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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 the JAMES R. RANDALL RESEARCH CENTER, 1001 BRUSH COLLEGE ROAD,
DECATUR, ILLINOIS, on Thursday, October 21, 1999, at 10:00 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 ratify the appointment by the Board of Directors of Ernst
&
Young LLP as independent auditors to audit the accounts of
the
Company for the fiscal year ending June 30, 2000;
(3) To consider and take action respecting the adoption of an
Incentive Compensation Plan, recommended by the Board of
Directors
of the Company, as set forth in full as Exhibit "A" in the
accompanying Proxy Statement;
(4) If properly presented, to consider and act upon the
Stockholders'
proposals set forth in the proxy statement; and
(5) To transact such other business as may properly come before
the meeting.
By Order of the Board of Directors
D. J. Smith, Secretary
September 15, 1999
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ARCHER-DANIELS-MIDLAND COMPANY
4666 Faries Parkway, Decatur, Illinois 62526
September 15, 1999
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 the JAMES R. RANDALL
RESEARCH CENTER, 1001 BRUSH COLLEGE ROAD, DECATUR, ILLINOIS, on
Thursday, October 21, 1999, at 10:00 A.M. This Proxy Statement and
the enclosed form of proxy are first being mailed to Stockholders on
or about September 15, 1999.
The cost of solicitation of proxies will be borne by the Company.
Georgeson Shareholder Communications Inc. has been retained by the
Company to assist in solicitation of proxies at a fee of $19,000, 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 Shareholder Communications 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 23, 1999 will be entitled to notice of and to vote
at the meeting and at all adjournments thereof. At the close of
business on August 23, 1999, the Company had outstanding 581,042,700
shares of Common Stock, each share being entitled to one vote.
Admittance to the Annual Meeting will be limited to Stockholders.
If you are a Stockholder of record and plan to attend, please detach
the admission ticket from the bottom of your proxy card and bring it
with you to the Annual Meeting. The number of people admitted will be
determined by how the shares are registered, as indicated on the
admission ticket. If you are a Stockholder whose shares are held by a
broker, bank or other nominee, please request an admission ticket by
writing to: Archer-Daniels-Midland Company Shareholder Relations,
4666 Faries Parkway, Decatur, IL 62526-5666. Evidence of your stock
ownership, which you can obtain from your broker, bank or nominee,
must accompany your letter. Stockholders who are not
pre-registered will only be admitted to the meeting upon verification
of stock ownership. The number of tickets sent will be determined by
the manner in which shares are registered. If your request is
received by October 15, 1999, an admission ticket will be mailed to
you. All other admission tickets can be obtained at the registration
table located at the James R. Randall Research Center lobby beginning
at 8:30 A.M. on the day of the Annual Meeting.
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.
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Name and Address of Beneficial Owner Amount Percent of
Class
State Farm Mutual Automobile Insurance 48,445,185
8.34
Company and Related Entities
Bloomington, Illinois 61701
Election of Directors
It is intended that proxies solicited by the Board of Directors
will, unless otherwise directed, be voted to fix at thirteen (13) the
number of Directors to be elected and to elect the nominees named
below.
Twelve of the thirteen nominees proposed for election to the Board
of Directors are presently members of the Board. The new nominee for
election to the Board of Directors, David Mimran, is the Chief
Executive Officer of Groupe Mimran. Founded almost 50 years ago, this
group of companies operates in the milling and sugar agro-industry,
international grain trading, and insurance and banking industries in
Europe and West Africa. Mr. Mimran also serves as the President of
Eurafrique, Sometra and Cavpa, all international grain trading
companies, and for the past ten years has served and continues to
serve as a director of other family-owned companies.
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 Ms.
Mollie Hale Carter and Messrs. Richard Burt and Andrew Young, 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. Ms. Carter was a Senior Investment Officer for the
John Hancock Mutual Life Insurance Company from 1987 until 1997 at
which time she became Chairman of Sunflower Bank in Salina, Kansas and
Vice President of Star A, Inc. Until 1994, Mr. Richard Burt was a
partner with McKinsey & Company, specializing in international
business strategy and telecommunications, at which time he became
Chairman of International Equity Partners, a Washington consulting
firm, and later in 1998 formed IEP Advisors, LLP of which he serves as
Chairman. Ambassador Andrew Young served as Vice-Chairman of the Law
Companies Group, an engineering and environmental consulting company,
from January 1990 until 1996 when he retired from this position to
serve as Co-Chairman of the Atlanta Committee for the Olympic Games.
In January 1997, Ambassador Young was appointed as Co-Chairman of
GoodWorks International and in 1998 was appointed Chairman of that
company.
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
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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.
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, 81, Chairman 1966 25,768,1 (1)(2) 4.43
Emeritus of the Board. He is 72 (3)
a Director of Hollinger
International, Inc.
*Mollie Hale Carter, 37, 1996 12,434,8 (2)(4) 2.14
Chairman, Sunflower Bank 55
and Vice President, Star A,
Inc. (a farming and ranch
operation).
*G. O. Coan, 63, Chief 1995 3,332,11 (2)(5) **
Executive Officer of Gold 5
Kist Inc. (a farmer-owned
cooperative). He is a
Director of SunTrust Banks
Inc. and Cotton States Life
Insurance Company.
*G. Allen Andreas, 56, 1997 3,639,30 (1)(6) **
Chairman of the Board and 8
Chief Executive of the
Company.
John R. Block, 64, President, 1996 6,906 (2) **
Food Distributors
International, (a trade
association whose members are
independent wholesale grocers
and food service
distributors). He is a
Director of Deere & Company
and Hormel Foods Corporation.
J. K. Vanier, 71, Chief 1978 10,620,9 (2)(7) 1.83
Executive Officer, Western 38
Star Ag. Resources,
Inc.(investments and
livestock).
M. Brian Mulroney, 60, Senior 1993 15,056 (2) **
Partner in the law firm of
Ogilvy Renault. He is a
Director of Barrick Gold
Corporation, Petrofina S.A.,
The TrizecHahn Corporation,
Cendant Corporation, Quebecor
Inc. and Quebecor Printing,
Inc.
O. G. Webb, 63, farmer. 1991 2,725,50 (2)(8) **
Chairman of the Board and 5
President, GROWMARK, Inc. (a
farmer-owned cooperative).
Richard Burt, 52, Chairman of 1996 5,761 (2) **
IEP Advisors, LLP(a direct
investment and advisory
services organization). Mr.
Burt is a Director of
Hollinger International,
Inc., Weirton Steel
Corporation, Paine Webber
Mutual Funds, Anchor
Gambling, and Homestake
Mining Company.
F. Ross Johnson, 67, Chairman 1989 177,633 (2) **
of RJM Group, Inc. (an
international management and
advisory organization). He
is a Director of American
Express Company, Power
Corporation of Canada and
Noma Industries of Canada.
*Robert S. Strauss, 80, 1992 50,941 (2) **
Partner in the law firm of
Akin, Gump, Strauss, Hauer &
Feld. Mr. Strauss is a
Director of Hollinger
International, Inc. and
Gulfstream Aerospace
Corporation.
Andrew Young, 67, Chairman of 1997 11,767 (2) **
GoodWorks International (a
specialty consulting group).
Mr. Young is a Director of
Delta Airlines, Inc., Argus
Inc., Host Marriott
Corporation, Cox
Communication Inc. and Thomas
Nelson, Inc.
3,451,60 (9) **
D. J. Mimran,32, Chief 0
Executive Officer of Groupe
Mimran and President of
Eurafrique, Sometra and Cavpa
(international grain trading
companies).
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* Member of the Executive Committee ** Less than 1% of
outstanding shares
<FN>
(1) Includes shares allocated as a beneficiary under the Company's
Tax Reduction Act Stock Ownership Plan (TRASOP) and ADM Employee Stock
Ownership Plan (ESOP).
(2) Includes stock units allocated under the Company's Stock Unit
Plan for Nonemployee Directors that are deemed to be the
equivalent of outstanding shares of Common Stock for bookkeeping and
valuation purposes.
(3) Includes 23,720,299 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 181,738 shares held for Mr. G. Allen Andreas.
(4) Includes 4,317,016 shares owned by or in trust for members of Ms.
Carter's family in which Ms. Carter disclaims beneficial interest in
163,050 shares. Includes 4,559,574 shares owned by Star A, Inc. and
3,544,175 shares owned by Star E, Inc., family corporations, with
respect to which Ms. Carter disclaims any beneficial interest in
4,236,627 shares and 3,271,546 shares, respectively.
(5) Includes 3,319,325 shares owned by Gold Kist Inc. and 169 shares
owned by a member of Mr. Coan's family in which Mr. Coan disclaims any
beneficial interest.
(6) Includes 3,343,578 shares, in which Mr. Andreas disclaims any
beneficial interest, in trust for members of his family of which he is
a Trustee or has sole or shared voting power. Includes 50,585 shares
that are unissued but are subject to stock options exercisable within
60 days from the date of this Proxy Statement.
(7) Includes 118,160 shares owned by members of Mr. Vanier's family
in which he disclaims any beneficial interest. Includes 6,811,657
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 4; Mr. Vanier is the
brother of Ms. Carter's mother and 3,544,175 of the reported shares
were also reported by Ms. Carter).
(8) Includes 2,715,301 shares owned by GROWMARK, Inc. in which Mr.
Webb disclaims any beneficial interest.
(9) Includes 1,251,600 shares of which Mr. Mimran has shared voting
power.
B. D Kraft, C. T. Bayless, M. L. Andreas and J. D. McNamara are four
of the five highest paid Executive Officers of the Company but are not
Directors of the Company.
B. D Kraft beneficially owns 2,939,233 shares of Common Stock of the
Company, which number includes (1) shares allocated to him as a
beneficiary under the Company's TRASOP, ESOP and Tabor Employees
Profit Sharing Plan, (2) 94,292 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) 30,213 shares that are subject to
stock options exercisable within 60 days from the date of this Proxy
Statement.
C. T. Bayless beneficially owns 130,065 shares of Common Stock of
the Company, which number includes (1) shares allocated to him as a
beneficiary under the Company's TRASOP and ESOP, (2) 186 shares owned
by a member of his family with respect to which he disclaims any
beneficial interest, and (3) 32,663 shares that are unissued but are
subject to stock options exercisable within 60 days from the date of
this Proxy Statement.
M. L. Andreas beneficially owns 1,721,021 shares of Common Stock of
the Company, which number includes (1) shares allocated to him as a
beneficiary under the Company's TRASOP and ESOP, (2) 1,189,284 shares
owned by Andreas Corporation with respect to which he disclaims any
beneficial interest in 987,107 shares, (3) 129,671 shares in trusts
for members of his family and in which he disclaims any beneficial
interest, and (4) 23,927 shares that are subject to stock options
exercisable within 60 days from the date of this Proxy Statement.
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J. D. McNamara beneficially owns 14,652 shares of Common Stock of
the Company, which number includes (1) shares allocated to him as a
beneficiary under the Company's ESOP and ADM Registered Retirement
Savings and Stock Purchase Plan and (2) 7,720 shares that are unissued
but 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
is 65,547,735 shares representing 11.28% of the outstanding shares, of
which 471,860 shares are unissued but are subject to stock options
exercisable within 60 days from the date of this Proxy Statement.
G. Allen Andreas and M. L. Andreas are nephews of D. O. Andreas. G.
Allen Andreas and M. L. Andreas are cousins. Mollie Hale Carter is a
niece of J. K. Vanier.
Information Concerning Committees and Meetings
During the last fiscal year the Board of Directors of the Company
held five regularly scheduled meetings.
During the last fiscal year, the Board had Audit, Compensation,
Nominating, Succession, Public Policy, and Corporate Governance
Committees. The Audit Committee consisted of Messrs. Coan, Block,
Burt, Young and Ms. Carter; the Compensation Committee consisted of
Messrs. Webb, Block, Coan, Johnson and Vanier; the Nominating
Committee consisted of Ms. Carter and Messrs. Burt, Coan and Young;
the Succession Committee consisted of Messrs. Webb, Coan, Johnson,
Strauss and Vanier; the Public Policy Committee consisted of Messrs.
Mulroney, Block, Burt, Webb and Young; and the Corporate Governance
Committee consisted of Messrs. Coan, Block, Burt, Johnson, Mulroney,
Strauss, Vanier, Webb, Young and Ms. Carter.
The Audit Committee, which met four 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 auditors and internal
auditors, (5) auditors' evaluation of internal controls, and (6)
matters of legal compliance.
The Compensation 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 twice 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.
The Succession Committee, which met four times during the fiscal
year, reviews and establishes the Succession plans for the management
of the Company.
The Public Policy Committee, which met two times during the fiscal
year, reviews and recommends activities directed at fulfilling the
social responsibility of the Company.
The Corporate Governance Committee, which met one time during the
fiscal year, assesses Board and Committee effectiveness and
establishes and approves performance criteria for evaluation of the
Chief Executive.
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Executive Compensation
The following table sets forth information concerning the Company's
Chief Executive and the four other most highly paid Executive Officers
of the Company.
Summary Compensation Table
Long All
Annual Compensation Term Other
Name and Fiscal Other AnnualCompen-Compen-
Principal Year Salary Bonus Compensationsation sation
Position $ $ $ #(2) $(3)
________________ _____ _______ ________________________ ______
G. Allen Andreas 19992,437,698 -0- N/A 112,500 8,000
Chairman and 19982,128,495-0- N/A -0- 8,000
Chief Executive 1997 803,282 -0- N/A 110,250 6,000
B. D Kraft 1999947,744 -0- N/A 20,000 8,000
Senior Vice 1998861,502 -0- N/A -0- 8,000
President 1997765,661 -0- N/A 22,050 6,000
C. T. Bayless, 1999 815,349 -0- N/A 30,000 8,000
Executive Vice 1998 628,728 -0- N/A -0- 8,000
President and 1997461,900 -0- N/A 33,075 6,000
Special Assistant
to the Chief
Executive
M. L. Andreas, 1999 748,445 -0- N/A 20,000 8,000
Senior Vice 1998701,186 -0- N/A -0- 8,000
President and 1997655,234 -0- N/A 16,537 6,000
Assistant to the
Chief Executive
J. D. McNamara, 1999 625,543 -0- N/A 45,000 8,000
President 1998 257,212(1) -0- N/A -0- 8,000
1997 147,672(1) -0- N/A 16,537 -0-
<FN>
(1) Salary paid all or in part in Canadian currency and converted to
U.S. currency based on an exchange rate of $1.4730 on June 30, 1999.
(2) Number of options granted in fiscal year indicated and adjusted
for all stock dividends and stock splits paid to date.
(3) These amounts represent the Company's matching contribution under
the ESOP for calendar year 1998. The Company converted the ESOP,
formerly called the ADM Savings and Investment Plan, to an employee
stock ownership plan effective April 1, 1998. This is a contributory
plan available to all salaried employees, as well as hourly employees
at specific locations, who have completed one year of service with the
Company. For most locations employees can contribute 1% to 10% of
regular earnings and the Company's matching contribution is equal to
100% of the first 4% and 50% of the next 2% of the employee's
contribution. The maximum employee contribution for calendar 1998 is
$10,000. The employees' and the Company's contributions are used to
purchase Common Stock of the Company from the Company. After age 55,
employees
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with 10 or more years of service are offered investment options as
required by IRS regulations for employee stock ownership plans. All
contributions are fully-vested to the participants; however, there are
withdrawal restrictions.
During the last fiscal year, compensation for nonemployee Directors
consisted of an annual retainer of $100,000, at least one-half of
which will be paid in stock units pursuant to the Company's Stock Unit
Plan for Nonemployee Directors.
D. O. Andreas was compensated at a rate of $800,000 per year for
acting as the Chairman of the Board of Directors from July 1, 1998
through his resignation as Chairman on January 25, 1999. Thereafter,
Mr. Andreas was compensated as a nonemployee Director as described in
the preceding paragraph.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option
Term
Percent
of
Number Total
of Options
Securiti Granted Exercis
esUnderl to e or
ying Employe Base Expiratio 5%($) 10% ($)
Name Options es in Price n Date (3) (3)
Granted Fiscal ($/Sh)
(#) (2) Year
G. A. 60,000 2.76 15.6563 5/3/2009 590,76 1,497,126
Andreas 6
52,500 2.41 16.4880 7/23/2008 544,38 1,379,574
3
B. D Kraft 20,000 0.92 15.6563 5/3/2009 196,92 499,042
2
C. T. 30,000 1.38 15.6563 5/3/2009 295,38 748,563
Bayless 3
M. L. 20,000 0.92 15.6563 5/3/2009 196,92 499,042
Andreas 2
J. D. 45,000 2.07 15.6563 5/3/2009 443,07 1,122,845
McNamara 5
<FN>
(1) Table reflects effect of 5% stock dividend in September 1998.
(2) For the period July 1, 1998 through June 30, 1999 the Executive
Officers named above were granted incentive and non-qualified stock
options exercisable in annual installments commencing on the first
anniversary date.
(3) They hypothetical potential appreciation shown in these columns
reflects the required calculations at annual rates of 5% and 10%
set by the Securities and Exchange Commission, and is not
intended to represent either historical appreciation or
anticipated future appreciation of the Company's Common Stock
price.
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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
G. A. Andreas 14,356 27,597 40,702 218,512 22,708 28,392
B. D Kraft 19,142 55,340 25,150 62,480 28,381 35,495
M. L. Andreas 14,356 40,158 19,876 53,125 22,708 28,392
C. T. Bayless 19,142 62,518 27,600 81,055 28,381 35,495
J. D. 2,392 5,560 5,695 67,996 2,835 14,198
McNamara
<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 1998 equal to
the required minimum ERISA contribution. 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:
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5 Year Average Base For Years of Credited Service Shown Below
Compensation 10 20 30 35
_____________________________________________________________________
$200,000 $ 33,182 $ 66,363 $ 99,545 $
104,545
400,000 68,182 136,363 204,545
214,545
600,000 103,182 206,363 309,545
324,545
800,000 138,182 276,363 414,545
434,545
1,000,000 173,182 346,363 519,545
544,545
1,200,000 208,182 416,363 624,545
654,545
1,400,000 243,182 486,363 729,545
764,545
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 36% plus 16.5% of final average compensation in
excess of covered compensation for the first 30 years of service plus
0.5% of final average compensation in excess of 30 years of service
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 five 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: G. A.
Andreas $1,063,467 (26 years); B. D Kraft $752,933 (23 years); M. L.
Andreas $640,437 (27 years); C. T. Bayless $480,333 (41 years); J.D.
McNamara $263,664 (19 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.
Compensation Committee Report
The Board of Directors of the Company has a Compensation Committee
comprised of five independent 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 and non-qualified 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
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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 reflective of earnings but are influenced by such
factors as interest rates, fluctuations in foreign currencies, trading
of 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
compensation for its employees and for its executives remains
competitive with that 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
independent directors who are 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 to 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; and
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 was established by the
Committee considering all of the factors previously described. The
Committee proposed and the Board approved an annual salary of $2.4
million and options for 50,000 shares under the 1991 Incentive Stock
Option Plan for G. A. Andreas at the July 1998 board meeting.
Henceforth the Corporate Governance Committee, comprised of all of the
non-management directors, shall evaluate the performance of the Chief
Executive consistent with these guidelines. The evaluation of the
Corporate Governance Committee will be forwarded to the Compensation
Committee which will establish the compensation for the Chief
Executive Officer for ratification by the Board of Directors.
Section 162(m) of the Internal Revenue Code generally disallows a
tax deduction to public corporations for compensation paid in excess
of $1,000,000 annually to the corporation's chief executive officer
and four other most highly compensated executive officers. One of the
exceptions to this deduction limit is for qualifying "performance-
based" compensation. The Company's 1996 Stock Option Plan, approved
by the Stockholders at the Company's 1996 Annual Meeting, and the
Incentive Compensation Plan to be proposed for adoption at the 1999
Annual Meeting of Stockholders have been designed to qualify as a
performance-based compensation plans satisfying this exception.
However, other compensation paid to the Company's executive officers
may be subject to the deduction limitation. The Committee believes,
in order to retain the flexibility to compensate its executive
officers in a competitive environment in accordance with the
principles discussed above, that it would be inadvisable to adopt a
strict policy of compliance with Section 162(m) in all cases. The
Committee will, however, continue to consider future opportunities
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for compliance with Section 162(m) that it feels are in the best
interests of the Company and its Stockholders. The Committee also
believes that the amount of any expected loss of a tax deduction under
Section 162(m) will be insignificant to the Company's overall tax
position.
Glenn Webb, Chairman
Jack Block
G. O. Coan
F. R. Johnson
J. K. Vanier
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 - 06/30/94 $100 $100 $100
FYE 06/30/95 $126 $129 $126
FYE 06/30/96 $137 $152 $159
FYE 06/30/97 $179 $213 $214
FYE 06/30/98 $156 $267 $279
FYE 06/30/99 $132 $241 $342
$100 invested on 06/30/94 in stock or index
including reinvestment of dividends.
Fiscal year ending June 30.
Graph produced in accordance with SEC regulations by Research Data
Group, Inc.
Certain Relationships and Related Transactions
Mr. J. K. Vanier, a director of the Company, has a beneficial
interest in farms and ranches in Kansas and other states. During the
last fiscal year the farms and ranches made sales of grain totaling
$65,817 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, 1999, the Company retained the
services of the law firms of Akin, Gump, Strauss, Hauer & Feld of
which Robert S. Strauss, a director of the Company, is a partner and
Ogilvy Renault of which M. Brian Mulroney, a director of the Company,
is the senior partner. The Company may continue to retain the
services of, and refer specific matters to, these firms during the
next fiscal year.
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PAGE 13
INCENTIVE COMPENSATION PLAN
Introduction
The Company's Board of Directors, following approval by the
Compensation Committee of the Board (the "Committee"), authorized the
adoption of the Archer-Daniels-Midland Company Incentive Compensation
Plan (the "Plan") effective as of October 22, 1999, subject to the
approval of the Plan by the Company's Stockholders. A copy of the
Plan is attached as Exhibit "A" to this Proxy Statement, and this
discussion is qualified in its entirety by reference to the full text
of the Plan.
The Board of Directors and the Committee believe that the adoption
of the Plan would be in the best interests of the Company. The
purpose of the Plan is to provide employees 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.
The Plan has been designed to meet the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), regarding deductibility of executive compensation, discussed
below. The basic features of the Plan are summarized below.
Administration
The Plan will be administered by the Committee or a subcommittee of
the Committee, which shall consist of two or more directors who are
"non-employee directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and/or "outside
directors" for purposes of Section 162(m) of the Code. Subject to the
provisions of the Plan, the Committee will have the exclusive power to
make awards under the Plan and to determine when and to whom awards
will be granted, and the form, amount, and other terms and conditions
of each award. The Committee will have the authority to interpret the
Plan and any award or agreement made under the Plan, to establish,
amend, waive, and rescind any rules and regulations relating to the
administration of the Plan, to determine the terms and provisions of
any agreements entered into under the Plan (not inconsistent with the
Plan), and to make all other determinations necessary or advisable for
the administration of the Plan.
Eligibility and Number of Shares
All employees of the Company and its affiliates will be eligible to
receive awards under the Plan at the discretion of the Committee. The
Company and its affiliates currently have approximately 23,600
employees.
The total number of shares of the Common Stock of the Company
available for distribution under the Plan is 10,000,000, no more than
2,000,000 of which may be granted in the form of restricted stock
(subject to adjustment for future stock splits, stock dividends, and
similar changes in the capitalization of the Company). No participant
may receive in any fiscal year of the Company awards under the Plan
that exceed the following limitations: no participant may receive an
award of more than 500,000 shares subject to stock options; no
participant may receive an award of more than 500,000 shares subject
to stock appreciation rights; no participant may receive an award of
more than 500,000 shares of restricted stock; no participant may
receive an award of more than 500,000 performance shares; no
participant may receive a maximum aggregate pay-out with respect to
performance units in excess of $500,000; and no participant may
receive a maximum aggregate pay-out with respect to cash-based awards
in excess of $500,000.
Awards under the Plan are to be evidenced by written agreements
containing the terms and conditions of the awards. Such agreements are
subject to amendment, including unilateral amendment by the Company
(with the approval of the Committee) unless such amendments adversely
affect the participant. To the extent that an award payable in shares
of the Common Stock of the Company is forfeited, cancelled, returned
to the Company for failure to satisfy vesting requirements or upon the
occurrence of other forfeiture events, or otherwise terminates without
payment being
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PAGE 14
made thereunder, the shares of the Common Stock of the Company covered
thereby will no longer be charged against the maximum 10,000,000 and
2,000,000 share limitations described above and may again be subject
to awards under the Plan.
Types of Awards
The types of awards that may be granted under the Plan include
incentive and nonqualified stock options, stock appreciation rights,
restricted stock, performance shares, performance units, and cash-
based awards. Subject to certain restrictions applicable to incentive
stock options, awards will be exercisable by the recipients at such
times as are determined by the Committee, but in no event may the term
of an award be longer than ten years after the date of grant.
In addition to the general characteristics of all of the awards
described in this Proxy Statement, the basic characteristics of awards
that may be granted under the Plan are as follows:
Incentive and Nonqualified Stock Options. Both incentive and
nonqualified stock options may be granted to participants at such
exercise prices as the Committee may determine, but the exercise price
for any option may not be less than 100% of the fair market value (as
defined in the Plan) of a share of the Common Stock of the Company as
of the date the option is granted. Stock options may be granted and
exercised at such times as the Committee may determine, except that,
unless applicable federal tax laws are modified, (a) no incentive
stock options may be granted more than ten years after the effective
date of the Plan; (b) an incentive stock option shall not be
exercisable more than ten years after the date of grant; and (c) the
aggregate fair market value of the shares of the Common Stock of the
Company with respect to which incentive stock options granted under
the Plan or any other plan of the Company may first become exercisable
in any calendar year for any employee may not exceed $100,000.
Additional restrictions apply to an incentive stock option granted to
an individual who beneficially owns more than 10% of the combined
voting power of all classes of stock of the Company.
The purchase price payable upon exercise of options may be paid in
cash, or, if the Committee permits, by delivering stock already owned
by the participant (the fair market value of the shares delivered on
the date of exercise being equal to the option price of the stock
being purchased), or by a combination of cash and such stock, unless
otherwise provided in the related agreement. To the extent permitted
by Regulation T of the Federal Reserve Board, participants may also
simultaneously exercise options and sell the stock purchased upon such
exercise pursuant to brokerage or similar relationships and use the
sale proceeds to pay the purchase price.
Stock Appreciation Rights, Performance Shares/Units and Cash-Based
Awards. The value of a stock appreciation right granted to a
recipient is determined by the appreciation in the Common Stock of the
Company, subject to any limitations upon the amount or percentage of
total appreciation that the Committee may determine at the time the
right is granted. The recipient receives all or a portion of the
amount by which the fair market value of a specified number of shares,
as of the date the stock appreciation right is exercised, exceeds a
price specified by the Committee at the time the right is granted.
The price specified by the Committee must be at least 100% of the fair
market value of the specified number of shares of the Common Stock of
the Company to which the right relates determined as of the date the
stock appreciation right is granted. A stock appreciation right may
be granted in connection with a previously or contemporaneously
granted option, or independent of any option.
Performance shares and units and cash-based awards entitle the
recipient to payment in amounts determined by the Committee based upon
the achievement of specified performance targets during a specified
term. With respect to awards intended to comply with the requirements
of Section 162(m) of the Code, such performance targets will be based
on one or any combination of two or more of the
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PAGE 15
following criteria: earnings per share, net income, return on assets
or return on equity, cash flow return on investments (net cash flows
divided by owners' equity), earnings before or after taxes, gross
revenues, and share price (including, but not limited to, growth
measures and total stockholder return). The performance targets may
be applied on an absolute or comparative basis. Any such targets may
relate to one or any combination of two or more of corporate, group,
unit, division or affiliate performance. Awards that are not intended
to comply with Section 162(m) of the Code, such awards may be based on
these or other performance criteria, as determined by the Committee.
The value in dollars of any award denominated in shares or units is
determined when the award is earned based on the fair market value of
a share of the Common Stock of the Company on the last day of the
performance period.
Payments with respect to stock appreciation rights, performance
shares and units and cash-based awards may be paid in cash, shares of
the Common Stock of the Company or a combination of cash and shares as
determined by the Committee. The Committee may require or permit
participants to defer the issuance of shares or the settlement of
awards in cash under such rules and procedures as it may establish
under the Plan.
Restricted Stock Awards. The Common Stock of the Company granted to
recipients may contain such restrictions as the Committee may
determine, including provisions requiring forfeiture and imposing
restrictions upon stock transfer. Awards of restricted stock may, in
the discretion of the Committee, provide the participant with
dividends and voting rights prior to vesting.
Transferability
During the lifetime of a participant to whom an award is granted,
only such participant (or, if so provided in the applicable agreement
in the case of a nonqualified stock option, a permitted transferee as
hereafter described) may exercise an option or stock appreciation
right or receive payment with respect to performance shares or any
other award. No award of restricted stock (prior to the expiration of
the restrictions), options, stock appreciation rights, performance
shares or units, or cash-based award (other than an award of stock
without restrictions) may be sold, assigned, transferred, exchanged,
or otherwise encumbered, and any attempt to do so will not be
effective, except that an agreement may provide that: (a) an award
may be transferable to a successor in the event of a participant's
death and (b) a nonqualified stock option may be transferable to a
participant's family member (as such term is defined in the award
agreement, in a manner consistent with the definition contained in the
instructions to the Form S-8 Registration Statement under the
Securities Act of 1933), provided that the participant receives no
consideration for the transfer and such transferred nonqualified stock
option will remain subject to the same terms and conditions as were
applicable to such option immediately prior to its transfer.
Duration, Adjustments, Modifications, Terminations
The Plan will remain in effect until all shares of the Common Stock
of the Company subject to the Plan are distributed or all awards have
expired or lapsed, whichever occurs later, or the Plan is terminated
as described below.
In the event of a recapitalization, stock dividend, stock split, or
other relevant change, the Committee has the discretion to adjust the
number and type of shares available for awards or the number and type
of shares and amount of cash subject to outstanding awards, the option
exercise price of outstanding options, and provisions regarding
payment with respect to outstanding awards. Adjustments in
performance targets and payments on performance shares and units and
cash-based awards are also permitted upon the occurrence of such
events as may be specified in the related agreements.
The Plan also gives the Board the right to amend, modify, terminate
or suspend the Plan, except that no amendment shall be effective
without stockholder approval if such amendment would (i) change the
class of persons eligible to participate under the Plan, (ii) increase
the number of shares of the Common Stock of the
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PAGE 16
Company reserved for issuance under the Plan or the maximum number of
shares subject to awards under the Plan, or (iii) allow the grant of
options at an exercise price below the fair market value of a share of
the Common Stock of the Company at the date of grant. In addition,
the Board may seek Stockholder approval of any amendment to the extent
the Board deems such approval necessary or advisable for purposes of
compliance with provisions of the Code or the listing requirements of
the New York Stock Exchange.
Federal Tax Considerations
The Company has been advised by its counsel that awards made under
the Plan generally will result in the following tax events for United
States citizens under current United States federal income tax laws.
Incentive Stock Options. A recipient will realize no taxable
income, and the Company will not be entitled to any related deduction,
at the time an incentive stock option is granted under the Plan. If
certain statutory employment and holding period conditions are
satisfied before the recipient disposes of shares acquired pursuant to
the exercise of such an option, then no taxable income will result
upon the exercise of such option, and the Company will not be entitled
to any deduction in connection with such exercise. Upon disposition
of the shares after expiration of the statutory holding periods, any
gain or loss realized by a recipient will be a capital gain or loss.
The Company will not be entitled to a deduction with respect to a
disposition of the shares by a recipient after the expiration of the
statutory holding periods.
Except in the event of death, if shares acquired by a recipient upon
the exercise of an incentive stock option are disposed of by such
recipient before the expiration of the statutory holding periods (a
"disqualifying disposition"), such recipient will be considered to
have realized as compensation, taxable as ordinary income in the year
of disposition, an amount, not exceeding the gain realized on such
disposition, equal to the difference between the exercise price and
the fair market value of the shares on the date of exercise of the
option. The Company will be entitled to a deduction at the same time
and in the same amount as the recipient is deemed to have realized
ordinary income. Any gain realized on the disposition in excess of
the amount treated as compensation or any loss realized on the
disposition will constitute capital gain or loss, respectively. If
the recipient pays the option price with shares that were originally
acquired pursuant to the exercise of an incentive stock option and the
statutory holding periods for such shares have not been met, the
recipient will be treated as having made a disqualifying disposition
of such shares, and the tax consequence of such disqualifying
disposition will be as described above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes, an incentive stock option will be
treated as if it were a nonqualified stock option, the tax
consequences of which are discussed below.
Nonqualified Stock Options. A recipient will realize no taxable
income, and the Company will not be entitled to any related deduction,
at the time a nonqualified stock option is granted under the Plan. At
the time of exercise of a nonqualified stock option, the recipient
will realize ordinary income, and the Company will be entitled to a
deduction, equal to the excess of the fair market value of the stock
on the date of exercise over the option price. Upon disposition of
the shares, any additional gain or loss realized by the recipient will
be taxed as a capital gain or loss.
Stock Appreciation Rights and Units, Performance Shares and Cash-
Based Awards. Generally: (a) the recipient will not realize income
upon the grant of a stock appreciation right, a performance share
award or unit or a cash-based award; (b) the recipient will realize
ordinary income, and the Company will be entitled to a corresponding
deduction, in the year cash, shares of Common Stock, or a combination
of cash and shares are delivered to the recipient upon exercise of a
stock appreciation right or in payment of the performance share award
or unit or a cash-
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PAGE 17
based award; and (c) the amount of such ordinary income and deduction
will be the amount of cash received plus the fair market value of the
shares of Common Stock received on the date of issuance. The federal
income tax consequences of a disposition of unrestricted shares
received by the recipient upon exercise of a stock appreciation right
or in payment of a performance share or unit or cash-based award are
the same as described below with respect to a disposition of
unrestricted shares.
Restricted Stock. Unless the recipient files an election to be taxed
under Section 83(b) of the Code: (a) the recipient will not realize
income upon the grant of restricted stock; (b) the recipient will
realize ordinary income, and the Company will be entitled to a
corresponding deduction, when the restrictions have been removed or
expire; and (c) the amount of such ordinary income and deduction will
be the fair market value of the restricted stock on the date the
restrictions are removed or expire. If the recipient files an
election to be taxed under Section 83(b) of the Code, the tax
consequences to the recipient and the Company will be determined as of
the date of the grant of the restricted stock rather than as of the
date of the removal or expiration of the restrictions.
When the recipient disposes of restricted stock, the difference
between the amount received upon such disposition and the fair market
value of such shares on the date the recipient realizes ordinary
income will be treated as a capital gain or loss.
Compensation of the Company's Chief Executive and four other most
highly compensated Executive Officers is subject to the tax deduction
limits of Section 162(m) of the Code. Awards that qualify as
"performance-based compensation" will be exempt from Section 162(m),
thus allowing the Company the full tax deduction otherwise permitted
for such awards. If approved by the Company's Stockholders, the Plan
will enable the Committee to grant awards that will be exempt from the
deduction limits of Section 162(m) of the Code.
Forfeiture
The Plan permits the Company to provide in the award agreements
conditions of forfeiture of a partici-ant's rights with regard to such
award in the event of the termination of employment of the participant
"for cause", the participant's breach of restrictive covenants or the
participant having engaged in an activity detrimental to the Company.
Such conditions of forfeiture may include suspension or cancellation
of the participant's right to exercise an option or SAR, suspension or
cancellation of the participant's pending right to receive an issuance
of shares or cash payment in settlement of any award, forfeiture of
any shares of restricted stock held by the participant or following
the issuance of shares upon exercise of an award, either cancellation
of the shares so issued or requiring the participant to pay the
Company in cash an amount equal to the gain realized by the
participant from such award.
Witholding
The Plan permits the Company to withhold from awards an amount
sufficient to cover any required withholding taxes. In lieu of cash,
the Committee may permit a participant to cover withholding
obligations through a reduction in the number of shares to be
delivered to such participant or by delivery of shares already owned
by the participant.
New Plan Benefits
The Committee has not yet made any determination with respect to
awards that may be granted in the future pursuant to the Plan. The
closing sale price of a share of the Common Stock of the Company on
the New York Stock Exchange on September 1, 1999 was $13.1250 per
share.
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Voting Requirements
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock of the Company present in person or by proxy
and entitled to vote on this item at the meeting is required for
approval of the Plan. Proxies solicited by the Board of Directors
will be voted for approval of the Plan unless shareholders specify
otherwise in their proxies. For this purpose, a Stockholder voting
through a Proxy who abstains with respect to approval of the Plan is
considered to be present and entitled to vote on the approval 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 or withholds authority to vote, on the approval of the
Plan, shall not be considered present and entitled to vote on the
proposal.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
INCENTIVE COMPENSATION PLAN.
Auditors
The firm of Ernst & Young LLP, independent auditors, 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, 2000, 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, 1999, 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: C. Hamlin 1 report/1 transaction and B. Cox 1 report/1
transaction.
STOCKHOLDER'S PROPOSAL NO. 1
The following proposal and supporting statement have been submitted
by Martin Glotzer, 7061 North Kedzie, Chicago, Illinois 60645 and/or
Margaret R. Gilbert, 29 East 64th Street, New York, New York 10021-
7043. Margaret R. Gilbert holds 441 shares of Company stock and Martin
Glotzer holds 115 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
Strong support along the lines we suggest were shown at the 1998
annual meeting when 28.9%, 125,935,045 shares, were cast in favor
of this proposal.
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.
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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; otherwise
it is automatically cast against it, unless you have marked to
abstain.
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
fraction 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 Company's
Stockholders defeated similar proposals at the 1996 and 1998 Annual
Meetings.
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
The following proposal and supporting statement have been submitted
by John J. Gilbert, 29 East 64th Street, New York, New York 10021-
7043, who holds 441 shares of Company stock:
Shareholder Proposal: Post-Meeting Report
RESOLVED: That the stockholders of Archer-Daniels-Midland Company,
assembled in Annual Meeting in person and by proxy, hereby
request that following the Annual Meeting the Management issue a
post-meeting report which shall include a brief resume of questions
and answers of general interest, a summary of the discussion,
identification of participants and the actual vote for and against
all resolutions.
REASONS
"Stockholders are entitled to accurate information as to what
transpires at the Annual Meeting, so they can act for their joint
interest. If stockholders cannot act together they cannot act
effectively" (quote from Judge John J. Biggs, Jr. United States
Appellate Court).
I was not able to attend the 1998 Annual Shareholders Meeting.
It was brought to my attention that the chief executive officer,
Mr. G. Allen Andreas, gave a review of our Company's business
and gave answers to questions by shareholders. I have not seen any
mention of questions and answers nor identification of speakers.
Nor have I seen the results of the voting on the shareholder
proposal for cumulative voting in the election of Directors.
A proper post meeting report as proposed by myself would in my
opinion be informative and the matters discussed would be meaningful
to the Company and Shareholders showing a post meeting report is
hardly a needless expense.
If you agree please mark your proxy for the resolution, otherwise
it is automatically cast against it.
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Recommendation of the Board of Directors Against the Proposal
The Company currently has in place a policy to provide a transcript
of each Annual Meeting of its Stockholders, upon the payment of
reasonable copying and mailing cost, to any Stockholder who so
requests. The Board of Directors believes that this is the most
efficient and economical way to provide this information. The
proposal requires the Company to prepare a selective report on certain
items and to incur the costs of mailing those materials to all
Stockholders, many of whom may not have any interest in these items or
in such a report. Because the present system of providing complete
information on request satisfies the varying interests of our
Stockholders and avoids the costs and waste of a mass mailing, the
Board of Directors believes that the present system should remain in
place.
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 PROPOSAL NO. 3
The following proposal and supporting statement have been submitted
by the Pipefitters Local 562 Pension Fund, 12385 Larimore Road, St.
Louis, Missouri 63138, which is the beneficial owner of at least 9,000
shares of Company stock:
Shareholder Proposal: Confidential Voting
BE IT RESOLVED, that the shareholders of Archer-Daniels-Midland
Company ("Company") recommend that our Board of Directors take
the steps necessary to adopt and implement a policy of Co
nfidential Voting at all meetings of its stockholders, which
includes the following provisions:
1. That the voting of all proxies, consents and authorizations be
secret, and that no such document shall be available for examination nor
shall the vote or identity of any shareholder be disclosed except to the
extent necessary to meet legal requirements, if any, of the Company's
state of incorporation; and
2. That the receipt, certification and tabulation of such votes shall be
performed by independent election inspectors.
AMENDED SUPPORTING STATEMENT
The proponents believe it is vitally important that a system
of Confidential Proxy Voting be established at Archer-Daniels-
Midland Company. Confidential balloting is a basic tenet of our
political electoral process that ensures its integrity. The
integrity of corporate board elections should also be protected
against potential abuses given the importance of corporate
policies and practices to shareholders and our national economy.
Archer-Daniels-Midland's board has adopted a limited
confidential voting policy that is defective because it exempts
"any contested solicitation" the very type of issue where
confidentiality is most important. The policy provided in this
proposal is intended to cure that defect by removing the
exemption.
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The implementation of a Confidential Voting System would
enhance shareholder rights in several ways. First, in protecting
the confidentiality of the corporate ballot, shareholders would
feel free to oppose management nominees and issue positions
without fear of retribution. This is especially important for
professional money managers whose business relationships can be
jeopardized by their voting positions.
A second important benefit of Confidential Voting would be
to invigorate the corporate governance process at the Company.
We believe Confidential Voting would promote shareholder activism
with the Company. We believe that shareholders empowered with a
free and protected vote would be more active in proposing
corporate policy resolutions and alternate board candidates.
Finally, we believe that this enhancement of the proxy
voting process would encourage shareholders to vote with their
ballots rather than "vote with their feet." This change would
help to develop a long-term investment perspective where
corporate assets could be deployed and used in a more effective
and efficient manner.
Recommendation of the Board of Directors Against the Proposal
The Company currently has a confidential voting policy to ensure
that the voting process does not result in any improper influence or
coercion of Stockholders. The Board of Directors believes that the
procedures adopted pursuant to this policy adequately address the
concerns raised in this Stockholder proposal and notes that a similar
proposal was defeated by the Company's Stockholders at the 1996 Annual
Meeting.
Specifically, 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. 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 that a modification of the
current policy 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.
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 preceding Stockholder proposals is
required for approval of any such Stockholder proposal. For this
purpose, a Stockholder voting through a proxy who abstains as to any
such proposal is considered to be present and entitled to vote on such
proposal 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 such proposal shall
not be considered present and entitled to vote on such proposal.
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Deadline for Submission of Stockholder Proposals
Proposals of Stockholders intended to be presented at the next
Annual Meeting and desired to be included in the Company's Proxy
Statement for that meeting must be received by the Secretary, Archer-
Daniels-Midland Company, 4666 Faries Parkway, Decatur, Illinois,
62526, no later than May 18, 2000, in order to be included in such
Proxy Statement. If notice of any other Stockholder proposal intended
to be presented at the next Annual Meeting is not received by the
Company on or before August 1, 2000, the proxy solicited by the Board
of Directors of the Company for use in connection with that meeting
may confer authority on the proxies to vote in their discretion on
such proposal, without any discussion in the Company's Proxy Statement
for that meeting of either the proposal or how such proxies intend to
exercise their voting discretion.
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
September 15, 1999 D. J. Smith, Secretary
EXHIBIT "A"
Archer-Daniels-Midland Company
Incentive Compensation Plan
Article 1. Establishment, Objectives, and Duration
1.1. Establishment of the Plan. Archer-Daniels-Midland Company, a
Delaware corporation (hereinafter referred to as the "Company"),
hereby establishes an incentive compensation plan to be known as the
"Archer- Daniels-Midland Company Incentive Compensation Plan"
(hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares, Performance Units, and Cash-Based Awards.
Subject to approval by the Company's Stockholders, the Plan shall
become effective as of October 22, 1999 (the "Effective Date") and
shall remain in effect as provided in Section 1.3 hereof.
1.2. Objectives of the Plan. The objectives of the Plan are to
optimize the profitability and growth of the Company through annual
and long-term incentives which are consistent with the Company's goals
and which link the personal interests of Participants to those of the
Company's Stockholders; to provide Participants with an incentive for
excellence in individual performance; and to promote teamwork among
Participants. The Plan is further intended to provide flexibility to
the Company in its ability to motivate, attract, and retain the
services of Participants who make significant contributions to the
Company's success and to allow Participants to share in the success of
the Company.
1.3. Duration of the Plan. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect,
subject to the right of the Board of Directors to amend or terminate
the Plan at any time pursuant to Article 15 hereof, until all Shares
subject to it shall have been purchased or acquired according to the
Plan's provisions. However, in no event may an Award be granted under
the Plan on or after
October 21, 2009.
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Article 2. Definitions
Whenever used in the Plan, the following terms shall have the
meanings set forth below, and when the meaning is intended, the
initial letter of the word shall be capitalized:
2.1. "Affiliate" shall mean an "affiliate" of the Company, within the
meaning of such term under Rule 12b-2 of the General Rules and
Regulations of the Exchange Act.
2.2. "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares, Performance
Units, or Cash-Based Awards.
2.3. "Award Agreement" means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable
to Awards granted under this Plan.
2.4. "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
2.5. "Board" or "Board of Directors" means the Board of Directors of
the Company.
2.6. "Cash-Based Award" means an Award granted to a Participant, as
described in Article 9 herein.
2.7. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.8. "Committee" means the Compensation Committee of the Board of
Directors, which shall consist of two or more directors all of whom
shall satisfy the requirements for an "outside director" under code
Section 162 (m) and/or a "non-employee director" within the meaning of
Rule 16b-3 of the Exchange Act, provided, however, that as to any
Section 162(m) Award, if any member of the Compensation Committee
shall not satisfy such "outside director" requirements, "Committee"
means a subcommittee (of two or more persons) of the Compensation
Committee consisting of all members thereof who satisfy such "outside
director" requirement.
2.9. "Company" means Archer-Daniels-Midland Company, a Delaware
corporation, and any successor thereto as provided in Article 18
herein.
2.10. "Covered Employee" means a Participant who, in the sole
judgement of the Committee, may be treated as a "covered employee"
under Code Section 162(m) at the time income is recognized by such
Participant in connection with an Award that is intended to qualify
for the Performance-Based Exception.
2.11. "Date of Grant" shall mean the date on which an Award under the
Plan is made by the Committee or such later effective date for such
Award as the Committee may specify.
2.12. "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan or, if no such plan
exists, at the discretion of the Committee.
2.13. "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.14. "Employee" means any person who is an employee of the Company,
any Affiliate or any Subsidiary;provided, however, that with respect
to ISOs, "Employee" means any person who is considered an employee of
the Company or any Subsidiary for purposes of Treasury Regulation
1.421-7(h).
2.15. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.16. "Fair Market Value" on any date shall be determined on the basis
of the closing sale price on the trading date immediately prior to such date
on the principal securities exchange on which the Shares are traded or,
if there is no such sale on the relevant date, then on the last previous day
on whicha sale was reported.
2.17. "Freestanding SAR" means a SAR that is granted independently of
any Options, as described in Article 7 herein.
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2.18. "Incentive Stock Option" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as an
Incentive Stock Option and which is intended to meet the requirements
of Code Section 422.
2.19. "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares granted under Article 6 herein and which is not
intended to meet the requirements of Code Section 422.
2.20. "Option" means an Incentive Stock Option or a Nonqualified
Stock Option, as described in Article 6 herein.
2.21. "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.22. "Participant" means an Employee who has been selected to receive
an Award or who has outstanding an Award granted under the Plan.
2.23. "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section
162(m).
2.24. "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.
2.25. "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.
2.26. "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way and the
Shares are subject to a risk of forfeiture (based on the passage of
time, the achievement of performance goals, or upon the occurrence of
other events as determined by the Committee, as its discretion), as
provided in Article 8 herein.
2.27. "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d)
thereof.
2.28. "Restricted Stock" means an Award granted to a Participant
pursuant to Article 8 herein.
2.29. "Retirement" shall mean "early retirement" or "normal
retirement" within the meaning of such terms under the ADM Retirement
Plan.
2.30."Section 162(m) Award" means an Award to a Covered Employee
intended to qualify for the Perform-ance-Based Exception.
2.31. "Shares" means the shares of common stock of the Company,
without par value.
2.32. "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as a SAR,
pursuant to the terms of Article 7 herein.
2.33. "Subsidiary" means any corporation, partnership, joint venture,
or other entity in which the Company has a majority voting interest;
provided, however, that with respect to ISOs, the term "Subsidiary"
shall include only an entity that qualifies under Code Section 424(f)
as a "subsidiary corporation" with respect to the Company.
2.34. "Tandem SAR" means a SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which
shall require forfeiture of the right to purchase a Share under the
related Option (with a similar cancellation of the Tandem SAR when a
Share is purchased under the Option).
Article 3. Administration
3.1. Committee Members. The Plan shall be administered by the
Committee. The members of the Committee shall be appointed by and
serve at the pleasure of the Board. The Committee shall have such
powers and authority as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan. No
member of the Committee shall be liable for any action or
determination made in good faith by the Committee with respect to the
Plan or any Award thereunder.
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3.2. Discretionary Authority. Subject to the express limitations of
the Plan, the Committee shall have authority in its discretion to
determine the Employees to whom, and the time or times at which,
Awards may be granted, the number of Shares, units or other rights
subject to each Award, the Option Price or purchase price of an Award
(if any), the time or times at which an Award will become vested,
exercisable or payable, the performance measure, performance goals and
other conditions of an Award, the duration of the Award, and all other
terms of the Award. The Committee shall also have discretionary
authority to interpret the Plan, to make all factual determinations
under the Plan, and to make all other determinations necessary or
advisable for Plan administration. The Committee may prescribe, amend,
and rescind rules and regulations relating to the Plan. All
interpretations, determinations, and actions by the Committee shall be
final, conclusive, and binding upon all parties.
Article 4. Shares Subject to the Plan and Maximum Awards
4.1. Number of Shares Available for Grants. Subject to adjustment as
provided in Section 4.2 herein, the number of Shares hereby reserved
for issuance to Participants under the Plan shall be ten million
(10,000,000), no more than two million (2,000,000) of which may be
granted in the form of Restricted Stock. The Shares to be delivered
under the Plan will be made available from authorized but unissued
Shares or issued Shares that are held in the Company's treasury. To
the extent that any Award payable in Shares is forfeited, cancelled,
returned to the Company for failure to satisfy vesting requirements or
upon the occurrence of other forfeiture events, or otherwise
terminates without payment being made thereunder, Shares covered
thereby will no longer be charged against the foregoing maximum Share
limitations and may again be made subject to Awards under the Plan
pursuant to such limitations. Subject to adjustments as provided in
Section 4.2 herein, the following rules shall apply to grants of such
Awards under the Plan:
(a) Stock Options: The maximum aggregate number of Shares that may be
covered by Stock Options, pursuant to Awards granted in any one fiscal
year to any one single Participant, shall be five hundred thousand
(500,000).
(b) SARs: The maximum aggregate number of Shares that may be covered
by Stock Appreciation Rights, pursuant to Awards granted in any one
fiscal year to any one single Participant, shall be five hundred
thousand (500,000).
(c) Restricted Stock: The maximum aggregate number of Shares that may
be covered by Awards of Restricted Stock granted in any one fiscal
year to any Participant shall be five hundred thousand (500,000).
(d) Performance Shares: The maximum aggregate number of Shares that
may be covered by Awards of Performance Shares granted in any one
fiscal year to any Participant shall be five hundred thousand
(500,000).
(e) Performance Units: The maximum aggregate payout (determined as of
the end of the applicable performance period) with respect to
Performance Units granted in any one fiscal year to any one
Participant shall be five hundred thousand dollars ($500,000).
(f) Cash-Based Awards: The maximum aggregate payout (determined as of
the end of the applicable performance period) with respect to Cash-
Based Awards granted in any one fiscal year to any one Participant
shall be five hundred thousand dollars ($500,000).
4.2. Adjustments in Shares. If there shall occur any
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other distribution with respect to the Shares,
or any merger, consolidation, reorganization or other change in
corporate structure affecting the Shares, the Committee may, in the
manner and to the extent that it deems appropriate and equitable to
the Participants and consistent with the terms of this Plan, cause an
adjustment to be made in (i) the maximum number and kind of Shares
provided in Section 4.1 hereof, (ii) the number and kind of shares,
units, or other rights subject to then outstanding Awards, (iii) the
Option Price or purchase price for
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PAGE 26
each Share or unit or other right subject to then outstanding Awards,
(iv) the performance targets or goals applicable to any outstanding
Awards, or (v) any other terms of an Award that are affected by the
event. Notwithstanding the foregoing, in the case of ISOs, any such
adjustments shall be made in a manner consistent with the requirements
of Code Section 424(a) and, in the case of a Section 162(m) Award, in
a manner consistent with the requirements of Code Section 162(m). In
the event of any merger, consolidation, reorganization or similar
corporate event in which Shares are to be exchanged for payment of
cash (the "Cash Consideration"), the committee may, in its discretion,
(i) make equitable adjustments as provided above, or (ii) cancel any
outstanding Option in exchange for payment in cash, if any, equal to
the excess of the Cash Consideration for the shares underlying such
Option over the Option Price for such Shares.
Article 5. Eligibility and Participation
5.1. Eligibility. Persons eligible to participate in this Plan
include all Employees.
5.2. Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees,
those to whom Awards shall be granted and shall determine the nature
and amount of each Award.
Article 6. Stock Options
6.1. Grant of Options. Subject to the terms and provisions of the
Plan, Options may be granted to Participants in such number, and upon
such terms, and at any time and from time to time as shall be
determined by the Committee.
6.2. Award Agreement. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of
the Option, the number of Shares to which the Option pertains,
provisions for vesting and exercisability, and such other provisions
as the Committee shall determine. The Award Agreement also shall
specify whether the Option is intended to be an ISO or a NQSO.
6.3. Option Price. The Option Price for each grant of an Option
under this Plan shall be at least equal to one hundred percent (100%)
of the Fair Market Value of a Share on the Date of Grant.
6.4. Duration of Options. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of
grant; provided, however, that no Option shall be exercisable later
than one day prior to the tenth (10th) anniversary date of its grant.
6.5. Exercise of Options. Options granted under this Article 6 shall
be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need
not be the same for each grant or for each Participant.
Notwithstanding the foregoing, the Committee may at any time, or upon
the occurrence of any events specified by the Committee in an Award
Agreement, accelerate a Participant's right to exercise an Option.
6.6. Payment. Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the
Company, setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by
tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price
(provided that the Shares which are tendered must have been held by
the Participant for at least six (6) months prior to their tender to
satisfy the Option Price), or (c) by a combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities
law restrictions, or exercise by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable
law.
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Subject to any governing rules or regulations, as soon as
practicable after receipt of a written notification of exercise and
full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based
upon the number of Shares purchased under the Option(s).
6.7. Additional Rules for Incentive Stock Options.
(a) No ISO shall be granted to a Participant as a result of
which the aggregate Fair Market Value (determined as of the Date of
the Grant) of the stock with respect to which ISOs are exercisable for
the first time in any calendar year under the Plan and any other stock
option plans of the Company, any Subsidiary, or any parent
corporation, would exceed the maximum amount permitted under Code
Section 422(d). This limitation shall be applied by taking Options
into account in the order in which granted.
(b) If Shares acquired by exercise of an ISO are disposed of
within two years following the Date of Grant or one year following the
transfer of such Shares to the Participant upon exercise, the
Participant shall, promptly following such disposition, notify
the Company in writing of the date and terms of such disposition and
provide such other information regarding the disposition as the
Committee may reasonably require.
(c) Any ISO granted hereunder shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as
are deemed necessary or desirable by the Committee, which terms,
together with the terms of this Plan, shall be intended and
interpreted to cause such ISO to qualify as an "incentive stock
option" under Code Section 422. Such terms shall include, if
applicable, limitations on ISOs granted to ten-percent owners of the
Company. An Award Agreement for an ISO may provide that such Option
shall be treated as a NQSO to the extent that certain requirements
applicable to "incentive stock options" under the Code shall not be
satisfied.
6.8. Restrictions on Share Transferability. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of
an Option granted under this Article 6 as it may deem advisable,
including, without limitation, restrictions under applicable federal
securities laws, under the requirements of any stock exchange or
market upon which such Shares are then listed and/or traded, and under
any blue sky or state securities laws applicable to such Shares.
6.9. Termination of Employment. The Participant shall have the right
to exercise the vested portion of an Option only while such
Participant is an Employee, or within three months after such
Participant ceases to be an Employee; provided, however, that in the
event the employment of the Participant is terminated on account of
the Participant's death, the Participant's personal representatives,
heirs or legatees shall have the right to exercise the vested portion
of any Option held by the Participant at the time of his or her death
for one year following the date of death.
6.10. Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant.
(b) Nonqualified Stock Options. Except as otherwise provided in
a Participant's Award Agreement in accordance with the terms provided
below, no NQSO granted under this Article 6 may be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution and no NQSOs granted to a Participant under this Article
6 shall be exercisable during his or her lifetime by anyone other than
such Participant.
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Notwithstanding the foregoing, an Award Agreement for a NQSO
may provide that the Participant shall be permitted, during his or
her lifetime and subject to the prior approval of the Committee at the
time of proposed transfer, to transfer all or part of the Option to a
family member (as defined in the Award Agreement in a manner
consistent with the requirements for the Form S-8 registration
statement). Any such transfer shall be subject to the condition that
it is made by the Participant for estate planning, tax planning,
donative purposes or pursuant to a domes tic relations order, and no
consideration (other than interests in family-related entities to
which the transfer is made) is received by the Participant therefore.
The transfer of a NQSO may be subject to such other terms and
conditions as the Committee may in its discretion impose from time to
time, including a condition that the portion of the Option to be
transferred be vested and exercisable by the Participant at the time
of the transfer. Subsequent transfers of an Option shall be prohibited
other than by will or the laws of descent and distribution upon the
death of the transferee.
Article 7. Stock Appreciation Rights
7.1. Grant of SARs. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time
as shall be determined by the Committee. The Committee may grant
Freestanding SARs, Tandem SARs, or any combination of these forms
of SAR.
The Committee shall have complete discretion in determining the
number of SARs granted to each Participant (subject to Article 4
herein) and, consistent with the provisions of the Plan, in
determining the terms and conditions pertaining to such SARs.
The base price of a Freestanding SAR shall equal the Fair Market
Value of a Share on the Date of Grant of the SAR. The base price of
Tandem SARs shall equal the Option Price of the related Option.
7.2. Exercise of Tandem SARs. Tandem SARs may be exercised for all
or part of the Shares subject to the related Option upon the surrender
of the right to exercise the equivalent portion of the related Option.
A Tandem SAR may be exercised only with respect to Shares for which
its related Option is then exercisable.
Notwithstanding any other provision of this Plan to the contrary,
with respect to a Tandem SAR granted in connection with an ISO: (i)
the Tandem SAR will expire no later than the expiration of the
underlying ISO; (ii) the value of the payout with respect to the
Tandem SAR may be for no more than one hundred percent (100%) of the
difference between the Option Price of the underlying ISO and the Fair
Market Value of the Shares subject to the underlying ISO at the time
the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised
only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
7.3. Exercise of Freestanding SARs. Freestanding SARs may be
exercised upon whatever terms and conditions the Committee, in its
sole discretion, imposes upon them.
7.4. SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the base price, the term of the SAR, and
such other provisions as the Committee shall determine.
7.5. Term of SARs. The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided,
however, that such term shall not exceed ten (10) years.
7.6. Payment of SAR Amount. Upon exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount
determined by multiplying:
(a) The difference between the Fair Market Value of a Share on
the date of exercise over the base price; by
(b) The number of Shares with respect to which the SAR is
exercised.
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At the discretion of the Committee, the payment upon SAR exercise
may be in cash, in Shares of equivalent value, or in some combination
thereof. The Committee's determination regarding the form of SAR pay
out shall be set forth in the Award Agreement pertaining to the grant
of the SAR.
7.7. Termination of Employment. The Participant shall have the right
to exercise the vested portion of a SAR only while such Participant is
an Employee, or within three months after such Participant ceases to
be an Employee; provided, however, that in the event the employment of
the Participant is terminated on account of the Participant's death,
the Participant's personal representatives, heirs or legatees shall
have the right to exercise the vested portion of any SAR held by the
Participant at the time of his or her death for one year following the
date of death.
7.8. Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all SARs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such
Participant.
Article 8. Restricted Stock
8.1. Grant of Restricted Stock. Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock to Participants in such amounts as
the Committee shall determine.
8.2. Restricted Stock Agreement. Each Restricted Stock grant shall
be evidenced by a Restricted Stock Award Agreement that shall specify
the Period(s) of Restriction, the number of Shares of Restricted Stock
granted, and such other provisions as the Committee shall determine.
8.3. Transferability. Except as provided in this Article 8, the
Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated
until the end of the applicable Period of Restriction established by
the Committee and specified in the Restricted Stock Award Agreement,
or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and set forth in the Restricted
Stock Award Agreement. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his
or her lifetime only to such Participant.
8.4. Other Restrictions. The Committee shall impose such other
conditions and/or restrictions on any Shares of Restricted Stock
granted pursuant to the Plan as it may deem advisable including,
without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock, restrictions based
upon the continued employment of the Participant, the achievement of
specific performance goals (Company-wide, divisional, and/or
individual), time-based restrictions on vesting following the
attainment of the performance goals, and/or restrictions under
applicable federal or state securities laws.
The Company may retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all
conditions and/or restrictions applicable to such Shares have been
satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted
Stock covered by a Restricted Stock grant made under the Plan shall
become freely transferable by the Participant after the last day of
the applicable Period of Restriction.
8.5. Voting Rights. Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting
rights with respect to those Shares during the Period of Restriction.
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8.6. Cash Dividends. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder shall be credited
with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions on
the Participant's receipt of the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Shares of Restricted Stock is
intended to be a Section 162(m) Award, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared
with respect to such Shares of Restricted Stock, such that the
dividends and/or the Shares of Restricted Stock maintain eligibility
for the Performance-Based Exception.
8.7. Termination of Employment. Each Restricted Stock Award
Agreement shall set forth the extent to which the Participant shall
have the right to receive unvested Shares of Restricted Stock
following termination of the Participant's employment with the
Company. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into
with each Participant, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.
8.8. Section 83(b) Election. If a Participant makes an election
pursuant to Code Section 83(b) with respect to a Restricted Stock
Award, the Participant shall be required to promptly file a copy of
such election with the Company.
Article 9. Performance Units, Performance Shares, and Cash-Based
Awards
9.1. Grant of Performance Units/Shares and Cash-Based Awards.
Subject to the terms of the Plan, Performance Units, Performance
Shares, and/or Cash-Based Awards may be granted to Participants in
such amounts and upon such terms, and at any time and from time to
time, as shall be determined by the Committee.
9.2. Value of Performance Units/Shares and Cash-Based Awards. At the
time Performance Units, Performance Shares, and/or Cash-Based Awards
are granted, the Committee shall determine, in its sole discretion,
one or more performance periods (the "Performance Periods") and the
performance goals to be achieved during the applicable Performance
Periods, as well as such other restrictions and conditions as the
Committee deems appropriate. Performance goals for Performance Units,
Performance Shares, and/or Cash-Based Awards shall be set using the
performance measures set forth in Section 10. In the case of
Performance Units, the Committee shall also determine a target unit
value or a range of unit values for each Award. Each Performance Share
shall have an initial value equal to the Fair Market Value of a Share
on the Date of Grant. Each Cash-Based Award shall have such value as
may be determined by the Committee.
9.3. Earning of Performance Units/Shares and Cash-Based Awards.
Subject to the terms of this Plan, after each applicable Performance
Period has ended, the Committee shall determine the extent to which
performance goals have been attained or a degree of achievement
between minimum and maximum levels with respect to Awards of
Performance Units/Shares and Cash-Based Awards in order to establish
the level of payment to be made, if any, and shall certify the results
in writing prior to payment of an Award.
9.4. Form and Timing of Payment of Performance Units/Shares and Cash-
Based Awards. Payment of earned Performance Units/Shares and Cash-
Based Awards shall be made in a single lump sum following the close of
the applicable Performance Period. Subject to the terms of this Plan,
the Committee, in its sole discretion, may pay earned Performance
Units/Shares and Cash-Based Awards in the form of cash or in Shares
(or in a combination thereof) which have an aggregate Fair Market
Value equal to the value of the earned Performance Units/Shares and
Cash-Based Awards at the close of the applicable Performance Period.
Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee. The determination of the Committee with
respect to the form of payout of such Awards shall be set forth in the
Award Agreement pertaining to the grant of the Award.
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9.5. Compliance with Code Section 162(m). In the case of Performance
Units, Performance Shares, and/or Cash-Based Awards granted to Covered
Employees that are intended to be Section 162(m) Awards, the Committee
shall make all determinations necessary to establish the terms of such
Section 162(m) Awards within 90 days of the beginning of the
applicable Performance Period (or such other time period required
under Code Section 162(m)), including, without limitation, the
designation of the Covered Employees to whom such Section 162(m)
Award's are made, the performance measures applicable to the Awards
and the performance goals that relate to such measures, and the dollar
amounts or number of Shares payable upon achieving the applicable
performance goals. As and to the extent required by Code Section
162(m), the provisions of such Section 162(m) Awards must state, in
terms of an objective formula or standard, the method of computing the
amount of compensation payable to the Covered Employee, and must
preclude discretion to increase the amount of compensation payable
under the Award (but may permit discretionary decreases in the amount
of compensation payable.)
9.6. Termination of Employment Due to Death, Disability, or
Retirement. Unless determined otherwise by the Committee and set forth
in the Participant's Award Agreement, and except in the case of
Section 162(m) Awards, in the event the employment of a Participant is
terminated by reason of death, Disability, or Retirement during a
Performance Period, the Participant shall receive a pro-rata payout of
the Performance Units/Shares or Cash-Based Awards based on the
applicable performance goals which have been achieved for such Awards,
if any, as determined by the Committee.
Payment of earned Performance Units/Shares or Cash-Based Awards
shall be made at a time specified by the Committee in its sole
discretion and set forth in the Participant's Award Agreement.
With respect to any Performance Units/Shares or Cash-Based Awards
that were intended to be Section 162(m) Awards, in the event the
employment of a Participant is terminated by reason of death or
Disability, the Committee may waive the requirement under such Awards
held by the Participant that one or more performance goals be achieved
as a condition of any payment under such Awards; provided, however,
that after such waiver any such Award will no longer qualify for the
Performance-Based Exception.
9.7. Termination of Employment for Other Reasons. In the event that
a Participant's employment terminates for any reason other than those
reasons set forth in Section 9.6 herein, all Performance Units/Shares
and Cash-Based Awards shall be forfeited by the Participant to the
Company unless determined otherwise by the Committee, as set forth in
the Participant's Award Agreement.
9.8. Nontransferability. Except as otherwise provided in a
Participant's Award Agreement, Performance Units/Shares and Cash-Based
Awards may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan
shall be exercisable during the Participant's lifetime only by the
Participant.
Article 10. Performance Measures
The performance measure(s) that may be used for purposes of
determining the degree of payout and/or vesting with respect to
Section 162(m) Awards shall be chosen from among the following (these
performance measures may be applied on an absolute or comparative
basis, and may be applied to the Company, any Subsidiary or Affiliate,
or any division or business unit thereof):
(a) Earnings per share;
(b) Net income (before or after taxes);
(c) Return on assets or return on equity;
(d) Cash flow return on investments, which equals net cash flows
divided by owners equity;
(e) Earnings before or after taxes;
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(f) Gross revenues; and
(g) Share price (including, but not limited to, growth measures
and total stockholder return).
In the case of Awards that are not Section 162(m) Awards, the
Committee shall designate performance measures from among the
foregoing or such other business criteria as it shall determine in its
sole discretion.
The Committee shall have the discretion to adjust the determinations
of the degree of attainment of the preestablished performance goals;
provided, however, that in the case of Section 162(m) Awards, no such
adjustment may increase the amount payable under the Award.
Article 11. Forfeiture Conditions
The Committee may provide in an Award Agreement for conditions of
forfeiture of a Participant's rights with respect to such Award in the
event of (i) the termination of employment of the Participant for
"cause" (as defined in an Award Agreement), (ii) the Participant's
breach of such restrictive covenants (e.g., non-competition and
confidentiality restrictions) as may apply to the Participant or (iii)
the Participant'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 Participant's right
to exercise an Option or SAR (whether or not then otherwise
exercisable), (b) suspension or cancellation of the Participant's
pending right to receive an issuance of Shares or cash payment in
settlement of any Award, (c) the forfeiture of any Shares of
Restricted Stock held by the Participant or (d) following the issuance
of Shares upon exercise of an Award, either (1) cancellation of the
Shares so issued (and repayment to the Participant of the full
purchase price, if any, paid for such shares) or (2) requiring the
Participant to pay to the Company in cash an amount equal to the gain
realized by the Participant from such Award (measured by the value (on
the date of receipt) of any property and/or amount of cash received by
the Participant under the Award, to the extent in excess of any amount
paid by the Participant).
Article 12. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case
of his or her death before he or she receives any or all of such
benefit. Each such designation shall revoke all prior designations by
the same Participant, shall be in a form prescribed by the Company,
and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of
any such designation, benefits remaining unpaid at the Participant's
death shall be paid to the Participant's estate.
Article 13. Deferrals
The Committee may permit (upon timely election by the Participant)
or require a Participant to defer such Participant's receipt of the
payment of cash or the delivery of Shares that would otherwise be due
to such Participant by virtue of the exercise of an Option or SAR, the
lapse or waiver of restrictions with respect to Restricted Stock, or
the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
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Article 14. Rights of Employees
14.1. Employment. Nothing in the Plan shall interfere with or limit
in any way the right of the Company or any affiliate to terminate any
Participant's employment at any time, nor confer upon any Participant
any right to continue in the employ of the Company or any Affiliate.
14.2. Participation. No Employee shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.
Article 15. Amendment, Modification, and Termination
15.1. Amendment, Modification, and Termination. Subject to the terms
of the Plan, the Board may at any time and from time to time, alter,
amend, suspend or terminate the Plan in whole or in part; provided,
however, that no amendment or modification of the Plan shall be
effective without the consent of the Company's stockholders that would
(i) change the class of persons eligible to participate under the
Plan, (ii) increase the number of Shares reserved for issuance under
the Plan or the maximum number of shares subject to Awards under
Article 4, hereof, or (iii) allow the grant of Options at an exercise
price below Fair Market Value. In addition, the Board may seek the
approval of any amendment or modification by the Company's
stockholders to the extent it deems necessary or advisable in its sole
discretion for purposes of compliance with Code Section 162(m) or Code
Section 422, the listing requirements of the New York Stock Exchange
or for any other purpose. No amendment or modification of the Plan
shall adversely affect any Award theretofore granted without the
consent of the Participant.
15.2. Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.
The Committee may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in Section 4.2 hereof) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that no such adjustment
shall be authorized to the extent that it would be inconsistent with a
Section 162(m) Award's meeting the requirements of Code Section
162(m).
15.3. Compliance with Code Section 162(m). The Committee shall have
the discretion to grant Awards under the Plan which are Section 162(m)
Awards and Awards which are not Section 162(m) Awards. Section 162(m)
Awards granted under the Plan shall comply with the Performance-Based
Exception from the tax deductibility limitations of Code Section
162(m).
Article 16. Withholding
16.1. Tax Withholding. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local
taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of this
Plan.
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16.2. Share Withholding. With respect to withholding required upon
the exercise of Options or SARs, upon the lapse of restrictions on
Restricted Stock, or upon any other taxable event arising as a result
of Awards granted hereunder, Participants may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair
Market Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by
the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems
appropriate.
Article 17. Indemnification
Each person who is or shall have been a member of the Committee, or
of the Board, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with
or resulting from any claim, action, suit, or proceeding to which he
or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and
from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of
any judgement in any such action, suit, or proceeding against him or
her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes
to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
Article 18. Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company.
Article 19. Legal Construction
19.1. Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had
not been included.
19.2. Requirements of Law. The granting of Awards and the issuance
of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
19.3. Securities Law Compliance. With respect to Participants
subject to Section 16 of the Exchange Act, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16b-
3 or its successors under the 1934 Act. To the extent any provision of
the Plan or action by the Board or Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board. In addition, no Shares will be issued
or transferred pursuant to an Award unless and until all then
applicable requirements imposed by federal and state securities and
other laws, rules and regulations and by any regulatory agencies
having jurisdiction, and by any stock exchanges upon which the Shares
may be listed, have been fully met. As a condition precedent to the
issuance of Shares pursuant to the grant or exercise of an Award, the
Company may require the Participant to take any reasonable action to
meet such requirements. The Committee
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may impose such conditions on any Shares issuable under the Plan as it
may deem advisable, including, without limitation, restrictions under
the Securities Act of 1933, as amended, under the requirements of any
stock exchange upon which such Shares of the same class are then
listed, and under any blue sky or other securities laws applicable to
such Shares.
19.4. Governing Law. To the extent not preempted by federal law, the
Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the
laws of the state of Illinois.
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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 10:00 A.M. ON THURSDAY, OCTOBER 21, 1999, AT
THE JAMES R. RANDALL RESEARCH CENTER, 1001 BRUSH COLLEGE ROAD,
DECATUR, ILLINOIS.
ADMITTANCE TO THE ANNUAL MEETING WILL BE LIMITED TO STOCKHOLDERS.
IF YOU ARE A STOCKHOLDER OF RECORD AND PLAN TO ATTEND, PLEASE DETACH
THE ADMISSION TICKET FROM THE BOTTOM OF YOUR PROXY CARD AND BRING IT
WITH YOU TO THE ANNUAL MEETING. THE NUMBER OF PEOPLE ADMITTED WILL BE
DETERMINED BY HOW THE SHARES ARE REGISTERED, AS INDICATED ON THE
ADMISSION TICKET. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE HELD BY A
BROKER, BANK OR OTHER NOMINEE, PLEASE REQUEST AN ADMISSION TICKET BY
WRITING TO: ARCHER-DANIELS-MIDLAND COMPANY SHAREHOLDER RELATIONS,
4666 FARIES PARKWAY, DECATUR, IL 62526-5666. EVIDENCE OF YOUR STOCK
OWNERSHIP, WHICH YOU CAN OBTAIN FROM YOUR BROKER, BANK OR NOMINEE,
MUST ACCOMPANY YOUR LETTER. STOCKHOLDERS WHO ARE NOT PRE-REGISTERED
WILL ONLY BE ADMITTED TO THE MEETING UPON VERIFICATION OF STOCK
OWNERSHIP. THE NUMBER OF TICKETS SENT WILL BE DETERMINED BY THE
MANNER IN WHICH SHARES ARE REGISTERED. IF YOUR REQUEST IS RECEIVED BY
OCTOBER 15, 1999, AN ADMISSION TICKET WILL BE MAILED TO YOU. ALL
OTHER ADMISSION TICKETS CAN BE OBTAINED AT THE REGISTRATION TABLE
LOCATED AT THE JAMES R. RANDALL RESEARCH CENTER LOBBY BEGINNING AT
8:30 A.M. ON THE DAY OF THE ANNUAL MEETING.
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