SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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)
/x/ Definitive proxy statement permitted by Rule 14a-6(e)(2))
/ / 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>
To the Stockholders of Darling International Inc.:
You are cordially invited to attend the annual meeting of stockholders of
Darling International Inc. (the "Company") to be held on Wednesday, May 17, 2000
at 10 a.m., local time, at the Company's corporate headquarters at 251 O'Connor
Ridge Blvd., Suite 300, Irving, Texas 75038.
At this meeting, the stockholders of the Company will elect the Board of
Directors for the coming year. In addition, the Company's stockholders will be
asked to consider and approve an amendment to the Company's 1994 Employee
Flexible Stock Option Plan (the "1994 Plan") which would transfer 540,000 shares
of the Company's common stock currently available for issuance under the 1994
Plan to be available separately outside the 1994 Plan. The objective of the
proposed amendment to the 1994 Plan is to ratify the grant of 540,000 options
formerly granted to the Company's past Chairman and Chief Executive Officer
which have lapsed under the 1994 Plan to the Company's current Chairman and
Chief Executive Officer outside the 1994 Plan due to certain features of the new
grants not being consistent with the 1994 Plan terms. In addition, the amendment
will ensure that the Company's total number of authorized options will not
increase. Lastly, the Company's stockholders will be asked to also consider and
approve an amendment to the Company's Non-Employee Directors Stock Option Plan
(the "Directors Plan") whereby annual grants to non-employee directors would be
changed from automatic to require that the Company achieve at least 90% of its
budgeted EBITDA for a fiscal year as a condition of grant of an option with
respect to that year. The objective of the proposed amendment to the Director
Plan is to conform non-employee director compensation to current general
practices in the marketplace by providing an incentive which will be superior to
a mandatory plan.
Please read the enclosed materials carefully. Even if you plan to
attend the meeting in person, please complete the enclosed proxy card and return
it in the accompanying envelope as soon as possible.
Sincerely,
Denis J. Taura
Chairman and Chief Executive Officer
<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, 2000
To the Stockholders of Darling International Inc.:
NOTICE IS HEREBY GIVEN that the 2000 annual meeting of
stockholders of Darling International Inc. will be held on Wednesday,
May 17, 2000 at 10:00 a.m., at the Company's corporate headquarters at
251 O'Connor Ridge Boulevard, Suite 300, Irving, Texas for the
following purposes:
(1) to elect seven directors of Darling International Inc. to serve
until the next annual meeting of stockholders;
(2) to consider and approve an amendment to the 1994 Employee
Flexible Stock Option Plan of Darling International Inc. and to
ratify the grant of stock options to purchase 540,000 shares of
Common Stock to Denis J. Taura, Chairman and Chief Executive
Officer;
(3) to consider and approve an amendment to the Non-Employee
Directors Stock Option Plan of Darling International Inc.; and
(4) 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 7, 2000 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 1, 2000 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
Joseph R. Weaver, Jr.
Secretary
April 10, 2000
<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, 2000
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
10, 2000, 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 ("Meeting") to be held at
the Company's corporate headquarters at 251 O'Connor Ridge Boulevard, Suite 300,
Irving, Texas 75038 on Wednesday, May 17, 2000, 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 (1) elect seven directors to hold
office until the next annual meeting of stockholders and until their successors
shall have been elected and qualified, (2) (i) amend the 1994 Employee Flexible
Stock Option Plan (the "1994 Plan") to decrease the number of shares of Common
Stock available for grant thereunder from 2,552,198 shares to 2,012,198 shares
and (ii) ratify the grant of stock options to purchase 540,000 shares of Common
Stock to Denis J. Taura, and (3) amend the Non-Employee Directors Stock Option
Plan (the "Directors Plan") to delete the automatic grant to directors of stock
options periodically and require that non-employee directors' options for any
year be granted only if the Company achieves at least 90% of its budgeted EBITDA
for the preceding year. 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.
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 1, 2000, 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 7,
2000 (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 seven
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.
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 six members. At the Meeting,
seven directors are to be elected to hold office until the next annual meeting
of stockholders and until their successors have been elected and qualified. The
nominees for election as directors are Joe Colonnetta, David Jackson, Fredric J.
Klink, Dennis B. Longmire, James A. Ransweiler, Denis J. Taura and Bruce
Waterfall. 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>
<CAPTION>
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
<S> <C> <C> <C>
Denis J. Taura 60 Mr. Taura has served as Chairman of the December 1993
Board and Chief Executive Officer of the
Company since August 1999. Mr. Taura is a
partner in the management 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 Kasper A.L.S. Limited.
Joe Colonnetta 38 Mr. Colonnetta has served as a Principal at __
the equity firm Hicks, Muse, Tate & Furst
Incorporated since June 1996. In June 1995,
Mr. Colonnetta founded and was the Chief
Executive Officer of Resource Management
Partners, a management partner to
institutional and private equity firms that
own middle market companies. Prior to June
1995, Mr. Colonnetta was the Chief Financial
Officer of TRC, a restaurant and food
company.
David Jackson 41 Mr. Jackson has served as a founder and November 1999
managing partner of both Contrarian Capital
Management, LLC, and Contrarian Capital
Advisors, LLC, institutional money
management firms since May 1995. Previously,
Mr. Jackson was a managing director at
Oppenheimer & Co.
Fredric J. Klink 66 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.
Dennis B. Longmire 55 Dr. Longmire is the Chairman of the Board of March 1995
McCauley Brothers. He has served as
Chairman of McCauley Brothers since 1999.
Prior to that, Dr. Longmire served as
Chairman and Chief Executive Officer of the
Company starting in March 1995. Prior to
that, Dr. Longmire was President of Premiere
AgriTechnologies, a wholly owned subsidiary
of Archer-Daniels-Midland Co. ("A.D.M.")
starting January 1994. Dr. Longmire also
serves as a director of Terra Nitrogen
Corporation and American Feed Manufacturers
Association.
James A. Ransweiler 57 Mr. Ransweiler has served as the President August 1999
and Chief Operating Officer of the Company
since August 1999. Mr. Ransweiler served as
the President of Darling Rendering from
October 1997 to August 1999. 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
February 1990 when he served as Special
Projects Coordinator.
Bruce Waterfall 62 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
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."
</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 1, 2000, the Board of Directors
held four regular meetings and nine special meetings, nine 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 1, 2000.
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. Longmire (Chairman)
and Klink. The Audit Committee met four times during the fiscal year ended
January 1, 2000. 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. Jackson (Chairman),
Mr. Klink, Mr. Taura (ex officio), Mr. Ransweiler (ex officio), and Mr.
Waterfall. The Compensation Committee met one time during the fiscal year ended
January 1, 2000. 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.
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, unless amended by Proposal No. 3 included herein. 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. See Proposal No. 3. 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.
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
Denis J. Taura........60 Chairman of the Board and Chief Executive Officer
James A. Ransweiler...57 President and Chief Operating Officer
John O. Muse..........51 Executive Vice President - Finance and Administration
John R. Witt (1)......49 President - Restaurant Services
Robert L. Willis......60 Vice President - Operations
Omer A. Dreiling, II..46 Vice President - Western Region
Neil Katchen..........54 Vice President - Eastern Region
Mitchell Kilanowski...48 Executive Vice President - Marketing and Research
Joseph R. Weaver, Jr..53 General Counsel and Secretary
(1) John R. Witt served as President-Restaurant Services from October 1997
until his resignation in February 2000. Mr. Witt's responsibilities have
been assumed by certain existing personnel and the decision as to
replacing the position has not been determined.
For a description of the business experience of Mr. Taura and Mr.
Ransweiler, see "Election of Directors."
John O. Muse has served as Executive Vice President - Finance and
Administration since February 2000. From October 1997 to February 2000, he
served as Vice President and Chief Financial Officer. 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. Since August 1998, Mr. Muse has served on an advisory board for
Allendale Mutual Insurance Company.
Robert L. Willis has served as Vice President-Operations since May 1999.
From September 1998 to May 1999 Mr. Willis served as President-Esteem Products.
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 1999, 1998 and 1997 paid to Denis J. Taura, the Company's Chief Executive
Officer, the other four most highly compensated executive officers of the
Company who were serving as such at January 1, 2000, and Dennis B. Longmire, who
served as the Company's previous Chief Executive Officer but officially ceased
employment as of August 26, 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>
Denis J. Taura 1999 -- -- 15,000(3) $328,007(1)
Chairman and Chief Executive 1998 -- -- 15,000(3) 335,592(2)
Officer 1997 -- -- 15,000(3) --
Dennis B. Longmire 1999 293,000 -- -- 40,000(4)
Chairman and Chief Executive 1998 390,000 -- -- --
Officer (previous) 1997 390,000 -- -- --
James A. Ransweiler 1999 258,000 -- -- --
President and Chief Operating 1998 235,000 -- -- 17,218(5)
Officer 1997 205,176 44,184 90,000 26,855(5)
John R. Witt (7) 1999 200,000 -- -- --
President - Restaurant Services 1998 200,000 -- -- --
1997 179,616 -- 45,000 --
Omer A. Dreiling, II 1999 195,000 -- -- --
Vice President - Western Region 1998 198,023 -- -- --
1997 193,654 -- -- --
Robert L. Willis 1999 193,000 -- -- --
Vice President - Operations 1998 193,000 -- -- --
1997 187,538 44,149 -- 37,313(6)
<FN>
(1) Amount represents payments of management consulting fees and expenses to
Taura Flynn & Associates, LLC, of which Mr. Taura is a principal. Of this
amount, $148,007 represented fees and expenses during 1999 related to
management consulting services provided to the Company prior to Mr. Taura
serving as Chief Executive Officer and $180,000 was paid pursuant to a
loan-out agreement in connection with Mr. Taura serving as Chief Executive
Officer. Also see "Compensation Committee Interlocks and Insider
Participation."
(2) Amount represents payments of management consulting fees and expenses to
Taura Flynn & Associates, LLC, of which Mr. Taura is a principal.
(3) Pursuant to the Directors Plan on the tenth business day of July each year,
15,000 options were granted to Mr. Taura as a non-employee director prior
to him serving as Chief Executive Officer of the Company.
(4) Amount represents payout of unused, accrued vacation.
(5) Amount represents moving expense allowances and reimbursements made by the
Company.
(6) Amount represents payment of legal fees for Mr. Willis in connection with a
certain legal matter.
(7) John R. Witt was no longer an employee of the Company as of February 25,
2000.
</FN>
</TABLE>
Option Grants
The Company did not grant options to any Named Officer during the
fiscal year ended January 1, 2000 except for 15,000 options granted to Mr. Taura
under the Directors Plan prior to his appointment as Chief Executive Officer.
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 1, 2000 by each of the
Named Officers and the value of unexercised options held by each of the Named
Officers at January 1, 2000:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Options Exercised in Fiscal 1999
---------------------------------- Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at January 1, 2000 at January 1, 2000
Acquired on Exercisable (E) Exercisable (E)
Exercise Value Realized Unexercisable (U) Unexercisable(U)(1)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Denis J. Taura --- --- 103,500 (E) $1,406 (E)
22,500 (U) 4,219 (U)
Dennis B. Longmire --- --- 0 (E) 0 (E)
0 (U) 0 (U)
James A. Ransweiler --- --- 232,332 (E) 0 (E)
22,500 (U) 0 (U)
John R. Witt (2) --- --- 114,750 (E) 0 (E)
20,250 (U) 0 (U)
Omer A. Dreiling, II --- --- 164,832 (E) 0 (E)
0 (U) 0 (U)
Robert L. Willis --- --- 65,934 (E) 0 (E)
0 (U) 0 (U)
<FN>
(1) Based on the difference between the closing price of the Common Stock
on January 1, 2000 ($2.125 per share) and the exercise price of the
option.
(2) John R. Witt was no longer an employee of the Company as of February
25, 2000.
</FN>
</TABLE>
Severance Agreements
The Company has entered into severance agreements with Messrs.
Ransweiler, Dreiling, and Willis 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, each to buy one (1) share of the
Company's Common Stock, 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
orth 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
1999, 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 1999 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, 2000,
annual compensation in excess of $170,000 ($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. Ransweiler, Dreiling and
Willis will be as follows: Ransweiler, 23 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. Jackson (Chairman), Mr. Klink,
Mr. Taura (ex officio), Mr. Ransweiler (ex officio), and Mr. Waterfall, each of
whom is a director of the Company.
The Company paid Taura Flynn & Associates, LLC, of which Denis J.
Taura, a director of the Company, is a principal, fees and expenses during 1999
of $328,007. Of this amount, $148,007 represented fees and expenses during 1999
related to management consulting services provided to the Company prior to Mr.
Taura serving as Chief Executive Officer and $180,000 was paid pursuant to a
loan-out agreement in connection with Mr. Taura serving as Chief Executive
Officer.
<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 Mr. Taura was originally established pursuant to his
loan-out 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 1999, 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.
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 1999, 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. No senior executives and only certain key
employees received bonuses in 1999, 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 1999, 39,000 options were granted under the 1994 Plan.
April 10, 2000
David Jackson
Fredric Klink
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 December 30, 1994 to January 1, 2000, assuming the
investment of $100 on December 30, 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
DARLING COMMON STOCK
NASDAQ STOCK MARKET- U.S.
DOW JONES INDUSTRIAL POLLUTION CONTROL/WASTE MANAGEMENT INDEX
CSFB-NELSON AGRIBUSINESS INDEX
(in this space, paper proxy contains performance graph of cumulative total
return for above)
<PAGE>
The Common Stock first became eligible for trading on the Nasdaq Stock
Market on September 8, 1994. 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
7, 2000, 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:
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent
of Beneficial Owner Ownership (1) of Class
-------------------- ------------- --------
<S> <C> <C>
Phoenix Partners....................................... 260,940 1.67%
Betje Partners......................................... 91,152 0.58%
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 5.66%
Restart Partners II, L.P............................... 1,746,980 11.17%
Restart Partners III, L.P.............................. 1,445,937 9.25%
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 8.11%
Edwin H. Morgens....................................... 7,161,882(3) 45.34%
Bruce Waterfall ....................................... 7,235,382(4) 45.59%
(collectively the "MW Group")
MW Group
10 East 50th Street
New York, NY 10022................................ 7,328,001(5) 46.17%
Intermarket Corp.
667 Madison Ave.
New York, NY 10021.................................. 1,787,000 11.46%
CIBC Oppenheimer Corp.
Oppenheimer Tower
World Financial Center
New York, NY 10281................................ 1,654,479 10.61%
Contrarian Capital Management, L.L.C.
Contrarian Capital Advisors, L.L.C.
411 West Putnam Avenue
Suite 225
Greenwich, CT 06830............................... 1,654,479 (6) 10.61%
David Jackson.......................................... 1,654,479 (7) 10.61%
<FN>
(1) Except as otherwise indicated in footnotes 2, 3, 4, 5 , 6, and 7
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
96,000 shares, of which 73,500 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 96,000 options, of which
73,500 are presently exercisable, and may be deemed to have indirect
beneficial ownership of an additional 208,320 options.
(6) Contrarian Capital Management, L.L.C. and Contrarian Capital Advisors,
L.L.C. do not directly own any of the Common Stock but may be deemed
to indirectly beneficially own 1,654,479 shares of Common Stock by
virtue of their position as investment advisers to CIBC Oppenheimer
Corp. regarding such shares of Common Stock.
(7) David Jackson does not have direct beneficial ownership of 1,654,479
shares of Common Stock but may be deemed to indirectly beneficially
own 1,654,479 shares of Common Stock by virtue of his position as
managing partner of Contrarian Capital Management, L.L.C. and
Contrarian Capital Advisors, L.L.C.
</FN>
</TABLE>
<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 7, 2000, by each nominee for director, each Named Officer
and by all executive officers and directors as a group:
<TABLE>
<CAPTION>
Former Common Stock
Common Class A Unexercised Beneficially Percent of 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 73,500 163,500 1.04%
Denis J. Taura 30,000 30,000 613,500 673,500 4.15%
Omer A. Dreiling, II 0 0 164,832 164,832 1.05%
Dennis B. Longmire 30,300 0 0 30,300 *
James A. Ransweiler 5,000 0 232,332 237,332 1.50%
Bruce Waterfall (4) 6,953,562 208,320 73,500 7,235,382 45.59%
Robert L. Willis 24,327 0 65,934 90,261 *
John R. Witt (5) 30,000 0 114,750 144,750 *
Joseph R. Weaver, Jr. 0 0 35,100 35,100 *
John O. Muse 7,500 0 30,000 37,500 *
Neil Katchen 5,000 0 58,800 63,800 *
Mitch Kilanowski 3,500 0 38,000 41,500 *
All executive officers and
directors as a group (12 persons) 7,179,189 238,320 1,500,248 8,917,757 51.46%
<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 7,
2000.
(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 7,257,882 of the securities
listed, assuming exercise of all of the options. See footnote 4 to
"Security Ownership of Certain Beneficial Owners" table above.
(5) John R. Witt was no longer an employee of the Company as of February
25, 2000.
</FN>
</TABLE>
<PAGE>
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.
<PAGE>
Proposal No. 2
AMENDMENTS TO THE 1994 EMPLOYEE FLEXIBLE STOCK OPTION PLAN
AND GRANT OF STOCK OPTIONS TO DENIS J. TAURA
The Board of Directors unanimously recommends the ratification of (i)
an amendment to the 1994 Plan to decrease the number of shares of Common Stock
available for grant thereunder from 2,552,198 shares to 2,012,198 shares, and
(ii) the grant of stock options to purchase 540,000 shares of Common Stock to
Denis J. Taura, the Chairman of the Board of Directors and Chief Executive
Officer of the Company, as more fully described below.
1994 Plan
As of June 7, 1995, the Company adopted the 1994 Plan, pursuant to
which stock options (both Nonqualified Stock Options and Incentive Stock
Options), may be granted to key employees (the "Participants"). The purpose of
the 1994 Plan is to provide the Company a means of retaining and attracting
competent personnel by extending to participating officers and key employees of
the Company, or of a Subsidiary (as defined herein) of the Company, added
long-term incentives for high levels of performance and for unusual efforts
designed to improve the financial performance of the Company. For purposes of
the Plan, the term "Subsidiary" shall have the meaning set forth in Section
4.24(f) of the Code.
The 1994 Plan is administered by the Compensation Committee. The
Compensation Committee currently consists of Mr. Jackson (Chairman), Mr. Klink,
Mr. Taura (ex officio), Mr. Ransweiler (ex officio), and Mr. Waterfall. The
Compensation Committee determines persons to be granted stock options and the
terms and conditions of any stock options.
The maximum number of shares with respect to which stock options may be
granted under the 1994 Plan is 2,552,198. The Compensation Committee determines,
in its discretion, the number of shares of Common Stock with respect to which a
Participant may be granted stock options. The Compensation Committee may grant
to Participants either Incentive Stock Options or Nonqualified Stock Options or
any combination thereof. Each option granted under the 1994 Plan designates the
number of shares covered thereby, if any, with respect to which the option is an
Incentive Stock Option, and the number of shares covered thereby, if any, with
respect to which the option is a Nonqualified Stock Option.
The Compensation Committee determines and designates which employees of
the Company will receive stock options. Incentive Stock Options may be granted
only to employees of the Company, which includes officers and directors who are
also employees of the Company.
The Compensation Committee, in its discretion, establishes the price
per share for which the shares covered by the option may be purchased. Any
Incentive Stock Option granted under the 1994 Plan will have an exercise price
of not less than 100 percent of the fair market value of the shares on the date
on which such option is granted. With respect to an Incentive Stock Option
granted to a Participant who owns more than 10 percent of the total combined
voting stock of the Company or of any parent or subsidiary of the Company, the
exercise price for such option must be at least 110 percent of the fair market
value of the shares subject to the option on the date the option is granted. A
Nonqualified Stock Option granted under the 1994 Plan (i.e., an option to
purchase the Common Stock that does not meet the requirements under the Internal
Revenue Code of 1986, as amended (the "Code") for Incentive Stock Options) must
have an exercise price of at least the par value of the stock.
The Company has registered the issuance of all options and all shares
issuable upon exercise of the options on Form S-8 under the Securities Act.
The stock options expire not more than 10 years from the date of
granting thereof; provided, however, that with respect to an Incentive Stock
Option granted to a Participant who, at the time of the grant, owns more than 10
percent of the total combined voting stock of all classes of stock of the
Company or of any parent or subsidiary, such option shall expire not more than
five years after the date of granting thereof.
If the employment of a Participant terminates, the Compensation
Committee may permit the exercise of stock options granted to such Participant
(i) for a period not to exceed three months following termination of employment
with respect to Incentive Stock Options if termination of employment is not due
to death or permanent disability of the Participant; (ii) for a period not to
exceed one year following termination of employment with respect to Incentive
Stock Options if termination of employment is due to the death or permanent
disability of the Participant; and (iii) for a period not to extend beyond the
expiration date with respect to Nonqualified Stock Options.
Options Granted to Denis J. Taura
On March 15, 2000, the Company granted options (the "Options") to buy
540,000 shares of Common Stock at an exercise price equal to $1.750 (the closing
price on that date) to Denis J. Taura. The options shall be exercisable
immediately and shall expire on the tenth anniversary of the date of grant
unless Mr. Taura severs his relationship as an officer and director prior to
September 1, 2000, in which case the Options shall be canceled. The closing
price of the underlying Common Stock was $1.625 per share on March 29, 2000.
Federal Income Tax Consequences
The following is a general summary of the income tax consequences to
the Company and the Participants of the grant and exercise of stock options
granted under the 1994 Plan. Such tax consequences are based upon the current
provisions of the Code, all of which are subject to change, which change could
be retroactive.
The 1994 Plan provides for the grant of options which are Incentive
Stock Options within the meaning of Section 422 of the Code and Nonqualified
Stock Options, which are options that do not qualify as Incentive Stock Options.
In general, under the Code there is no taxable income to a Participant
upon the grant of a Nonqualified Stock Option. Upon the exercise of a
Nonqualified Stock Option, the Participant recognizes ordinary income equal to
the excess of the fair market value of the stock on the date of exercise over
the exercise price paid for the stock pursuant to the Nonqualified Stock Option,
unless the stock is subject to a substantial risk of forfeiture. If the stock is
subject to a substantial risk of forfeiture, the Participant generally does not
recognize income until the restrictions lapse, although the Participant may
elect to recognize income on the date of exercise by making a timely election
under the Code. The Company generally obtains a tax deduction equal to the
amount of income recognized by the Participant at the time such income is
recognized by the Participant, subject to compliance with applicable provisions
of the Code. The Participant generally acquires a tax basis in the stock
acquired pursuant to the exercise of the Nonqualified Stock Option equal to the
fair market value of the stock on the date of exercise. Upon the subsequent
disposition of the stock, the Participant would recognize capital gain or loss,
assuming the stock was a capital asset in the Participant's hands, equal to the
difference between the tax basis of the stock and the amount realized upon
disposition. If the stock was held for less than 12 months, the capital gain, if
any, recognized by the Participant on a disposition would be eligible for the
maximum federal income tax rate of 28 percent; if the stock was held for more
than 12 months, the capital gain, if any, recognized by the Participant on a
disposition would be eligible for the maximum federal income tax rate of 20
percent.
Under the Code, there is no taxable income to an Participant upon the
grant or exercise of Incentive Stock Options. Upon exercise, the Participant
acquires a tax basis in the stock acquired equal to the exercise price of the
option. Under the Code, an Participant must satisfy employment and holding
period requirements for Incentive Stock Option treatment. In general, an
Incentive Stock Option must be exercised while the Participant is an employee of
the Company or within three months following termination of employment, except
in cases of death or disability. The holding period requirements for Incentive
Stock Option treatment are as follows: the stock acquired upon exercise of an
Incentive Stock Option must be held until at least two years from the date of
grant of the option and for at least one year from the exercise of the option.
If the foregoing requirements are met, the Participant does not recognize
ordinary income in connection with the Incentive Stock Option and the Company
does not obtain a deduction for compensation paid to the Participant with
respect to such option. Upon the subsequent disposition of the stock, the
Participant would recognize capital gain or loss, assuming the stock was a
capital asset in the Participant's hands, equal to the difference between the
tax basis of the stock and the amount realized upon disposition. If the stock
was held for more than 12 months, the capital gain, if any, recognized by the
Participant on a disposition would be eligible for the maximum federal income
tax rate of 20 percent.
Reasons for Proposal
The objective of the proposed amendment to the 1994 Plan is to grant
the 540,000 options formerly granted to the Company's past Chairman and Chief
Executive Officer which have lapsed under the 1994 Plan to the Company's current
Chairman and Chief Executive Officer, Mr. Taura, outside the 1994 Plan due to
certain features of the new grants not being consistent with the 1994 Plan
terms. This amendment will ensure that the Company's total number of authorized
options will not increase. Consequently, the Company recommends that the
Company's Stockholders ratify (i) an amendment to the 1994 Plan to decrease the
number of shares of Common Stock available for grant thereunder from 2,552,198
shares to 2,012,198 shares, and (ii) the grant of stock options to purchase
540,000 shares of Common Stock to Denis J. Taura.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE
PROPOSED AMENDMENTS TO THE 1994 PLAN AND THE
PROPOSED GRANT OF STOCK OPTIONS TO DENIS J. TAURA,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
Proposal No. 3
AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors unanimously recommends the ratification of an
amendment to the Directors Plan to remove the requirements that (i) options to
buy 21,000 shares of the Company's Common Stock be granted when a new director
is elected to the board, and instead grant options to buy 4,000 shares
(including an option to purchase 4,000 shares granted which was granted to Dr.
Longmire on March 23, 2000 when he agreed to stand for reelection as a director)
and (ii) options to buy 15,000 shares of the Company's Common Stock be granted
to Eligible Directors (as herein defined) on the tenth business day in the month
of July and instead grant options to buy 4,000 shares on the date the Company's
independent auditors sign the Form 10-K, but such grants shall occur only if the
Company obtains ninety percent (90%) of the Company's target for EBITDA
(earnings before interest, taxes, depreciation and amortization) as defined in
the Annual Incentive Plan.
General
As of June 7, 1995, the Company adopted the Directors Plan to encourage
stock ownership by non-employee directors of the Company in order to increase
their identification with the interests of the Company's shareholders, and to
encourage such directors to remain in the service of the Company and to put
forth maximum efforts for the success of the business.
The Directors Plan is administered by the Compensation Committee. The
Compensation Committee currently consists of Mr. Jackson (Chairman), Mr. Klink,
Mr. Taura (ex officio), Mr. Ransweiler (ex officio), and Mr. Waterfall. The
Compensation Committee grants stock options under the Directors Plan and is
authorized to interpret the Directors Plan, to promulgate, amend and rescind
rules and regulations relating to the Directors Plan and to make all other
determinations necessary or advisable for its administration.
The maximum number of shares of Common Stock with respect to which
options may be granted under the Directors Plan is 450,000. The number of shares
subject to each outstanding option, the number of shares subject to each option
to be granted under the Directors Plan, the option price with respect to
outstanding options, and the aggregate number of shares remaining available
under the Directors Plan are subject to adjustment as the Compensation
Committee, in its discretion, deems appropriate to reflect such events as
reorganizations of or by the Company.
Each member of the Board of Directors (an "Eligible Director") who
otherwise (1) is not currently an employee of the Company, or (2) is not a
former employee still receiving compensation for prior services (other than
benefits under a tax-qualified pension plan) is eligible for the grant of stock
options under the Directors Plan. The Compensation Committee may grant Eligible
Directors such number of stock options as the Compensation Committee may
determine from time to time. Presently, each Eligible Director is entitled to
receive an option to purchase 15,000 shares of Common Stock on the tenth
business day in the month of July, which options will be exercisable at the
closing price of such shares of Common Stock at the date of such grant.
An option granted under the Directors Plan will have an exercise price
equal to 100 percent of the fair market value of the shares on the date on which
such option is granted.
Options granted under the Plan shall be exercisable as to twenty-five
percent (25%) of the shares subject thereto six months after the date of grant
thereof and shall become exercisable as to an additional twenty-five percent
(25%) of the shares subject thereto on each of the first, second and third
anniversaries of the date of grant thereof; provided, however, that the
Committee may, in its sole discretion, on a case by case basis, accelerate the
schedule of the time or times when an Option granted under the Plan may be
exercised, including accelerating such schedule so that any such Option becomes
immediately exercisable as to all of the shares subject thereto. An Option shall
be exercisable for a period of ten (10) years from the date of grant of such
Option.
Except as mentioned below, an option may not be exercised unless the
Eligible Director is then in service as a director of the Corporation and unless
the Eligible Director has remained continuously in the Corporation's service as
a director since the date of grant of the option.
If an Eligible Director is terminated from the Board of Directors by
reason of death or disability, an option granted to such Eligible Director may
be exercised for a period of twelve months after such termination. If an
Eligible Director is terminated from the Board of Directors for any reason other
than death or disability or cause, an option granted to such Eligible Director
may be exercised for a period within three (3) months after such termination. If
the service of an Eligible Director shall terminate for cause, all options
theretofore granted to such Eligible Director, shall to the extent not
theretofore exercised, terminate forthwith.
.
Federal Income Tax Consequences
The following is a general summary of the income tax consequences to
the Company and the Eligible Directors of the grant and exercise of stock
options granted under Directors Plan. Such tax consequences are based upon the
current provisions of the Code, all of which are subject to change, which change
could be retroactive.
The Directors Plan provides for the grant of options which are
Nonqualified Stock Options. In general, under the Code there is no taxable
income to an Eligible Director upon the grant of a Nonqualified Stock Option.
Upon the exercise of a Nonqualified Stock Option, the Eligible Director
recognizes ordinary income equal to the excess of the fair market value of the
stock on the date of exercise over the exercise price paid for the stock
pursuant to the Nonqualified Stock Option, unless the stock is subject to a
substantial risk of forfeiture. If the stock is subject to a substantial risk of
forfeiture, the Eligible Director generally does not recognize income until the
restrictions lapse, although the Eligible Director may elect to recognize income
on the date of exercise by making a timely election under the Code. The Company
generally obtains a tax deduction equal to the amount of income recognized by
the Eligible Director at the time such income is recognized by the Eligible
Director, subject to compliance with applicable provisions of the Code. The
Eligible Director generally acquires a tax basis in the stock acquired pursuant
to the exercise of the Nonqualified Stock Option equal to the fair market value
of the stock on the date of exercise. Upon the subsequent disposition of the
stock, the Eligible Director would recognize capital gain or loss, assuming the
stock was a capital asset in the Eligible Director's hands, equal to the
difference between the tax basis of the stock and the amount realized upon
disposition. If the stock was held for more than 12 months, the capital gain, if
any, recognized by the Eligible Director on a disposition would be eligible for
the maximum federal income tax rate of 20 percent.
<PAGE>
Reasons for Proposal
The Company believes that the Directors Plan's requirement that (i)
options to buy 21,000 shares of the Company's Common Stock be granted when a new
director is elected to the board and (ii) options to buy 15,000 shares of the
Company's Common Stock be granted to Eligible Directors on the tenth business
day in the month of July, in each case impacts unfavorably upon the Company's
ability to provide incentives. The Board of Directors of the Company believes
that an incentive based plan for the issuance of options will be superior to a
mandatory plan, where the Compensation Committee does not have as much
discretion when issuing options. The Board of Directors therefore has approved
an amendment to the Directors Plan to change these requirements. The Board of
Directors recommends that the Company's Stockholders ratify such amendment
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE PROPOSED AMENDMENT TO THE DIRECTORS PLAN.
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of its Audit Committee, has
appointed KPMG LLP as the Company's independent auditors for the fiscal year
ending December 30, 2000. A representative of KPMG 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.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2001 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,
2001, in order to be included in the proxy statement and form of proxy for such
meeting.
By Order of the Board of Directors
JOSEPH R. WEAVER, JR.
Secretary
April 10, 2000
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>
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 May 17, 2000
The undersigned hereby appoints Denis J. Taura 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, at 10:00 a.m. on Wednesday, May 17, 2000, and at any adjournments
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: (01) Joe Colonnetta, (02) David Jackson, (03) Fredric J. Klink,
(04) Dennis B. Longmire, (05) James A. Ransweiler,
(06) Denis J. Taura, and (07) Bruce Waterfall
For / / Withheld / /
/ /
--------------------------------------
for all nominees except as noted above
2. Proposal No. 2: Amendment to (i) decrease the number of shares available
under the 1994 Employee Flexible Stock Option Plan by 540,000 and (ii) grant
stock options to purchase 540,000 shares of Common Stock to Denis Taura.
For / / Against / / Abstain / /
3. Proposal No. 3: Amendment to remove the requirement under the Non-Employee
Director Stock Option Plan whereby annual grants to non-employee directors
would be changed from automatic to require that the Company achieve at
least 90% of its budgeted EBITDA for a fiscal year as a condition of grant
of an option with respect to that year.
For / / Against / / Abstain / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly coome before the meeting or any adjournments
thereof.
MARK HERE FOR CHANGE OF ADDRESS 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:
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