PAGE 1
September 26, 1996
Dear Stockholder:
The notice of annual meeting and the proxy statement
accompanying this letter describe the business to be considered
at the meeting. You are cordially invited to attend the
meeting, but, even if you cannot attend, it is important that
you sign, date and return your proxy as promptly as possible.
This year we are proposing substantial changes in the
membership of your Board of Directors. Three management
Directors chose not to stand for reelection, but will be members
of an Executive Management Committee. The Nominating Committee
has chosen three outside Directors to be added to the Board.
I'm sure you as a Stockholder, and particularly long-term
investors, recognize the valuable contributions that have been
made by the current Board members.
I have proposed and firmly endorse the restructuring that
is occurring at this time. We have attempted to strike a
balance between investors' concern about Board independence and
our goal of finding the best qualified candidates. We believe a
director can make the greatest contribution to ADM and be of
maximum value to shareholders if he or she has knowledge of
agriculture, the commodity markets or world trade. Each
director and nominee, without excetpion, serves on this Board or
is nominated to serve on this Board because of outstanding
qualifications.
We continue to search for Board candidates who can
effectively represent our owners and provide the expertise to
guide ADM into the future. We have appealed broadly to our
investors and others in the business community seeking qualified
nominees. These nominees are then thoroughly reviewed by the
Board's Nominating Committee. This process is vital to the
continued strength of the company.
On behalf of our Board and Management I want to thank our
shareholders for their support, which is sincerely appreciated.
Sincerely,
D. O. Andreas
Chairman of the Board and
Chief Executive
1
PAGE 2
ARCHER-DANIELS-MIDLAND COMPANY
4666 Faries Parkway, Decatur, Illinois 62526
________________________________________________________________
____________
NOTICE OF ANNUAL MEETING
________________________________________________________________
____________
To All Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of
Archer-Daniels-Midland Company, a Delaware corporation, will be
held at its
ADM/LAKEVIEW OFFICE, 1001 BRUSH COLLEGE ROAD, DECATUR, ILLINOIS,
on
Thursday, October 17, 1996, at 11:00 A.M., for the following
purposes:
(1) To fix the number of Directors and to elect Directors
to hold
office until the next Annual Meeting of Stockholders
and until
their successors are duly elected and qualified.
(2) To consider and take action respecting the adoption of
an
Incentive Stock Option Plan, recommended by the Board
of Directors
of the Company, as set forth in full as Exhibit "A" in
the
accompanying Proxy Statement.
(3) To consider and take action respecting the adoption of
a Stock
Unit Plan for Nonemployee Directors, recommended by the
Board of
Directors of the Company, as set forth in full as
Exhibit "B" in the accompanying Proxy Statement.
(4) To ratify the appointment by the Board of Directors of
Ernst &
Young LLP as independent accountants to audit the
accounts of the
Company for the fiscal year ending June 30, 1997.
(5) If properly presented, to consider and act upon the
Stockholders' proposals set forth in the Proxy
Statement.
(6) To transact such other business as may properly come
before the
meeting.
By Order of the Board
of Directors
R. P. Reising,
Secretary
September 26, 1996
2
PAGE 3
ARCHER-DANIELS-MIDLAND COMPANY
4666 Faries Parkway, Decatur, Illinois 62526
September 26, 1996
PROXY STATEMENT
General Matters
The accompanying proxy is SOLICITED BY THE BOARD OF
DIRECTORS of Archer-Daniels-Midland Company (the "Company") for
the Annual Meeting of Stockholders of the Company to be held at
its ADM/LAKEVIEW OFFICE, 1001 BRUSH COLLEGE ROAD, DECATUR,
ILLINOIS, on Thursday, October 17, 1996, at 11:00 A.M. This
Proxy Statement and the enclosed form of proxy are first being
mailed to Stockholders on or about September 26, 1996.
The cost of solicitation of proxies will be borne by the
Company. Georgeson & Company Inc. has been retained by the
Company to assist in solicitation of proxies at a fee of
$25,000, plus reasonable out-of-pocket expenses. Solicitation
other than by mail may be made by Officers or by regular
employees of the Company or by employees of Georgeson & Company
Inc. by personal or telephone solicitation, the cost of which is
expected to be nominal. The Company will reimburse brokerage
firms and other securities custodians for their reasonable
expenses in forwarding proxy materials to their principals.
Only holders of shares of Common Stock of record at the
close of business on August 19, 1996 will be entitled to notice
of and to vote at the meeting and at all adjournments thereof.
At the close of business on August 19, 1996, the Company had
outstanding 518,975,939 shares of Common Stock, each share being
entitled to one vote.
Shares represented by proxies in the form enclosed,
properly executed, will be voted. Proxies may be revoked at any
time prior to being voted.
Principal Holders of Voting Securities
The following Stockholder is known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock
of the Company, based upon filings thereof with the Securities
and Exchange Commission.
Name and Address of Beneficial Owner Amount
Percent of Class
State Farm Mutual Automobile Insurance 41,766,617 8.05
Company and Related Entities
Bloomington, Illinois 61701
3
PAGE 4
Election of Directors
It is intended that proxies solicited by the Board of
Directors will, unless otherwise directed, be voted to fix at
twelve (12) the number of Directors to be elected and to elect
the nominees named below.
Nine of the twelve nominees proposed for election to the
Board of Directors are presently members of the Board. Mr. H.
D. Hale, a member of the Board since 1973, retired as an
Officer, Chairman and Chief Executive Officer of ADM Milling Co.
and as a Director of the Company in April of this year. Mr. J.
H. Daniels, retired Chairman of the Company and a member of the
Board since 1957, Mr. Ralph Bruce, retired Executive Vice
President of the Company and a member of the Board since 1980,
Mrs. Nelson A. Rockefeller, a member of the Board since 1983,
Mr. Michael D. Andreas, Vice Chairman of the Board, Executive
Vice President of the Company and a member of the Board since
1985, Mr. R. A. Goldberg, a member of the Board since 1991, Mr.
Martin L. Andreas, Senior Vice President of the Company,
Assistant to the Chief Executive and a member of the Board since
1986, and Mr. J. R. Randall, President of the Company and a
member of the Board since 1975, are not standing for reelection.
The nominees for election to the Board of Directors are as
follows:
i. Mr. Lowell Andreas became a Director in 1966. He was
president of Honeymead Product Company, a soybean processor,
retired as President of the Company, and retired as Chairman of
the Board of National City Bancorporation. He continues on the
Boards of the Company and National City Bancorporation. During
his presidency, his programs doubled the Company's earnings
twice. He is one of the Company's largest Stockholders.
ii. Mr. Shreve Archer became a Director in 1948. He has been
on the Board for 48 years - longer than any other Director.
During his lifetime, he has been actively engaged in all phases
of agribusiness and he and his family are one of the Company's
largest Stockholders. Over the years, he has been actively
participating on several Board and Policy Committees.
iii. The Honorable John R. Block is the former U.S. Secretary of
Agriculture and has held positions as Illinois State Director of
Agriculture and President of the National-American Wholesale
Grocers. He serves on the Board for Agriculture Council of
America, Farm Foundation, Citizens Network for Foreign Affairs,
Bradley University and Citizens Democracy Corps. He is a
graduate of the U.S. Military Academy. He is also a director of
other companies, including Deere & Company and Arcadian
Corporation.
iv. Ambassador Richard Burt is Chairman of International Equity
Partners, a Washington consulting firm. He formerly was a
partner with McKinsey & Company specializing in international
business strategy and led McKinsey's Public Sector Practice and
its work in Eastern Europe and the former Soviet Union. He was
appointed as U.S. Chief Negotiator in the Strategic Arms
Reduction Talks (START) with the former Soviet Union. He also
served as the U.S. Ambassador to the Federal Republic of Germany
and held several key positions at the State Department,
including Assistant Secretary of State for European and Canadian
Affairs and Director of Politico-Military Affairs. He currently
serves on the Board of the Lauder Institute at the Wharton
School of Business, University of Pennsylvania, the American
Council on Germany and the Council on Foreign Relations.
Ambassador Burt received his Masters degree in International
Relations from the Fletcher School of Law and Diplomacy at Tufts
University.
v. Ms. Mollie Hale Carter is a Senior Investment Officer for
the John Hancock Mutual Life Insurance Company of Boston,
Massachusetts. In her position, she has analyzed and managed
investments in the food and beverage industry. She has also
held positions at Agribusiness Associates, Inc. in Wellesley,
Massachusetts, and Tabor Commodities in Chicago, Illinois. She
brings over fourteen years of experience in the agriculture
field to the Board. Ms. Carter holds a Masters degree in
Business Administration from Harvard Graduate School of Business
Administration. She received her B.A., magna cum laude, in
Economics from Dartmouth College, Hanover, New Hampshire,
including being a member of Phi Beta Kappa Society and Rufus
Choate Scholar. Ms. Carter serves on the Board of Directors of
Sunflower Bank, Salina, Kansas and Lyons Manufacturing, Lyons,
Kansas. She represents a family that is one of the Company's
largest Stockholders.
vi. Mr. Gaylord Coan became a Director in 1995. He is Chief
Executive Officer of Gold Kist Inc., a diversified farm
cooperative based in Atlanta, Georgia. Gold Kist is the second
largest poultry processor in the United States, the largest farm
supply retailer in the Southeast, and a major buyer and
processor of cotton and pecans. He managed Gold Kist's
commodity operations for many years and in 1986 was named
President and Chief Executive Officer of Golden Peanut Company,
a joint venture between the Company and Gold Kist Inc. He
returned to Gold Kist Inc. in 1990 as Executive Vice President
and Member of the Management Executive Committee and was
elevated to President and Chief Operating Officer in 1991.
After 36 years with the Cooperative, in 1995, he was elected
Chief Executive Officer and Chairman of the Management Executive
Committee. Gold Kist Inc. is one of the Company's largest
Stockholders.
vii. Mr. Ross Johnson became a Director in 1989. He has been a
Chief Executive Officer for the past 25 years and during the
period of 1976-1989 compounded return to his public shareholders
in excess of 30% annually as Chief Executive Officer of RJR
Nabisco. Mr. Johnson currently is Chairman of the RJM Group,
which is his personal management advisory company in Atlanta,
Georgia. He presently is on the Board of six companies,
including American Express, National Services Industries and
Power Corporation of Canada. At the Company he serves as
Chairman of the Audit Committee, and is a member of the
Executive Committee.
viii. The Right Honorable Brian Mulroney became a Director
in 1993. Having led his party to the largest parliamentary
victory in Canadian history on September 17, 1984, he was sworn
in as Canada's 18th Prime Minister. His government was
reelected with a majority for a second mandate on November 21,
1988.
Mr. Mulroney was born in Baie Comeau, Quebec, on March 20,
1939. Upon graduating from law school, Mr. Mulroney joined the
Montreal firm of Ogilvy Renault, where he remained a partner
until July 1976. Mr. Mulroney joined the Iron Ore Company of
Canada as Executive Vice President in July 1976 and was elected
President the following year. He served as Chairman of that
company's executive committee, and as President of its
subsidiary firms, including the Quebec North Shore and Labrador
Railway.
Prime Minister Mulroney's government brought about the
Canada-U.S. Free Trade Agreement, NAFTA, the Acid Rain Treaty
and historic taxation reform.
On February 24, 1993, Mr. Mulroney announced his intention
to resign as Prime Minister and Party Leader to return to his
law firm of Ogilvy Renault as Senior Partner. He has become a
director of leading companies such as Barrick Gold Corporation,
The Horsham Corporation, Petrofina S.A. and Trustee of the
Freedom Forum. In 1988, he was named Chairman of the G-7 and
became involved deeply in international trade. He has been a
guest of President Yelstin of Russia, Prime Minister Li Peng of
China, President Mitterrand of France and Chancellor Kohl of
Germany. These are countries where the Company does business
and it is clearly advantageous for the Company to be known by
their heads of State and their governments.
ix. Ambassador Robert Strauss became a Director in 1992. He is
the founding partner of the law firm Akin, Gump, Strauss, Hauer
& Feld. He served as United States Special Trade Representative
from 1977-1978. In 1979, he served as Personal Representative
to the Middle East Peace Negotiations and Camp David Accords.
In 1991, he served as U.S. Ambassador to the Soviet Union and,
following the dissolution of the Soviet Union, became U.S.
Ambassador to the Russian Federation. He is a director of
numerous American corporations and in 1981 was awarded the
nation's highest civilian award, the Presidential Medal of
Freedom.
x. Mr. J. K. Vanier and his family are one of the Company's
largest Stockholder groups. Mr. Vanier became a Director in
1978. Prior to being elected to the Company's Board, he was a
member of a family operation which included six flour mills,
three soybean plants, three livestock feed mills, and various
other enterprises. He is presently Chief Executive Officer of
Western Star Ag Resources, Inc., a family-held corporation
involving securities investments, rural real estate and
livestock operations located in Kansas, Oklahoma, Colorado and
Wyoming. He is past president of American Hereford Cattle
Association and past Board member of National Cattlemen's
Association.
xi. Mr. Glenn Webb became a Director in 1991. He is now
Chairman of GROWMARK, Inc., one of the Company's largest
Stockholders, ADM/GROWMARK, and Federal Farm Credit System
Funding Corporation. He is a Board member of CoBank (Bank of
Coops), Farm Credit Systemwide Audit Committee, Graduate
Institute of Cooperative Leadership and CF Industries, Inc.
(shareholder representative). And more recently, he is involved
in the purchase of assets which expand GROWMARK's operations
into Canada.
xii. Dwayne Andreas began his career as a partner of a family-
owned company in 1938. He was Vice President of Cargill, Inc.
from 1945 to 1952, and subsequently Executive Vice President of
the Farmers Union Grain Terminal Association. He joined the
Company in 1966 and became its Chairman and Chief Executive in
1970. He has been active in international affairs for many
years. He has been Director of the Committee for National Trade
Policy, Chairman of the Economic Club of New York, Chairman of
the Executive Council on Foreign Diplomats, a Director of the
Foreign Policy Association and of the Council on Foreign
Relations and Chair of the US-USSR Trade and Economic Council.
He has served as Chairman of President Reagan's Task Force
on International Private Enterprise as well as serving on
President Johnson's General Advisory Council on Foreign
Assistance and President Nixon's Advisory Committee on
Management Improvement.
Currently he is a member of the Council of the Woodrow
Wilson International Center for Scholars, Director of the
National Cooperative Business Association, Director of Salomon
Inc., Director of Hollinger, Inc., a Trustee of the Hoover
Institute on War, Revolution and Peace at Stanford University
and a member of the Trilateral Commission. In addition, he has
also been a recipient of the coveted Horatio-Alger Award.
The proxies (unless otherwise directed) will be voted for
the election of the nominees named herein as Directors to hold
office until the next succeeding Annual Meeting of Stockholders
and until their successors are duly elected and qualified. In
the event any nominee for Director becomes unavailable, it is
intended that the persons named in the proxy may vote for a
substitute who will be designated by the Board of Directors.
The Board has no reason to believe that any nominee will be
unable to serve as a Director. All present members have served
continuously as Directors from the year stated.
The nominees, their age, position with the Company,
principal occupation, directorships of other publicly owned
companies, the year in which each first became a Director, and
the number of shares of Common Stock of the Company beneficially
owned, directly or indirectly, by each are shown in the
following table. Except for Messrs. Brian Mulroney, Robert S.
Strauss and Richard Burt, all of the nominees have been
Executive Officers of their respective companies or employed as
otherwise specified below for at least the last five years. Mr.
Strauss served on the Board from 1981 until August 1991 when he
resigned to become U.S. Ambassador to the Soviet Union, an
appointment he held until October 1992. Mr. Mulroney served as
Prime Minister of Canada for almost nine years, resigning in
June 1993, at which time he rejoined the law firm of Ogilvy
Renault as Senior Partner. Mr. Burt was a partner with McKinsey
& Company from 1991 to 1994, at which time he was appointed
Chairman of International Equity Partners, a Washington
consulting firm.
The affirmative vote of a majority of the outstanding
shares of Common Stock of the Company present in person or
represented by proxy at the meeting and entitled to vote on the
election of Directors is required for the election of Directors.
For this purpose, a Stockholder voting through a
proxy who abstains with respect to the election of Directors is
considered to be present and entitled to vote on the election of
Directors at the meeting, and is in effect a negative vote, but
a Stockholder (including a broker) who does not give authority
to a proxy to vote, or withholds authority to vote, on the
election of Directors shall not be considered present and
entitled to vote on the election of Directors.
4
PAGE 5
Name, Age, Principal Occupation or Year First Common Percent
Position, Directorships of Other Elected as Stock of
Publicly Owned Companies Director Owned Class
* D. O. Andreas, 78, Chairman 1966 24,829,7 (1)(2) 4.78
of the Board, Chief Executive 24
of the Company. He is a
Director of Salomon Inc. and
Hollinger Inc.
Mollie Hale Carter, 34, 10,978,8 (3) 2.12
Senior Investment Officer, 67
John Hancock Mutual Life
Insurance Company (financial
services)
G. O. Coan, 60, Chief 1995 2,800,00 (4) **
Executive Officer of Gold 6
Kist Inc. (a farmer-owned
cooperative). He is a
Director of Golden Poultry
Company, Inc., SunTrust Bank,
Atlanta, SunTrust Banks of
Georgia and Cotton States
Life Insurance Company.
* L. W. Andreas, 74, Retired 1966 6,287,41 (1)(5) 1.21
President of the Company. 5
Mr. Andreas is a Director of
National City
Bancorporation.
* S. M. Archer, Jr., 73, 1948 1,498,08 (6) **
Private Investments 1
John R. Block, 61, President, 270 **
Food Distributors
International. He is a
Director of Deere & Company
and Arcadian Corporation.
* J. K. Vanier, 68, Chief 1978 9,254,80 (7) 1.78
Executive Officer, Western 8
Star Ag. Resources,
Inc.(investments and
livestock)
M. Brian Mulroney, 57, Senior 1993 836 **
Partner in the law firm of
Ogilvy Renault. He is a
Director of Barrick Gold
Corporation Ltd., The Horsham
Corporation and Petrofina
S.A.
O. G. Webb, 60, farmer. 1991 2,303,58 (8) **
Chairman of the Board and 9
President, GROWMARK, Inc.
(farmer-owned cooperative)
Richard Burt, 49, Chairman of -0- -0-
International Equity Partners
(a direct investment and
advisory services
organization). Mr. Burt is a
Director of Hollinger
International Corp., Wierton
Steel Corp., Paine Webber
Mutual Funds, and VLT, Inc.
* F. Ross Johnson, 64, 1989 138,947 **
Chairman and Chief Executive
Officer of RJM Group, Inc.
(an international management
and advisory organization).
He is a Director of American
Express Company, Power
Corporation of Canada,
National Services Industries,
Inc., Noma Ltd. of Canada and
Midland Financial Group.
Robert S. Strauss, 77, 1992 35,161 **
Partner in the law firm of
Akin, Gump, Strauss, Hauer &
Feld. Mr. Strauss is a
Director of General
Instruments Corp. and
Hollinger, Inc.
* Member of the Executive Committee
** Less than 1% of outstanding shares
5
PAGE 6
<FN>
(1) Includes shares allocated as a beneficiary under the
Company's Tax Reduction Act Stock Ownership Plan (TRASOP) and
ADM Savings & Investment Plan.
(2) Includes 20,115,112 shares in which Mr. Andreas disclaims
any beneficial interest, in trust for members of his family of
which he is a Trustee and in a partnership of which Mr. Andreas
is the Managing Partner which includes 4,338,766 shares held for
Mr. L. W. Andreas and 4,258,451 shares held for Mr. M. D.
Andreas (also included in the table above are the shares owned
by Mr. L. W. Andreas and Mr. M. D. Andreas).
(3) Includes 3,785,412 shares owned by or in trust for members
of Ms. Carter's family in which Ms. Carter disclaims beneficial
interest in 6,064 shares. Includes 4,123,897 shares owned by
Star A, Inc. and 3,061,593 shares owned by Star E, Inc., family
corporations, with respect to which Ms. Carter disclaims any
beneficial interest in 3,464,073 shares and 2,890,144 shares,
respectively.
(4) Includes 2,799,826 shares, owned by Gold Kist Inc. in which
Mr. Coan disclaims any beneficial interest.
(5) Includes 1,329,028 shares, in which Mr. Andreas disclaims
any beneficial interest, in trust for members of his family of
which he is a Trustee (see footnote 2). Includes 589,910 shares
held in a private foundation in which Mr. Andreas has voting and
investment power.
(6) Includes 328,104 shares owned by a member of Mr. Archer's
family in which he disclaims any beneficial interest.
(7) Includes 19,465 shares owned by members of Mr. Vanier's
family in which he disclaims any beneficial interest. Includes
5,944,428 shares in various trusts of which Mr. Vanier is one of
the Trustees and in a corporation in which Mr. Vanier and
members of his family have certain beneficial interests (see
footnote 3; Mr. Vanier is the brother of Ms. Carter's mother and
3,061,593 of the reported shares were also reported by Ms.
Carter).
(8) Includes 2,299,971 shares owned by GROWMARK, Inc. in which
Mr. Webb disclaims any beneficial interest.
B. D Kraft, J. R. Randall, M. D. Andreas, H. D. Hale and M.
L. Andreas are five of the six highest paid Executive Officers
of the Company but are not Directors of the Company.
B. D Kraft beneficially owned 2,557,476 shares of Common
Stock of the Company, which number includes (1) shares allocated
to him as a beneficiary under the Company's TRASOP, ADM Savings
& Investment Plan and Tabor Employees Profit Sharing Plan, (2)
85,900 shares in trusts for members of his immediate family of
which he is a Co-Trustee and in which he disclaims any
beneficial interest, and (3) 17,016 shares that are subject to
stock options exercisable within 60 days from the date of this
Proxy Statement.
J. R. Randall beneficially owned 1,159,316 shares of Common
Stock of the Company, which number includes (1) shares allocated
to him as a beneficiary under the Company's TRASOP and ADM
Savings & Investment Plan, (2) 52,965 shares owned by a member
of his family with respect to which he disclaims any beneficial
interest, (3) 147,586 shares in trust for members of his family
of which he is a Co-Trustee and in which he disclaims any
beneficial interest, and (4) 31,276 shares that are unissued but
are subject to stock options exercisable within 60 days from the
date of this Proxy Statement.
M. D. Andreas beneficially owned 6,389,917 shares of Common
Stock of the Company (1.23% of outstanding shares), which number
includes (1) shares allocated to him as beneficiary under the
Company's TRASOP and Savings & Investment Plan, (2) 2,015,080
shares, in which he disclaims any beneficial interest, in trust
for members of his family of which he is a Trustee or has sole
voting power (see footnote 2), and (3) 27,776 shares that are
subject to stock options exercisable within 60 days from the
date of this Proxy Statement.
H. D. Hale retired in April of this year. He served as an
Officer, Chairman and Chief Executive Officer of ADM Milling Co.
and as a Director of the Company. Mr. Hale beneficially owned
14,063,201 shares of Common Stock of the Company (2.71% of the
outstanding shares), which number includes (1) shares allocated
to him as a beneficiary under the Company's TRASOP and ADM
Savings & Investment Plan, (2) 1,470,355 shares owned by or in
trust for a member of his family in which he disclaims any
beneficial interest, (3) 4,123,897 shares owned by Star A, Inc.,
a family corporation, with respect to which Mr. Hale disclaims
beneficial interest in 4,022,861 shares, (4) 6,075,283 shares in
trust for which Mr. Hale's wife is one of several Trustees and
in which he disclaims any beneficial interest, and (5) 6,999
shares that are unissued but are subject to a stock option
exercisable within 60 days from the date of this Proxy Statement
(see footnotes 3 and 7; Mr. Hale is Mollie Hale Carter's father
and his wife is the sister of Mr. Vanier and 4,123,897 shares
and 3,732,752 shares of the reported shares were also reported
by Ms. Carter and Mr. Vanier, respectively).
M. L. Andreas beneficially owned 1,547,397 shares of Common
Stock of the Company, which number includes (1) shares allocated
to him as beneficiary under the Company's TRASOP and Savings and
Investment Plan, (2) 1,027,350 shares owned by Andreas
Corporation with respect to which he disclaims any beneficial
interest in 852,701 shares, (3) 102,546 shares in trust for
members of his family and in which he disclaims any beneficial
interest, and (4) 13,199 shares that are subject to stock
options exercisable within 60 days from the date of this Proxy
Statement.
Common Stock beneficially owned by all Directors and
Executive Officers as a group, numbering 39 persons including
those listed above and excluding H. D. Hale, is 71,721,435
shares representing 13.82% of the outstanding shares, of which
426,435 shares are unissued but are subject to stock options
exercisable within 60 days from the date of this Proxy
Statement.
D. O. Andreas and L. W. Andreas are brothers. G. Allen
Andreas, Jr., Vice President of the Company and Counsel to the
Executive Committee, is a nephew of these two Directors.
Michael D. Andreas is the son of D. O. Andreas and a nephew of
L. W. Andreas. Martin L. Andreas is a nephew of D. O. Andreas
and L. W. Andreas. G. Allen Andreas, Jr., Michael D. Andreas
and Martin L. Andreas are cousins. Mollie Hale Carter is a niece
of J. K. Vanier. C. P. Archer, Treasurer of the Company, is the
son of S. M. Archer, Jr.
Information Concerning Committees and Meetings
During the last fiscal year the Board of Directors of the
Company held five regularly scheduled meetings. Mr. Ralph Bruce
attended less than seventy-five percent of the scheduled
meetings of the Board.
The Board has Audit, Compensation and Stock Option,
Nominating, Public Policy, Finance, Special and Ziedman
Committees. The Audit Committee consists of Messrs. Johnson, L.
W. Andreas, Archer, Daniels and Vanier, all of whom were elected
on October 19, 1995 and Coan, elected to this Committee on
January 15, 1996. The Compensation and Stock Option Committee
was formerly the Salary and Stock Option Committee and consisted
of Messrs. Archer, Johnson, Mulroney and Vanier. On January 15,
1996, this Committee became known as the Compensation and Stock
Option Committee and now consists of Messrs. Webb, Bruce,
Vanier, Coan and Archer. The Nominating Committee was formerly
the Nominating and Proxy Committee and its members consisted of
Messrs. M. D. Andreas, D. O. Andreas, Archer and Daniels. On
January 15, 1996, this Committee became known as the Nominating
Committee and its members consist of Messrs. Strauss, Mulroney,
Archer and Mrs. N. A. Rockefeller. The Corporate Governance
Committee, consisting of Messrs. Goldberg, Webb, Mulroney and
Vanier met ten times from October 1995 through January 1996.
This Committee combined with the Public Policy Committee,
consisting of Messrs. Mulroney, Bruce, Goldberg, Strauss, Webb
and Mrs. N. A. Rockefeller, on January 15, 1996 and current
members of the Public Policy Committee now consist of Messrs.
Mulroney, Goldberg, Strauss, Webb and Mrs. N. A. Rockefeller.
The Finance Committee consists of Messrs. Webb, L. W. Andreas,
Archer and Strauss. The Special Committee (formerly the
Litigation Committee) consists of Messrs. Mulroney, Daniels,
Bruce, Goldberg, Johnson, Vanier and Webb. The Zeidman
Committee consists of Messrs. Mulroney and Coan.
The Audit Committee, which met five times during the fiscal
year, reviews (1) the overall plan of the annual independent
audit, (2) financial statements, (3) scope of audit procedures,
(4) the performance of the Company's independent accountants and
internal auditors, and (5) auditors' evaluation of internal
controls.
The Compensation and Stock Option Committee, which met four
times during the fiscal year, reviews and establishes
compensation of Officers, approves direct compensation in the
amount of $150,000 or more annually to any employee and approves
modifications and changes in employee benefit plans affecting
benefits salaried employees receive under such plans. All of
its actions are submitted to the Board for approval.
The Nominating Committee, which met once during the fiscal
year, considers and recommends nominees to the Board. The
Committee will consider nominees recommended by a Stockholder
provided the Stockholder submits the nominee's name in writing
addressed to the Secretary of the Company listing the nominee's
qualifications together with a statement signed by the nominee
indicating a willingness to serve.
Antitrust Investigation, Litigation and Special Committee
The Company is the target of an investigation being
conducted by a grand jury in the Northern District of Illinois
into possible violations of federal antitrust laws and related
crimes in the food additives industry. This investigation in
Chicago is focused on antitrust violations with respect to
lysine. A federal grand jury in San Francisco is investigating
antitrust violations with respect to citric acid and a federal
grand jury in Atlanta is investigating antitrust violations with
respect to high fructose corn syrup. The Company and two of its
executive officers - Michael D. Andreas and Terrance S. Wilson -
have been informed that they are targets of the lysine
investigation and indictments are being considered against them.
Following public announcement in June 1995 of these
investigations, the Company was named as a defendant in a number
of putative class action suits for alleged violations of federal
and state antitrust laws. In addition, the Company and certain
of its directors and executive officers were named as defendants
in a number of putative class actions for alleged violations of
securities laws. Shareholder derivative actions also are
pending against certain of the Company's directors and executive
officers and nominally against the Company alleging that the
individuals named as defendants (including all director
nominees, except Messrs. Block, Burt, Coan and Ms. Carter, and
all incumbent directors who are not standing for reelection)
breached their fiduciary duties to the Company and seeking
monetary damages and other relief on behalf of the Company from
the individuals named as defendants. For a more detailed
description of these actions see Note 11 of the Note to
Consolidated Financial Statements included in the Annual Report
to Stockholders for the year ended June 30, 1996.
The Board of Directors of the Company has appointed a
Special (formerly the Litigation) Committee to oversee the
Company's response to the criminal investigations and related
civil antitrust and securities litigation. The Special
Committee consists of Messrs. Mulroney and Daniels, co-chairs,
Messrs. Bruce, Goldberg, Johnson, Vanier and Webb.
6
PAGE 7
Executive Compensation
The following table sets forth information concerning the Company's
Chief Executive and the five other most highly paid Executive Officers of
the Company.
Summary Compensation Table
__________________________
Long All
Annual Compensation Term Other
Name and Principal Fiscal Other Annual Compen- Compen-
Position Year Salary Bonus Compensation sation sation
$ $ $ #(3) $(4)
____ _________ _____ ____________ _______ _______
D. O. Andreas, 199 3,649,13 -0- 259,501( -0- 6,000
Chairman and 6 0 -0- 1) -0- 6,000
Chief 199 3,612,17 -0- 152,670( -0- 6,000
Executive 5 1 1)
199 3,171,03 198,403(
4 3 1)
J. R. Randall, 199 1,868,79 -0- N/A -0- 6,000
President 6 6 -0- N/A 78,750 6,000
199 1,686,00 -0- N/A 41,343 6,000
5 4
199 1,486,31
4 3
M. D. Andreas, 199 1,314,63 -0- -0- 6,000
Vice Chairman 6 0 -0- 62,006(2 63,000 6,000
of the Board 199 1,136,00 -0- ) 41,343 6,000
and Executive 5 4
Vice President 199 977,980 59,591(2
4 )
N/A
H. D. Hale, 199 950,077 -0- N/A -0- 6,000
Retired 6 887,521 -0- N/A 63,000 6,000
Chairman and 199 812,480 -0- N/A 16,537 6,000
Chief 5
Executive 199
Officer of ADM 4
Milling Co.
B. D Kraft, 199 695,796 -0- N/A -0- 6,000
Group Vice 6 656,337 -0- N/A 39,375 6,000
President 199 624,147 -0- N/A 16,537 6,000
5
199
4
M. L. Andreas, 199 619,480 -0- N/A -0- 6,000
Senior Vice 6 581,341 -0- N/A 31,500 6,000
President and 199 548,205 -0- N/A 12,402 6,000
Assistant to 5
the Chief 199
Executive 4
<FN>
(1) Includes $102,866, $51,001 and $133,074 for personal use of
Company-owned aircraft in 1994, 1995 and 1996, respectively and
$78,024, $86,941 and $107,965 for personal office and expense
allocation in 1994, 1995 and 1996, respectively. Amounts for
Other Annual Compensation are reported on a calendar year basis.
(2) Includes $41,749 and $42,488 for personal use of Company-
owned aircraft in 1995 and 1996, respectively.
(3) Number of options granted in fiscal year indicated and
adjusted for all stock dividends and stock splits paid to date.
(4) These amounts represent the Company's matching contribution
under the ADM Savings & Investment Plan, a 401(k) Plan. This
Plan was established July 1, 1984 as a successor to the
Company's Tax Reduction Act Stock Ownership Plan. This is a
contributory plan available to all salaried employees who have
completed one year of service with the Company. Employees may
contribute 1% to 6% of gross wages to a maximum of $9,000 in
year 1995. The Company's matching contribution is equal to 100%
of the first 2% and 50% of the next 4% of an employee's
contribution. The employees' and the Company's contributions
are used to purchase Common Stock of the Company from the
Company. All contributions are fully vested to the
participants; however, there are withdrawal restrictions.
Compensation for nonemployee Directors consists of an
annual retainer of $37,500 and an annual retainer of $37,500 for
memberships on the Executive, Audit, Special, Zeidman and Public
Policy Committees with a maximum annual retainer for all
services of $100,000.
For the period July 1, 1995 through June 30, 1996 the
Executive Officers named above were not granted any stock
options, but exercised options to purchase stock of the Company
with an aggregate market value over exercise price as shown in
the following table:
7
PAGE 8
Aggregated Option Exercises in Fiscal Year and
Fiscal Year-End Option Values (1)
Name Shares Value Number of Unexercised Value of Unexercised
Acquired on Realized Options at Fiscal Year In-the-Money Options
Exercise ($) End (#) at Fiscal Year End ($)
(#)
Exercisab Unexercisab Exercisab Unexercisab
le le le le
_____________ ___________ _________ _________ ___________ _________ ___________
___ __ __ __ __ __ __
D. O. Andreas - - - - - -
J. R. Randall 98,289 910,561 22,527 97,566 101,242 371,503
M. D. Andreas 5,725 41,127 20,777 83,566 95,610 326,447
H. D. Hale 4,134 20,895 6,999 - 22,525 -
B. D Kraft 9,450 66,706 12,642 43,270 57,934 156,507
M. L. Andreas 19,142 147,083 9,700 34,202 44,154 123,009
<FN>
(1) Table reflects adjustments for stock dividends and stock splits paid to
date.
The Company has a Retirement Plan for Salaried Employees (the "Plan"). The
Company made a contribution to the Plan for calendar and Plan year 1995 equal to
the full funding limit of the IRS Code. The following table shows the estimated
annual benefits payable as a life annuity, upon normal retirement, to persons in
specified salary and years-of-service classifications:
5 Year Average Base For Years of Credited Service Shown
Below
Compensation 10 20 30
35
$200,000 $ 29,861 $ 59,721 $ 89,582 $
104,512
400,000 61,861 123,721 185,582
216,512
600,000 93,861 187,721 281,582
328,512
800,000 125,861 251,721 377,582
440,512
1,000,000 157,861 315,721 473,582
552,512
1,200,000 189,861 379,721 569,582
664,512
1,400,000 221,861 443,721 665,582
776,512
1,600,000 253,861 507,721 761,582
888,512
1,800,000 285,861 571,721 857,582
1,000,512
2,000,000 317,861 635,721 953,582
1,112,512
2,200,000 349,861 699,721 1,049,582
1,224,512
2,400,000 381,861 763,721 1,145,582
1,336,512
2,600,000 413,861 827,721 1,241,582
1,448,512
2,800,000 445,861 891,721 1,337,582
1,560,512
3,000,000 477,861 955,721 1,433,582
1,672,512
3,200,000 509,861 1,019,721 1,529,582
1,784,512
3,400,000 541,861 1,083,721 1,625,582
1,896,512
3,600,000 573,861 1,147,721 1,721,582
2,008,512
3,800,000 605,861 1,211,721 1,817,582
2,120,512
The pension amount is based on the final average monthly
compensation (average of the 60 consecutive months of the last
180 months which produce the highest average). For purposes of
the Plan, the term "compensation" is defined as base
compensation ("Salary" as shown in the Summary Compensation
Table) paid during the Plan year. The pension amount is
calculated as follows: final average monthly compensation times
56%, less 50% of primary Social Security payable at age 65 and
proportionately reduced for service of less than 35 years and
additional early retirement reduction when the pension commences
prior to age 65. The normal retirement age under the Plan is
age 65 with 5 years of service. The 5 year average compensation
for purposes of the Plan of each of the six highest paid
Executive Officers of the Company and the number of years of
service rounded to the nearest year and credited to each of them
under the Plan was as follows: D. O. Andreas $3,047,896 (25
years); J. R. Randall $1,425,197 (27 years); Michael D. Andreas
$948,531 (25 years); H. D. Hale $775,000 (35 years); B. D Kraft
$594,064 (20 years); M. L. Andreas $524,144 (24 years).
Various provisions of the Internal Revenue Code of 1986
limit the amount of benefits payable under a qualified pension
plan. When these limits operate to reduce a pension benefit
payable under the Plan, the Company will provide additional
amounts so that the total annual pension will be as provided in
the Plan.
8
PAGE 9
Compensation and Stock Option Committee Report
The Board of Directors of the Company has a Compensation
and Stock Option Committee consisting of five directors. The
Committee reviews and establishes compensation of officers,
approves the direct compensation in the amount of $150,000 or
more annually to any employee and approves modifications and
changes in employee benefit plans with respect to the benefits
salaried employees receive under such plans. All of its actions
are submitted to the Board for ratification.
The Company's compensation program is informal and rather
simple consisting principally of salary and from time to time,
not necessarily annually, an award of incentive stock options.
Charges for the personal use of Company facilities, if any,
gross-up an executive's cash remuneration. Options for stock
are at the market price on the date of grant and are exercisable
in increments usually over a five year term but none can be
acquired during the first year. Bonuses and incentive awards
are not a part of the compensation program, nor do any
executives, including the Chief Executive, have employment
contracts.
Compensation is not related to the market performance of
the Company's stock or to the annual profit performance of the
Company. Stock prices are not only reflective of earnings but
are influenced by such factors as interest rates, trading or
corporate equities as commodities by large financial
institutions and funds, comments and recommendations of security
analysts, government actions (i.e. tax and fiscal policies) and
market makers' perceptions of an entire industry. The
performance of a company in the basic food industry may be
affected by plantings, global weather (such as floods and
droughts), foreign nations' actions, including trade
negotiations, and the Federal Government's programs, policies
and restrictions. Management cannot manage the vagaries of the
equity markets or the outside influences that relate to the
production of food for human and animal consumption.
The Company's compensation program is designed so that the
annual emolument for its employees and for its executives
remains competitive with the emolument for comparable
employment, responsibilities and performance in major
industries, not only in the U.S. but on a world-wide basis. The
Committee consisting of investors and business leaders is
familiar with compensation packages and also familiarizes itself
with various forms and types of remuneration primarily from
publications including general news reports, periodicals and
reports of other public corporations.
The Committee in its deliberations considers all of the
factors listed above and in addition the following principles:
a. an individual's on-the-job performance
b. the Company's ability to pay and its growth record
c. cost-of-living increases
d. in the case of all individuals except the Chief
Executive, the recommendations of management and a
person's supervisors.
The compensation for the Chief Executive is established by
the Committee as previously described. The Committee proposed
and the Board approved a continuance of Mr. D. O. Andreas'
salary at the current level for fiscal year 1996.
Under Section 162(m) of the Internal Revenue Code and the
proposed Regulations thereunder, a new provision created under
the Omnibus Budget Reconciliation Act of 1993, the allowable
deduction for compensation paid or accrued with respect to the
chief executive officer and each of the four other most highly
compensated executive officers of a publicly held corporation,
except for "performance-based compensation", is limited to $1
million per year for taxable years beginning on or after January
1, 1994. The exception for "performance-based compensation" is
applicable to remuneration over $1 million based solely upon the
attainment of objective performance goals established by a
compensation committee comprised of two or more "outside
directors" and approved by the Company's Stockholders.
In order to claim the exceptions under the current
Regulations, the Committee must agree that payments will not be
made if the established performance is not met. The Committee
is unable to agree to this provision of the current Regulations
since it believes it must be free to exercise its independent
business judgment to compensate executives for their performance
as set forth above.
Glenn Webb, Chairman
S. M. Archer, Jr.
Ralph Bruce
G. O. Coan
J. K. Vanier
9
PAGE 10
Comparison of Five Year Cumulative Total Return
Among Archer-Daniels-Midland Company (ADM), the S & P Foods
Index
and the S & P 500 Index
Measurement Period ADM S & P Foods S & P 500
(Fiscal Year Covered) Index
Index
__________________ ___ __________ _________
Measurement Pt - 06/30/91 $100 $100 $100
FYE 06/30/92 $105 $112 $113
FYE 06/30/93 $111 $112 $129
FYE 06/30/94 $116 $112 $131
FYE 06/30/95 $146 $144 $165
FYE 06/30/96 $159 $170 $208
$100 invested on 06/30/91 in stock or index
including reinvestment of dividends.
Fiscal year ending June 30.
Graph produced in accordance with SEC regulations by Research
Data Group.
10
PAGE 11
Certain Relationships and Related Transactions
Mr. J. K. Vanier has a beneficial interest in various farms
and ranches in Kansas and other states. During the last fiscal
year the farms and ranches made sales of wheat totaling $155,828
to the Company on terms and conditions that were no more
favorable than those afforded by any other customer.
During the fiscal year ended June 30, 1996, the Company
retained the services of the law firms of Akin, Gump, Strauss,
Hauer & Feld and Ogilvy Renault of which Robert S. Strauss and
M. Brian Mulroney is a partner and a senior partner,
respectively. The Company may continue to retain the services
of, and refer specific matters to, these firms during the next
fiscal year.
1996 Stock Option Plan
The Board of Directors has approved, subject to approval by
the Stockholders, the 1996 Stock Option Plan dated April 18,
1996 for 4,000,000 shares of the Common Stock of the Company,
herein referred to as "1996 Plan", and set forth in full as
Exhibit "A" to this Proxy Statement. The last option plan
approved by the Stockholders of the Company was the Incentive
Stock Option Plan dated April 18, 1991 (the "1991 Plan"), which
remains in effect. However, only 594,025 shares presently
remain available for the grant of options under the 1991 Plan.
The Board of Directors believes that the adoption of a new
stock option plan would be in the best interests of the Company.
The purpose of the 1996 Plan is to encourage ownership of the
Company's Common Stock by employees who are in a position to
make contributions to the Company's progress, to provide them
with an incentive to put forth maximum efforts for the Company's
success and to provide a valuable means of retaining key
personnel as well as attracting new management personnel when
needed for future operations and growth. A stock option program
is also desirable from a competitive standpoint in retaining and
obtaining key personnel.
The 1996 Plan permits the grant of stock options from time
to time to employees of the Company and its subsidiaries, either
as incentive stock options ("ISOs") qualifying under Section 422
of the Internal Revenue Code, or as nonqualified stock options
("NSOs") which do not so qualify. The value of the Company's
Common Stock (determined at the time of grant) that may be
subject to ISO's that become exercisable by any one employee in
any one year is limited by the Internal Revenue Code to
$100,000.
The 1996 Plan will be administered by the Compensation and
Stock Option Committee of the Board of Directors (the
"Committee") consisting, to the extent available, of members of
the Board who are not Officers or other employees of the
Company. The Committee shall determine of the approximately 750
executive and administrative employees of the Company or its
subsidiaries to whom options shall be granted from time to time,
and the number of shares which shall be the subject of each such
option, provided that the number of shares subject to options
that may be granted to any one employee during any one calendar
year shall not exceed 25,000 shares. The Committee shall also
determine the exercise price per share, provided that the
exercise price per share for ISO's shall not be less than 100%
of the fair market value per share at the time the option is
granted. The Committee is authorized to cancel and replace
stock options previously granted with new options for the same
or a different number of shares and having a higher or lower
exercise price.
The number and kind of shares and price per share of an
option may be adjusted by the Committee to give effect to
adjustments in the number and kind of shares of stock of the
Company through recapitalization, combinations, stock dividends,
mergers, consolidations and other relevant changes. Shares
subject to lapsed or terminated options may be made subject to
new options.
No option granted under the 1996 Plan shall permit the
purchase of any shares thereunder during the first year
following the date such option is granted, nor permit the
purchase in each of the second, third, fourth and fifth years,
respectively, of more than 25% of the total number of shares
covered by such option, unless in any such year the full amount
purchasable in any such year is not purchased, in which event
the shares purchasable but not purchased in such year may be
purchased at any time thereafter until expiration of the option.
The Committee may accelerate an optionee's right to purchase the
shares subject to an option at any time or upon the occurrence
of events specified by the Committee in an option agreement,
such as termination of employment or a change in ownership or
control the Company. The exercise price of an option is payable
in cash or in Common Stock of the Company. An optionee must
satisfy all applicable tax withholding requirements at the time
of exercise.
The maximum term of options granted under the 1996 Plan is
10 years from the date of grant. All options are
nontransferable by the optionee, except upon the optionee's
death in accordance with his will or applicable law. In the
event of an optionee's death, outstanding options that have
become exercisable will remain exercisable for a period of one
year. In the case of any other termination of employment,
outstanding options that have previously become exercisable will
generally remain exercisable for a period of three months. The
Committee may provide in an option agreement for conditions of
forfeiture of an optionee's rights with respect to an option in
the event of the termination of employment of the employee for
"cause," for the optionee's breech of restrictive covenants that
may apply (such as noncompetition and confidentiality
restrictions) or for certain specified activities of the
optionee that are detrimental to the Company.
The 1996 Plan has a term of 10 years, subject to earlier
termination by the Board of Directors. All options granted
under the 1996 Plan prior to its termination remain outstanding
until they have been exercised or are terminated in accordance
with their terms. The Board may amend the 1996 Plan at any
time, provided that Stockholder approval is required for certain
types of amendments.
The Company has not yet made any determination with respect
to stock options that may be granted in the future under the
1996 Plan to executive officers and employees of the Company.
During fiscal 1996, no stock options were granted to any
executive officers or employees of the Company. The closing
price for one share of the Company's Common Stock as recorded on
the New York Stock Exchange's Composite Transaction Quotation on
August 19, 1996 was $18 1/8.
The grant of a stock option under the 1996 Plan will not
generally result in taxable income for the optionee, nor in a
deductible compensation expense for the Company, at the time of
grant. The optionee will have no taxable income upon exercising
a ISO (except that the alternative minimum tax may apply), and
the Company will receive no deduction when an ISO is exercised.
Upon exercising an NSO, the optionee will recognize ordinary
income in the amount by which the fair market value of the
Company's Common Stock on the date of exercise exceeds the
exercise price, and the Company will generally be entitled to a
corresponding deduction. The treatment of an optionee's
disposition of the shares of the Company's Common Stock acquired
upon the exercise of an option is dependent upon the length of
time the shares have been held and on whether such shares were
acquired by exercising an ISO or an NSO. Generally, there will
be no tax consequence to the Company in connection with the
disposition of shares acquired under an option, except that the
Company may be entitled to a deduction in the case of a
disposition of shares acquired upon exercise of an ISO before
the applicable holding period has been satisfied.
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock of the Company present in
person or represented by proxy at the meeting entitled to vote
is required for adoption of the 1996 Plan. For this purpose, a
Stockholder voting through a proxy who abstains with respect to
adoption of the 1996 Plan is considered to be present and
entitled to vote on the adoption of the 1996 Plan at the
meeting, and is in effect a negative vote, but a Stockholder
(including a broker) who does not give authority to a proxy to
vote on the adoption of the 1996 Plan shall not be considered
present and entitled to vote on the adoption of the 1996 Plan.
The Board of Directors recommends that Stockholders vote
"FOR" the proposed 1996 Plan.
11
PAGE 12
Stock Unit Plan for Nonemployee Directors
The Board of Directors has approved, subject to approval by
the Stockholders, the Stock Unit Plan for Nonemployee Directors,
herein referred to as the "Directors Plan." The Company does
not currently maintain a stock-based compensation program for
its nonemployee directors, and the Board of Directors believes
that adoption of such a plan would be in the best interests of
the Company. If approved by the Stockholders, the Directors
Plan will become effective on January 1, 1997. The purpose of
the Directors Plan is to promote the interests of the Company
and the Stockholders by paying part or all of the compensation
of the Company's nonemployee directors in the form of an
economic equivalent of a stock interest in the Company, thereby
providing appropriate incentives and rewards to encourage
nonemployee directors to take a long-term outlook when
formulating policy applicable to the Company and encouraging
them to remain on the Board of Directors.
Under the Directors Plan, 25 percent of all fees earned by
a nonemployee director (including his retainer fee, meeting
fees, committee fees and any other fees) during each calendar
quarter are automatically converted into the number of "Stock
Units" that have a value at the end of such calendar quarter
equal to the amount of such fees. Each Stock Unit is a non-
voting unit of measurement which is valued at the then-current
public trading price of the Common Stock. In addition to the 25
percent mandatory deferral, each nonemployee director may elect
to have up to a total of 100% of his directors' fees converted
into Stock Units, provided the election is made before the end
of the calendar year prior to the year in which the fees are
earned.
Each nonemployee director is credited with Stock Units to
his account under the Directors Plan based on the aggregate
amount of his mandatory and elective conversion of directors'
fees for the calendar quarter. A director's account will also
be credited with dividend equivalents as and to the same extent
that dividends are declared on the Company's Common Stock, with
such dividend equivalents being converted into additional Stock
Units. Stock Units credited to a director's account may be
adjusted to reflect adjustments in the number and kind of shares
of stock of the company through recapitalization, combinations,
stock dividends, mergers, consolidations and other relevant
changes.
A nonemployee director will receive distributions under the
Directors Plan following the expiration of five calendar years
following the year in which his fees were originally converted
into Stock Units, or following his termination of service on the
Board of Directors, if earlier. Thus, assuming a director
continues his service on the Board of Directors, he will receive
annual distributions of benefits under the Directors Plan, based
on Stock Unit conversions occurring five years earlier. Each
distribution under the Directors Plan will be made in a single-
sum cash payment, based on the value of Stock Units then being
distributed, determined by the fair market value of the
Company's Common Stock at the time of distribution. A director
will not be entitled to distribution of benefits under the
Directors Plan if his termination from service on the Board of
Directors is for "cause," as defined in the plan. Directors may
designate beneficiaries to receive the benefits in the event of
death.
The Directors Plan may be terminated or amended by the
Board of Directors at any time. The Directors Plan does not
provide for specific limits as to the term of the plan or the
total amount of compensation that may be credited as Stock Units
under the plan.
The crediting of Stock Units under the Directors Plan will
not result in taxable income for the director, nor in a
deductible compensation expense for the Company, at the time of
such crediting. Upon payment to the director of his interests
under the Directors Plan from time to time in respect of his
Stock Units, the director will recognize taxable ordinary
income, and the Company will be entitled to a corresponding tax
deduction, equal to the amount of the payment.
The benefits to be received by nonemployee directors in the
future under the Directors Plan are not determinable at this
time, due to the uncertainty as to the future value of the
Company's Common Stock and as to the amount of voluntary Stock
Unit conversion that may be elected by directors.
This Plan could have been implemented by the Board of
Directors without presenting it to Stockholders for vote.
However, the Board of Directors believes it is appropriate for
the Stockholders to review the Plan, which will not be
implemented unless approved by an affirmative vote of the
holders of a majority of the outstanding shares of Common Stock
of the Company present in person or represented by proxy and
entitled to vote. For this purpose, a Stockholder voting
through a proxy who abstains with respect to this issue is
considered to be present and entitled to vote on the adoption of
the Plan at the meeting, and is in effect a negative vote, but a
Stockholder (including a broker) who does not give authority to
a proxy to vote on the adoption of this Plan shall not be
considered present and entitled to vote on this issue.
The Board of Directors recommends that Stockholders vote "FOR"
the proposed Plan.
12
PAGE 13
Auditors
The firm of Ernst & Young LLP, independent Certified Public
Accountants, has audited the records of the Company for many
years. The Board of Directors wishes to continue the services
of this firm for the fiscal year ending June 30, 1997, and the
Stockholders' ratification of such appointment is requested.
Representatives of Ernst & Young LLP will attend the Annual
Meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate
questions.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of copies of reports furnished to
the Company during the fiscal year ended June 30, 1996, the
following persons filed the number of late reports or failed to
file reports/representing the number of transactions set forth
after his or her name: W. H. Camp 1 report/2 transactions, B.
Cox 1 report, B. D Kraft 1 report/1 transaction, P. Mulhollem 1
report, B. Peterson 1 report, K. Robinson 1 report, M. Whitacre,
1 report/1 transaction and S. Yu 1 report.
13
PAGE 14
Stockholder's Proposal No. 1 (Board Diversity)
The following proposal and supporting statement have been
submitted by The General Board of Pension and Health Benefits of
the United Methodist Church, 1201 Davis Street, Evanston,
Illinois, 60201, which is the beneficial owner of 179,257 shares
of common stock of the Company:
SHAREHOLDER PROPOSAL: DIVERSITY ON THE BOARD OF DIRECTORS
WHEREAS, we believe the employee and board composition of
major corporations should reflect the people in the workforce
and marketplace of the 21st Century, if our company is going
to remain competitive. Our employees, customers and
stockholders are made up of a greater diversity of
backgrounds than ever before. The Department of Labor's 1995
Bi-partisan Glass Ceiling Commission report "Good for
Business: Making Full Use of the Nation's Human Capital"
confirms diversity and inclusiveness in the workplace has a
positive impact on the bottom line. A Covenant Fund Report
of Standard and Poor 500 companies revealed "...firms that
succeed in shattering their own glass ceiling racked up stock
market records that were nearly 2 1/2 times better than
otherwise comparable companies".
The Equal Employment Opportunity Commission reports 97% of
senior ranks of corporations are occupied by white males. We
believe our company needs to open up top management and the
board to qualified people of all races and to women.
The Office of Federal Contract Compliance mandates that
companies must not discriminate on the basis of race, sex,
color, religion, national origin, disability, or veterans
status. Women and minorities comprise fifty percent of
America's workforce, and the U. S. Department of Labor
reports their advancement is oftentimes hindered by
artificial barriers -- glass ceilings. Our company must make
a strong and continued commitment to use its available tools
and resources to remove ceiling barriers, because it is our
responsibility under the law, and the right thing to do.
In 1994, the Investor Responsibility Research Center reported
inclusiveness at senior management and board levels was only
9% within the Fortune 500 companies, in a comparable
workforce of 57% diversity. The Glass Ceiling Commission
reported that companies are selecting only half of the
available talent in our workforce. If our company is to be
competitive in the 21st Century, we must recognize the truth
that we exist in an increasingly diverse global market, and
must look to select the most qualified people, regardless of
race, gender or physical challenges. We urge our corporation
to enlarge its search for the best qualified board members by
casting a wider net.
THEREFORE, BE IT RESOLVED that the shareholders request:
1.The nominating committee of the Board, in its search for
suitable bard (sic) candidates, make a greater effort
to search for qualified women and minority candidates for
nomination to the Board of Directors;
2.A report on our company's efforts to encourage diversified
representation on our Board of Directors;
3.Report on our company's use of minority and women executive
search firms;
4.Issue a statement making a public commitment to a policy of
inclusiveness on our Board of Directors, with the Chief
Executive Officer's policy program outlining steps to be
taken and an
anticipated time line.
Recommendation of the Board of Directors Against the Proposal
The Stockholders disapproved a similar proposal by this
proponent at the Company's 1995 annual meeting.
The Board of Directors believes that each director should
be chosen for his or her qualifications and ability to serve the
Company and all its Stockholders. Because the Company is a
major global producer of food, feed, fuel, and other
agricultural products the Board of Directors believes a director
can be of maximum value to shareholders if he or she has
knowledge of agriculture, commodity markets or world trade.
The Nominating Committee of the Board of Directors has in
the past considered and will continue to consider in the future
all qualified candidates for nomination to the Company's Board
of Directors, including those submitted to the Secretary of the
Company in accordance with the provisions as set forth in the
Company's Proxy Statement. The Company does not believe there
is any justification for requiring the adoption of formal
programs and policies in this regard.
The Board of Directors recommends that Stockholders vote
AGAINST this stockholder proposal. Proxies solicited by the
Board of Directors will be so voted unless Stockholders specify
a different choice.
Stockholder's Proposal No. 2 (Cumulative Voting)
The following proposal and supporting statement have been
submitted by John J. Gilbert and Margaret R. Gilbert, 29 East
64th Street, New York, New York, 10021-7043. John J. Gilbert
holds 559 shares of Company stock; Margaret R. Gilbert holds 400
shares of Company stock; and John J. Gilbert and Margaret R.
Gilbert co-trustees under the will of Samuel Rosenthal hold 570
shares of Company stock:
SHAREHOLDER PROPOSAL: CUMULATIVE VOTING
RESOLVED: That the stockholders of Archer-Daniels-Midland
Company, assembled in annual meeting in person and by
proxy, hereby request the Board of Directors to take the
steps necessary to provide for cumulative voting in the
election of directors, which means each stockholder shall
be entitled to as many votes as shall equal the number of
shares he or she owns multiplied by the number of directors
to be elected, and he or she may cast all of such votes for
a single candidate, or any two or more of them as he or she
may see fit.
REASONS
We believe the board of directors of Archer-Daniels should
adopt cumulative voting in the election of directors as
part of its program of corporate governance.
Provision for cumulative voting brings to the corporate
system a means by which a significant group of
stockholders, though in the minority, can elect candidates
of its choice, making a more diverse board of directors.
If you agree, please mark your proxy for this resolution;
proxies not marked will be voted consistent with the
Company's discretionary voting authority.
Recommendation of the Board of Directors Against the Proposal
The Board of Directors believes that each director should
be chosen for his or her qualifications and ability to serve the
Company and all of its Stockholders. Cumulative voting
introduces the possibility of a director being committed to
serve the special interests of a small faction responsible for
the director's election rather than the best interests of the
Stockholders as a whole. The present system of voting for the
election of directors avoids the conflict created when a
director is elected by a narrow constituency.
The Board of Directors recommends that Stockholders vote
AGAINST this stockholder proposal. Proxies solicited by the
Board of Directors will be so voted unless Stockholders specify
a different choice.
Stockholder's Proposal No. 3 (Confidential Voting)
The following proposal and supporting statement have been
submitted by the New York City Fire Department Pension Fund, 1
Centre Street, New York, New York, 10007-2341, which holds
96,368 shares of Company stock:
SHAREHOLDER PROPOSAL: CONFIDENTIAL BALLOT
RESOLVED, that the shareholders of the Corporation request
that the board of directors adopt and implement a policy
requiring all proxies, ballots and voting tabulations that
identify how shareholders voted be kept confidential, except
when disclosure is mandated by law, such disclosure is
expressly requested by a shareholder or during a contested
election for the board of directors, and that the tabulators
and the inspectors of election be independent and not the
employees of the Corporation.
STATEMENT IN SUPPORT
The confidential ballot is fundamental to the American
political system. The reason for this protection is to
ensure that voters are not subjected to actual or perceived
coercive pressure. We believe that it is time that this
fundamental principle of the confidential ballot be applied
to public corporations.
Many excellent companies, such as Coca-Cola Co., Dow
Chemical, Georgia-Pacific Corp., Gillette, Kimberly Clark,
Louisiana Pacific, and Quaker Oats, use confidential voting.
In 1989, the Investor Responsibility Research Center (IRRC)
surveyed 22 companies which had adopted some form of
confidential voting system. The survey examined "... the
lessons learned by companies that designed and implemented
confidential voting systems." The results, reported in
Confidential Proxy Voting by Patrick S. McGurn (IRRC, 1989),
showed that none of the firms reported any difficulty
reaching quorums, meeting super majority vote requirements,
nor found confidential voting particularly expensive or
difficult to administer.
It is our belief that all shareholders need the protection of
a confidential ballot no less than voters in political
elections. While we make no imputation that our Company's
management has acted coercively, the existence of this
possibility is sufficient to justify confidentiality.
This resolution would permit shareholders to voluntarily
disclose their vote to management by expressly requesting
such disclosure on their proxy cards. Additionally,
shareholders may disclose their vote to any other person they
choose. This resolution would merely restrict the ability of
the Corporation to have access to the vote of its
shareholders without their specific consent.
Many shareholders believe confidentiality of ownership is
ensured when shares are held in street or nominee name. This
is not always the case. Management has various means of
determining actual (beneficial) ownership. For instance,
proxy solicitors have elaborate databases that can match
account numbers with the identity of some owners. Moreover,
why should shareholders have to transfer their shares to
nominees in an attempt to maintain confidentiality? In our
opinion, this resolution is the only way to ensure a secret
ballot for all shareholders irrespective of how they choose
to hold their shares.
We believe that confidential voting is one of the most basic
reforms needed in the proxy voting system and that the system
must be free of the possibility of pressure and the
appearance of retaliation.
We hope that you would agree and vote FOR this proposal.
Recommendation of the Board of Directors Against the Proposal
In their supporting statement, the proponents acknowledge
that their proposal does not mean to imply that the Company has
a history of past abuse in its voting process. The proposal
urges a change in voting procedures to cover "the existence of a
possibility" of future coercive conduct, however remote. The
Company currently takes steps to ensure that the voting process
does not result in any improper influence or coercion of
Stockholders. The Board of Directors believes that these
procedures adequately address the concerns raised in the
stockholder proposal.
Confidentiality safeguards are already in place throughout
the voting and tabulation process. The voting and tabulation
process is conducted by a third party and is overseen by third
party election inspectors. Votes are tabulated mechanically,
except where a vote is withheld in which case it is tabulated by
hand, and the Board has full confidence in the accuracy and
impartiality of the results.
As demonstrated by the existence of these safeguards it is
Company policy to maintain confidentiality in the proxy
tabulation process. Besides these precautions, however,
Stockholders have the additional option of registering their
shares in the name of a bank, broker, or other nominee. These
nominee holders do not reveal the names of the holders without
their permission, thereby further protecting stockholders'
privacy and the confidentiality of their votes.
The Board believes that its current practices protect the
confidentiality of stockholder votes and prevents the
possibility of unfair voting pressure. In the absence of past
or current abuse in the voting process, the Board of Directors
believes that an overhaul of the voting process is unwarranted.
The Board of Directors recommends that Stockholders vote
AGAINST this stockholder proposal. Proxies solicited by the
Board of Directors will be so voted unless Stockholders specify
a different choice.
Stockholder's Proposal No. 4 (Independent Board)
The following proposal and supporting statement have been
submitted by the Florida Retirement System Trust Fund, P. O. Box
13300, Tallahassee, Florida, 32317-3300, which owns 2,865,921
shares of Company stock and the California Public Employees'
Retirement System, P. O. Box 2749, Sacramento, California,
95812, which owns 3,557,004 shares of Company stock:
SHAREHOLDER PROPOSAL: INDEPENDENT BOARD
RESOLVED: The shareholders of Archer-Daniels-Midland Company
(the "Company") urge the Company's Board of Directors to take
the steps necessary to amend the Company's By-Laws, effective
after the 1996 annual meeting, to provide that the Board of
Directors shall consist of a majority of independent
directors. For these purposes, the definition of independent
director shall mean a director who:
- has not been employed by the Company or an affiliate in an
executive capacity within the last five years;
- was not, and is not a member of a corporation or firm that
is one of the Company's paid advisers or consultants;
- is not employed by a customer, supplier or provider of
professional services to the Company;
- has no personal services contract with the Company;
- is not employed by a foundation or university that receives
grants or endowments from the Company;
- is not a relative of the management of the Company;
- is not an officer of a company on which the Company's
Chairman or Chief Executive Officer is also a board
member.
SUPPORTING STATEMENT
The purpose of this proposal is to incorporate within the
Board of Directors a basic standard of independence that we
believe will permit clear and objective decision making in
the best long term interests of shareholders. A Board of
Directors must formulate corporate policies and monitor the
activities of management in implementing those policies.
Given the critical importance of these functions, we believe
that it is in the best interest of all stockholders that a
majority of board members be independent. This proposal is
prompted by our belief that the employment, business, and
family relationships of any corporate director has the
potential to raise conflicts of interest that may limit the
vigilance and diligence of the board.
A temporary committee of the Board of Directors, impaneled
after the 1995 annual meeting of shareholders, the Governance
Committee ("Committee"), examined the issue of the
independence of the Board of Directors and issued a report in
January of 1996 that in part addressed the issue. The
Committee recommended that a "majority of the Board should be
comprised of outside directors." Unfortunately, the
committee's definition of "outside director" does not
establish a clear and strong standard of independence. Under
the Committee's definition, a director is considered an
"outside director" even if "personal business" or "a
professional relationship" is maintained with the Company.
This is only qualified by an undefined materiality standard.
The definition of "independent director" established in
this proposal provides clear guidance in determining whether
or not a given director is independent for purposes of
determining the composition of the board. Adoption of this
proposal would assure that the Company has the governance
structures necessary to achieve its goals profitably and
responsibly.
Recommendation of the Board of Directors Against the Proposal
The independence of the Company's Board of Directors has
been carefully reviewed by the Governance Committee of the Board
of Directors in its January 1996 report (the "Report"). The
Report recommends that a majority of the Company's directors be
"outside directors" and defines an "outside director" as, among
other things, one who "does not have any personal business or
professional relationship with the Company that is material to
it or to the director". The Board of Directors believes that
this materiality standard provides clear guidance in determining
whether a director is independent and avoids overly broad
definitions which would be practically unworkable in their
application. The Board of Directors further believes that this
approach, which focuses on the materiality of the relationship,
more appropriately balances the interests of the Company and its
Stockholders in ensuring independent oversight and in selecting
quality leadership.
The Board of Directors believes that the proponent's
proposed definition of an "independent director" would be unduly
limiting and would unnecessarily circumscribe the ability of the
Company to secure prominent, successful and capable individuals
to serve as directors. For example, under the proposal's
definition, if the Company were to provide even modest monetary
support to a university professor conducting research, the
entire faculty and administrative personnel at that university
would be deemed to be "non-independent", even if they had
nothing to do with that area of research. Moreover, the
proposal would exclude anyone who is employed by a "customer" of
the Company. Given the breadth of the Company's products and
services, this approach could eliminate many well-qualified
board candidates who have no material personal or professional
relationship with the Company.
The Company is proposing substantial changes in the
membership of the Board of Directors based upon the
recommendations of the Governance Committee. These proposed
changes include three management Directors not standing for re-
election, the Nominating Committee proposing three outside
directors to be added to the Board, and reducing the size of
the Board from seventeen to twelve.
The Company has consistently sought and secured qualified
business, academic and community leaders to serve on its board
of directors. The Board of Directors believes a director can be
of maximum value to stockholders if he or she has knowledge of
agriculture, commodity markets or world trade. Everyone of the
nominees for election has superb knowledge in one or more of
these fields. Because the Company is a major global producer of
food, feed, fuel and other agricultural products, many of these
persons and the corporations and institutions they represent are
likely to have some non-material relationship with the Company.
The Board of Directors recommends that Stockholders vote AGAINST
this stockholder proposal. Proxies solicited by the Board of
Directors will be so voted unless Stockholders specify a
different choice.
Stockholder's Proposal No. 5 (Director Liability)
The following proposal and supporting statement have been
submitted by the United Brotherhood of Carpenters Pension Fund,
101 Constitution Avenue, N.W., Washington, D.C., 20001, which
holds 42,000 shares of Company stock:
SHAREHOLDER PROPOSAL: DIRECTOR LIABILITY
RESOLVED: The shareholders of Archer Daniels Midland
Company urge the Board of Directors to take such action as is
necessary to provide for directors personal monetary
liability for acts or omissions that constitute a breach of a
director's fiduciary duty of care resulting from gross
negligence.
SUPPORTING STATEMENT
Article Fourteenth of Archer Daniels Midland's ("ADM" or
"Company") certificate of incorporation exempts directors
from any personal liability for monetary damages except for
the following: any breach of the director's duty of loyalty
to the Corporation or its shareholders; for acts or omissions
not in good faith or which involve intentional misconduct;
for unlawful payment of dividends or unlawful stock
repurchases; and for any transaction in which the director
derives a personal benefit. Delaware court decisions support
the position that a director or an entire board could act in
a grossly negligent manner without incurring any personal
liability for monetary damages. We believe this broad
exemption of liability does not promote diligence on the part
of directors in carrying out their responsibilities. We
believe re-instituting director personal monetary liability
for grossly negligent behavior would increase director
accountability to the shareholders who elect them, improve
the corporate decision-making process, and consequently,
improve long-term shareholder value.
The issue of director liability is particularly relevant
to ADM because of the close business and personal ties many
Company directors have to the Company and its chairman, and
because of the ongoing investigation of alleged price fixing
activity. In addition to the federal grand jury price fixing
investigation of ADM, as of February 15, 1996 there have been
dozens of customer lawsuits alleging price fixing and
shareholder lawsuits alleging mismanagement by the Board of
Directors and artificial inflation of the stock price. We
believe the federal grand jury investigation and subsequent
lawsuits raise serious questions about the oversight
capabilities of our Board of Directors and pose potential
damage to ADM's reputation and future earnings.
We believe it is in the best interest of the Company and
its shareholders to have a standard of care that strikes a
proper balance between the need to attract qualified persons
to the Board and the need to provide incentives to directors
to diligently exercise their oversight of management. We
believe that including director personal liability for
monetary damages for gross negligence within the exceptions
to the exemptions from liability under Article Fourteenth
strikes the appropriate balance. We believe that raising the
standard of director personal monetary liability to include
gross negligence will not increase Company or director
exposure to frivolous litigation, as the "gross negligence"
standard entails conduct that in our opinion involves an
intentional failure to perform a duty in reckless disregard
of the consequences. Additionally, to allay director fears
of large potential judgments against them, a reasonable
monetary cap could be placed on a director's personal
liability.
The law does not equate bad business judgment with
negligence. As a practical matter, the business judgment
rule will shield directors from liability in most suits
alleging duty of care violations. We strongly believe that
holding directors personally liable for monetary damages for
gross negligence will allow the Company to establish a highly
competent and motivated Board that will help establish and
maintain public and investor confidence in the Company.
Recommendation of the Board of Directors Against the Proposal
To attract and retain qualified candidates the Company must
provide board members with protection from liability consistent
with the protection afforded by other companies with whom the
Company competes for qualified candidates. Charter provisions
similar or identical to those the Company currently has in place
are commonplace. The Stockholders of the Company adopted
Article Fourteenth at the Company's annual meeting in 1986. It
is the position of the Directors that maintaining the present
standards serves the best interests of the Company and its
Stockholders.
The provisions of Article Fourteenth are expressly
permitted by Delaware law. The Delaware General Assembly
revised the Delaware General Corporation Law to permit these
limitations partly in response to a significant increase in the
number and magnitude of lawsuits against directors. The General
Assembly considered this development a threat to the quality and
stability of the governance of Delaware corporations.
Legislation modeled on the Delaware statute has subsequently
been enacted in at least 35 other states.
The Directors believe that broadening the liability
threshold to provide for monetary damages for gross negligence
would effectively eliminate the protections afforded by Article
Fourteenth and make board members easier targets for
nonmeritorious lawsuits. Under the proposed amendment,
potential plaintiffs would simply have to assert a claim of
"gross negligence" in order to embroil a board member in a
costly court battle. Determining what does or does not
constitute "gross negligence" involves legal and factual
questions that do not lend themselves to simple definition. The
uncertain results of litigation subject directors to
considerable risks. Increased legal action would not only
distract the board members subject to such claims, but possibly
result in substantial additional costs for the Company.
Moreover, broadening the liability standards for board
members could hinder the Company's ability to recruit and retain
top quality individuals as directors, particularly independent
directors. If the proposed liability threshold were adopted,
the Company would be at a distinct disadvantage in competing for
board candidates versus corporations that afford protection from
liability to the fullest extent permitted by law.
The Board of Directors recommends that Stockholders vote
AGAINST this stockholder proposal. Proxies solicited by the
Board of Directors will be so voted unless Stockholders specify
a different choice.
Deadline for Submission of Stockholder Proposals
Proposals of Stockholders intended to be presented at the
next Annual Meeting must be received by the Secretary, Archer-
Daniels-Midland Company, 4666 Faries Parkway, Decatur, Illinois,
62526, no later than May 29, 1997.
Other Matters
It is not contemplated or expected that any business other
than that pertaining to the subjects referred to in this Proxy
Statement will be brought up for action at the meeting, but in
the event that other business does properly come before the
meeting calling for a Stockholders' vote, the Proxy Committee
will vote thereon according to its best judgment in the interest
of the Company.
By Order of the Board
of Directors
ARCHER-DANIELS-MIDLAND
COMPANY
R. P. Reising,
Secretary
September 26, 1996
14
PAGE 15
EXHIBIT "A"
ARCHER-DANIELS-MIDLAND COMPANY
1996 STOCK OPTION PLAN
Dated April 18, 1996
1. General. Subject to the terms of this Plan, the
Compensation and Stock Option Committee of Archer-Daniels-
Midland Company may from time to time prior to November 2006,
grant options to any employee of the Company, or of any
Subsidiary, to purchase shares of Common Stock of the Company,
subject to such conditions as such Committee may from time to
time determine. Stock options granted under the Plan may be
either "Incentive Stock Options" intended to qualify as such
under Section 422 of the Internal Revenue Code, as amended (the
"Code"), or any successor provision thereto, or "nonqualified
stock options," which are not intended to so qualify. Options
shall be designated by the Committee as either an Incentive
Stock Option or a nonqualified stock option at the time of
grant.
2. Shares Reserved. The total number of shares subject
to options granted pursuant to this Plan shall not exceed
4,000,000, except that, if any options lapse or terminate for
any reason before being completely exercised, the shares covered
by the unexercised portion of such options may again be made
subject to options granted pursuant to this Plan. Shares sold
pursuant to options granted under this Plan may be either
authorized but unissued, or issued and reacquired shares.
3. Administration. The Board of Directors shall appoint
a Compensation and Stock Option Committee or a subcommittee
thereof (the "Committee"), consisting of two or more members of
the Board, to administer the Plan. To the extent that members
of the Board who are not officers or other employees of the
Company are available for service on the Committee, the members
of such Committee shall be selected from among such members of
the Board. To the extent deemed necessary or desirable by the
Board of Directors, each of the members of the Committee shall
satisfy the requirements of (i) a "nonemployee director," within
the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 and/or (ii) an "outside director," within the meaning of
Section 162(m) of the Code, or any successor provisions thereto.
The Committee shall determine the employees of the Company (or
its Subsidiaries)to whom options shall be granted from time to
time, and the number of shares which shall be the subject of
each such option. The term "Subsidiary" as used in the Plan
shall mean a "subsidiary corporation" as defined in Section 424
of the Code (and shall also include any corporation which is a
"parent corporation," as defined in such Section 424, with
respect to the Company). Subject to the provisions in
paragraphs 7 and 8 below, more than one option may be granted to
the same individual.
4. Purchase Price. Subject to such limitations as the
Committee may determine from time to time, the purchase price
per share under an option shall be determined by the Committee;
provided, however, that with respect to Incentive Stock Options,
the purchase price per share shall not be less than 100% of the
fair market value per share of the Company's Common Stock at
such time as such option is granted, as determined by the
Committee in accordance with the provisions of the Code and the
Income Tax Regulations thereunder from time to time in effect.
In no event may the purchase price of any shares issued pursuant
to options granted under the Plan be less than the par value, if
any, of such shares.
5. Cancellation and Regrant. The Committee may permit
the voluntary surrender of all or a portion of any option
granted under this Plan to be conditioned upon the granting to
the employee of a new option for the same or a different number
of shares as the option surrendered, or may require such
voluntary surrender as condition precedent to a grant of a new
option to such employee. Such new option shall be exercisable
at the price, during the period and in accordance with any other
terms or conditions specified by the Committee at the time the
new option is granted, all determined in accordance with the
provisions of this Plan without regard to the price, period of
exercise, or any other terms or conditions of the option
surrendered, except as provided in paragraphs 7 and 8 below.
6. Term of Option. Each option granted under this Plan
shall expire and all rights to purchase shares thereunder shall
cease not later than 10 years following the date such option is
granted, as determined from time to time by the Committee.
7. Individual Limit. The number of shares of Common
Stock of the Company underlying options that may be granted
under the Plan to any one person during any one calendar year
shall not exceed 25,000 shares, subject to adjustment in the
same manner as provided in paragraph 19 below. To the extent
required for exemption under Section 162(m) of the Code, any
option shares that are canceled or repriced during the calendar
year of grant shall not again be available for grant under this
maximum share limit.
8. Incentive Stock Option Limitation. No Incentive Stock
Option shall be granted to an employee under which the aggregate
fair market value (as determined above as of the date of grant)
of the stock with respect to which Incentive Stock Options are
exercisable for the first time in any calendar year under the
Plan (and any other stock options of the Company or any
Subsidiary)would exceed $100,000. This limitation shall be
applied by taking options into account in the order in which
granted.
9. Vesting. No option granted under this Plan shall
permit the purchase of any shares thereunder during the first
year following the date such option is granted, nor permit the
purchase in each of the second, third, fourth and fifth years,
respectively, of more than 25% of the total number of shares
covered by such option, unless in any such year the full amount
purchasable in any such year is not purchased, in which event
the shares purchasable but not purchased in such year may be
purchased at any time thereafter until expiration of the option.
Notwithstanding the foregoing, the Committee may at any time, or
upon the occurrence of events specified by the Committee in an
option agreement, accelerate an employee's right to purchase the
shares subject to an option. Such events may include, without
limitation and in the discretion of the Committee, termination
of employment and a change in ownership or control of the
Company.
10. Ten-Percent Owners. No Incentive Stock Option shall
be granted under the Plan to any individual who, at the time
such option is granted, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company (or of a Subsidiary), including stock attributed to such
individual under the Section 424(d) of the Code.
11. Termination of Employment. During the lifetime of the
individual to whom an option is granted, it may be exercised
only by such individual and only while such individual is an
employee (as defined in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations, or any
successor regulations) of the Company (or of a Subsidiary), or
within three months after he ceases to be such an employee,
except as provided in paragraph 12 below in the event of death.
In no event, however, shall any option be exercisable at any
time after its expiration date.
12. Nontransferability; Death. No option shall be
transferable or assignable by the individual to whom it is
granted, except that it may be transferable by will or the laws
of descent and distribution. An option, if so transferable, may
be exercised after the death of the individual to whom granted
only by such individual's personal representatives, heirs, or
legatees, and only within one year after the death of such
individual and only with respect to the shares purchasable at
date of death. In no event, however, shall any option be
exercisable at any time after its expiration date.
13. Forfeiture Conditions. The Committee may provide in
an option agreement for conditions of forfeiture of an
employee's rights with respect to an option in the event of (i)
the termination of employment of the employee for "cause" (as
defined in an option agreement), (ii) the employee's breach of
such restrictive covenants (e. q., noncompetition and
confidentiality restrictions) as may apply to the employee or
(iii) the employee's having engaged in an activity that is
detrimental to the Company (including, without limitation,
criminal activity or accepting employment with a competitor of
the Company). Such conditions of forfeiture may include, in the
discretion of the Committee, (a) suspension or cancellation of
the employee's right to exercise an option (whether or not then
otherwise exercisable), (b) suspension or cancellation of the
employee's pending right to receive an issuance of shares in
settlement of any stock option exercise, or (c) within the
period of six months following the issuance of shares of Common
Stock upon exercise of an option, either (1) cancellation of the
shares so issued (and repayment to the employee of the full
purchase price paid for such shares) or (2) requiring the
employee to pay to the Company in cash an amount equal to the
gain realized by the employee upon exercise of such option.
14. Exercise of Option. A person entitled to exercise an
option may, subject to its terms and the terms of the Plan,
exercise it in whole at any time or in part from time to time
(but with respect to at least 100 shares at any one time) by
delivery to the Company at its principal office in Decatur,
Illinois, written notice of exercise, specifying the number of
shares with respect to which the option is being exercised,
accompanied by the full purchase price of the shares to be
purchased. Payment of the purchase price of the shares may be
made in whole or in part in Common Stock of the Company, valued
at its fair market value at the date of the exercise, in
accordance with the rules for such payment established by the
Committee, which rules shall conform to the requirements for
qualification of Incentive Stock Options under Section 422 of
the Code and the rules and regulations issued thereunder. In
addition to and at the time of payment of the purchase price,
the employee shall pay to the Company in cash or, at the
discretion of the Committee, in Common Stock, the full amount of
any federal and state withholding and other employment taxes
applicable to such employee as a result of such exercise. No
shares shall be issued until full payment of the purchase price
and any applicable withholding tax has been made and the
granting of an option to an individual shall give such
individual no rights as a stockholder except as to shares issued
to him.
15. Committee Rules. The Committee may make such rules
for the administration of this Plan as it deems appropriate, and
its decision on any matter affecting the Plan or the rights or
obligations arising under it shall be final and binding upon all
persons.
16. Loans Prohibited. Neither the Company nor any
Subsidiary shall directly or indirectly lend money to any
individual for the purpose of assisting him to acquire or carry
any shares of stock issuable upon the exercise of options
granted under this Plan.
17. Option Agreements. Nothing contained in this Plan or
in any resolution adopted or to be adopted by the Board of
Directors or the Stockholders of the Company nor any action by
the Committee shall constitute an option hereunder. An option
under this Plan shall be of no force or effect until a written
option agreement shall have been duly executed by or on behalf
of the Company. Options granted under this Plan shall be in the
form of written agreements and shall contain such provisions not
inconsistent with this Plan as may be determined by the
Committee. Such provisions may include a provision to the
effect that the Company shall not be obligated to issue or sell
shares pursuant to the exercise of any option if, in the opinion
of counsel for the Company, such issuance or sale would be
contrary to any agreement between the Company and the New York
Stock Exchange or would constitute a violation by the Company of
the Securities Act of 1933.
18. Shareholder Approval. No option granted pursuant to
this Plan shall be exercisable unless this Plan shall have been
approved by the vote of the holders of a majority of the issued
and outstanding Common Stock of the Company at a meeting thereof
within twelve months of the date of adoption of this Plan by the
Board of Directors.
19. Certain Adjustments. In the event of a
reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger or consolidation, or the sale,
conveyance, lease or other transfer by the Company of all or
substantially all of its property, or any other change in the
corporate structure or shares of the Company pursuant to any of
which events the then outstanding shares of the Company's Common
Stock are split up or combined or are changed into, become
exchangeable at the holder's election for, or entitle the holder
thereof to, other shares of stock, or the case of any other
transaction described in Section 424(a) of the Code, the Board
of Directors of the Company may change the number and kind of
shares (including substitution of shares of another corporation)
and option price in any manner as it shall deem appropriate. In
no event may any change be made hereunder which would constitute
a "modification" within the meaning of Section 424(h)(3) of the
Code and no such change shall require the Company to sell a
fractional share under any option. The options granted under
the Plan shall contain such provisions as are consistent with
the foregoing with respect to adjustments to be made in the
number and kind of shares covered by such options and in the
option price per share in the event of any such change.
20. Committee Interpretations. The interpretation and
construction of the Plan and any option granted hereunder is
vested in the Committee and such construction thereby shall be
final and conclusive.
21. Amendment and Termination. The Board of Directors of
the Company may alter, suspend or discontinue this Plan at any
time. No action by the Board, however, subject to the
provisions in paragraph 19 hereof, may increase the maximum
number of shares which may be made the subject of options
hereunder, change the class of employees eligible to receive
options, change the minimum purchase price of Incentive Stock
Options, extend the period during which options may be granted
under the Plan or extend the maximum permissible option period,
unless such amendment or modification shall be approved by the
Company's shareholders, nor, without the consent of the holder
of the option, alter or impair any option previously granted
under this Plan.
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PAGE 16
EXHIBIT "B"
ARCHER-DANIELS-MIDLAND COMPANY
STOCK UNIT PLAN
FOR NONEMPLOYEE DIRECTORS
1. INTRODUCTION
The Archer-Daniels-Midland Company Stock Unit Plan for
Nonemployee Directors is intended to promote the interests of
the Company and its Stockholders by paying part or all of the
compensation of the Company's nonemployee directors in the form
of an economic equivalent of an equity interest in the Company,
thereby providing appropriate incentives and rewards to
encourage nonemployee directors to take a long-term outlook when
formulating policy applicable to the Company and encouraging
them to remain on the Board. In general, the Plan provides for
the conversion of at least 25 percent and up to 100 percent of a
nonemployee director's fees for each calendar year into units of
measurement relating to the value of the Company's common stock,
and for payment to the director of the value of such units five
full calendar years later (or upon termination from service on
the Board, if earlier), so that a director will normally receive
payment under the Plan each successive year in respect of the
fees originally converted into units in the year preceding the
fifth calendar year prior to the year of payment. A nonemployee
director will participate in the Plan for all periods of service
on the Board following the effective date of the Plan,
notwithstanding any future payments to the director of any part
of his interest under the Plan. Subject to the approval by the
Stockholders of the Company at its 1996 Annual Meeting, the Plan
shall become effective on January 1, 1997.
2. DEFINITIONS
(a) "Board" means the Board of Directors of the
Company.
(b) "Committee" means the Benefit Plans Committee of
the Company, or any successor committee thereto.
(c) "Common Stock" means the common stock of the
Company, without par value.
(d) "Company" means Archer-Daniels-Midland Company, a
Delaware corporation.
(e) "Director's Fees" means the annual retainer fee
and all meeting fees, committee fees and other Director's fees
earned by the Participant for his service on the Board.
(f) "Fair Market Value" means, with respect to a
share of the Common Stock, the average of the high and low
reported sales price regular way per share of the Common Stock
on the New York Stock Exchange Composite Tape for the relevant
day, or, in the absence thereof, on the most recent prior day
for which such sales are reported. If the Common Stock is not
listed on the New York Stock Exchange as of any date that Fair
Market Value is to be determined, Fair Market Value shall be
determined by the Committee in its discretion in a manner
consistently applied.
(g) "Mandatory Conversion" means the required
conversion of 25 percent of a Participant's Director's Fees into
a Stock Unit Award pursuant to Section 4 hereof.
(h) "Participant" means a member of the Board who is
not an employee of the Company or any of its affiliates.
(i) "Plan" means this Archer-Daniels-Midland Company
Stock Unit Plan for Nonemployee Directors.
(j) "Realization Date" means, with respect to each
Stock Unit allocated to a Participant's Stock Unit Account, the
first business day following the earlier of (i) the date five
years after the end of the calendar year that includes the
calendar quarter for which such Stock Unit is awarded to the
Participant or in which such stock unit is credited to the
Participant as a dividend equivalent, or (ii) the date the
Participant ceases to be a member of the Board.
(k) "Stock Unit" means a non-voting unit of
measurement that is deemed for valuation and bookkeeping
purposes to be equivalent to an outstanding share of Common
Stock, and shall include fractional units.
(l) "Stock Unit Account" means a book account
maintained by the Company reflecting the Stock Units allocated
to a Participant pursuant to Section 4 hereof as a result of the
Participant's Mandatory Conversions and Voluntary Conversions
and such additional Stock Units as shall be credited thereto in
respect of dividends paid on the Common Stock.
(m) "Stock Unit Award" means an award under Section
4(c) hereof of Stock Units as a result of a Participant's
Mandatory Conversion and Voluntary Conversion for a calendar
quarter.
(n) "Voluntary Conversion" means the conversion based
on the election of the Participant of all or part of a
Participant's Director's Fees otherwise payable to the
Participant in cash into a Stock Unit Award pursuant to Section
4 hereof.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The
Committee shall have full authority to administer the Plan,
including the discretionary authority to interpret and construe
all provisions of the Plan, to resolve all questions of fact
arising under the Plan, and to adopt such rules and regulations
for administering the Plan as it may deem necessary or
appropriate. Decisions of the Committee shall be final and
binding on all parties. The Committee may delegate
administrative responsibilities under the Plan to appropriate
officers or employees of the Company. All expenses of the Plan
shall be borne by the Company.
4. CREDITING OF STOCK UNITS
(a) Mandatory Conversions
For each calendar quarter in which the Plan is in
effect, 25 percent of the aggregate dollar amount of a
Participant's Director's Fees payable for such quarter shall be
converted into a Stock Unit Award pursuant to Section 4(c)
hereof.
(b) Voluntary Conversions
For each calendar quarter in which the Plan is in
effect, a Participant may elect to convert all or any portion of
his Director's Fees payable for such quarter (in addition to
those required to be converted under Section 4(a) hereof) into a
Stock Unit Award pursuant to Section 4(c) hereof. Each
Voluntary Conversion shall be made on the basis of a
Participant's written election stating the amount by which such
Director's Fees shall be converted to a Stock Unit Award. Each
such election shall be made in the form required by the
Committee, shall be delivered to the Company no later than
December 31 of the calendar year immediately preceding the
calendar year for which the election is made, and shall be
effective for each calendar quarter of such calendar year. In
the case of a member of the Board who first becomes a
Participant during a calendar year, such election for such year
must be made within 30 days following such member becoming a
Participant, and shall apply only to calendar quarters that
begin following the date such election is made.
(c) Stock Unit Awards
A Participant shall receive a Stock Unit Award for
each calendar quarter in respect of his Mandatory Conversion and
any Voluntary Conversion applicable to such quarter. Such Stock
Unit Award shall equal the number of the Stock Units determined
by dividing (A) the aggregate dollar amount of the Participant's
Director's Fees that are converted to a Stock Unit Award for the
quarter by his Mandatory Conversion and Voluntary Conversion, by
(B) the Fair Market Value of the Common Stock on the last
business day of such calendar quarter. Each Stock Unit Award
shall be credited to the Participant's Stock Unit Account as of
the first day following the end of the calendar quarter for
which such Stock Unit Award is granted.
(d) Dividend Equivalents
As of any date that cash dividends are paid with
respect to the Common Stock from time to time, each
Participant's Stock Unit Account shall be credited with an
additional number of Stock Units determined by dividing (A) the
aggregate dollar amount of the dividends that would have been
paid on the Stock Units credited to the Participant's Stock Unit
Account as of the record date for such dividend had such Stock
Units been actual shares of Common Stock by (B) the Fair Market
Value of the Common Stock on the dividend payment date.
(e) Certain Adjustments
In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger or
consolidation, or the sale, conveyance, lease or other transfer
by the Company of all or substantially all of its property, or
any other change in the corporate structure or shares of the
Company, pursuant to any of which events the then outstanding
shares of the Common Stock are split up or combined or are
changed into, become exchangeable at the holder's election for,
or entitle the holder thereof to, other shares of stock, or
similar change in the Common Stock or other similar event that
the Committee, in its discretion, deems appropriate, each
Participant's Stock Unit Account shall be adjusted as determined
by the Committee in its sole discretion to reflect such change
or other event. It is intended that in making such adjustments,
the Committee will seek to treat each Participant as if he were
a stockholder of the Common Stock of the number of Stock Units
credited to his Stock Unit Account (but without duplication of
any benefits that may be provided under Section 4(d) hereof).
Except as is expressly provided in this Section, Participants
shall have no rights as a result of any such change in the
Common Stock or other event.
5. DISTRIBUTIONS OF BENEFITS
(a) Valuation and Payment of Units
Subject to Section 6 hereof, a Participant shall be
entitled to a benefit under the Plan with respect to each Stock
Unit Award upon the Realization Date for such Stock Unit Award.
Such benefit shall be equal to the cash amount determined by
multiplying (A) the number of Stock Units credited to the
Participant's Stock Unit Account in respect of the Stock Unit
Award for which the Realization Date has occurred (including
additional Stock Units credited to the Participant's Stock Unit
Account with respect thereto pursuant to Section 4(d) hereof) by
(B) the Fair Market Value of the Common Stock on the Realization
Date. Each such amount shall be paid to the Participant in cash
within 30 days after the applicable Realization Date.
(b) Payment of Additional Dividends
Subject to Section 6 hereof, if, pursuant to Section
4(d) hereof, additional Stock Units are required to be credited
to a Participant's Stock Unit Account in respect of Stock Units
that were held in the Participant's Stock Unit Account as of the
record date for dividends paid on the Common Stock that were
paid after the payment to the Participant of a benefit in
respect of such Stock Units, the Company shall pay to the
Participant a cash amount in respect of such dividends equal to
the dollar amount of such dividends. Such amount shall be paid
to the Participant within 30 days after the dividend payment
date.
(c) Payment of Nonconverted Fees
Subject to Section 6 hereof, in the event that a
Participant ceases to be a member of the Board prior to the time
that Stock Units are credited to his Stock Unit Account pursuant
to Section 4(c) hereof in respect of his Mandatory Conversion or
Voluntary Conversion for a calendar quarter, the amount of all
Director's Fees earned by the Participant during such quarter
shall be paid to the Participant in cash within 30 days after
his termination of service as a director.
(d) Section 16 Restrictions
Notwithstanding any other provision hereof, if and to
the extent required in order for Stock Units to meet the
requirements for exemption under Rule 16b-3 (or any successor
thereto) promulgated under the Securities Exchange Act of 1934,
no amount in respect of any Stock Unit Award (including any
additional Stock Units allocated to a Participant's Stock Unit
Account pursuant to Section 4(d) hereof) shall be paid to a
Participant until the expiration of 6 months after the Stock
Units in respect of which the payment is to be made have been
allocated to the Participant's Stock Unit Account, and the
amount of such payment shall be determined based on the Fair
Market Value of the Common Stock on the date such 6-month period
expires.
6. FORFEITURE OF BENEFITS
Each Participant's benefits hereunder shall be
nonforfeitable, except that a Participant shall forfeit all
rights to all benefits hereunder in respect of Mandatory
Conversions, Voluntary Conversions and Stock Units credited to
the Participant's Stock Unit Account if the Participant's status
as a director of the Company is (or is deemed to have been)
terminated for Cause. For purposes hereof, a Participant's
status as a director shall have been terminated for "Cause" upon
the voluntary or involuntary termination of the individual's
service as a director on account of (i) the willful violation by
the Participant of any federal or state law or any rule or
regulation of any regulatory body to which the Company or its
affiliates is subject, which violation would materially reflect
on the Participant's character, competence or integrity or (ii)
a breach by the Participant of the Participant's duty of loyalty
to the Company and its affiliates. If, subsequent to the
termination of a Participant's status as a director of the
Company, it is determined by the Committee that the
Participant's status as a director of the Company could have
been terminated for Cause, such Participant's status as a
director of the Company may be deemed to have been terminated
for Cause.
7. BENEFICIARIES
Any payment required to be made to a Participant
hereunder that cannot be made to the Participant because of his
death shall be made to the Participant's beneficiary or
beneficiaries, subject to applicable law. Each Participant
shall have the right to designate in writing from time to time a
beneficiary or beneficiaries by filing a written notice of such
designation with the Committee. In the event a beneficiary
designated by the Participant does not survive the Participant
and no successor beneficiary is selected, or in the event no
valid designation has been made, such Participant's beneficiary
shall be such Participant's estate.
8. UNFUNDED STATUS OF THE PLAN
The Plan shall be unfunded, and Mandatory Conversions,
Voluntary Conversions, Stock Units credited to each
Participant's Stock Unit Account and all benefits payable to
Participants under the Plan represent merely unfunded, unsecured
promises of the Company to pay a sum of money to the Participant
in the future.
9. ALIENATION OF BENEFITS PROHIBITED
No transfer (other than pursuant to Section 7 hereof)
by a Participant of any right to any payment hereunder, whether
voluntary or involuntary, by operation of law or otherwise, and
whether by means of alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge, or
encumbrance of any kind, shall vest the transferee with any
interest or right, and any attempt to so alienate, sell,
transfer, assign, pledge, attach, charge, or otherwise encumber
any such amount, whether presently or thereafter payable, shall
be void and of no force or effect.
10. NO SPECIAL RIGHTS
Nothing contained in the Plan shall confer upon any
Participant any right with respect to the continuation of the
Participant's status as a director of the Company.
11. TERMINATION AND AMENDMENT
The Plan may be terminated at any time by the Board.
The Plan may be amended by the Board from time to time in any
respect; provided, however, that no such amendment may reduce
the number of Stock Units theretofore credited or creditable to
a Participant's Stock Unit Account without the affected
Participant's prior written consent.
12. CHOICE OF LAW
The Plan and all rights hereunder shall be subject to and
interpreted in accordance with the laws of the State of
Illinois, without reference to the principles of conflicts of
laws, and to applicable federal securities laws.
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PAGE 17
Please Fill In and Sign the
Accompanying
Form of Proxy and Mail as Soon as
Possible
In the Enclosed Addressed Envelope.
No Postage is Necessary.
ANNUAL MEETING OF STOCKHOLDERS
You are urged to attend the Annual Meeting of Stockholders
this year. It will be held at 11:00 A.M. on Thursday, October
17, 1996, the third Thursday in October, at ADM/LAKEVIEW, 1001
BRUSH COLLEGE ROAD, DECATUR, ILLINOIS.
You are invited to stay after the meeting and visit with
our Directors and Executives.
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PAGE 18
ARCHER-DANIELS-MIDLAND COMPANY
(LOGO) ADM 4666 Faries Parkway, Decatur, IL 62526
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints J. K. Vanier, S. M. Archer, Jr.,
and D. O. Andreas as Proxies, with the power of substitution, to
represent and to vote, as designated below, all the shares of
the undersigned held of record on August 19, 1996, at the Annual
Meeting of Stockholders to be held on October 17, 1996 and any
adjournments thereof.
The Board of Directors recommends that Stockholders vote FOR the
following:
1. ELECTION OF DIRECTORS
FOR ___ all nominees listed below (except as indicated
below)
WITHHOLD AUTHORITY ___ to vote for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual
nominee strike a line through the nominee's name in the list
below.)
D. O. Andreas, G. O. Coan, L. W. Andreas, S. M. Archer, Jr., J.
K. Vanier, R. Burt, O. G. Webb, F. R. Johnson, R. S. Strauss, M.
B. Mulroney, J. R. Block, M. H. Carter;
2. Adoption of an Incentive Stock Option Plan, recommended by
the Board of Directors of the Company, as set forth in full as
Exhibit "A" in the accompanying Proxy Statement; FOR __ AGAINST
__ ABSTAIN __
3. Adoption of a Stock Unit Plan for Nonemployee Directors,
recommended by the Board of Directors of the Company, as set
forth in full as Exhibit "B" in the accompanying Proxy
Statement; FOR __ AGAINST __ ABSTAIN __
4. Ratify the appointment of Ernst & Young LLP as
independent accountants for the fiscal year ending June 30,
1997;
FOR__ AGAINST__ ABSTAIN __
The Board of Directors recommends that Stockholders vote AGAINST
the following:
5. Adopt Stockholder's Proposal No. 1 FOR __ AGAINST __ ABSTAIN
__
(Board Diversity);
6. Adopt Stockholder's Proposal No. 2 FOR __ AGAINST __ ABSTAIN
__
(Cumulative Voting);
7. Adopt Stockholder's Proposal No. 3 FOR __ AGAINST __ ABSTAIN
__
(Confidential Voting);
8. Adopt Stockholder's Proposal No. 4 FOR __ AGAINST __ ABSTAIN
__
(Independent Board);
9. Adopt Stockholder's Proposal No. 5 FOR __ AGAINST __ ABSTAIN
__
(Director Liability);
all as more fully referred to in the Proxy Statement with
respect to such meeting, and upon such other matters as may
properly come before such meeting.
This Proxy when properly executed will be
voted in the manner directed herein by the
undersigned Stockholder. If no direction
is made, this Proxy will be voted for
Proposals 1, 2, 3 and 4 and against Proposals
5, 6, 7, 8 and 9.
Please sign exactly as name(s) appear below.
___________________________
When shares are held by joint tenants, both Signature
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
___________________________
corporation, please sign in full corporate Signature if
held jointly
name by President or other authorized officer.
If a partnership, please sign in partnership
name by authorized person. DATED:
______________, 1996
PLEASE
MARK, SIGN,
DATE AND
RETURN THE
PROXY CARD
PROMPTLY
USING THE
ENCLOSED ENVELOPE
18