INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Darling International 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)(1) 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:
N/A
-------------------------------
/ / 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>
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
DARLING INTERNATIONAL INC.
251 O'Connor Ridge Boulevard
Suite 300
Irving, Texas 75038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 17, 1999
To the Stockholders of Darling International Inc.:
NOTICE IS HEREBY GIVEN that the 1999 annual meeting of
stockholders of Darling International Inc. will be held on Monday, May
17, 1999 at 10:00 a.m., at the Company's corporate headquarters at 251
O'Connor Ridge Boulevard, Suite 300, Irving, Texas to elect five
directors of Darling International Inc. to serve until the next annual
meeting of stockholders and to transact such other business as may
properly come before the meeting or any adjournment or postponement
thereof.
The Board of Directors has fixed the close of business on
April 15, 1999 as the record date for determination of stockholders
entitled to notice of and vote at the meeting or any adjournment or
postponement thereof.
The Annual Report of Darling International Inc. for the
fiscal year ended January 2, 1999 is enclosed for your convenience.
STOCKHOLDERS ARE URGED TO FILL IN, SIGN, DATE AND MAIL THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE.
By Order of the Board of Directors
/s/ Joseph R. Weaver, Jr.
---------------------------------
Joseph R. Weaver, Jr.
Secretary
April 27, 1999
<PAGE>
DARLING INTERNATIONAL INC.
251 O'Connor Ridge Boulevard
Suite 300
Irving, Texas 75038
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 17, 1999
The enclosed proxy is solicited by the Board of Directors of Darling
International Inc. (the "Company"). This Proxy Statement and the accompanying
form of proxy, Notice of Annual Meeting of Stockholders and letter to
stockholders are first being mailed to stockholders of record of the Company's
common stock, par value $.01 per share (the "Common Stock"), on or about April
27, 1999, in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders,
including any adjournments or postponements thereof (the "Meeting") to be held
at the Company's corporate headquarters at 251 O'Connor Ridge Boulevard, Suite
300, Irving, Texas 75038 on Monday, May 17, 1999, at 10:00 a.m.
SOLICITATION OF PROXIES
The expense of the solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by the directors, officers and employees of the Company by other means,
including telephone, telegraph or in person. No special compensation will be
paid to directors, officers or employees for the solicitation of proxies. To
solicit proxies, the Company also will request the assistance of banks,
brokerage houses and other custodians, nominees or fiduciaries, and, upon
request, will reimburse such organizations or individuals for their reasonable
expenses in forwarding soliciting materials to beneficial owners and in
obtaining authorization for the execution of proxies. The Company will also use
the services of the proxy solicitation firm of Corporate Investor
Communications, Inc. to assist in the solicitation of its proxies. For such
services the Company will pay a fee that is not expected to exceed $5,000, plus
out-of-pocket expenses.
PURPOSE OF MEETING
At the Meeting, action will be taken to elect five directors to hold
office until the next annual meeting of stockholders and until their successors
shall have been elected and qualified. The Board of Directors does not know of
any other matter that is to come before the Meeting. If any other matters are
properly presented for consideration, however, the persons authorized by the
enclosed proxy will have discretion to vote on such matters in accordance with
their best judgment.
<PAGE>
Stockholders are urged to sign the accompanying form of proxy,
solicited on behalf of the Board of Directors of the Company, and, immediately
after reviewing the information contained in this Proxy Statement and in the
Annual Report outlining the Company's operations for the fiscal year ended
January 2, 1999, return it in the envelope provided for that purpose. If the
accompanying proxy card is properly signed and returned to the Company prior to
the Meeting, it will be voted at the Meeting and any adjournment or adjournments
thereof in the manner specified therein. If no directions are given but proxies
are executed in the manner set forth therein, such proxies will be voted FOR the
election of the nominees for director set forth in this Proxy Statement.
REVOCATION OF PROXY
Any stockholder returning the accompanying proxy may revoke such proxy
at any time prior to its exercise by giving written notice to the Secretary of
the Company of such revocation, voting in person at the Meeting, or executing
and delivering to the Secretary of the Company a later-dated proxy. Any such
later-dated proxy should be sent to the attention of Joseph R. Weaver, Jr.,
Darling International Inc., 251 O'Connor Ridge Blvd., Suite 300, Irving, TX
75038. Attendance at the Meeting will not by itself constitute a revocation of a
proxy.
QUORUM AND VOTING REQUIREMENTS
Only stockholders of record as of the close of business on April 15,
1999 (the "Record Date") are entitled to notice of and to vote at the Meeting or
any adjournments thereof. As of the close of business on the Record Date, there
were 15,589,362 shares of Common Stock issued and outstanding and entitled to
vote. The Common Stock constitutes the only class of capital stock of the
Company issued and outstanding. Each stockholder of record on the Record Date is
entitled to one vote on each matter presented at the Meeting for each share of
Common Stock held of record by such stockholder. A majority of the outstanding
shares of Common Stock, represented in person or by proxy, will constitute a
quorum at the Meeting; however, if a quorum is not present or represented at the
Meeting, the stockholders entitled to vote thereat, present in person or
represented by proxy, have the power to adjourn the Meeting from time to time,
without notice, other than by announcement at the Meeting, until a quorum is
present or represented. At any such adjourned Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the original Meeting.
Each share of Common Stock may be voted to elect up to five individuals
(the number of directors to be elected) as directors of the Company. To be
elected, each nominee must receive a plurality of all votes cast with respect to
such position as director. It is intended that, unless authorization to vote for
one or more nominees for director is withheld, proxies will be voted FOR the
election of all of the nominees named in this Proxy Statement.
Votes cast by proxy or in person will be counted by two persons
appointed by the Company to act as inspectors for the Meeting. The election
inspectors will treat shares represented by proxies that reflect abstentions as
shares that are present and entitled to vote for the purpose of determining the
presence of a quorum. Abstentions will have no effect on the outcome of the
election of directors.
<PAGE>
Broker non-votes occur where a broker holding stock in street name
votes the shares on some matters but not others. Brokers are permitted to vote
on routine, non-controversial proposals in instances where they have not
received voting instructions from the beneficial owner of the stock but are not
permitted to vote on non-routine matters. The missing votes on non-routine
matters are deemed to be "broker non-votes." The election inspectors will treat
broker non-votes as shares that are present and entitled to vote for the purpose
of determining the presence of a quorum. However, for the purpose of determining
the outcome of any matter as to which the broker or nominee has indicated on the
proxy that it does not have discretionary authority to vote, those shares will
be treated as not present and not entitled to vote with respect to that matter
(even though those shares are considered entitled to vote for quorum purposes
and may be entitled to vote on other matters).
<PAGE>
Proposal No. 1
ELECTION OF DIRECTORS
The current Board of Directors consists of five members. At the
Meeting, five directors, to hold office until the next annual meeting of
stockholders and until their successors have been elected and qualified, are to
be elected. The nominees for election as directors are Fredric J. Klink, Dennis
B. Longmire, Denis J. Taura, Bruce Waterfall and William L. Westerman. Each of
the nominees has consented to serve as a director if elected. If any of the
nominees shall become unable or unwilling to stand for election as a director
(an event not now anticipated by the Board of Directors), proxies will be voted
for such substitute as shall be designated by the Board of Directors. The
following table sets forth for each nominee for election as a director of the
Company, his age, principal occupation, position with the Company, if any, and
certain other information.
<TABLE>
<S> <C> <C> <C>
Name Age Principal Occupation Director Since
--------- --- ------------------------- ---------------
Dennis B. Longmire 54 Dr. Longmire has served as Chairman of the March 1995
Board and Chief Executive Officer of the
Company since March 1995. Prior to that,
Dr. Longmire was President of Premiere
AgriTechnologies, a wholly owned subsidiary
of Archer-Daniels-Midland Co. ("A.D.M.").
From 1969 to January 1994, at which time
Central Soya Co., Inc. ("Central") was
acquired by A.D.M., Dr. Longmire was
employed by Central, where he held various
management positions, including Group Vice
President for Feed. Dr. Longmire also
serves as a director of Terra Nitrogen
Corporation and American Feed Manufacturers
Association.
Fredric J. Klink 65 Mr. Klink has been a partner at the law firm April 1995
of Dechert Price & Rhoads for more than five
years. Mr. Klink's law practice
concentrates on mergers and acquisitions,
securities, and international work. He
received his LL.B. from Columbia Law School
in 1960.
Denis J. Taura 59 Mr. Taura is a partner in the management December 1993
consulting firm Taura Flynn & Associates,
LLC. Previously, in October 1991, Mr. Taura
founded D. Taura & Associates, a management
consulting firm, of which Mr. Taura served
as chairman. From January 1995 through
October 1996, Mr. Taura was also affiliated
with Zolfo Cooper LLC, a management
consulting firm. From 1972 to October 1991,
Mr. Taura was a partner with KPMG Peat
Marwick. Mr. Taura serves as a director of
Geonex Corporation and Kasper A.L.S. Limited.
<PAGE>
Bruce Waterfall 61 Mr. Waterfall is President and co-founder of March 1995
Morgens, Waterfall, Vintiadis & Company,
Inc., ("Morgens, Waterfall"). Mr. Waterfall
has been a professional money manager and
analyst for more than twenty-five years.
Mr. Waterfall serves as a director of Geonex
Corporation and Elsinore Corporation.
Entities controlled by Morgens, Waterfall
beneficially own approximately 46% of the
issued and outstanding Common Stock. See
"Security Ownership of Certain Beneficial
Owners and Management."
William L. Westerman 67 Mr. Westerman is the Chairman of the Board June 1997
for both Riviera Holdings Corporation
("Riviera") and Riviera Operating
Corporation, and Chief Executive Officer,
President, Secretary and Treasurer of
Riviera Operating Corporation. He has
served as the Chairman of Riviera since
January 1992. Mr. Westerman previously
served as President and CEO of Cellu-Craft,
Inc. Entities controlled by Morgens,
Waterfall beneficially own in excess of 10%
of the outstanding capital stock of Riviera.
</TABLE>
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
<PAGE>
Meetings and Committees of the Board of Directors
During the fiscal year ended January 2, 1999, the Board of Directors
held seven regular meetings and three special meetings, four of which were
teleconference meetings. Each of the directors attended at least 75% of all
meetings held by the Board of Directors and all meetings of each committee of
the Board of Directors on which such director served during the fiscal year
ended January 2, 1999.
The Board of Directors has an audit committee (the "Audit Committee")
and the Compensation Committee. The Board of Directors does not have a
nominating committee or any other committees.
The Audit Committee currently consists of Messrs. Taura (Chairman),
Klink and Westerman. The Audit Committee met three times during the fiscal year
ended January 2, 1999. The functions of the Audit Committee are (i) to review
the audit plans, scope, fees, and audit results of the Company's independent
auditors; (ii) to review internal audit reports on the adequacy of internal
audit controls; (iii) to review non-audit services and fees; and (iv) to review
the scope of the internal auditors' plans, the results of their audits, and the
effectiveness of the Company's program of correcting audit findings. The Audit
Committee also recommends to the Board of Directors the independent auditors to
perform the annual audit of the Company's financial statements.
The Compensation Committee currently consists of Mr. Westerman
(Chairman), Dr. Longmire (ex officio), Mr. Taura and Mr. Waterfall. The
Compensation Committee met one time during the fiscal year ended January 2,
1999. The functions of the Compensation Committee are (i) to review and
recommend to the Board of Directors the direct and indirect compensation and
employee benefits of the Company's executive officers; (ii) to review and
administer the Company's incentive, bonus, and employee benefit plans, including
the 1993 Plan, the 1994 Plan, and the Non-Employee Directors Stock Option Plan
(the "Directors Plan"); (iii) to review the Company's policies relating to
employee and executive compensation; and (iv) to review management's long-range
planning for executive development and succession. The Compensation Committee
also performs the functions of the nominating committee of the Board of
Directors.
Compensation of Directors
Non-employee members of the Board of Directors are paid a $40,000
annual retainer, plus a fee of $1,500 for each board meeting or committee
meeting personally attended after six board meetings have been personally
attended, and $500 for each meeting telephonically attended during a calendar
year after having attended six board or committee meetings, as applicable,
during such year. Mr. Waterfall waived his director fees for fiscal 1998.
Under the Directors Plan, each incumbent director who was a
disinterested person within the meaning of Rule 16b-3(c)(2)(i) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), was granted an option to
purchase 15,000 shares of Common Stock on the tenth business day of July 1995
and will be granted an identical option on the tenth business day of July of
each year thereafter. New directors are granted an option to purchase 21,000
shares of Common Stock on the day they are first elected to and duly qualify as
a member of the Board of Directors. The per share exercise price of each option
granted under the Directors Plan is equal to the fair market value per share of
the Company's Common Stock on the date of grant of the options relating thereto.
Twenty-five percent of the shares subject to each option vest on the date that
is six months following the date of grant and 25% of the shares vest on each of
the first, second and third anniversaries of the date of grant thereafter.
Options to purchase an aggregate of 450,000 shares of Common Stock may be
granted under the Directors Plan.
<PAGE>
If while unexercised options remain outstanding under the Directors
Plan, any of the following events occur, all options granted under the Directors
Plan become exercisable in full, whether or not they are otherwise exercisable:
(1) any entity other than the Company makes a tender or exchange offer for
shares of the Company's Common Stock pursuant to which purchases are made; (2)
the stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation or to sell all or
substantially all of the assets or adopt a plan of liquidation; (3) the
beneficial ownership of securities representing more than 15% of the combined
voting power of the Company is acquired by any person; or (4) during any period
of two consecutive years, the individuals who at the start of such period were
members of the Board of Directors cease to constitute at least a majority
thereof, unless the election of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
start of such period. In the case of a merger, where the Company is the
surviving entity and in which there is a reclassification of the shares of
Common Stock, each option shall become exercisable for the kind and amount of
shares of stock or other securities receivable upon such reclassification or
merger.
EXECUTIVE OFFICERS
The executive officers of the Company serve at the discretion of the
Board of Directors and are chosen annually by the Board at its first meeting
following the annual meeting of stockholders. The following table sets forth the
names and ages of the executive officers of the Company and all positions held
with the Company by each individual.
Name Age Title
Dennis B. Longmire........54 Chairman of the Board and Chief Executive Officer
Douglas P. Anderson (1)...52 Chief Operations Officer
John O. Muse..............50 Vice President and Chief Financial Officer
James A. Ransweiler.......56 President - Darling Rendering
John R. Witt..............48 President - Restaurant Services
Robert L. Willis..........59 President - Esteem Products
Robert E. McMullen (2)...53 President - International Processing Corp.
Omer A. Dreiling, II......45 Vice President - Western Region
Neil Katchen..............53 Vice President - Eastern Region
Mitchell Kilanowski.......47 Executive Vice President - Marketing and Research
Joseph R. Weaver, Jr......52 General Counsel and Secretary
- --------------
(1) Douglas P. Anderson served as Chief Operations Officer from October
1997 until his resignation February 1999. Mr. Anderson's
responsibilities have been assumed by certain existing personnel and
therefore the Company does not anticipate replacing the position.
(2) Robert E. McMullen has served as President of International Processing
Corp. ("IPC"), a wholly-owned subsidiary of the Company, since
February 1997. IPC was sold on April 5, 1999 and Mr. McMullen,
pursuant to the Stock Purchase Agreement, will retain employment with
IPC.
For a description of the business experience of Dr. Longmire, see
"Election of Directors."
<PAGE>
John O. Muse has served as Vice President and Chief Financial Officer since
October 1997. From 1994 to October 1997 he served as Vice President and General
Manager at Consolidated Nutrition, L.C. Prior to serving at Consolidated
Nutrition, Mr. Muse was Vice President of Premiere Technologies, a wholly-owned
subsidiary of Archer-Daniels-Midland Company. From 1988 to 1994 he served as
Group Director of Finance and Administration at Central Soya Company, Inc. Since
August 1998, Mr. Muse has served on an advisory board for Allendale Mutual
Insurance Company.
James A. Ransweiler has served as President - Darling Rendering since
October 1997. From August 1986 to October 1997, he served as Vice President of
the Company's Eastern Region, except for the period from January 1989 to June
1990 when he served as Special Projects Coordinator.
John R. Witt has served as President - Restaurant Services since October
1997. From January 1996 to October 1997 he served as Vice President and Chief
Financial Officer of the Company. He served as Secretary of the Company from
June 1996 to April 1997. From March 1992 to May 1995, Mr. Witt served as Chief
Financial Officer of Intertrans Corporation, an international freight forwarding
company. From May 1995 to December 1995, he served as Chief Financial Officer of
Fritz Air Freight Division.
Robert L. Willis has served as President-Esteem Products since September
1998. From September 1986 to September 1998 Mr. Willis served as Vice President
of the Company's Central Region. From August 1983 to August 1986, he served as
Assistant Division Manager of the Company's Midwest Division.
Omer A. Dreiling, II has served as Vice President of the Company's Western
Region since 1986. Mr. Dreiling is a past president of the Southwest Meat
Association and has served as a director of the Texas Renderers Association.
Neil Katchen has served as Vice President of the Company's Eastern Region
since October 1997 and served as General Manager of the Company's Newark, New
Jersey facility from January 1990 to October 1997.
Mitchell Kilanowski has served as Executive Vice President-Marketing and
Research since January 1999. From September 1997 to January 1999 Mr. Kilanowski
served as Vice President-Marketing. From August 1986 to September 1997 he served
as Director of Domestic Sales. From March 1975 to August 1986 he served in
customer sales and service.
Joseph R. Weaver, Jr. has served as General Counsel of the Company since
March 1997 and as Secretary of the Company since April 1997. From May 1994 to
March 1997, he served as Secretary and General Counsel of AAF-McQuay, Inc. From
January 1990 to April 1994, Mr. Weaver served as Assistant General Counsel of
AAF-McQuay, Inc., then known as Snyder General Corporation.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
annual and long-term compensation for services in all capacities for fiscal
years 1998, 1997 and 1996 paid to Dennis B. Longmire, the Company's Chief
Executive Officer, the other four most highly compensated executive officers of
the Company who were serving as such at January 2, 1999, and Douglas P.
Anderson, who served as the Company's Chief Operations Officer but officially
ceased employment as of February 28, 1999 (hereinafter collectively referred to
as the "Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------- ------------
Number of
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Options Compensation
--------------------- ---- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Dennis B. Longmire, 1998 $390,000 -- -- --
Chairman and Chief Executive 1997 390,000 -- -- --
Officer 1996 390,000 $117,000 -- --
Douglas P. Anderson, 1998 230,000 -- -- $15,078(1)
Chief Operations Officer 1997 216,124 -- 93,507 51,806(1)
1996 206,500 51,625 -- --
James A. Ransweiler, 1998 235,000 -- -- 17,218(1)
President - Darling Rendering 1997 205,176 44,184 90,000 26,855(1)
1996 184,000 28,646 -- --
John R. Witt 1998 200,000 -- -- --
President - Restaurant Services 1997 179,616 -- 45,000 --
1996 145,385 24,063 90,000 --
Omer A. Dreiling, II, 1998 198,023 -- -- --
Vice President - Western Region 1997 193,654 -- -- --
1996 176,000 60,014 -- --
Robert L. Willis 1998 193,000 -- --
Vice President - Central Region 1997 187,538 44,149 -- --
1996 184,000 46,000 -- 37,313(2)
37,716(2)
<FN>
(1) Amount represents moving expense allowances and reimbursements made by
the Company.
(2) Amount represents payment of legal fees for Mr. Willis in connection
with a certain legal matter.
</FN>
</TABLE>
<PAGE>
OPTION GRANTS
The Company did not grant options to any Named Officer during the
fiscal year ended January 2, 1999.
Option Exercises and Year-End Options Values
The following table sets forth certain information with respect to
options exercised during the fiscal year ended January 2, 1999 by each of the
Named Officers and the value of unexercised options held by each of the Named
Officers at January 2, 1999:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Options Exercised in Fiscal 1998 Number of Securities Value of Unexercised
--------------------------------- Underlying Unexercised In-the-Money Options at
Shares Options at January 2, 1999 January 3, 1998
Acquired on Exercisable (E) Exercisable (E)
Exercise Value Realized Unexercisable (U) Unexercisable(U)(1)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dennis B. Longmire --- --- 540,000 (E) $ 0 (E)
0 (U) 0 (U)
Douglas P. Anderson --- --- 211,586 (E) 33,873 (E)
46,754 (U) 0 (U)
James A. Ransweiler --- --- 209,832 (E) 33,873 (E)
45,000 (U) 0 (U)
John R. Witt --- --- 85,500 (E) 0 (E)
49,500 (U) 0 (U)
Omer A. Dreiling, II --- --- 164,832 (E) 33,873 (E)
0 (U) 0 (U)
Robert L. Willis --- --- 65,934 (E) 13,549 (E)
0 (U) 0 (U)
<FN>
(1) Based on the difference between the closing price of the Common Stock
on January 2, 1999 ($3.0625 per share) and the exercise price of the
option.
</FN>
</TABLE>
Employment Agreements
Dr. Longmire was party to an Employment Agreement with the Company
dated March 31, 1995 (the "Longmire Agreement") for an initial term expiring on
March 31, 1998. The Longmire Agreement has not been renewed by the Company and
Dr. Longmire. Dr. Longmire continues to serve as the Company's Chief Executive
Officer at an annual base salary of $390,000 and is entitled to receive
incentive compensation under the Company's annual incentive plan based on the
Company's attaining or exceeding certain financial performance goals.
Severance Agreements
The Company has entered into severance agreements with Messrs.
Longmire, Ransweiler, Dreiling, Willis and Witt which provide for severance
compensation equal to one year's compensation to the officer in the event of a
termination of the officer's employment unless such termination is voluntary or
based upon cause as defined in the agreement.
<PAGE>
Stock Option Plans
1993 Plan. The Board of Directors has suspended the 1993 Plan and no further
options are to be issued under such plan. Officers and other key employees of
the Company and its subsidiaries were eligible to receive options under the 1993
Plan. In December 1993, the Company granted options covering 1,483,500 shares of
Common Stock to seven members of the Company's management pursuant to the 1993
Plan. The exercise price of these options is $2.857 per share. These options
vested 20% on the date of grant and vest 20% on each anniversary date thereof.
The vesting schedule for the options granted under the 1993 Plan is accelerated
by one year upon the termination of a grantee's employment. The options granted
pursuant to the 1993 Plan are intended to be incentive stock options to the
maximum extent permissible under the Internal Revenue Code of 1986, as amended
(the "Code") and nonqualified stock options to the extent not incentive stock
options. 184,066 of the shares covered by these options were transferred to the
1994 Plan prior to the three-for-one stock split, pursuant to shareholder
approval at the annual meeting of stockholders held May 20, 1997.
1994 Plan. The Compensation Committee may grant options under the 1994 Plan to
officers and other key employees of the Company and its subsidiaries. The
purpose of the 1994 Plan is to attract, retain and motivate officers and key
employees of the Company, and to encourage them to have a financial interest in
the Company. In 1994, 500,000 options were authorized for the 1994 Plan and
pursuant to stockholder approval at the annual meeting of stockholder held May
20, 1997, 184,066 options forfeited or canceled under the 1993 Plan were
authorized as additional options available for grant under the 1994 Plan.
Therefore, after the effect of the three-for-one stock split, a total of
2,052,198 options were authorized to be granted under the 1994 Plan. Pursuant to
stockholder approval at the annual meeting of stockholders held May 27, 1998,
500,000 additional options were authorized for the 1994 Plan bringing the total
authorized to be granted under the 1994 Plan to 2,552,198 options. The exercise
price of these options is the Fair Market Value of the stock on the date of the
grant of the option. Options granted pursuant to the 1994 Plan typically vest
20% on the date of grant and 20% on each anniversary date therof.
Directors Plan. For a description of the Directors Plan, see the disclosure set
forth under Compensation of Directors herein.
Annual Incentive Plan
The Annual Incentive Plan is administered by the Compensation Committee
and provides incentive cash bonuses to corporate and regional executives. In
1998, the Annual Incentive Plan was tied principally to actual levels of cash
flow at the corporate or division level relative to budgets established at the
beginning of the year.
The total amount of incentive compensation under the program is subject
to boundaries established by formula and expressed in terms of a percentage of
base salary. For 1998 and prior years, a "target" bonus was paid when corporate
or division objectives were achieved at the 100% level, no bonus was paid below
the 90% level and a maximum bonus was paid when 125% of the corporate or
division budget was achieved.
<PAGE>
Pension Plan Table
The following table illustrates the approximate annual pension that the
Named Officers would receive under the Salaried Employee's Retirement Plan (the
"Retirement Plan") if the plan remains in effect and a Named Officer retired at
age 65. However, because of changes in the tax laws or future adjustments to
benefit plan provisions, actual pension benefits could differ significantly from
the amounts set forth in the table.
Estimated Annual Pension
----------------------------------------------------
(Years of Service)
Average Annual Salary
During the Last 5 Years 15 20 25 30 35
----------------------- ------- ------- -------- -------- --------
$150,000 $40,500 $54,000 $67,500 $71,250 $75,000
175,000 47,250 63,000 78,750 83,125 87,500
200,000 54,000 72,000 90,000 95,000 100,000
235,840 63,677 84,902 106,128 112,024 117,920
The above amounts do not reflect the compensation limitations for plans
qualified under the Code, effective January 1, 1994. Effective January 1, 1997,
annual compensation in excess of $160,000 ($235,840 for 1993) is not taken into
account when calculating benefits under the Retirement Plan. Such limitation
will not, however, operate to reduce plan benefits accrued as of December 31,
1993.
If the Named Officers remain employees of the Company until they reach
age 65, the years of credited service for Messrs. Longmire, Ransweiler, Witt,
Dreiling and Willis will be as follows: Longmire, 13 years; Ransweiler, 23
years; Witt, 18 years; Dreiling, 35 years; and Willis, 29 years.
The Retirement Plan is a non-contributory defined benefit plan. Office
and supervisory employees of the Company, not covered under another plan,
automatically become participants in the plan on the earlier of January 1 or
July 1 following completion of 1,000 hours of service in a consecutive
twelve-month period. Upon meeting the eligibility requirement, employees are
recognized as a participant from the date of commencement of their service with
the Company. Eligible employees become fully vested in their benefits after
completing five years of service. Benefits under the Plan are calculated on
"average monthly pay" based upon the highest 60 consecutive months of the latest
120 months (and subject to the limitations discussed above) and the years of
service completed.
The basic pension benefit is equal to 45% of the employee's average
monthly pay, reduced proportionally for years of service less than 25 years. The
multiple is increased 0.5% per year for years of service in excess of 25 years
to a maximum of 15 additional years.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Mr. Westerman (Chairman),
Dr. Longmire (ex officio) Chairman and Chief Executive Officer of the Company,
Mr. Taura and Mr. Waterfall, each of whom is a director of the Company.
The Company paid Taura Flynn & Associates, LLC, of which Denis Taura, a
director of the Company, is a principal, fees and expenses of $335,592 related
to management consulting services provided to the Company. Of this amount,
$100,000 represents a security retainer securing final payment for future
services to be provided to the Company, or, if not credited toward future
services, to be refunded to the Company.
<PAGE>
REPORT OF THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee and the performance
graph that appears immediately after such report shall not be deemed to be
soliciting material or to be filed with the Securities and Exchange Commission
under the Securities Act of 1933 or the Securities Exchange Act of 1934 or
incorporated by reference in any document so filed.
The Company's executive compensation program is designed to attract,
motivate, reward and retain the executive officers needed to achieve the
Company's business objectives, to increase its profitability and to provide
value to its stockholders.
The program has been structured and implemented to provide competitive
compensation opportunities and various incentive awards based on Company and
individual performance.
The Company's executive compensation program is composed of three
principal components: base salary, short term incentive awards and long term
incentive awards.
Base Salaries
The base salaries of the Named Officers are set forth in the Summary
Compensation Table located on page 9 of the Proxy Statement.
The base salary of Dr. Longmire was originally established pursuant to
his employment agreement with the Company, which was established and reviewed by
the Compensation Committee.
Executive positions are grouped by grades which are part of the
Company's overall salary structure. The base salaries of senior executives,
except those established by employment agreements, are reviewed to determine if
adjustment is necessary based on competitive practices and economic conditions.
Salaries are adjusted within grade ranges based on individual performance and
changes in job content and responsibilities.
Short Term Incentive Awards
The short-term program, or Annual Incentive Plan, consists of an
opportunity for the award of an annual incentive cash bonus in addition to the
payment of base salary.
In 1998, the Company's Annual Incentive Plan for corporate and division
executives was tied principally to actual levels of cash flow at the corporate
or division level relative to budgets established at the beginning of the year.
The total amount of incentive compensation under the short-term program
is subject to boundaries established by formula and expressed in terms of a
percentage of base salary. A "target" bonus is paid when corporate or division
objectives are achieved at the 100% level, no bonus is paid below the 90% level
and a maximum bonus is paid when 125% of the corporate or division budget is
achieved.
<PAGE>
Under his employment agreement, Dr. Longmire was entitled to receive an
annual bonus of up to 90% of his annual base salary under terms consistent with
the Annual Incentive Plan. In fiscal 1998, the Company did not meet the
predetermined threshold established for the payment of cash incentive awards to
all employees participating in the Annual Incentive Plan. Under the Annual
Incentive Plan, other senior executives are entitled to receive annual bonuses
of up to 75% of their base salaries. Only certain senior executives and their
key employees received bonuses in 1998, as the Company as a whole did not meet
the predetermined threshold.
Long Term Incentive Awards
In connection with a Company financial restructuring consummated in
December 1993, long term incentive awards in the form of stock options were
granted to certain executive officers of the Company under the 1993 Plan. In
Fiscal 1997, the Board of Directors suspended the 1993 Plan and no further
options are to be issued under such plan.
Under the 1994 Plan, stock options are awarded based on an individual's
level of responsibility within his or her area, such individual's executive
development potential and competitive market norms. Options granted under the
1994 Plan are granted at 100% of the market value of the stock on the date of
grant. During fiscal 1998, 36,900 options were granted under the 1994 Plan.
April 27, 1999
William L. Westerman
Denis J. Taura
Bruce Waterfall
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the change in the cumulative
total stockholder return on the Company's Common Stock with the cumulative total
return of the Nasdaq Stock Market - U.S. Index, the Dow Jones Industrial
Pollution Control/Waste Management Index, and the CSFB-Nelson Agribusiness Index
for the period from September 14, 1994 to January 2, 1999, assuming the
investment of $100 on September 14, 1994 and the reinvestment of dividends.
The stock price performance shown on the graph only reflects the change
in the Company's stock price relative to the noted indices and is not
necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
DARLING COMMON STOCK
NASDAQ STOCK MARKET- U.S.
DOW JONES INDUSTRIAL POLLUTION CONTROL/WASTE MANAGEMENT INDEX
CSFB-NELSON AGRIBUSINESS INDEX
[inserted here is a graph showing cumulative total returns from September 14,
1994 through fiscal year end January 2, 1999. Chart below is representation of
graph as included in proxy]
09/14/94 12/30/94 12/29/95 12/28/96 01/03/98 01/02/99
-------- -------- -------- -------- -------- --------
Darling
International Inc. 100 110 224 241 211 77
NASDAQ Stock Market US 100 97 139 171 213 295
Dow Jones Industrial
Pollution Control/Waste
Management Index 100 92 104 112 119 131
CSFB - Agribusiness
Index (2) 100 106 118 145 170 158
- -----------------------
(1) The Company previously included the AMEX Market Value Index which is
no longer available.
(2) Replaces the Dain Bosworth Food Index which was previously included by
the Company but is no longer available.
<PAGE>
The Common Stock first became eligible for trading on the Nasdaq Stock
Market on September 8, 1994 and, accordingly, total return is measured from the
closing price on September 14, 1994, the first date on which the stock traded on
the Nasdaq Stock Market. On September 12, 1997, the Common Stock began trading
on the American Stock Exchange and ceased trading on the Nasdaq Stock Market.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table and the notes thereto set forth certain information
with respect to the beneficial ownership of shares of Common Stock, as of April
15, 1999, by each person or group within the meaning of Rule 13(d)-3 under the
Exchange Act who is known to the management of the Company to be the beneficial
owner of more than five percent of the outstanding Common Stock of the Company
and is based upon information provided to the Company by such persons:
Amount and
Nature of
Name and Address Beneficial Percent
of Beneficial Owner Ownership (1) of Class
--------------------- ------------- ---------
Phoenix Partners................................ 260,940 1.67%
Betje Partners.................................. 91,152 0.59%
Phaeton B.V.I................................... 182,349 1.17%
Morgens Waterfall Income Partners............... 233,187 1.50%
Morgens, Waterfall, Vintiadis & Company, Inc.... 273,501(2) 1.75%
Restart Partners L.P............................ 884,193 5.67%
Restart Partners II, L.P........................ 1,746,980 11.21%
Restart Partners III, L.P....................... 1,445,937 9.28%
Restart Partners IV, L.P........................ 900,369 5.77%
Restart Partners V, L.P......................... 150,000 0.96%
MWV Employee Retirement Plan Group Trust........ 70,119 0.45%
Endowment Restart, L.L.C........................ 1,266,775 8.13%
Edwin H. Morgens................................ 7,161,882(3) 45.34%
Bruce Waterfall ................................ 7,220,382(4) 45.54%
(collectively the "MW Group")
MW Group
10 East 50th Street
New York, NY 10022......................... 7,313,001(5) 46.12%
Intermarket Corp.
667 Madison Ave.
New York, NY 10021........................... 1,847,304 11.85%
CIBC Oppenheimer Corp.
Oppenheimer Tower
World Financial Center
New York, NY 10281......................... 1,654,479 10.61%
<PAGE>
----------------
(1) Except as otherwise indicated in footnotes 2, 3, 4, and 5 hereto, the
entities named in this table have sole voting and investment power with
respect to all shares of capital stock shown as beneficially owned by
them.
(2) Morgens Waterfall Vintiadis & Company, Inc. does not directly own any
of the Common Stock or options described in footnote 5 hereto but may
be deemed to indirectly beneficially own 273,501 shares of Common
Stock, assuming exercise of the options, by virtue of contracts with
Phaeton B.V.I. and Betje Partners pursuant to which Morgens Waterfall
Vintiadis & Company, Inc. provides investment advisory services.
(3) Edwin H. Morgens does not have direct beneficial ownership of the
Common Stock or options described in footnote 5 hereto. Mr. Morgens may
be deemed to indirectly beneficially own 7,161,882 shares of Common
Stock, assuming exercise of the options described in the second to last
sentence of footnote 5 hereto, by virtue of his positions as managing
member of each of MW Management, L.L.C., MW Capital, L.L.C. and
Endowment Prime, L.L.C., as general partners of Phoenix Partners and
Morgens Waterfall Income Partners and managing member of Endowment
Restart, L.L.C., respectively; as Chairman of the Board of Directors
and Secretary of Morgens Waterfall Vintiaids & Company, Inc.; as
Chairman of the Board of Directors and Secretary of Prime, Inc., as
general partner of each of Prime Group, L.P., Prime Group II, L.P.,
Prime Group III, L.P., Prime Group IV, L.P. and Prime Group V, L.P., as
general partners of Restart Partners L.P., Restart Partners II, L.P.,
Restart Partners III, L.P., Restart Partners IV, L.P. and Restart
Partners V, L.P., respectively.
(4) Bruce Waterfall does have direct beneficial ownership of options for
81,000 shares, of which 58,500 are presently exercisable. He may be
deemed to indirectly beneficially own 7,161,882 shares of Common Stock,
assuming exercise of the options described in the last sentence of
footnote 5 hereto, by virtue of his positions as managing member of
each of MW Management, L.L.C., MW Capital, L.L.C. and Endowment Prime,
L.L.C., as general partners of Phoenix Partners and Morgens Waterfall
Income Partners and managing member of Endowment Restart, L.L.C.,
respectively; as President, Assistant Secretary and a Director of
Morgens Waterfall Vintiadis & Company, Inc.; as President and a
Director of Prime, Inc. as general partner of each of Prime Group,
L.P., Prime Group II, L.P., Prime Group III, L.P., Prime Group IV, L.P.
and Prime Group V, L.P., as general partners of Restart Partners L.P.,
Restart Partners II, L.P., Restart Partners III, L.P., Restart Partners
IV, L.P. and Restart Partners V, L.P., respectively.
(5) Includes options, which are immediately exercisable, in the following
amounts for each entity: Phoenix Partners (6,498 options); Betje
Partners (2,322 options); Phaeton B.V.I. (4,620 options); Morgens
Waterfall Income Partners (7,014 options); Morgens, Waterfall,
Vintiadis & Company, Inc. (6,942 options); Restart Partners L.P.
(26,603 options); Restart Partners II, L.P. (52,562 options); Restart
Partners III, L.P. (43,500 options); Restart Partners IV, L.P. (27,087
options); MWV Employee Retirement Plan Group Trust (1,680 options);
Endowment Restart, L.L.C. (38,114 options), Edwin H. Morgens may be
deemed to have indirect beneficial ownership of 208,320 options. Bruce
Waterfall has direct beneficial ownership of 81,000 options, of which
58,500 are presently exercisable, and may be deemed to have indirect
beneficial ownership of an additional 208,320 options.
<PAGE>
Security Ownership of Management
The following table and the notes thereto set forth certain information
with respect to the beneficial ownership of shares of Common Stock of the
Company, as of April 15, 1999, by each nominee for director, each Named Officer
and by all executive officers and directors as a group:
<TABLE>
<CAPTION>
Former Common Stock Percent of
Common Class A Unexercised Beneficially Common
Name of Individual Stock Owned Options (1) Plan Options (2) Owned (3) Stock Owned
------------------ ----------- ----------- ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Fredric J. Klink 90,000 0 58,500 148,500 *
Denis J. Taura 30,000 30,000 58,500 118,500 *
Douglas P. Anderson (5) 12 0 211,586 211,598 1.34%
Omer A. Dreiling, II 0 0 164,832 164,832 1.05%
Dennis B. Longmire 300 0 540,000 540,300 3.35%
Robert E. McMullen (5) 0 0 39,000 39,000 *
James A. Ransweiler 0 0 209,832 209,832 1.33%
Bruce Waterfall (4) 6,953,562 208,320 58,500 7,220,382 45.54%
Robert L. Willis 24,327 0 65,934 90,261 *
John R. Witt 10,000 0 85,500 95,500 *
Joseph R. Weaver, Jr. 0 0 26,325 26,325 *
William L. Westerman 0 0 21,750 21,750 *
John O. Muse 2,500 0 15,000 17,500 *
Neil Katchen 0 0 43,800 43,800 *
Mitch Kilanowski 0 0 30,070 30,070 *
All executive officers
and directors as a
group (15 persons) 7,110,701 238,320 1,629,129 8,978,150 51.43%
- ------------------
<FN>
* Represents less than one percent of the Common Stock outstanding.
(1) These Class A options were canceled and the numbers represent options
to purchase shares of Common Stock.
(2) Represents options that have vested and are exercisable as of June 15,
1999.
(3) Except as otherwise indicated in the columns "Former Class A Options"
and footnote 1 thereto and "Unexercised Plan Options" and footnote 2
thereto and in footnote 4 hereto, the persons named in this table have
sole voting and investment power with respect to all shares of capital
stock shown as beneficially owned by them.
(4) Based on his management positions with the MW Group, Mr. Waterfall may
be deemed to indirectly beneficially own 7,242,882 of the securities
listed, assuming exercise of all of the options. See footnote 4 to
"Security Ownership of Certain Beneficial Owners" table above.
(5) Douglas P. Anderson was no longer an employee of the Company as of
February 28, 1999 and Robert E. McMullen was no longer an employee of
the Company as of April 5, 1999.
</FN>
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that Company directors,
executive officers and persons who own more than 10% of the Common Stock file
initial reports of ownership and reports of changes in ownership of Common Stock
with the Securities and Exchange Commission. Officers, directors and
stockholders who own more than 10% of the Common Stock are required by the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) reports they file.
To the Company's knowledge, based solely on the review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all reports required by Section 16(a) of the Exchange Act
were filed on a timely basis.
INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of its Audit Committee, has
appointed KPMG Peat Marwick LLP as the Company's independent auditors for the
fiscal year ending January 1, 2000. A representative of KPMG Peat Marwick LLP
will be present at the Meeting to answer any appropriate questions and to make a
statement if he desires to do so.
OTHER MATTERS
The management of the Company is not aware of any other matters to be
presented for action at the Meeting; however, if any such matters are properly
presented for action, it is the intention of the persons named in the enclosed
form of proxy to vote in accordance with their best judgment on such matters.
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 annual
meeting of stockholders of the Company must be received by the Secretary of the
Company at the Company's principal executive office no later than January 1,
2000, in order to be included in the proxy statement and form of proxy for such
meeting.
By Order of the Board of Directors
/s/ Joseph R. Weaver, Jr.
---------------------------------
JOSEPH R. WEAVER, JR.
Secretary
April 27, 1999
Irving, Texas
STOCKHOLDERS ARE URGED, REGARDLESS OF THE NUMBER OF SHARES OF COMMON
STOCK OF THE COMPANY OWNED, TO DATE, SIGN AND RETURN THE ENCLOSED PROXY. YOUR
COOPERATION IN GIVING THESE MATTERS YOUR IMMEDIATE ATTENTION AND IN RETURNING
YOUR PROXY PROMPTLY IS APPRECIATED.
<PAGE>
[text of proxy card shown below]
PROXY
DARLING INTERNATIONAL INC.
Proxy Solicited on Behalf of the Board of Directors of the Company
for the Annual Meeting of Stockholders to be held on
The undersigned hereby appoints Dennis B. Longmire and Joseph R. Weaver,
Jr., or either of them, his true and lawful agents and proxies with full power
of substitution in each, to represent the undersigned at the annual meeting of
stockholders of Darling International Inc., to be held at the Company's
corporate headquarters at 251 O'Connor Ridge Blvd., Suite 300, Irving, Texas
75038, on Monday, May 17, 1999, and at any adjournment thereof, on all matters
coming before said meeting.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. Proxies cannot vote
your shares unless you sign and return this card.
(Continued, and to be signed on reverse side) SEE REVERSE SIDE
<PAGE>
/X/ Please mark votes as in this example.
1. Proposal No. 1: Election of Directors
Nominees: Fredric J. Klink, Dennis B. Longmire, Denis J. Taura,
Bruce Waterfall and William L. Westerman
For / / Withheld / /
/ /
--------------------------------------
for all nominees except as noted above
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Signature: Date: Signature: Date:
---------------- ------- ----------------- ------
