PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, JANUARY 31, 2001
The Annual Meeting of Stockholders of Pilgrim's Pride Corporation (the
"Company") will be held at the Company's headquarters building, 110 South Texas
Street, Pittsburg, Texas, on Wednesday, January 31, 2001, at 11:00 a.m., local
time, to consider the following matters:
a. The election of ten Directors for the ensuing year;
b. The appointment of Ernst & Young LLP as the Company's independent auditors
for the
fiscal year ending September 29, 2001; and
c. To transact such other business as may be properly brought before the
meeting or any
adjournment. No other matters are expected to be voted on at the
meeting.
The Board of Directors has fixed the close of business on December 4,
2000, as the record date for determining stockholders of record entitled to
notice of, and to vote at, the meeting.
RICHARD A. COGDILL
Pittsburg, Texas EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
December 13, 2000 SECRETARY AND TREASURER
YOUR VOTE IS IMPORTANT!
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY.
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
PROXY STATEMENT
GENERAL INFORMATION
The Board of Directors of Pilgrim's Pride Corporation (the "Company")
solicits stockholders' proxies in the accompanying form for use at the Annual
Meeting of Stockholders to be held on Wednesday, January 31, 2001, at 11:00
a.m., local time, at the Company's headquarters at 110 South Texas Street,
Pittsburg, Texas and at any adjournments thereof (the "Meeting"). This Proxy
Statement, the accompanying proxy card and the Company's 2000 Annual Report to
Stockholders are being mailed, beginning on or about December 13, 2000, to all
stockholders entitled to receive notice of, and to vote at, the Meeting.
The principal executive offices of the Company are located at 110 South
Texas Street, Pittsburg, Texas 75686. Any writing required to be sent to the
Company should be mailed to this address.
OUTSTANDING VOTING SECURITIES
Each stockholder of record at the close of business on December 4, 2000
(the "Record Date"), will be entitled to one vote for each share of the
Company's Class A common stock, $.01 par value per share, and twenty votes for
each share of the Company's Class B common stock, $.01 par value per share,
held on the Record Date. The accompanying proxy card indicates the number of
shares to be voted. On December 4, 2000, there were 13,523,429 shares of the
Company's Class A common stock issued and outstanding and there were 27,589,250
shares of the Company's Class B common stock issued and outstanding. For all
proposals at the Meeting, the votes of holders of Class A common stock and
Class B common stock will be counted together as a single class.
VOTING OF PROXIES
Because many of the Company's stockholders are unable to attend the
Meeting, the Board of Directors solicits proxies by mail to give each
stockholder an opportunity to vote on all items of business scheduled to come
before the Meeting. Each stockholder is urged to:
(1) read carefully the material in this Proxy Statement;
(2) specify his or her voting instruction on each item by marking the
appropriate boxes on the accompanying proxy card; and
(3) sign, date and return the proxy card in the enclosed, postage prepaid
envelope.
The accompanying proxy card provides a space, with respect to the election
of Directors, for a stockholder to withhold voting for any or all nominees for
the Board of Directors, but does not permit a stockholder to vote for any
nominee not named on the proxy card. The card also allows a stockholder to
abstain from voting on any other item if the stockholder chooses to do so.
When the accompanying proxy card is properly executed and returned with
voting instructions with respect to any of the items to be voted upon, the
shares represented by the proxy will be voted in accordance with the
stockholder's directions by the persons named on the proxy card as proxies of
the stockholder. If a proxy card is signed and returned, but no specific
voting instructions are given, the shares represented by the proxy card will be
voted for the election of the ten nominees for Directors named on the
accompanying proxy card and for the appointment of Ernst & Young LLP as the
Company's independent auditors.
Unless otherwise indicated by the stockholder, returned proxy cards also
confer upon the persons named on the card, as proxies for the stockholder,
discretionary authority to vote all shares of stock represented by the proxy
card on any item of business that is properly presented for action at the
Meeting, even if not described in this Proxy Statement. If any of the nominees
for Director named below should be unable or unwilling to accept nomination,
the proxies will be voted for the election of such other person as may be
recommended by the Board of Directors. The Board of Directors, however, has no
reason to believe that any item of business not set forth in this Proxy
Statement will come before the Meeting or that any of the nominees for Director
will be unavailable for election.
The proxy does not affect a stockholder's right to vote in person at the
Meeting. If a stockholder executes a proxy, he or she may revoke it at any
time before it is voted by submitting a new proxy card, or by communicating his
or her revocation in writing to the Secretary of the Company or by voting by
ballot at the Meeting.
VOTES REQUIRED
The holders of at least a majority of the combined voting power of the
Company's Class A common stock and Class B common stock outstanding on the
Record Date must be present in person or by proxy at the Meeting for the
Meeting to be held. Abstentions and broker non-votes are counted in
determining whether at least a majority of the voting power of the Company's
Class A common stock and Class B common stock outstanding on the Record Date
are present at the Meeting.
Directors will be elected by a plurality of the votes cast at the Meeting.
The affirmative vote of a majority of the voting power of the Company's Class A
common stock and Class B common stock represented and entitled to vote at the
Meeting is required for the appointment of the Company's independent auditors
and approval of any other item of business to be voted upon at the Meeting.
Abstentions from voting on any matter will be included in the voting tally.
Abstentions will have no effect on the election of Directors. Abstentions will
have the same effect as votes against the proposal to appoint the Company's
independent auditors. Broker non-votes are shares held by a broker or nominee
which are represented at the Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal. Broker non-votes
will have no effect on the election of Directors or the proposal to appoint the
Company's independent auditors. Lonnie "Bo" Pilgrim owned or controlled
8,350,313 shares (60.5%) of the Company's Class A common stock and 16,774,320
shares (60.8%) of the Company's Class B common stock on the Record Date, or
60.8% of the combined voting power of both classes of stock, and thus will be
able to elect all of the nominees for Director and approve Ernst & Young LLP as
independent auditors for the Company.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
The Company's Amended and Restated Corporate Bylaws state that a
stockholder must give the Secretary of the Company written notice, at the
Company's principal executive offices, of its intent to present a proposal at
the Company's 2002 Annual Meeting of Stockholders by October 5, 2001, but not
before May 6, 2001. Additionally, in order for stockholder proposals which are
submitted pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to be considered by the Company for inclusion in
the Company's proxy materials for the 2002 Annual Meeting of Stockholders, they
must be received by the Secretary of the Company no later than the close of
business on August 15, 2001.
COST OF PROXY SOLICITATION
The Company will bear the cost of the Meeting and the cost of soliciting
proxies in the accompanying form, including the cost of mailing the proxy
material. In addition to solicitation by mail, Directors, officers and other
employees of the Company may solicit proxies by telephone or otherwise. They
will not be specifically compensated for such services. The Company will
request brokers and other custodians, nominees and fiduciaries to forward
proxies and proxy soliciting material to the beneficial owners of the Company's
Class A common stock and Class B common stock and to secure their voting
instructions, if necessary. The Company will reimburse them for the expenses
in so doing.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. However, it
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business through discussions with the Chairman and
other officers, by reviewing analyses and reports sent to them each month, as
well as by participating in Board and committee meetings.
BOARD COMMITTEES
To assist in carrying out its duties, the Board of Directors has delegated
certain authority to the Audit and Compensation Committees. The Board of
Directors does not maintain a Nominating Committee. The members of the Audit
Committee are Charles L. Black, S. Key Coker, who replaced Robert E. Hilgenfeld
(who retired from the Board on August 2, 2000 (retired)), Vance C. Miller, Sr.,
James G. Vetter, Jr., and Donald L. Wass. The members of the Compensation
Committee are Lonnie "Bo" Pilgrim, Vance C. Miller, Sr., Lonnie Ken Pilgrim,
James G. Vetter, Jr., and Charles L. Black. The Compensation Committee also
has a subcommittee made up of Charles L. Black and Vance C. Miller, Sr. Each
Committee meets to examine various facets of the Company's operations and take
appropriate action or make recommendations to the Board of Directors.
The Audit Committee's responsibilities include making recommendations to the
Board of Directors regarding the selection of independent public accountants
and reviewing the plan and results of the audit performed by the public
accountants of the Company and the adequacy of the Company's systems of
internal accounting controls, and monitoring compliance with the Company's
conflicts of interest and business ethics policies. The Compensation Committee
reviews the Company's remuneration policies and practices and establishes the
salaries of the Company's officers. The Compensation Committees' subcommittee
is responsible for administering certain aspects of the Senior Executive
Performance Bonus Plan dealing with compensation for designated Section 162(m)
participants, currently Mr. Lonnie "Bo" Pilgrim and Mr. David Van Hoose.
MEETINGS
During the Company's fiscal year ending September 30, 2000, there were
eight meetings of the Board of Directors, two meetings of the Audit Committee
and one meeting of the Compensation Committee and subcommittee. During fiscal
2000, each member of the Board of Directors attended at least 75% of the
aggregate number of meetings of the Board and Board Committees on which the
Director served.
ELECTION OF DIRECTORS
At the Meeting, ten Directors are to be elected, each to hold office for
one year or until his successor is duly elected and qualified. Unless otherwise
specified on the proxy card, the shares represented by the enclosed proxy will
be voted for the election of the ten nominees named below. The Board of
Directors has no reason to believe that any nominee will be unable to serve if
elected. In the event any nominee shall become unavailable for election, it is
intended that such shares will be voted for the election of a substitute
nominee selected by the Board of Directors.
NOMINEES FOR DIRECTOR
LONNIE "BO" PILGRIM, 72, has served as Chairman of the Board since the
organization of the Company in July 1968. He was previously Chief Executive
Officer from July 1968 to June 1998. Prior to the incorporation of the
Company, Mr. Pilgrim was a partner in the Company's predecessor partnership
business founded in 1946.
CLIFFORD E. BUTLER, 58, serves as Vice Chairman of the Board. He joined the
Company as Controller and Director in 1969, was named Senior Vice President of
Finance in 1973, became Chief Financial Officer and Vice Chairman of the Board
in July 1983, became Executive President in January 1997 and served in such
capacity through July 1998.
DAVID VAN HOOSE, 59, serves as Chief Executive Officer, President and Chief
Operating Officer (the Company's Principal Executive Officer) of the Company.
He became a Director in July 1998. He was named Chief Executive Officer and
Chief Operating Officer in June 1998 and President in July 1998. He was
previously President of Mexico Operations from April 1993 to June 1998 and
Senior Vice President, Director General, Mexico Operations from August 1990 to
April 1993. Mr. Van Hoose was employed by the Company in September 1988 as
Senior Vice President, Texas Processing. Prior to that, Mr. Van Hoose was
employed by Cargill, Inc. as General Manager of one of its chicken operations.
RICHARD A. COGDILL, 40, has served as Executive Vice President, Chief
Financial Officer, Secretary and Treasurer (the Company's Principal Financial
and Accounting Officer) since January 1997. He became a Director in September
1998. Previously, he served as Senior Vice President, Corporate Controller,
from August 1992 through December 1996 and as Vice President, Corporate
Controller, from October 1991 through August 1992. Prior to October 1991, he
was a Senior Manager with Ernst & Young LLP. He is a Certified Public
Accountant.
LONNIE KEN PILGRIM, 42, has been employed by the Company since 1977 and has
been Senior Vice President, Transportation since August 1997. Prior to that he
served the Company as its Vice President, Director of Transportation. He has
been a member of the Board of Directors since March 1985. He is a son of
Lonnie "Bo" Pilgrim.
CHARLES L. BLACK, 71, was Senior Vice President, Branch President of
NationsBank, Mt. Pleasant, Texas, from December 1981 to his retirement in
February 1995. He previously was a Director of the Company from 1968 to August
1992 and has served as a Director since his re-election in February 1995.
S. KEY COKER, 43, has served as Executive Vice President of Compass Bank
since October 2000, a $20 billion dollar bank with offices throughout the
southern United States. Previously, he served as Senior Vice President from
June 1995 through September 2000 and had been employed by Compass Bank since
1992. He is a career banker with 21 years of experience in banking. He was
appointed a Director in September 2000, following the resignation of Robert
Hilgenfeld on August 2, 2000.
VANCE C. MILLER, SR., 66, was elected a Director in September 1986. Mr.
Miller has been Chairman of Vance C. Miller Interests, a real estate
development company formed in 1977, and has served as the Chairman of the Board
and Chief Executive Officer of Henry S. Miller Cos., a Dallas, Texas, real
estate services firm, since 1991. Mr. Miller also serves as a director of
Resurgence Properties, Inc.
JAMES G. VETTER, JR., 66, has practiced law in Dallas, Texas, since 1966. He
is a shareholder of the Dallas law firm of Godwin, White & Gruber, P.C.
(formerly Godwin & Carlton, P.C.), and has served as general counsel and a
Director since 1981. Mr. Vetter is a Board Certified-Tax Law Specialist and
serves as a lecturer and author in tax matters.
DONALD L. WASS, PH.D., 68, was elected a Director of the Company in May
1987. He has been President of the William Oncken Company of Texas, a time
management consulting company, since 1970.
REPORT OF THE AUDIT COMMITTEE
Pursuant to the Audit Charter attached as Exhibit A, the Audit Committee
oversees the Company's financial reporting process on behalf of the Board of
Directors. Management has the primary responsibility for the financial
statements and the reporting process, including the systems of internal
controls. In fulfilling its oversight responsibilities, the committee reviewed
and discussed the audited financial statements in the Annual Report with
management, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments and
the clarity of disclosures in the financial statements.
The committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company's accounting principles and
such other matters as are required to be discussed with the committee under
generally accepted auditing standards. In addition, the committee has discussed
with independent auditors the auditor's independence from management and the
Company, including the matters in the written disclosures required by the
Independence Standards Board.
The committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The committee meets
with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls and the overall quality of the Company's financial
reporting. In reliance on the reviews and discussions referred to above, the
committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended September 30, 2000 for filing with the Securities and
Exchange Commission. The committee and the Board have also recommended, subject
to stockholder approval, the selection of the Company's independent auditors.
The members of the Audit Committee are independent as defined in Sections
303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards.
AUDIT COMMITTEE
James G. Vetter, Jr.
Charles L. Black
Vance C. Miller, Sr.
Donald L. Wass, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, the members of the Company's Compensation Committee
were Lonnie "Bo" Pilgrim, Chairman of the Board of the Company, S. Key Coker,
Robert E. Hilgenfeld (retired), Vance C. Miller, Sr., Lonnie Ken Pilgrim,
Senior Vice President, Transportation of the Company, James G. Vetter, Jr., and
Charles L. Black.
The Company has been and continues to be a party to certain transactions
with Lonnie "Bo" Pilgrim and a law firm affiliated with James G. Vetter, Jr.
These transactions, along with all other transactions between the Company and
affiliated persons, require the prior approval of the Audit Committee of the
Board of Directors.
The Company's transactions with Lonnie "Bo" Pilgrim have allowed the
Company to obtain the use of required production facilities and equipment on
terms which management believes are not less favorable to the Company than
could have been arranged with unaffiliated persons. Since 1985, Lonnie "Bo"
Pilgrim has engaged in chicken grow-out operations with the Company which
involve the purchase of chicks, feed and veterinary and technical services from
the Company and the growing-out of chickens to maturity at which time they are
purchased by the Company. Chicks, feed and services are purchased from the
Company for their fair market value, and the Company purchases the mature
chickens from Mr. Pilgrim at market-quoted prices at the time of purchase.
Management of the Company believes that this operation is conducted on terms
not less favorable to the Company than those which could be arranged with
unaffiliated persons. During fiscal year 2000, the Company paid Mr. Pilgrim,
doing business as Pilgrim Poultry G.P. ("PPGP"), $31,879,000 for chickens
produced in his grow-out operations, and PPGP paid the Company $31,979,000 for
chicks, feed and services. Lonnie "Bo" Pilgrim is the sole proprietor of PPGP.
PPGP also produces eggs for the Company. In addition to the chicken grow-
out operations described above, PPGP contracts with the Company to house and
care for Company flocks used for egg production and is paid an egg grower fee
based on actual production. The egg grower contract between PPGP and the
Company renews automatically as each expended flock of laying hens is replaced
by a new flock. The contract is cancelable by either party at any time prior
to the time when the then current producing flock is 48 weeks old. Flocks are
normally replaced every 14 months. Management of the Company believes that
these relationships are on terms not less favorable to the Company than those
which could be arranged with unaffiliated persons. During fiscal year 2000, the
Company paid contract egg grower's fees to PPGP of $5,100,000.
Since 1985, the Company has leased an airplane from Lonnie "Bo" Pilgrim
under a lease agreement which provides for monthly lease payments of $33,000
plus operating expenses, which terms management of the Company believes to be
substantially similar to those obtainable from unaffiliated parties. During
fiscal 2000, the Company had lease expenses of $396,000 and operating expenses
of $128,000 associated with the use of this airplane.
Historically, much of the Company's debt has been guaranteed by the major
stockholders of the Company. In consideration of such guarantees, the Company
has paid such stockholders a quarterly fee equal to .25% of the average
aggregate outstanding balance of such guaranteed debt. During fiscal 2000, the
Company incurred $795,000 for such guarantees and paid $845,000 to Pilgrim
Interests, Ltd.
Godwin, White & Gruber, P.C., represents the Company in connection with a
variety of legal matters. James G. Vetter, Jr., is a Director of the Company
and is a shareholder of Godwin, White & Gruber, P.C. During fiscal year 2000,
the Company paid Godwin, White & Gruber, P.C., legal fees of $116,872 in
connection with such matters.
Mr. Hilgenfeld (retired), a member of the Company's Compensation Committee,
served as an officer of the Company prior to 1973.
COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth a summary of compensation paid to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other All
Fiscal Annual Other
NAME AND PRINCIPAL Year SALARY BONUS COMPENSATION COMPENSATION(1)
POSITION
Lonnie "Bo" Pilgrim.... 2000 $1,070,600 $532,921 $30,057 $10,096
Chairman of the Board 1999 717,191 748,417 22,594 8,349
1998 501,314 210,975 36,558 11,430
David Van Hoose....... 2000 517,923 404,231 12,947 7,659
Chief Executive Officer,1999 419,468 503,921 10,486 9,689
President and Chief 1998 283,395 200,000 6,579 6,704
Operating Officer
Clifford E. Butler.... 2000 388,870 120,492 10,015 2,053
Vice Chairman of 1999 395,819 386,722 9,868 3,032
of the Board 1998 372,267 156,666 9,304 3,213
Richard A. Cogdill.... 2000 285,441 248,673 7,496 1,262
Executive 1999 220,328 310,000 5,489 1,075
Vice President 1998 204,905 100,000 5,115 776
Chief Financial Officer,
Secretary and Treasurer
Secretary and Treasurer
Robert L. Hendrix..... 2000 283,576 120,492 7,089 4,364
Executive 1999 280,364 336,813 6,987 6,570
Growout and Processing 1998 262,119 110,356 6,523 4,801
_____________________
(1) Includes the following items of compensation:
a. Company's contributions to the named individual under its 401(k) Salary
Deferral Plan in the following amounts: Lonnie "Bo" Pilgrim, $52 (2000,
1999 & 1998); David Van Hoose, $312 (2000), $318 (1999), $312 (1998);
Clifford E. Butler, $312 (2000), $318 (1999), $312 (1998); Richard A.
Cogdill, $312 (2000), $318 (1999), $312 (1998); and Robert L. Hendrix,
$312 (2000), $318 (1999), $318 (1998).
b. Section 79 income to the named individual due to group term life insurance
in excess of $50,000 in the following amounts: Lonnie "Bo" Pilgrim,
$10,044 (2000), $8,296 (1999), $11,379 (1998); David Van Hoose, $7,347
(2000), $9,371 (1999), $6,392 (1998); Clifford E. Butler, $1,741 (2000),
$2,714 (1999), $2,901 (1998); Richard A. Cogdill, $950 (2000), $757
(1999), $464 (1998); and Robert L. Hendrix, $4,052 (2000), $6,252 (1999),
$4,482 (1998).
DIRECTORS' FEES
The Company pays its Directors who are not employees of the Company $5,000
per meeting attended in person, plus expenses, and Directors who are not
employees of the Company also receive $2,500 and $1,250 per telephonic meeting
that they participate in that lasts at least 45 minutes or less than 45
minutes, respectively.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee establishes executive compensation and oversees
the administration of the bonus plan for key members of management and the
Company's employee benefit plans.
The following is a report submitted by the Compensation Committee members
in their capacity as the Board's Compensation Committee, addressing the
Company's compensation policy as it related to the named executive officers for
fiscal 2000.
PERFORMANCE MEASURES
The Compensation Committee's establishment of annual executive
compensation is a subjective process in which the Committee considers many
factors, including the Company's performance as measured by earnings for the
year, each executive's specific responsibilities, the contribution to the
Company's profitability by each executive's specific areas of responsibility,
the level of compensation believed necessary to motivate and retain qualified
executives and the executive's length of time with the Company.
FISCAL COMPENSATION
For fiscal 2000, the Company's executive compensation program consisted of
(a) base salary, (b) a discretionary bonus based upon the factors described
above, (c) the bonus plan described below, (d) Company contributions to the
Company's 401(k) salary deferral plan which are made up of mandatory
contributions of one dollar per week and matching contributions of up to five
dollars per week and additional matching contributions of up to four percent of
an executive's compensation subject to an overall Company contribution limit of
five percent of domestic income before taxes and (e) Company contributions to
the Employee Stock Investment Plan in an amount equal to 33 1/3% of the
officers' payroll deduction for purchases of the Company's common stock under
the plan, which deductions are limited to 7 1/2%of the officer's base pay.
In establishing the fiscal 2000 compensation for Lonnie "Bo" Pilgrim, the
Company's Chairman of the Board, the Compensation Committee adjusted Mr.
Pilgrim's annual base salary from $1,040,000 to $1,071,200 to reflect changes
in the cost of living. He also received a bonus determined pursuant to the
bonus plan discussed below, plus a discretionary bonus of $100,384. This
discretionary bonus was made in response to the Compensation Subcommittee's
subjective assessment of Mr. Pilgrim's contribution to the Company's
performance in fiscal 2000.
In establishing the fiscal 2000 compensation for David Van Hoose as the
Company's Chief Executive Officer, President and Chief Operating Officer, the
Compensation Committee adjusted Mr. Van Hoose's annual base salary from
$412,000 to $520,000 to reflect his contribution to the Company's excellent
performance in fiscal 1999. Mr. Van Hoose's bonus for fiscal 2000 consisted of
a bonus awarded pursuant to the bonus plan discussed below, plus a
discretionary bonus of $194,983. This discretionary bonus was made in response
to the Compensation Subcommittee's subjective assessment of Mr. Van Hoose's
contribution to the Company's performance in fiscal 2000.
The Company's objective is to obtain financial performance that achieves
increased return on equity, sales volume, earnings per share and net income.
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate goals and stockholder interests.
The Company maintains a bonus plan for certain key members of management.
The description below outlines the plan:
The Company's Senior Executive Performance Bonus Plan (the "Plan"), which was
approved by stockholders at the February 2, 2000 Annual Stockholders Meeting,
provides for five percent of the Company's U.S. income before income taxes to
be allocated among certain key members of management. Such amount is allocated
among all plan participants based upon the ratio of each participant's eligible
salary to the aggregate salaries of all participants and the number of months
of the fiscal year the participant was approved for participation. The Plan
also provides for a Subcommittee to administer the plan provisions dealing with
certain designated Section 162(m) participants, currently Mr. Lonnie "Bo"
Pilgrim and Mr. David Van Hoose. The Compensation Committee retains the right,
in its sole discretion, to reduce, increase or eliminate, prior to payment
thereof, the amount of any bonus that would otherwise be due under the Plan to
non-Section 162(m) participants, and the Compensation Subcommittee retains
these same rights, except for the right to increase bonus amounts for
designated Section 162(m) participants. Participants may generally be added or
removed from the plan at the discretion of the Compensation Committee.
Participants must continue to be employed by the Company on January 1 following
the end of a fiscal year in order to be paid a bonus with respect to that year.
Bonuses are typically paid during the January following the fiscal year with
respect to which the bonus has been granted.
COMPENSATION COMMITTEE
Lonnie "Bo" Pilgrim
Charles L. Black
Vance C. Miller, Sr.
Lonnie Ken Pilgrim
James G. Vetter, Jr.
COMPENSATION SUBCOMMITTEE
Charles L. Black
Vance C. Miller, Sr.
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for the Company, the Russell 2000 composite index and a peer group
selected by the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE RUSSELL 2000 INDEX AND A PEER GROUP
Cumulative Total Return
--------------------------------------------------
9/30/95 9/28/96 9/27/97 9/26/98 10/02/99 9/30/00
PILGRIM'S PRIDE CORPORATION-
CLASS A{(1) - - - 100 38 36
PILGRIM'S PRIDE CORPORATION-
CLASS B(1) 100 110 198 248 111 90
PEER GROUP 100 92 130 128 85 78
RUSSELL 2000 100 113 135 124 144 179
- ----------------------------------
(1) On July 30, 1999, the Company issued a stock dividend of one share of
Class A common stock for every two shares of Class B common stock held to
stockholders of record on June 30, 1999. This was the first issuance of the
Company's Class A common stock. The above results for the Company's Class B
common stock were adjusted for the Class A common stock dividend. The Company's
Class A common stock was not outstanding at the beginning of fiscal 1999 and is
presented on a separate line of the graph.
The total cumulative return on investment (change in the year-end stock
price plus reinvested dividends) for each of the periods for the Company, the
Russell 2000 composite index and the peer group is based on the stock price or
composite index at the end of fiscal 1995.
The above graph compares the performance of the Company with that of the
Russell 2000 composite index and a group of peer companies with the investment
weighted on market capitalization. Companies in the peer group are Sanderson
Farms, Inc., WLR Foods, Inc., Cagles, Inc, Seaboard and the Company. These
companies were selected because of their similar operations and market
capitalizations relative to the Company and were approved by the Compensation
Committee.
CERTAIN OTHER TRANSACTIONS
The Company has entered into chicken grower contracts involving farms
owned by certain of its officers and Directors, providing the placement of
Company-owned flocks on their farms during the grow-out phase of production.
The contracts are on terms substantially the same as contracts entered into by
the Company with unaffiliated parties and can be terminated by either party
upon completion of the grow-out of each flock. The aggregate amounts paid by
the Company to its officers and Directors under grower contracts during the
fiscal year 2000 were as follows: Clifford E. Butler--$203,930, O.B. Goolsby--
$155,501, and James J. Miner--$219,799. See "Compensation Committee Interlocks
and Insider Participation" for a discussion of the Company's transactions with
Lonnie "Bo" Pilgrim and James G. Vetter, Jr.
SECURITY OWNERSHIP
The following table sets forth, as of December 1, 2000, certain
information with respect to the beneficial ownership of the Company's Class A
common stock and Class B common stock by (a) each stockholder beneficially
owning at least 5% of the Company's outstanding Class A common stock and Class
B common stock; (b) each Director of the Company who is a stockholder of the
Company; (c) each of the executive officers listed in the executive
compensation table who is a stockholder of the Company; and (d) all executive
officers and Directors of the Company as a group.
Amount and Amount and
Nature of Percent Nature of Percent
Beneficial of Beneficial of
Ownership of Class A Ownership of Class B
NAME OF Class A Class B
BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
Pilgrim Interests, Ltd 7,200,474 52.2% 14,395,385 52.2%
110 South Texas Street
Pittsburg, Texas 75686
Lonnie "Bo" Pilgrim(a)(b) 8,350,313 60.8% 16,774,320 60.8%
110 South Texas Street
Pittsburg, Texas 75686
Lonnie Ken
Pilgrim(a)(b)(c) 7,503,359 54.3% 14,951,466 54.2%
110 South Texas Street
Pittsburg, Texas 75686
Clifford E. Butler(b) 57,634 (d) 36,080 (d)
Robert L. Hendridx(b) 13,677 (d) 31,068 (d)
Richard A. Cogdill(b) 13,007 (d) 8,954 (d)
David Van Hoose(b) 36,903 (d) 13,762 (d)
James G. Vetter, Jr. 975 (d) 1,550 (d)
Donald L. Wass 150 (d) 300 (d)
Robert Hilgenfeld(retired) 9,100 (d) - -
All executive officer and
Directors as a group
(18 persons) 8,753,106 63.5% 17,361,530 62.9%
___________________
(a) Includes 7,200,474 shares of Class A common stock and 14,395,385 shares of
Class B common stock held of record by Pilgrim Interests, Ltd., a
partnership formed by Mr. Pilgrim's family of which Lonnie A. Pilgrim and
Lonnie Ken Pilgrim are managing partners. Also includes 30,193 shares of
Class A common stock and 60,387 shares of Class B common stock held of
record by Pilgrim Family Trust I, an irrevocable trust dated June 16,
1987, for the benefit of Lonnie "Bo" Pilgrim's surviving spouse and
children, of which Lonnie Ken Pilgrim and Patty R. Pilgrim, Lonnie "Bo"
Pilgrim's wife, are co-trustees, and 30,193 shares of Class A common stock
and 60,386 shares of Class B common stock held of record by Pilgrim Family
Trust II, an irrevocable trust dated December 23, 1987, for the benefit of
Lonnie "Bo" Pilgrim and his children, of which Lonnie "Bo" Pilgrim and
Lonnie Ken Pilgrim are co-trustees. Each of Lonnie A. Pilgrim and Lonnie
Ken Pilgrim disclaim beneficial ownership of the Company's Class A common
stock and Class B common stock held by Pilgrim Interests, Ltd., except to
the extent of their respective pecuniary interest therein.
(b) Includes shares held in trust by the Company's 401(k) Salary Deferral
Plan.
1. Includes 7,232 shares of Class A common stock and 6,465 shares of Class
B common stock held by his wife. Also includes 20,674 shares of Class A
common stock and 25,350 shares of Class B common stock held in two
irrevocable trusts dated December 15, 1994 and October 31, 1989, of
which Lonnie Ken Pilgrim is a co-trustee for the benefit of his
children. Lonnie Ken Pilgrim disclaims any beneficial interest in the
foregoing shares.
2. Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
Directors, and persons who own more than ten percent of the Company's Class A
common stock and Class B common stock, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission ("SEC") and the New
York Stock Exchange. Officers, Directors and greater than ten-percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the
Company believes that all filing requirements applicable to its officers,
Directors and greater than ten-percent stockholders for fiscal 2000 were
complied with.
ITEM 2. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends the appointment of Ernst & Young LLP as
the Company's independent auditors for the 2001 fiscal year. This firm of
certified public accountants has served as independent auditors of the Company
pursuant to annual appointment by the Board of Directors since 1969 except for
1982 and 1983.
Representatives of Ernst & Young are expected to be present at the Meeting
and to be available to respond to appropriate questions. They will be given
the opportunity to make a statement if they wish to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 2001.
FINANCIAL STATEMENTS AVAILABLE
FINANCIAL STATEMENTS FOR THE COMPANY ARE INCLUDED IN THE ANNUAL REPORT TO
STOCKHOLDERS FOR THE YEAR 2000. ADDITIONAL COPIES OF THESE STATEMENTS, AS WELL
AS FINANCIAL STATEMENTS FOR PRIOR YEARS AND THE ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K, MAY BE OBTAINED UPON WRITTEN REQUEST
WITHOUT CHARGE FROM THE SECRETARY OF THE COMPANY, 110 SOUTH TEXAS STREET,
PITTSBURG, TEXAS 75686. FINANCIAL STATEMENTS ARE ALSO ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C. 20549, AND THE NEW YORK
STOCK EXCHANGE.
OTHER BUSINESS
The Board of Directors is not aware of, and it is not anticipated that
there will be presented to the Meeting, any business other than the election of
the Directors and the proposal to appoint Ernst & Young independent auditors
described above. If other matters properly come before the Meeting, the
persons named on the accompanying proxy card will vote the returned proxies as
the Board of Directors recommends.
Please date, sign and return the proxy at your earliest convenience. A
prompt return of your proxy will be appreciated as it will save the expense of
further mailings.
By order of the Board of Directors,
RICHARD A. COGDILL
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER
Pittsburg, Texas
December 13, 2000
EXHIBIT A
Pilgrim's Pride Corporation
Audit Committee Charter
Organization
This charter governs the operations of the Audit Committee (the"Committee") of
Pilgrim's Pride Corporation (the "Company"). The Committee shall review and
reassess the charter at least annually and obtain the approval of the Board of
Directors. The Committee shall be appointed by the Board of Directors and shall
comprise at least three Directors, each of whom are independent of management
and the Company. Members of the Committee shall be considered independent if
they have no relationship that may interfere with the exercise of their
independence from management and the Company. Independence standards shall be
established by the Board of Directors, and shall at a minimum include a review
of direct and indirect business relationships. All Committee members shall be
financially literate, and at least one member shall have accounting or related
financial management expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibility to the stockholders, potential
stockholders, the investment community and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the Internal Audit function and the
annual independent audit of the Company's financial statements, as established
by management and the Board. In so doing, it is the responsibility of the
Committee to maintain free and open communication between the Committee,
independent auditors, the Internal Audit provider and management of the
Company. In exercising its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, or other experts, for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible
for auditing those financial statements. The Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible in
order to best react to changing conditions and circumstances. The Committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices and ethical
behavior.
THE FOLLOWING SHALL BE THE PRINCIPAL RECURRING PROCESSES OF THE AUDIT COMMITTEE
IN CARRYING OUT ITS OVERSIGHT RESPONSIBILITIES. THE PROCESSES ARE SET FORTH AS
A GUIDE WITH THE UNDERSTANDING THAT THE COMMITTEE MAY SUPPLEMENT THEM AS
APPROPRIATE.
(a) THE COMMITTEE SHALL HAVE A CLEAR UNDERSTANDING WITH MANAGEMENT AND THE
INDEPENDENT AUDITORS THAT THE INDEPENDENT AUDITORS ARE ULTIMATELY
ACCOUNTABLE TO THE BOARD AND THE AUDIT COMMITTEE, AS REPRESENTATIVES OF
THE COMPANY'S STOCKHOLDERS. THE COMMITTEE SHALL HAVE THE ULTIMATE
AUTHORITY AND RESPONSIBILITY TO EVALUATE AND, WHERE APPROPRIATE, REPLACE
THE INDEPENDENT AUDITORS. THE COMMITTEE SHALL DISCUSS WITH THE AUDITORS
THEIR INDEPENDENCE FROM MANAGEMENT AND THE COMPANY AND THE MATTERS
INCLUDED IN THE WRITTEN DISCLOSURES REQUIRED BY THE INDEPENDENCE STANDARDS
BOARD. ANNUALLY, THE COMMITTEE SHALL REVIEW AND RECOMMEND TO THE BOARD THE
SELECTION OF THE COMPANY'S INDEPENDENT AUDITORS, SUBJECT TO STOCKHOLDERS
APPROVAL.
(b) THE COMMITTEE SHALL DISCUSS WITH THE INDEPENDENT AUDITORS THE OVERALL
SCOPE AND PLANS FOR THEIR RESPECTIVE AUDITS, INCLUDING THE ADEQUACY OF
STAFFING AND COMPENSATION. ALSO, THE COMMITTEE SHALL DISCUSS WITH
MANAGEMENT, AND THE INDEPENDENT AUDITORS, THE ADEQUACY AND EFFECTIVENESS
OF THE ACCOUNTING AND FINANCIAL CONTROLS, INCLUDING THE COMPANY'S SYSTEM
TO MONITOR AND MANAGE RISK AND OTHER COMPLIANCE PROGRAMS. FURTHER, THE
COMMITTEE SHALL MEET SEPARATELY WITH THE INDEPENDENT AUDITORS, WITH AND
WITHOUT MANAGEMENT PRESENT, TO DISCUSS THE RESULTS OF THEIR EXAMINATIONS.
(c) THE COMMITTEE SHALL REVIEW, DISCUSS AND APPROVE WITH THE INTERNAL AUDIT
PROVIDER THE COMPREHENSIVE AUDIT PLAN, WITH RESPECT TO OVERALL SCOPE AND
PLANS FOR THE AUDITS, INCLUDING THE ADEQUACY AND EFFECTIVENESS OF INTERNAL
CONTROLS, COMPLIANCE WITH CORPORATE POLICIES, COMPLIANCE WITH LAWS AND
REGULATIONS AND EXTERNAL FINANCIAL STATEMENTS. ALSO, THE COMMITTEE SHALL
PROVIDE OVERSIGHT AND DIRECTION TO MANAGEMENT AND THE INTERNAL AUDIT
PROVIDER IN EXECUTING THE COMPREHENSIVE AUDIT PLAN. FURTHER, THE
COMMITTEE SHALL MEET SEPARATELY WITH THE INTERNAL AUDIT PROVIDER, WITH AND
WITHOUT MANAGEMENT PRESENT, TO DISCUSS AND REVIEW AUDIT PROGRESS AND
FINDINGS AND MANAGEMENT'S RESPONSES TO THOSE FINDINGS.
(d) THE COMMITTEE SHALL DISCUSS ANY MATTERS REQUIRED TO BE COMMUNICATED TO THE
COMMITTEE BY THE INDEPENDENT AUDITORS UNDER GENERALLY ACCEPTED AUDITING
STANDARDS PRIOR TO THE FILING OF THE COMPANY'S QUARTERLY REPORT ON FORM
10-Q. THE CHAIR OF THE COMMITTEE MAY REPRESENT THE ENTIRE COMMITTEE FOR
THE PURPOSES OF THIS REVIEW.
(e) THE COMMITTEE SHALL REVIEW WITH MANAGEMENT AND THE INDEPENDENT AUDITORS
THE FINANCIAL STATEMENTS TO BE INCLUDED IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K (OR THE ANNUAL REPORT TO STOCKHOLDERS IF DISTRIBUTED PRIOR TO
THE FILING OF FORM 10-K), INCLUDING THEIR JUDGMENT ABOUT THE QUALITY, NOT
JUST ACCEPTABILITY, OF ACCOUNTING PRINCIPLES, THE REASONABLENESS OF
SIGNIFICANT JUDGMENTS AND THE CLARITY OF THE DISCLOSURES IN THE FINANCIAL
STATEMENTS. ALSO, THE COMMITTEE SHALL DISCUSS THE RESULTS OF THE ANNUAL
AUDIT AND ANY OTHER MATTERS REQUIRED TO BE COMMUNICATED TO THE COMMITTEE
BY THE INDEPENDENT AUDITORS UNDER GENERALLY ACCEPTED AUDITING STANDARDS.
APPROVED ON JUNE 14, 2000.
PILGRIM'S PRIDE CORPORATION
110 SOUTH TEXAS STREET
PITTSBURG, TEXAS 75686
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lonnie "Bo" Pilgrim and Clifford E.
Butler, and each of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them, and each of them, to represent and to
vote, as designated below, all the shares of Class A common stock and Class B
common stock of Pilgrim's Pride Corporation held of record by the undersigned
on December 4, 2000, at the Annual Meeting of Stockholders to be held on
Wednesday, January 31, 2001, or any adjournment thereof.
PLEASE EXECUTE THIS PROXY AND RETURN PROMPTLY IN THE
Enclosed Self-Addressed Stamped Envelope
(CONTINUED ON OTHER SIDE)
PILGRIMS PRIDE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
---------------------------------
CLASS A AND/OR CLASS B COMMON STOCK
1. ELECTION OF DIRECTORS:
FOR all nominees TO WITHHOLD AUTHORITY
Listed to vote for all
(except as marked nominees listed
to the contrary)
Lonnie "Bo" Pilgrim Lonnie Ken Pilgrim Vance C. Miller, Sr.
Clifford E. Butler James G. Vetter, Jr. Donald L. Wass,Ph.D.
David Van Hoose Charles L. Black
Richard A. Cogdill S. Key Coker
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name
on the line provided below.)
------------------------------------------------------------
2. The appointment of Ernst & Young LLP as independent auditors for the
Company for the fiscal year ending
September 29, 2001:
FOR AGAINST ABSTAIN
- -------------------------------------------------------------------------------
3. In their discretion such other business as may properly come before the
Annual Meeting.
UNLESS OTHERWISE SPECIFIED ON THIS PROXY, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF MANAGEMENT'S NOMINEES FOR DIRECTORS AND
"FOR" PROPOSAL 2 . DISCRETION WILL BE USED WITH RESPECT TO SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
____________________________________________________________________
Date
____________________________________________________________________
Signature of Stockholder
____________________________________________________________________
Signature if held jointly
Please date this proxy and sign your name exactly as it appears hereon.
Persons signing in a representative capacity should indicate their capacity. A
proxy for shares held in joint ownership should be signed by each owner.