murphy
P.O. Box 280
Rose Hill, NC 28458 3,581,982(5) --- 3,581,982(5) 6.5%
----------------------
</TABLE>

2
<PAGE>

(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) The Series B Share has voting and other rights substantially
equivalent to [__________] shares of Common Stock. See "Voting Securities"
above. The percentages shown in this table have been calculated as if these
[___________] 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.

(5) Information regarding shares beneficially owned by Mr. Murphy was
obtained from a Schedule 13G dated January 28, 2000.

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 Carol T.
Crawford and Melvin O. Wright who were elected to the Board of Directors on
January 20, 2000 and Wendell H. Murphy who previously served on the Board of
Directors from 1991 until his resignation in May 1998. Each person elected will
hold office until the next annual meeting of shareholders or, if Proposal 2
relating to the classification of the Board of Directors is approved by the
shareholders at the Annual Meeting, until the annual meeting at which members of
such director's class are next up for election. 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.

If Proposal 2 is approved by the shareholders at the Annual Meeting,
the Board of Directors will be divided into three classes (Class I, Class II and
Class III) as such directors are elected at the Annual Meeting. The initial
terms of the Class I directors will expire at the Company's 2001 Annual Meeting.
The nominees for Class I directors are Ray A. Goldberg and Melvin O. Wright.
The initial terms of the Class II directors will expire at the Company's 2002
Annual Meeting. The nominees for Class II directors are Robert L. Burrus, Jr.,
Carol T. Crawford and George E. Hamilton. The initial terms of the Class III
directors will expire at the Company's 2003 Annual Meeting. The nominees for
Class III directors are Joseph H. Luter, III, Wendell H. Murphy and William H.
Prestage. Assuming the passage of Proposal 2, directors elected at annual
meetings after this Annual Meeting will be elected for three-year terms. If
Proposal 2 is not approved by the shareholders, all eight directors elected at
the Annual Meeting will serve for a one-year term expiring at the 2001 Annual
Meeting.

3
<PAGE>

The following table sets forth the names, ages, and principal
occupations of the nominees and other information with respect to them:

<TABLE>
<CAPTION>
NAME--AGE--PRINCIPAL OCCUPATION--OTHER INFORMATION DIRECTOR SINCE
-------------------------------------------------- --------------
<S> <C>
Joseph W. Luter, III (61) 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. (65) 1996
Partner in the law firm of McGuire, Woods, Battle & Boothe LLP,
Richmond, Virginia; Director, CSX Corporation, Heilig-Meyers
Company, Concepts Direct, Inc., and S&K Famous Brands, Inc.

Carol T. Crawford (57) 2000
Distinguished Visiting Professor of Law at George Mason
University School of Law, formerly Commissioner of the U.S.
International Trade Commission from 1991 until 2000
and Assistant Attorney General Of the United States from 1989
until 1991

Ray A. Goldberg (73) 1999
Moffett Professor of Agriculture and Business, Emeritus, Harvard
Business School; Director, RDO Farm Equipment Co.

George E. Hamilton, Jr. (84) 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

Wendell H. Murphy (61) ---
Private Investor, formerly Chairman of the Board and Chief
Executive Officer of Murphy Farms, Inc., Rose Hill, North
Carolina, a hog producer, prior to the Company's purchase of
such business in January, 2000

William H. Prestage (65) 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

Melvin O. Wright (71) 2000
Advisor to Primco, a Paris merchant bank; Prior to 1992 a Senior Vice
President and Director of Dean Witter Reynolds (now Morgan Stanley
Dean Witter)
</TABLE>

No family relationship exists between any of the nominees for election as
directors of the Company.

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

4
<PAGE>

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 April 30, 2000, the Company believes
that 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 12, 2000, 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 7 of this Proxy
Statement, and (iii) all current directors and executive officers as a group,
together with their respective percentages:

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NUMBER OF SHARES (1)
-------------------------
PERCENT
NAME DIRECT OTHER TOTAL OF CLASS (2)
------------------------- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Robert L. Burrus, Jr. 1,000 -- 1,000 *
Carol T. Crawford 6,000 35,600(3) 41,600 (3) *
Ray A. Goldberg -- -- -- *
George E. Hamilton, Jr. 150,000 9,000 (4) 159,000 (4) *
Lewis R. Little 15,000 -- 15,000 *
Joseph W. Luter, III 3,681,418 850,064 (5) 4,531,482 (5) 8.2%
Wendell H. Murphy 3,581,982 -- 3,581,982 6.5%
C. Larry Pope 93,000(6) 70,000 163,000 (6) *
Richard J.M. Poulson -- -- -- *
William H. Prestage 800 120,000 (7) 120,800 (7) *
Joseph B. Sebring 10,450 -- 10,450 *
Melvin O. Wright 5,000 -- 5,000 *

(All current directors and
executive officers as
a group 11 persons) 3,962,668 1,084,664 (8) 5,047,332 (8) 9.3%
</TABLE>
____________________

* 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.

(3) Includes 4,400 shares owned by Mrs. Crawford's husband, 30,200
shares owned by defined benefit plans of which Mrs. Crawford is a co-trustee,
and 1,000 shares held by a partnership in which Mrs. Crawford's husband is a
Partner. Mrs. Crawford disclaims beneficial ownership of all 35,600 shares.

(4) Includes 9,000 shares owned by Mr. Hamilton's son with respect to
which Mr. Hamilton disclaims beneficial ownership.

5
<PAGE>

(5) 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.

(6) Includes 1,000 shares owned by Mr. Pope's son and 1,000 shares
owned by Mr. Pope's daughter with respect to which Mr. Pope disclaims beneficial
ownership.

(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 400,000 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. Luter and Burrus and,
with certain limitations, exercises the power of the Board of Directors between
Board meetings. The Executive Committee held no meetings in fiscal 2000.

The Audit Committee is composed of Messrs. Burrus, Goldberg and
Wright. 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 two meetings in fiscal 2000.

The Compensation Committee is composed of Ms. Crawford and Messrs.
Burrus and Goldberg. 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 four
meetings in fiscal 2000.

The Board of Directors held four meetings during fiscal 2000,
including two regular meetings. All directors 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 2000 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 April 30, 2000,
May 2, 1999, and May 3, 1998, the annual and long-term compensation for services
in all capacities to the Company and its subsidiaries of those persons who on
April 30, 2000, were the Company's Chief Executive Officer and the next four
most highly compensated executive officers (collectively, the "Named Executive
Officers").

6
<PAGE>

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------------------------
ANNUAL COMPENSATION (1)
------------------------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) COMPENSATION($)
------------------------------ ---- --------- ------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
Joseph W. Luter, III 2000 620,000 2,528,316 -- 522,896 (2)
Chairman of the Board 1999 623,975 3,211,761 -- 274,771
and Chief Executive 1998 628,077 1,680,833 -- 164,988
Officer of the Company

Joseph B. Sebring 2000 620,000 1,071,595 -- --
President and Chief 1999 620,000 1,988,916 60,000 --
Operating Officer of 1998 550,000 774,507 -- --
John Morrell

Lewis R. Little 2000 620,000 809,638 -- --
President and Chief 1999 623,975 2,736,761 60,000 --
Operating Officer of the 1998 628,077 915,416 -- --
Company, Lykes and
Smithfield Packing

C. Larry Pope 2000 350,000 550,000 -- --
Vice President and 1999 301,923 400,000 -- --
Chief Financial Officer 1998 203,846 200,000 -- --

Richard J.M. Poulson 2000 400,000 500,000 -- --
Vice President and 1999 348,718 250,000 -- --
Senior Advisor to the 1998 -- -- -- --
Chairman
</TABLE>

(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 2000 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 April 30, 2000 for the period commencing on
the later of the date the premiums were paid and May 3, 1999 until April 30,
2000. 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 table below sets forth information with respect to option
exercises during fiscal 2000 and the number and value of options held at April
30, 2000 by each of the Named Executive Officers.

7
<PAGE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END UNEXERCISED OPTION VALUES
<TABLE>
<CAPTION>
(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> <C> <C> <C>
Joseph W. Luter, III -- -- 200,000 / 0 1,956,200 / 0
Joseph B. Sebring -- -- 0 / 100,000 0 / 307,500
Lewis R. Little -- -- 130,000 / 70,000 1,271,530 / 339,045
C. Larry Pope -- -- 70,000 / 0 684,670 / 0
Richard J.M. Poulson -- -- -- --
</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 New
York Stock Exchange 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 also 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.

The relative levels of base salary for executive officers are designed
to reflect each executive officer's scope of responsibility and accountability
within the Company. 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 persons who assumed significant new responsibilities, the
base salaries of the Company's executive officers remained basically unchanged
for fiscal 2000 as compared to prior years.

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 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 41% to 84% of an executive officer's total cash
compensation depending on Company, relevant subsidiary and individual
performance. Bonus awards for fiscal 2000 averaged approximately 68% of the

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<PAGE>

total cash compensation paid to all executive officers as compared to 69% in
fiscal 1999 and 58% in fiscal 1998.

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 2000, two
eligible employees (none of whom were executive officers) were awarded stock
options to acquire a total of 30,000 shares of Common Stock.

CEO Compensation

The compensation of Joseph W. Luter, III, the Chairman of the Board
and Chief Executive Officer of the Company, for fiscal 2000 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 1998
through fiscal 2000. In making its decision on Mr. Luter's base salary at the
beginning of fiscal 2000, the Committee determined that Mr. Luter had done an
exceptional job during fiscal 1999 in guiding and managing the continued growth
of the Company. The Committee, however, determined to maintain Mr. Luter's
salary at the same level as the prior year in light of Mr. Luter's substantial
bonus opportunity.

Mr. Luter's bonus award for fiscal 2000 was paid under the 1998 Stock
Incentive Plan approved by shareholders. The Committee believes that the strong
emphasis on incentive compensation for Mr. Luter operates as an appropriate
incentive for Mr. Luter to continue his efforts for increasing shareholder
value. Under that plan, Mr. Luter was entitled to 1% of the first $15 million
of the Company's fiscal 2000 net income before income taxes and incentive
payments due to executives, and 2% of such net income in excess of $15 million.
Mr. Luter's bonus represented approximately 80% of his total cash compensation.
Mr. Luter has a substantial stock ownership in the Company and was not awarded
any stock options during fiscal 2000. The Committee has maintained a policy of
large option grants every few years rather than annual grants for Mr. Luter.
The Committee will continue to evaluate each year whether Mr. Luter should be
granted a stock option award.

Administration of Compensation Programs

Ms. Crawford and Messrs. Burrus, Goldberg and, until his death in
April, 2000, Richard J. Holland, were the members of the Committee during fiscal
2000. None of the Committee members has been or is an officer or employee of
the Company. 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. Carol T. Crawford Ray A. Goldberg

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

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<PAGE>

Code 2011), the Nasdaq Market Value Index and the S&P 500 Index, each prepared
by Media General Financial Services, Inc., assuming that investments of $100
were made on April 30, 1995 and that dividends were reinvested.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG SMITHFIELD FOODS, INC., NASDAQ MARKET INDEX,
S&P 500 INDEX AND SIC CODE INDEX

[GRAPH]

1995 1996 1997 1998 1999 2000
SMITHFIELD FOODS, INC. 100.00 129.67 212.64 270.33 207.69 187.36
MEAT PACKING INDEX 100.00 118.01 156.92 167.38 147.58 117.15
NASDAQ MARKET VALUE INDEX 100.00 139.59 148.79 221.00 291.84 453.45
S&P 500 INDEX 100.00 130.22 162.95 229.86 280.02 308.39

During fiscal year 2000, the Company's Common Stock began trading on
the New York Stock Exchange. In the future the Company will use the S&P 500
Index rather than the Nasdaq Market Value Index as a broad market index for
purposes of this graph.

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 2000, based on the specific remuneration and years of service classifications
set forth below.

PENSION PLAN TABLE
<TABLE>
<CAPTION>
SELECTED YEARS OF SERVICE
--------------------------------------------------------
AVERAGE
REMUNERATION 15 20 25 30 35
-------------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <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
1,000,000 250,000 330,000 420,000 500,000 580,000
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 1,770,000
3,500,000 890,000 1,180,000 1,480,000 1,780,000 2,070,000
</TABLE>

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<PAGE>

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.

As of April 30, 2000, Messrs. Luter, Little, Pope and Poulson are credited
with 32, 37, [________] years of service, respectively, under the Company Plan
and the Supplemental Plan. Mr. Sebring is credited with six 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"), a
wholly-owned subsidiary of the Company, had arrangements with B&G Farms LLC
("B&G"), a limited liability company in which Brown's and Fishing Creek each had
a 50% interest, for the production of hogs for the Company's pork processing
plants. In fiscal 2000, the Company purchased Fishing Creek's interest in B&G
for $550,000. Prior to the acquisition, the aforementioned arrangements
involved, inter alia, (i) the lease of certain hog production facilities by B&G
to Brown's, and (ii) advances by B&G to Brown's of cash for working capital.
Brown's paid B&G [$__________] for leasing the hog production facilities in
fiscal 2000 and working capital advances totaling [$_______] were outstanding as
of the date when the Company purchased Fishing Creek's interest. All profits
and losses from the hog production operations were shared equally by Brown's and
Fishing Creek. All advances made pursuant to the arrangements accrued 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 $3,822,000 of sales
to other subsidiaries of the Company in fiscal 2000. The Company believes that
the terms of the foregoing arrangements are no less favorable to the Company
than if entered into with unaffiliated parties.

In May, 1999, the Company purchased Carroll's Foods, Inc. ("CFI") and certain
related companies and assets for 4,338,274 shares of Common Stock. 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
August 1999, the Company repurchased 500,000 of such shares based on the
prevailing market price at that time. 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.

Smithfield of Utah, Inc. ("Smithfield-Utah"), a wholly-owned subsidiary of the
Company, was a participant in a joint hog production arrangement with Carroll's
Foods of Utah, Inc. ("CFU") and certain other companies to produce hogs in the
state of Utah for sale to an unrelated party. CFU is an affiliate of CFI, of

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<PAGE>

which F. J. Faison, Jr., a former director of the Company, was the president and
a director. 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 were no less
favorable to the Company than if entered into with unaffiliated parties.

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
$138,705,000 of live hogs from PFI in fiscal 2000. The Company believes that the
prices paid under the purchase agreement with PFI are equivalent to market.

In January, 2000, the Company purchased Murphy Farms, Inc. and certain
affiliated corporations ("Murphy Farms") for 11,054,396 shares of Common Stock
(subject to post-closing adjustment). As a result of this transaction, the
former shareholders of Murphy Farms (Wendell H. Murphy, a nominee for director,
Harry D. Murphy, Joyce M. Norman, Wendell H. Murphy, Jr., Wendy Murphy Crumpler,
Stratton K. Murphy, Marc D. Murphy and Angela Brown) became the beneficial
owners in the aggregate of [______________] shares of the Company's Common
Stock, which amount includes shares of Common Stock previously held by Murphy
Farms, such shareholders and their affiliates. In connection with the
acquisition, the Company entered into a registration rights agreement and a
shareholders agreement with the former Murphy Farms shareholders. Under the
registration rights agreement, each of the former Murphy Farms shareholders is
entitled for a period of five 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 Murphy Farms
shareholders agreed for five years not to (i) initiate any solicitation of
proxies from Company shareholders or participate in any election contest or in
any proposal made under Rule 14(a)-8 of 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. Under such agreement, such shareholders also agreed not to sell or
otherwise transfer shares of Common Stock aggregating 5% or more of the then
outstanding Common Stock to any one person or group. Such shareholders further
agreed not to sell or transfer within any 12 month period or make any other
agreement or arrangement of transfer with respect to 10% or more of the shares
of Common Stock issued to any such shareholder in connection with the
acquisition of Murphy Farms.

On September 9, 1998, the Company made loans aggregating $9,444,000 to
employees of the Company including former director Roger R. Kapella, former
director and officer Aaron D. Trub, Messrs. Luter and Pope. The loans were made
to facilitate the employees' 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 29, 2001. Each employee's loan was
secured by a pledge to the Company of shares acquired upon exercise of the
options. The aggregate amount of loan principal and accrued interest
outstanding as of April 30, 2000 for Messrs. Luter and Pope was $7,800,000 and
$95,335, respectively. Mr. Trub repaid his loan in full in the amount of
$750,000 on September 17, 1999. Mr. Kapella repaid his loan principal and
accrued interest in full in the amount of $306,239 on June 9, 1999.

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

AMENDMENT TO ARTICLES OF INCORPORATION

The Board of Directors has approved and recommends that the shareholders
approve a proposed amendment (the "Amendment") to the Corporation's Articles of

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<PAGE>

Incorporation to provide for (i) the classification of the Board of Directors
into three classes of directors with staggered terms of office, (ii) the removal
of directors only with cause by the affirmative vote of the holders of shares
representing at least two-thirds of the votes entitled to be cast on such action
and (iii) the filling of vacancies on the Board of Directors only by the
remaining directors. The Amendment further provides that these provisions may
not be amended or repealed unless such action has been approved by the
affirmative vote of the holders of shares representing at least two-thirds of
the votes entitled to be cast by each voting group entitled to vote on such
action. A copy of the Amendment is attached to this Proxy Statement as Exhibit
A.

Classification of the Board of Directors

Virginia law permits the Company to include a provision in its Articles of
Incorporation that provides for a classified board of directors with staggered
three-year terms. Absent such a provision, Virginia law provides that all
directors serve a one-year term and until their successors are duly elected and
qualified. The proposed classified board provision would divide the Board of
Directors into three classes, as nearly equal in number as possible, with each
Class I director elected for a one-year term expiring at the 2001 annual meeting
of shareholders, each Class II director elected for a two-year term expiring at
the 2002 annual meeting of shareholders and each Class III director elected for
a three-year term expiring at the 2003 annual meeting of shareholders. At each
annual meeting of shareholders following this initial classification and
election, the successors to the class of directors whose terms expire at that
meeting would be elected for a term expiring at the third succeeding annual
meeting of shareholders after their election and until their successors have
been duly elected and qualified. If the number of directors is changed, any
newly created directorships or decrease in directorships would be apportioned
among the classes by the Board of Directors so as to make all classes as nearly
equal in number as possible. Under Virginia law, directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election. The
Company's Articles of Incorporation do not permit shareholders to cumulate their
votes for directors.

Removal of Directors Only for Cause

The Amendment provides that directors may be removed only with cause by the
affirmative vote of the holders of shares representing at least two-thirds of
the votes entitled to be cast on such action. Under Virginia law, (i) directors
may be removed by shareholders with or without cause, unless a corporation's
articles of incorporation provide that directors may be removed only with cause
and (ii) the vote requirement to remove a director is a majority of the votes
entitled to be cast at an election of directors, unless a corporation's articles
of incorporation require a greater vote. Currently, the Company's Articles of
Incorporation provide that any director may be removed with cause by the
affirmative vote of the holders of a majority of the shares entitled to vote at
an election of directors. This existing provision is essentially unchanged from
the provision contained in the Company's Certificate of Incorporation prior to
the reincorporation of the Company from Delaware to Virginia in 1997 and may be
considered ambiguous, under Virginia law, as to whether it permits directors to
be removed only with cause. If approved, the Amendment would eliminate any
uncertainty under this existing provision of the Company's Articles of
Incorporation as to whether directors may be removed only with cause and would
increase the shareholder vote required for such removal.

Filling Vacancies on the Board of Directors

The Amendment also provides that any vacancy occurring on the Board of
Directors, including a vacancy resulting from an increase in the number of
directors or the removal of a director, may be filled only by a majority of the
remaining directors even if the remaining directors constitute less than a
quorum. Absent such a provision, Virginia law provides that vacancies occurring
on the Board of Directors may be filled by the shareholders, by the Board of
Directors or, if the remaining directors constitute less than a quorum, by a
majority of the remaining directors. Under Virginia law, the term of a director
elected by the Board of Directors to fill a vacancy expires at the next meeting
of shareholders at which directors are elected, even if the new director is
filling an unexpired term in a class with more than one year remaining in its
term.

Supermajority Vote for Amendment or Repeal of the Amendment

The Company's Articles of Incorporation currently provide that any amendment
to the Articles of Incorporation must be approved by a majority of the votes

13
<PAGE>

entitled to be cast by each voting group that is entitled to vote on the matter.
As permitted under Virginia law, the Amendment would provide that a greater vote
is required to amend or repeal any provision contained in the Amendment or to
approve any other amendment to the Articles of Incorporation that would be
inconsistent with the Amendment. Any such amendment or repeal would require the
affirmative vote of the holders of shares representing at least two-thirds of
the votes entitled to be cast by each voting group entitled to vote on such
matter. Approval of any other future amendments to the Articles of
Incorporation would continue to be governed by the existing majority voting
requirement contained in the Articles of Incorporation.

Reasons for the Amendment

The Board of Directors believes that the Amendment, if adopted, would be in
the best interests of the Company and its shareholders by enhancing the
likelihood of continuity and stability in the composition of the Board of
Directors and in the policies formulated by the Board, particularly in the event
of an unsolicited attempt to acquire control of the Company. The Board of
Directors has observed that certain tactics, including the accumulation of
substantial block positions as a prelude to an attempted takeover or significant
corporate restructuring, have become relatively common in corporate takeover
practice. These actions are often undertaken without advance notice to or
consultation with management of the corporation. In many cases, such third
parties seek representation on the corporation's board of directors in order to
increase the likelihood that their proposals will be implemented by the
corporation. If the corporation resists the efforts to obtain representation on
the corporation's board, the outside parties may commence proxy contests to have
themselves or their nominees elected to the board in place of certain directors
or the entire board.

It is believed that in many circumstances such efforts may not be beneficial
to the interests of a corporation and its shareholders, because they may deprive
management of the time and information necessary to evaluate the proposals, to
study alternative proposals and to help ensure that the best price is obtained
in any transaction which may ultimately be undertaken.

The Board of Directors believes that a classified board with staggered terms
will protect against rapid shifts in control of the Company by requiring at
least two annual meetings for shareholders to make a change in control of the
Board of Directors. The Board also believes that the other provisions of the
Amendment described above will ensure that the purpose of having a classified
board will not be circumvented by the removal of directors without cause, the
filling of new directorships by shareholders or the repeal or modification of
the classified board or other provisions of the Amendment by persons holding
less than two-thirds of the voting power of the Company's stock. The Amendment
is not being recommended in response to any specific effort of which the Company
is aware to accumulate the Company's stock or to acquire control of the Company.
Although the Board of Directors may review other possible anti-takeover
programs, the Board has no present intention of proposing additional amendments
to the Articles of Incorporation that would affect the ability of a third party
to change control of the Company.

Potential Effects of the Amendment

The Amendment is intended to encourage persons seeking to acquire control of
the Company to initiate such an acquisition through arm's-length negotiations
with the Company's management and the Board of Directors. However, the overall
effect of the Amendment may be to render more difficult or to discourage a third
party from making a tender offer or otherwise attempting to obtain control of
the Company, even though such an attempt might be beneficial to the Company and
its shareholders, by preventing such third party from immediately removing and
replacing the incumbent directors. If the Amendment is adopted, it will take at
least two annual meetings for the holders of a majority of the voting power of
the Company's stock to remove and replace a majority of the directors of the
Company and three annual meetings to remove and replace the entire Board of
Directors. Currently, the holders of a majority of the voting power of the
Company's stock could remove and replace all of the directors being elected at
an annual meeting. The classification of the Board of Directors into three
classes with staggered terms would be effective for the election at this Annual
Meeting and all future annual meetings, whether or not a change in control of
the Company has occurred or is threatened.

The Amendment may also serve to benefit incumbent management by making it more
difficult to remove management even when the only reason for the proposed change

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<PAGE>

of control through shareholder action may be the unsatisfactory performance of
the present directors. In addition, since the Amendment may discourage
accumulations of large blocks of the Company's shares by purchasers whose
objective is to have such shares repurchased by the Company at a premium, its
adoption could tend to reduce the temporary fluctuations in the market price of
such shares that are caused by such accumulations. Accordingly, shareholders
conceivably could be deprived of certain opportunities to sell their shares at a
temporarily higher market price.

Takeovers or changes in control in management of the Company which are
proposed and effected without prior consultation and negotiation with the
Company's management may not always be detrimental to the Company and its
shareholders. However, the Board of Directors feels that the benefits of
seeking to protect its ability to negotiate with the proponent of an unfriendly
or unsolicited proposal to take over or restructure the Company outweigh the
disadvantages of discouraging such proposals.

Other Takeover Defenses

In 1988, the Board of Directors adopted a shareholder rights plan to protect
shareholders against hostile attempts to gain control of the Company.
In connection with the Company's reincorporation in 1997, a new shareholder
rights plan was adopted by the Board of Directors as a continuation of the old
plan. Under the new plan, the rights, which were issued as a dividend on the
Common Shares, will become distributable when an "acquiring person" acquires 20%
of the Common Shares or commences a tender offer that would result in its owning
20% of Common Stock. When an "acquiring person" acquires 20% of the outstanding
Common Shares or effects a business combination with the Company, the rights
permit shareholders to acquire securities having a value equal to twice the
amount of the purchase price specified in the rights. Rights held by the
acquiring person are void and may not be exercised. In certain circumstances,
rights may be redeemed by the Company for a nominal consideration.

The Articles of Incorporation authorize the Board of Directors to determine
the characteristics of shares of Preferred Stock that could be issued to render
more difficult or discourage an unsolicited attempt to acquire the Company. The
Company's Bylaws prescribe procedures for shareholders' nominations of directors
and submissions of proposals for consideration at a meeting of shareholders.
The Bylaws further provide that only the Board of Directors, the President or
the Chairman of the Board may call a special meeting of shareholders, which has
the effect of permitting shareholders to remove directors only at annual
meetings unless the Board of Directors endorses the action.

The Virginia Stock Corporation Act contains provisions governing "affiliated
transactions" designed to deter uninvited takeovers of Virginia corporations.
These provisions, with several exceptions discussed below, require approval of
material acquisition transactions between a Virginia corporation and any holder
of more than 10% of any class of its outstanding voting shares (an "interested
shareholder") by the holders of at least two-thirds of the remaining voting
shares. For three years following the time the interested shareholder becomes
an owner of 10% of the voting shares, a Virginia corporation cannot engage in an
"affiliated transaction" (primarily a merger, sale of assets or other business
combination) with the interested shareholder without the approval of both the
"disinterested directors" and holders of two-thirds of the voting shares other
than those owned by the interested shareholder. At the expiration of the three-
year period, the statute requires approval by holders of two-thirds of the
voting shares other than those beneficially owned by the interested shareholder
absent an exception. The principal exceptions to the special voting
requirements apply to transactions proposed after the three-year period has
expired and require either that the transaction be approved by a majority of
"disinterested directors" or satisfy the statute's "fair price" requirements.

The Virginia Stock Corporation Act also provides that shares acquired in a
transaction that would cause the acquiring person's voting strength to cross any
of three thresholds (20%, 33 1/3%, or 50%) have no voting rights unless granted
by a majority vote of shares not owned by the acquiring person or any officer or
employee-director of the Company. An acquiring person may require the Company
to hold a special meeting of shareholders to consider the granting of voting
rights within 50 days.

Vote Required

Approval of the Amendment to the Company's Articles of Incorporation requires
the affirmative vote of the holders of a majority of the total votes entitled to
be cast at the Annual Meeting.

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<PAGE>

The Board of Directors believes that approval of the Amendment is in the best
interests of all shareholders and, accordingly, recommends a vote "FOR" approval
of the Amendment.

PROPOSAL 3

PROPOSAL TO AMEND THE 1998 STOCK INCENTIVE PLAN

The Board of Directors of the Company has approved, subject to shareholder
approval, an amendment to the Smithfield Foods, Inc. 1998 Stock Incentive Plan
(as amended, the "1998 Plan") to increase the number of shares of Common Stock
reserved for issuance from 1,500,000 to 3,000,000 and to increase from 300,000
to 1,000,000 the maximum number of shares that may be allocated to Incentive
Awards granted to any Participant during a single tax year.

The 1998 Plan became effective as of July 1, 1998 and received shareholder
approval on August 27, 1998. Unless sooner terminated by the Board of
Directors, the Plan will terminate on June 30, 2008. No awards may be made
under the 1998 Plan after its termination.

The 1998 Plan is intended to provide a means for selected key employees of the
Company to increase their personal financial interest in the Company, thereby
stimulating the efforts of these employees and strengthening their desire to
remain with the Company (references to the "Company" in this section will
include any parent and subsidiary corporations.)

The principal features of the 1998 Plan as amended are summarized below.
Capitalized terms are defined in the 1998 Plan.

General

The 1998 Plan authorizes the reservation of 3,000,000 shares of Company Stock
for issuance pursuant to Incentive Awards (after giving effect to the proposed
amendment). Such Incentive Awards may be in the form of Performance Awards,
Incentive Stock Options or Nonstatutory Stock Options, as described below. 1998
Plan Participants will pay no consideration for awards under the 1998 Plan,
although they will pay to exercise options, as further described below.

If an award under the 1998 Plan or the Company's prior stock option plans is
cancelled, terminates or lapses unexercised, any unissued shares allocable to
such award may be subjected again to an Incentive Award under the 1998 Plan.
The number of shares that may be issued under the 1998 Plan will be adjusted in
the event of a future stock dividend, stock split or other similar event
affecting the Company Stock.

No more than 1,000,000 shares may be allocated to the Incentive Awards that
are granted to any Participant during a single tax year.

Eligibility

All present and future employees of the Company who may contribute
significantly to the Company are eligible to receive awards under the 1998 Plan.
The Company estimates that it has approximately 90 such employees (55 of whom
are officers) who may be eligible for awards.

Administration

The 1998 Plan is administered by a committee or subcommittee composed of non-
employee directors of the Company (the "Committee"). The 1998 Plan is intended
to conform to the provisions of SEC Rule 16b-3 and to meet the requirements for
performance-based compensation under Section 162(m) of the Code. The Committee
has the power and complete discretion to determine when to grant awards, which

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<PAGE>

eligible employees will receive awards, whether the award will be an Incentive
or Nonstatutory Stock Option and the number of shares to be allocated to each
award. The Committee may impose conditions on the exercise of options, and may
impose such other restrictions and requirements as it may deem appropriate.

Performance Awards

Performance Awards are subject to the achievement of pre-established
Performance Goals and will be administered to comply with the requirements of
Section 162(m) of the Code. Performance Goals will use objective and
quantifiable Performance Criteria that are measures for the Company or a
subsidiary which are asset growth; pre-tax earnings; pre-tax profits; earnings
per share; revenues; net income; and other measures listed in Section 2(t) of
the 1998 Plan. The Committee sets target and maximum amounts payable under the
Performance Award. The Participant receives the appropriate payments at the end
of the performance period if the Performance Goals (and other terms and
conditions of the award) are met. The amount payable under a Performance Award
to any Participant for a Taxable Year may not exceed the greater of $2,000,000
or 3% of the Company's net income before income taxes, incentive payments and
accounting for minority interests for the year for which the Performance Award
is made. The actual payments under a Performance Award will be in cash.

Stock Options

Options to purchase shares of Company Stock granted under the 1998 Plan may be
Incentive Stock Options or Nonstatutory Stock Options. Incentive Stock Options
qualify for income tax treatment under Section 422 of the Code, while
Nonstatutory Stock Options do not. The purchase price of Company Stock covered
by an option may not be less than 100% (or, in the case of an Incentive Stock
Option granted to a 10% shareholder, 110%) of the fair market value of the
Company Stock on the date of the option grant. Fair market value means the
average of the high and low sales price as quoted on the New York Stock
Exchange.

The value of Incentive Stock Options, based on the exercise price, that can be
exercisable for the first time in any calendar year under the 1998 Plan or any
other similar plan maintained by the Company is limited to $100,000 for each
Participant.

Options may not be exercised until five years after the date of grant except
as otherwise specified by the Committee. Incentive Stock Options may not be
exercised after the first to occur of (i) 10 years (or, in the case of an
Incentive Stock Option granted to a 10% shareholder, five years) from the date
on which the Incentive Stock Option was granted, (ii) three months from the
optionee's termination of employment with the Company for reasons other than
death or disability, or (iii) one year from the optionee's termination of
employment on account of death or disability. Unless otherwise provided in an
Incentive Award, an option not otherwise exercisable will become exercisable
upon a Change of Control. The Committee may also accelerate the expiration date
of outstanding options in the event of a Change of Control.

An optionee exercising an option may pay the purchase price in cash. If the
option provides, payment may also be made by delivering or having withheld
shares of Company Stock, or by delivering an exercise notice together with
irrevocable instructions to a broker to deliver to the Company the amount of
sale or loan proceeds from the option shares. The Plan does not provide for
"reload" options and does not allow repricing of options at a lower exercise
price. The Committee may provide for a Participant to defer receipt of stock
after an option exercise.

The Company's Common Stock is traded on the New York Stock Exchange and on
July __, 2000, the last reported sales price was $[__________].

Transferability of Awards

Nonstatutory Stock Options are transferable to the extent provided in an
Incentive Award or by Committee action. All other Incentive Awards are not
transferable except by will or the laws of descent and distribution.

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<PAGE>

Amendment of the 1998 Plan and Awards

The Board of Directors may amend the 1998 Plan in such respects as it deems
advisable. Shareholder approval must be obtained for any amendment that
increases shares reserved, materially modifies eligibility to participate or
materially increases benefits to Participants. Awards granted under the 1998
Plan may be amended with the consent of the recipient so long as the amended
award is consistent with the terms of the Plan.

Federal Income Tax Consequences

Generally, a Participant will not incur federal income tax when he is granted
Performance Awards, Nonstatutory Stock Options or Incentive Stock Options.

A Participant who receives payment under a Performance Award will include in
income an amount equal to the cash that is paid to the Participant under the
Performance Award.

Upon exercise of a Nonstatutory Stock Option, a Participant generally will
recognize compensation income equal to the difference between the fair market
value of the Company Stock on the date of the exercise and the option price.
Generally, such amounts will be included in the Participant's gross income in
the taxable year in which exercise occurs. The compensation income recognized
by the Participant is subject to income tax withholding by the Company.

Upon exercise of an Incentive Stock Option, a Participant generally will not
recognize income subject to tax, unless the Participant is subject to the
alternative minimum tax. If the Participant holds the Company Stock acquired
upon the exercise of an Incentive Stock Option until the latter of two years
after the option was awarded to the Participant or one year after the Company
Stock was issued to the Participant, then any profit or loss realized on the
later sale or exchange of the Company Stock will be capital gain or loss.

A Participant may pay the purchase price on the exercise of a Nonstatutory
Stock Option or an Incentive Stock Option by delivery of cash. If the option
agreement or the Committee otherwise provides, a Participant may also pay with
shares of Company Stock, or a combination of cash and Company Stock. Usually
when a Participant delivers shares of Company Stock in satisfaction of all, or
any part, of the purchase price, no taxable gain is recognized on any
appreciation in the value of the previously held Company Stock.

Assuming that a Participant's compensation is otherwise reasonable, the
Company usually will be entitled to a business expense deduction at the time and
in the amount that the recipient of an Incentive Award recognizes ordinary,
compensation income in connection therewith, as described above. The Company
generally does not receive a deduction in connection with the exercise of an
Incentive Stock Option, unless the Participant disposes of Company Stock
received upon exercise of such option before the end of the holding period
requirements.

This summary of federal income tax consequences of Performance Awards,
Nonstatutory Stock Options and Incentive Stock Options does not purport to be
complete. There may also be state and local income taxes applicable to these
transactions.

Vote Required

Approval of the amendment to the Smithfield Foods, Inc. 1998 Stock Incentive
Plan requires the affirmative vote of the holders of a majority of the shares of
Common Stock voting at the Annual Meeting.

The Board of Directors believes that approval of the amendment to the
Smithfield Foods, Inc. 1998 Stock Incentive Plan to increase the number of
authorized shares is in the best interest of all shareholders and, accordingly,
recommends a vote "FOR" approval of the proposed amendment to the Smithfield
Foods, Inc. 1998 Stock Incentive Plan.

18
<PAGE>

PROPOSAL 4

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 29, 2001, 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 2001 to stand unless the Board of Directors finds other reasons for
making a change.

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 29, 2001.

OTHER MATTERS

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. If
any matters not set forth in the Notice of Meeting accompanying this proxy
statement 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 2001
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 March 30, 2001. 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 (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.

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 2001 Annual Meeting must be received: (i) on or after May 1, 2001
and before June 1, 2001 if the annual meeting is to be held during the months of
August, and September, 2001; or (ii) not less than 50 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

19
<PAGE>

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 2001 Annual Meeting must be received: (i) on or after May
1, 2001 and before June 1, 2001 if the annual meeting is to be held during the
months of August, and September, 2001; or (ii) not less than 50 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 2001 Annual Meeting, the persons named in the Board's proxy
for the 2001 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
APRIL 30, 2000, 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: MICHAEL H. COLE, SECRETARY.

BY ORDER OF THE BOARD OF DIRECTORS,

MICHAEL H. COLE
SECRETARY

July __, 2000

20
<PAGE>

SMITHFIELD FOODS, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Joseph W. Luter, III and [_________________]
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 August 29, 2000 or any adjournments thereof.

<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as indicated to the contrary to vote for all nominees listed
below) below
</TABLE>

Robert L. Burrus, Jr. Carol T. Crawford Ray A. Goldberg
George E. Hamilton, Jr. Joseph W. Luter, III Wendell H. Murphy
William H. Prestage Melvin O. Wright

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)

__________________________________________________

2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
PROVIDING FOR, AMONG OTHER THINGS, THE CLASSIFICATION OF THE BOARD OF DIRECTORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>

3. PROPOSAL TO AMEND THE COMPANY'S 1998 STOCK INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as the Company's
independent public accountants for the fiscal year ending April 29, 2001
[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. 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, 3 AND 4.

The undersigned acknowledges receipt of the Notice of said Annual Meeting and of
the Proxy Statement attached thereto.

Dated: ______________________________, 2000

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.