CAGLE'S, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JULY 13, 2001
TO THE HOLDERS OF CLASS A COMMON STOCK:
Notice is hereby given that the Annual Meeting of Shareholders of Cagle's,
Inc. (the "Company"), will be held at the Company's offices located at 2000
Hills Avenue, Atlanta, Georgia on the 13th day of July, 2001, at 11:00 A.M.
Eastern Daylight Time, for the following purposes:
(1) To fix the number of members of the Board of Directors at ten (10), and
to elect the members thereof; and
(2) To transact any other business that may properly come before the meeting
or any adjournments thereof; all as set forth in the Proxy Statement
accompanying this notice.
Only holders of record of Class A Common Stock on May 26, 2001 will be
entitled to vote at the meeting. The transfer books will not be closed.
By order of the Board of Directors.
GEORGE L. PITTS, Secretary
Atlanta, Georgia
June 15, 2001
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS
REPLY ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU WISH, WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
(Cover Page)
CAGLE'S, INC.
2000 HILLS AVENUE, N.W. ATLANTA, GEORGIA 30318
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 13, 2001
The enclosed proxy is solicited by the Board of Directors of Cagle's, Inc.
(the "Company") for use at the Annual Meeting of Shareholders to be held on
July 13, 2001, and at any adjournment thereof, and is revocable by written
notice to the Secretary of the Company at any time before its exercise.
Unless revoked, proxies in the form enclosed, properly executed and received
by the Secretary of the Company prior to the Annual Meeting, will be voted at
the meeting as specified by the shareholder in the proxy, or, except with
respect to broker non-votes, if no specification is made in the proxy, the
persons designated as proxies shall vote FOR each of the proposals set forth
in the accompanying Notice of Annual Meeting of Shareholders, and according
to their discretion upon all other matters which may properly come before the
meeting. Broker non-votes will not be included in vote totals and will have
no effect on the outcome of the vote. Abstentions will not be counted either
as a vote FOR or a vote AGAINST a proposal and will have no effect on the
outcome of the vote.
An annual report to the shareholders, including financial statements for the
year ended March 31, 2001, is enclosed herewith. The approximate date of
mailing this proxy statement and the form of proxy is June 15, 2001.
On May 26, 2001, the Company had outstanding and entitled to vote at the
Annual Meeting 4,740,280 shares of Class A Common Stock. With regard to any
matter to be considered, each share of Class A Common Stock is entitled to
one vote. If a quorum is present, directors will be elected by the
affirmative vote of a majority of the shares represented at the meeting in
person or by proxy. A quorum consists of shareholders owning 50% of the
Class A Common Stock plus one share. Only shareholders of record on May 26,
2001 are entitled to vote at the meeting.
The enclosed proxy will be voted to fix the number of members of the Board of
Directors at ten (10) and elect the ten (10) nominees named in the proxy.
Each director shall hold office until the annual meeting of shareholders held
next after his or her election and until a qualified successor shall be duly
elected and qualified. In the event that any of the nominees is unable to
serve (which is not anticipated), the persons designated as proxies will cast
votes for the remaining nominees and for such other persons as they may
select. All ten (10) of the nominees are presently directors, whose terms of
office will expire at the Annual Meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are presently directors of the Company and have been
nominated to stand for re-election:
J. Douglas Cagle, 70, has been a director of the Company since 1953, and has
been Chief Executive Officer of the Company since 1970 and Chairman of the
Board of the Company since July 1993. Mr. Cagle served as President of the
Company from 1970 to July 1993. He is expected to be reelected to the
offices of Chief Executive Officer and Chairman of the Board when his one
year term expires at the next annual meeting of the Board, which is scheduled
for July 13, 2001, immediately following the Annual Meeting of Shareholders.
Mr. Cagle is the father of George Douglas Cagle and James David Cagle, who
are also directors of the Company.
Page 1
George Douglas Cagle, 48, has been a director of the Company since July 1976.
Mr. Cagle has been Vice President-New Product Development since July 1993, an
office to which he is expected to be reelected at the next annual meeting of
the Board. Mr. Cagle is the son of J. Douglas Cagle and the brother of James
David Cagle, who are also directors of the Company.
Kenneth R. Barkley, 60, has been a director of the Company since July 1977.
Mr. Barkley has been Treasurer and Chief Financial Officer of the Company
since July 1977 and Senior Vice President-Finance of the Company since July
1993. He is expected to be reelected to the offices of Treasurer, Chief
Financial Officer and Senior Vice President-Finance at the next annual
meeting of the Board.
James David Cagle, 47, has been a director since July 1987. Mr. Cagle has
been Vice President-New Product Sales since July 1993, an office to which he
is expected to be reelected at the next annual meeting of the Board. Mr.
Cagle is the son of J. Douglas Cagle and the brother of George Douglas Cagle,
who are also directors of the Company.
Jerry D. Gattis, 52, has been a director since July 1989. Mr. Gattis has
been President and Chief Operating Officer of the Company since July 1993,
offices to which he is expected to be reelected at the next annual meeting of
the Board.
Mark M. Ham IV, 46, has been a director since July 1993. Mr. Ham has been
Assistant Secretary of the Company since July 1987 and Vice President-
Information Systems since July 1993, offices to which he is expected to be
reelected at the next annual meeting of the Board.
John J. Bruno, Jr., 57, has been a director since July 1993. Mr. Bruno has
been Senior Vice President-Sales and Marketing of the Company since July
1993, an office to which he is expected to be reelected at the next annual
meeting of the Board.
Candace Chapman, 45, has been a director since July 1993. Ms. Chapman is a
partner and Director of Marketing and Client Services of New Amsterdam
Partners, an investment management firm. Ms. Chapman previously had been a
principal in C2 & Associates, Ltd., an investment management firm, from March
1996 to June 1999. Prior to forming C2 & Associates, Ltd., Ms. Chapman had
been a Consultant/Director of Marketing at Wyatt Investment Consulting, Inc.
since October 1994. Ms. Chapman is a Certified Public Accountant and also
holds Series 7 and Series 63 investment licenses.
G. Bland Byrne III, 49, has been a director since July 1995. Mr. Byrne is a
principal in the law firm of Byrne, Moore & Davis, P.C. Mr. Byrne previously
was a partner in the law firm of Swift, Currie, McGhee & Hiers, from January
1984 to April 1994.
Panos J. Kanes, 48, has been a director since June 2001. Mr. Kanes is a
member of the law firm of Kanes and Benator, Attorneys At Law, LLC, and has
practiced law with the firm since 1977. He is also a member of the accounting
firm of Kanes, Benator & Company, LLC and has practiced as a CPA since
becoming licensed in 1979.
The foregoing list of nominees includes several persons who also may be
considered executive officers of the Company: namely, J. Douglas Cagle,
George Douglas Cagle, Kenneth R. Barkley, James David Cagle, Jerry D. Gattis,
Mark M. Ham IV, and John J. Bruno, Jr. In addition, the following
individuals are expected to be reelected as executive officers immediately
following the Annual Meeting:
Page 2
George L. Pitts III, 52, has been Secretary of the Company since July 1993,
an office to which he is expected to be reelected at the next annual meeting
of the Board. Mr. Pitts has been employed in the corporate accounting
department of the company since 1974, holding the position of Corporate
Accounting Manager.
Johnny M. Burkett, 59, has been Senior Vice President of the Company since
December 1996, an office to which he is expected to be reelected at the next
annual meeting of the Board. Before joining the Company, Mr. Burkett was
employed by Fieldale Farms, a poultry processing company. Since 1991, Mr.
Burkett worked in both processing and live operations at Fieldale Farms,
holding the positions of Director of Processing and Director of Live Operations.
OWNERSHIP OF VOTING SHARES BY OFFICERS, DIRECTORS AND OTHERS
The following table sets forth the stock ownership in the Company, as of May
1, 2001, of each director and nominee for director and of each executive
officer named in the Summary Compensation Table on Page 7 hereof.
. Amount and Nature of Percent of
. Beneficial Ownership of Class A
. Name Class A Common Stock Common Stock
. ----------------------- ------------
J. Douglas Cagle 2,090,355 (1 44.1%
George Douglas Cagle 453,516 (2 9.6%
Kenneth R. Barkley 5,300 (3 *
James David Cagle 440,147 (4 9.3%
Jerry D. Gattis 792 *
Mark M. Ham IV 2,600 (5 *
John J. Bruno, Jr. 549 *
Candace Chapman 1,028 *
G. Bland Byrne III 2,000 *
Panos J. Kanes 0 *
Johnny M. Burkett 0 *
All directors, nominees and
executive officers as a
group (twelve (12) persons) 2,996,287 (6 63.2%
*Less than 1% of issued and outstanding shares of Class A Common Stock of the
Company.
1 This amount includes 946,375 shares owned by Mr. Cagle as trustee of a
trust established under the will of his father.
2 This amount includes 117,300 shares held as custodian for Mr. Cagle's
children.
3 This amount includes 2,500 shares which may be acquired upon the
exercise of options which are presently exercisable.
4 This amount includes 127,133 shares held as custodian for Mr. Cagle's
children.
5 This amount includes 2,500 shares which may be acquired upon the
exercise of options which are presently exercisable.
6 This amount includes 5,000 shares which may be acquired upon the
exercise of options which are presently exercisable.
Page 3
The following table sets forth each person known to management to be the
beneficial owner of more than five percent of the voting securities of the
Company as of May 1, 2001:
Name and Address of Title of Amount and Nature Percent of
Beneficial Owner Class of Beneficial Ownership1 Class
. Amount and Nature
Name and Address of Title of of Beneficial Percent of
Beneficial Owner Class Ownership (1) Class
- ------------------------ ------------- ----------------- -----------
J. Douglas Cagle Class A 2,090,355 (2 44.1%
2001 Hills Avenue, N.W. Common Stock
Atlanta, Georgia 30318
George Douglas Cagle Class A 453,516 (3 9.6%
2001 Hills Avenue, N.W. Common Stock
Atlanta, Georgia 30318
James David Cagle Class A 440,147 (4 9.3%
2001 Hills Avenue, N.W. Common Stock
Atlanta, Georgia 30318
FMR Corp. Class A 354,700 7.5%
82 Devonshire Street Common Stock
Boston, Massachusetts 02109
___________
1 Of the shares shown in this column, management knows of no shares with
respect to which such listed beneficial owners have the right to acquire
beneficial ownership as specified in regulations of the Securities and
Exchange Commission.
2 This amount includes 946,375 shares owned by Mr. Cagle as trustee of a
trust established under the will of his father.
3 This amount includes 117,300 shares held as custodian for Mr. Cagle's
children.
4 This amount includes 127,133 shares held as custodian for Mr. Cagle's
children.
Page 4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
Securities and Exchange Commission ("SEC") regulations, the Company's
directors, certain officers, and greater than ten percent shareholders are
required to file reports of ownership and changes in ownership with the SEC
and the American Stock Exchange and to furnish the Company with copies of all
such reports they file. Based solely on its review of such reports from
certain reporting persons, the Company believes that all filing requirements
applicable to its directors, officers and ten percent shareholders were
satisfied during the Company's last fiscal year, except as follows: (i)
Johnny M. Burkett, an executive officer of the Company, failed to report on a
timely filed Form 4 or Form 5, (A) purchases of an aggregate of 267 shares of
Class A Common Stock of the Company between April 1997 and March 2000, which
purchases were effectuated by the stock brokerage firm holding Mr. Burkett's
shares, which firm mistakenly believed the Company had in place a dividend
reinvestment plan, and (B) a sale of 9852 shares on February 16, 2001; and
(ii) Candace Chapman, a director of the Company, failed to report on a timely
filed Form 4 or Form 5 purchases of an aggregrate of 28 shares of Class A
Common Stock of the Company which purchases were effectuated by the stock
brokerage firm holding Ms. Chapman's shares, which firm also mistakenly
believed the Company had in place a dividend reinvestment plan. Both
brokerage firms have been notified that the Company has no such dividend
reinvestment plan and instructed to cease reinvesting dividends in shares of
the Company's Class A Common Stock.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
AND COMPENSATION OF DIRECTORS
The Board of Directors established an Audit Committee in February 1981. This
committee reviews the work of the Company's independent public accountants,
management, and internal accounting staff to ensure that each is properly
discharging its responsibilities in the area of financial control and
reporting. As of the date of the most recent meeting of the Audit Committee,
two of the three members of the Committee, G. Bland Byrne III and George
Douglas Cagle, were not considered independent directors under the Rules of
the American Stock Exchange. Since that time, a rule of the American Stock
Exchange has become effective which requires at least two of the three
members of the Committee to be independent, and places certain other
restrictions on the remaining member. At the current date, the membership of
the Audit Committee has been changed to comply with this rule, and the
members now consist of Candace Chapman, Chairman, G. Bland Byrne III, and
Panos J. Kanes. G. Bland Byrne III is not considered independent under the
rules of the American Stock Exchange due to the amount of compensation for
legal services that the Company paid to the law firm of which he is a
partner. (See MATERIAL INTERESTS AND MATERIAL TRANSACTIONS.) In conformity
with the applicable rule of the American Stock Exchange, the Board determined
that it was in the best interests of the Company and its shareholders for Mr.
Byrne to remain on the Audit Committee because of his extensive knowledge of
the Company's operations and because no other director could have satisfied
the requirements of the American Stock Exchange rule.
The Board has adopted a charter for the Audit Committee which is included as
an Appendix "A" to this Proxy Statement.
The Company does not have nominating or compensation committees of the Board
of Directors. During the last fiscal year, there were five meetings of the
Board of Directors, and the Audit Committee met one time. Each of the
incumbent directors during the last fiscal year attended at least 75% of the
aggregate of the number of meetings of the Board of Directors and the number
of meetings of the Audit Committee held during any period during which he or
she was a director or member of the Audit Committee, respectively.
During the Company's last fiscal year, each director who was not also an
officer or full time employee of the Company received an annual director's
fee in the amount of $15,000. Directors who were officers or full time
employees of the Company received an annual director's fee of $10,000.
Page 5
REPORT OF THE AUDIT COMMITTEE
The Committee reviewed with the Company's Chief Financial Officer and the
independent auditors overall audit scopes and plans, the results of internal
and external audit examinations, evaluations by the auditors of the Company's
internal controls and the quality of the Company's financial reporting. The
Committee also discussed with the independent auditors other matters required
to be discussed by the auditors with the Committee under Statement on
Auditing Standards No. 61 (communication with audit committees). The
Committee received from the auditors their annual written report on their
independence from the Company and its management, which is made under
Independence Standards Board Standard No. 1 (independence discussions with
audit committees). The Committee did not engage in substantive discussions
with the auditors regarding their independence from the Company.
In performing all of these functions, the Audit Committee acts only in an
oversight capacity, and, in its oversight role, the Committee relies on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors, who, in their report, express an opinion on the conformity of the
Company's annual financial statements to generally accepted accounting
principles.
In reliance on these reviews and discussions and on the report of the
independent auditors, the Audit Committee has recommended to the Board of
Directors, and the Board has approved, that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the year ended
March 31, 2001, for filing with the Securities and Exchange Commission.
Candace Chapman, Chairman
G. Bland Byrne III
George Douglas Cagle
AUDIT FEES
Arthur Andersen LLP served as the auditors for the Company for the fiscal
year ended March 31, 2001. In addition to performing the audit of the
Company's consolidated financial statements, Arthur Andersen provided various
other services during fiscal 2001. The aggregate fees billed for fiscal 2001
for each of the following categories of services are set forth below:
Audit and quarterly reviews $159,000
All other services $140,000
Arthur Andersen did not provide any services related to financial information
systems design and implementation during fiscal 2001. All other services
include tax planning and preparation of tax returns of the Company and audits
of the Company's employee benefit plans.
Page 6
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in the
Company's fiscal year ended March 31, 2001, and its two prior fiscal years, to
the Company's Chief Executive Officer and the Company's four (4) other most
highly compensated executive officers.
. Summary Compensation Table
. Long Term
. Annual Compensation Compensation
- ----------------------- -------------------------- ------------ ---------------
. Securities
Name and Principal Underlying All Other
Position Year(1) Salary(2) Bonus(3) Options Compensation(4)
J. Douglas Cagle 2001 $335,154 $ -0- -0- $24,849 (5
Chairman of the Board & 2000 324,117 94,515 -0- 35,118 (5
Chief Executive Officer 1999 314,538 151,466 -0- 37,034 (5
Jerry D. Gattis 2001 319,439 -0- -0- 6,235
President & 2000 309,624 90,154 -0- 9,839
Chief Operating Officer 1999 299,343 144,477 -0- 12,282
John J. Bruno 2001 222,497 -0- -0- 2,769
Senior Vice President- 2000 206,268 59,055 -0- 8,982
Sales and Marketing 1999 197,455 94,640 -0- 7,310
Johnny M. Burkett 2001 204,027 -0- -0- 4,339
Senior Vice President 2000 196,269 59,055 -0- 5,522
1999 190,220 94,640 -0- 5,881
Kenneth R. Barkley 2001 151,801 -0- -0- 5,482
Senior Vice President- 2000 146,530 41,081 -0- 8,521
Finance, Treasurer & 1999 143,096 65,884 -0- 8,339
Chief Financial Officer
___________
1 The year designated in this column refers to the Company's fiscal year
which ended in such year, which for 2001 was March 31, 2001.
2 With regard to each named executive officer who is also a director of the
Company, the amounts shown in this column include the amount of the annual
director's fee paid to such person, as reported on the preceding page.
3 The amounts in this column represent the bonuses paid to the named
individuals pursuant to the Company's Executive Bonus Plan.
4 This column includes contributions or payments to, or for the account of,
the named individuals pursuant to the Company's Cash or Deferred
Profit-Sharing Plan (the "401(k) Plan"), the Company's Nonqualified Savings
Plan and the Company's medical reimbursement plan. The medical reimbursement
plan covers directors who are also employees and officers. Medical expenses
of the covered individuals and their dependents which are not otherwise
covered by insurance are paid under this plan upon the filing of a proof of
claim by the covered individual with the Company's insurance carrier.
5 These amounts include $28,752 for 1999, $30,478 for 2000 and $22,942 for
2001, representing the portion of the premiums paid with respect to the
split dollar life insurance policies described in COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION below, which portion is considered
income for purposes of taxation.
Page 7
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
. Number of Value of
. Securities Unexercised
. Underlying In-the-Money
. Unexercised Options at
. Options at Year End
. Shares Acquired Value Year End (#) ($)
. on Exercise Realized Exercisable/ Exercisable/
Name (#) $ Unexercisable Unexercisable
- ------------------ --------------- ---------- ------------- ----------------
J. Douglas Cagle _ _ _ _
Jerry D. Gattis _ _ _ _
John J. Bruno _ _ _ _
Johnny M. Burkett _ _ _ _
Kenneth R. Barkley _ _ 2,500/0 0/0
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Company does not have a standing compensation
committee. The entire Board determines the compensation of the Chief Executive
Officer, and the Chief Executive Officer determines the compensation of the
remaining executive officers of the Company and its wholly owned subsidiary.
The following members of the Board of Directors were also executive officers of
the Company and its subsidiary during the last fiscal year: J. Douglas Cagle,
Jerry D. Gattis, Kenneth R. Barkley, John J. Bruno, Jr., Mark M. Ham IV, George
Douglas Cagle and James David Cagle.
Two irrevocable trusts hold two cash value life insurance policies on the lives
of J. Douglas Cagle and his wife, the aggregate face value of which is
$20,000,000. The Company is a party to a split dollar agreement with each trust
pursuant to which the Company has agreed to make all premium payments on the
policies which are not paid by the trusts until the death of both J. Douglas
Cagle and his wife or, if earlier, the termination of the agreements by the
trusts, at which time the trusts shall repay to the Company all amounts paid by
the Company on such policies. The premiums paid by the Company on these
policies during the last fiscal year totaled $139,293.
Board Report on Executive Compensation
The components of the annual compensation paid to the Chief Executive Officer
and the other executive officers of the Company are (i) base salary; (ii) a
bonus calculated pursuant to the provisions of the Company's Executive Bonus
Plan; (iii) allocation of contributions made by the Company to the respective
accounts of such executive officers under the Company's 401(k) Plan; (iv)
allocations of contributions made by the Company to the respective accounts of
such executive officers under the Company's Nonqualified Savings Plan; and (v)
payments made pursuant to the Company's medical reimbursement plan. All
executive officers other than the Chief Executive Officer are also eligible to
participate in the Company's 1993 Stock Option Plan.
The base salaries of the Chief Executive Officer and the other executive
officers are not directly related to factors such as the Company's
profitability, sales growth, return on equity or market share, except to the
extent that such factors impact the Company's overall ability to satisfy its
compensation obligations to all employees. The base salaries for the Chief
Executive Officer and the other executive officers of the Company are determined
primarily by a comparison of similarly situated officers of other companies in
the poultry industry. Years of service,
Page 8
degree of responsibilities, company growth, future plans and the Company's
current ability to pay are also taken into account in determining such base
salaries.
The Chief Executive Officer and certain other executive officers are
participants in the Company's Executive Bonus Plan. The amount of the bonuses
payable are based upon an increase in the Company's after tax return on
shareholder equity during its fiscal year. Such return is calculated before the
accrual of any bonus payable pursuant to the plan. Pursuant to the plan, each
participant receives a bonus in an amount equal to: fifty percent (50%) of such
participant's base salary for a return on shareholders equity of twenty percent
(20%) or more, thirty percent (30%) of base salary for a return of 15% to
19.99%, twenty percent (20%) of base salary for a return of 10% to 14.99%, with
no bonus payable if the return is less than ten percent (10%).
The stock options granted under the 1993 Stock Option Plan, which plan was
approved by the shareholders in July, 1993, provide an incentive for executive
officers to manage the Company with a view toward maximization of long-term
shareholder value. Stock options to purchase Class A Common Stock may be
granted by the Plan Administrator to executive officers at an option price of
100% of the market value on the date of the grant, with a maximum term of 10
years. The Plan Administrator has sole discretion in determining the amount of
shares covered by each option and the vesting thereof.
This report was prepared by the entire Board of Directors of the Company.
Page 9
Performance Graph
The following graph presents a comparison of five year cumulative total
shareholder returns among Cagle's, Inc., the S&P 500 Index and a Peer Group
Index. This information provides the annual return from the beginning of the
previous fiscal year assuming dividends are reinvested monthly. The graph
assumes an initial investment of $100 in March 1996. The Peer Group Index
consists of the following companies: Pilgrim's Pride Corporation, Sanderson
Farms, Inc., and Tyson Foods, Inc.
March 31, 1996 = $100.00
. Base
. Year March March March March March
Company/Index 1996 1997 1998 1999 2000 2001
. ---- ----- ----- ----- ----- -----
CAGLE'S, INC. 100 76.49 73.82 97.49 55.31 69.85
S&P 500 INDEX 100 119.82 117.34 210.07 247.77 194.06
PEER GROUP INDEX 100 127.16 131.24 141.73 74.98 94.97
Page 10
MATERIAL INTERESTS AND MATERIAL TRANSACTIONS
Certain directors or nominees for director are affiliated with entities that
have transacted a material amount of business with the Company during the
Company's last fiscal year or that propose to do so during the Company's current
fiscal year. These business relationships are as follows:
The firm of Byrne, Moore & Davis, P.C. in which Mr. G. Bland Byrne III, a
director of the Company, is a principal, received $1,586,005 during the last
fiscal year of the Company as fees for legal services rendered to the Company
and its subsidiaries.
The Board of Directors of the Company does not have a standing compensation
committee. The entire Board determines the compensation of the Chief Executive
Officer, and the Chief Executive Officer determines the compensation of the
remaining executive officers of the Company and its wholly owned subsidiary.
The following members of the Board of Directors were also executive officers of
the Company and its subsidiary during the last fiscal year: J. Douglas Cagle,
Jerry D. Gattis, Kenneth R. Barkley, John J. Bruno, Jr., Mark M. Ham IV, George
Douglas Cagle and James David Cagle.
Two irrevocable trusts hold two cash value life insurance policies on the lives
of J. Douglas Cagle and his wife, the aggregate face value of which is
$20,000,000. The Company is a party to a split dollar agreement with each trust
pursuant to which the Company has agreed to make all premium payments on the
policies which are not paid by the trusts until the death of both J. Douglas
Cagle and his wife or, if earlier, the termination of the agreements by the
trusts, at which time the trusts shall repay to the Company all amounts paid by
the Company on such policies. The premiums paid by the Company on these
policies during the last fiscal year totaled $139,293.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation of shareholders of record by mail, telephone or personal contact,
arrangements will be made with brokerage houses to furnish proxy materials to
their principals, and the Company will reimburse them for mailing expenses.
Custodians and fiduciaries will be supplied with proxy materials to forward to
beneficial owners of stock.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP to serve as independent
accountants of the Company for the current fiscal year. Arthur Andersen LLP has
served as the Company's independent accountants since 1984.
Representatives from Arthur Andersen LLP are expected to be present at the
annual shareholders' meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.
PROPOSALS OF SECURITY HOLDERS FOR 2002 ANNUAL MEETING
The deadline for receipt of shareholder proposals for inclusion in the Company's
proxy statement and form of proxy for presentation at the 2002 annual meeting of
shareholders is February 12, 2002.
OTHER MATTERS
Management does not know of any matter to be brought before the meeting other
than those referred to above. If any other matters properly come before the
meeting, the persons designated as proxies will vote thereon in accordance with
their best judgment.
Page 11
Whether or not you expect to be present at the meeting in person, please sign,
date and return the enclosed proxy promptly in the enclosed business reply
envelope. No postage is necessary if mailed in the United States.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS HEREBY
SOLICITED, ON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 13a-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
COMPANY'S MOST RECENT FISCAL YEAR. REQUESTS SHOULD BE ADDRESSED TO MR. GEORGE
L. PITTS, SECRETARY, CAGLE'S, INC., POST OFFICE BOX 4664, ATLANTA, GEORGIA
30302. IF THE PERSON REQUESTING THE REPORT WAS NOT A SHAREHOLDER OF RECORD ON
MAY 26, 2001, THE REQUEST MUST INCLUDE A REPRESENTATION THAT SUCH PERSON WAS A
BENEFICIAL OWNER OF THE COMMON STOCK ON THAT DATE.
By order of the Board of Directors.
George L. Pitts, Secretary
Atlanta, Georgia
June 15, 2001
Page 12
APPENDIX "A"
CAGLE'S, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of Directors
(the "Board") to assist the Board in fulfilling its oversight responsibilities.
The Committee's primary purpose is to monitor the integrity of the Company's
financial reporting process, including the Company's systems of internal
accounting and financial controls, and the annual independent audit of the
Company's financial statements. The Committee will monitor the independence and
the performance of the Company's independent auditors.
AUTHORITY
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company. The Committee is authorized to retain
outside counsel, auditors or other experts and professionals for this purpose.
The outside auditor is ultimately accountable to the Board and the Committee, as
representatives of the shareholders. The Board and the Committee have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditor (or to nominate the outside auditor to
be proposed for shareholder approval in any proxy statement.)
MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board,
and the Committee's composition shall meet all requirements of the Audit
committee policy of the American Stock Exchange.
RESPONSIBILITIES
The Committee's job is one of oversight. In discharging its oversight
responsibilities, the Committee is not providing any expertise or special
assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. This list shall not be
construed as being an all encompassing listing of the Committee's duties. These
functions are set forth as a guide with the understanding that the Committee may
diverge from this guide as appropriated under the circumstances.
1. The Committee shall review with management and the outside Company's auditors
the audited financial statements to be included in the Company's Annual
Report on Form 10-K (or the Annual Reports to Shareholders if distributed
prior to the filing of Form 10-K) and review and consider with the outside
auditors the matters required to be discussed by Statement of Auditing
Standards ("SAS") No. 61. The management review shall include consultation
with the Company's counsel relative to legal matters that could have a
significant impact on the Company's financial statement.
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2. The outside auditors shall be instructed to contact the Committee chair
whenever they feel the need to discuss specific issues relating to the
Company's quarterly financial report. As a whole, or through the Committee
chair, the Committee shall review with the outside auditors the Company's
interim financial results to be included in the Company's Quarterly Reports
on Form 10-Q to be filed with the Commission and the matters required to be
discussed by SAS No. 61, whenever the outside auditors contact the Committee
chair. Such review shall occur prior to the filing of the Company's Quarterly
Reports on Form 10-Q.
3. The Committee shall discuss with Management and the outside auditors the
quality and adequacy of the Company's internal controls.
4. The Committee shall request from the outside auditors annually, a formal
written statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard No.1;
5. The Committee shall discuss with the outside auditors any such disclosed
relationships and their impact on the outside auditor's independence; and
6. The Committee shall recommend that the Board take appropriate action in
response to the outside auditor's report to satisfy itself of the auditor's
independence.
The Committee shall review the adequacy of this Charter on an annual basis.
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