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NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
- ------------------------------------------------------------------- --- ----------------
Directors Whose Terms Expire in 1997:
John T. Roberts.................................................... 37 July 1, 1993
Mr. Roberts is Chief Financial Officer and Treasurer of Quest
Environmental Resources Corporation, a distributor of
environmental safety products. He practiced law with a private
law firm until September 1989, at which time he became a
private investor. He assumed his present position in February
1991. Mr. Roberts is a member of the Compensation Committee.
Richard O. Ryan.................................................... 53 June 15, 1988
Mr. Ryan is President and Chief Operating Officer of the
Company. Mr. Ryan is a member of the Executive Committee.
Directors Whose Terms Expire in 1998:
H. Blair White..................................................... 68 August 29, 1988
Mr. White is Of Counsel to Sidley & Austin, a law firm that
provides legal services to the Company. He is a director of
R.R. Donnelley & Sons Company. Mr. White is Chairman of the
Compensation Committee and of the Executive Committee.
Bruce P. Bickner................................................... 52 June 15, 1988
Mr. Bickner is Chairman and Chief Executive Officer of the
Company. Mr. Bickner was Chairman of the Board and Chief
Executive Officer of DEKALB Energy Company until November
1992. He is a director of Castle BancGroup, Inc. Mr. Bickner
is a member of the Executive Committee.
Dr. Charles Arntzen................................................ 54 August 1, 1990
Dr. Arntzen is President and Chief Executive Officer of the
Boyce Thompson Institute for Plant Research, Inc. He was
Manager, Plant Biotechnology Program, Institute of Biosciences
and Technology of Texas A & M University until he assumed his
present position in August 1995. He was deputy Chancellor for
Agriculture and Dean of the College of Agriculture and Life
Sciences of Texas A & M University until January 1992. He also
serves on the University of Chicago's Board of Governors for
the Argonne National Laboratory. Dr. Arntzen is Chairman of
the Audit Committee.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed by or under the direction of the
Board of Directors. The Board has established several committees whose principal
functions are briefly described below. During fiscal 1995, the Board of
Directors held five meetings. All of the directors attended at least 75 percent
of the meetings of the Board and the Committees on which they served during the
year except for H. Blair White, who attended ten of the fourteen meetings of the
Board of Directors and of the applicable Audit, Compensation and Executive
Committee meetings held during fiscal 1995. Directors who are not employees of
the Company are paid $14,000 annually, plus $1,000 per day for attending
meetings of the Board of Directors, meetings of the committees of the Board of
Directors or for attending other meetings at the request of the Company, plus
expenses for attending meetings. An additional fee of $1,000 per year is paid to
each of the Chairmen of the Executive, Compensation and Audit Committees.
Pursuant to the DEKALB Genetics Corporation Director Stock Option Plan (the
"Director Plan"), directors who are not officers or employees of the Company may
elect to receive options to purchase shares of Class A Common Stock of the
Company in lieu of cash compensation ("Director Options"). The number of
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shares of Class A Common Stock subject to each Director Option shall be equal to
the nearest number of whole shares determined by dividing the amount of the
Annual Retainer and Meeting Fees by 25 percent of the Fair Market Value (as
defined below) of a share of Class A Common Stock on the date of the annual
meeting of stockholders of the Company. For purposes of the Director Plan, the
"Annual Retainer" is equal to the amount the director will be entitled to
receive for serving as a director in the relevant year and the "Meeting Fees"
are equal to the amounts the director will be entitled to receive for attendance
at all regularly scheduled meetings of the Board of Directors or any committee
of the Board of Directors of which he is a member in the relevant year. If a
director does not attend such a Board of Directors or committee meeting
(including non-attendance because any meeting was not held), the director will
forfeit that portion of the Director Options related to the Meeting Fees for
that meeting. The per share exercise price of the Class A Common Stock subject
to each Director Option will be 75 percent of the Fair Market Value of a share
of Class A Common Stock on the date prior to the date each Director Option was
granted. Under the Director Plan, the "Fair Market Value" of a share of Class A
Common Stock is the last price per share at which a share of the Company's Class
B Common Stock is sold in the regular way on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on the day prior to the
day each Director Option is granted, or, in the absence of any reported sales on
such day, the first preceding day on which there were such sales.
The Executive Committee is authorized to act in lieu of the Board between
meetings of the Board and recommends to the Board nominees for the Board. The
Executive Committee will consider suggestions for Board nominees by shareholders
if such suggestions are received in writing by the Secretary of the Company on
or before May 31 of each year. The Executive Committee held five meetings during
fiscal 1995.
The Audit Committee reviews periodically with independent auditors the
performance of the services for which such auditors are engaged, including
reviewing the scope of the annual audit and its results, reviewing the adequacy
of the Company's internal accounting controls with management and auditors, and
reviewing fees charged by the Company's independent auditors. The Audit
Committee held three meetings during fiscal 1995.
The Compensation Committee reviews and recommends to the Board of Directors
compensation to be paid to senior officers of the Company. During fiscal 1995,
the Compensation Committee held three meetings. Certain members of the Board of
Directors serve, along with officers of the Company, on committees administering
various employee benefit plans of the Company.
APPROVAL OF PROPOSED AMENDMENT TO THE
DEKALB GENETICS CORPORATION LONG-TERM INCENTIVE PLAN
As described elsewhere in this Proxy Statement, the Company has a Long-Term
Incentive Plan (the "LTIP") that provides for, among other things, the grant to
eligible officers and other key employees of options ("Options") to purchase
Class A or Class B Common Stock (collectively, "Common Stock") of the Company,
stock appreciation rights ("SARs") and shares of restricted Common Stock
("Restricted Stock"). Holders of shares of Class A Common Stock are being asked
to approve a proposed amendment (the "Amendment") to the LTIP which would
increase the number of shares of Common Stock available for grant under the LTIP
(the "Increased Share Authorization"), place a limit on the number of shares
which may be subject to outstanding grants under the LTIP from time to time (the
"Outstanding Grant Limit"), and place a limit on the number of shares of Common
Stock subject to awards under the LTIP that can be granted to any participant
during any year (the "Participant Limit").
A copy of the Amendment is attached to this Proxy Statement as Exhibit A
and the description of the Amendment is qualified in its entirety by reference
to the full text of Exhibit A.
BACKGROUND
Increased Share Authorization and Outstanding Grant Limit. The LTIP
currently provides that the number of shares of Common Stock which may be issued
and sold or granted under the LTIP shall be the
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The Outstanding Grant Limit and the Participant Limit are further
limitations on the current terms of the LTIP and do not add benefits or
compensation currently available for awards under the LTIP.
VOTE REQUIRED AND RECOMMENDATION
Each holder of shares of Class A Common Stock will be entitled to cast one
vote for each such share held of record on the record date. Approval of the
Amendment requires the affirmative vote of at least a majority of the shares of
Class A Common Stock of the Company present (in person or by proxy) and entitled
to vote at the meeting. Consequently, shares which are voted to abstain from
voting on the approval of the Amendment will have the legal effect of a vote
against approval of the Amendment and shares which are not voted with respect to
the approval of the Amendment (including broker non-votes) will not affect the
approval of the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of November 30, 1995 the beneficial
ownership of the Class A and Class B Common Stock of the Company (including
shares as to which a right to acquire ownership exists (e.g., through the
exercise of stock options) within the meaning of Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934) of each director and nominee, each Named
Executive Officer (as defined below) and all directors and executive officers as
a group:
NUMBER OF SHARES OF COMMON STOCK
OWNED BENEFICIALLY AND PERCENTAGES
OF CLASS OUTSTANDING ON NOVEMBER 30,
1995(1)(2)
-------------------------------------------
CLASS A % CLASS B %
------- ------ ------- -----
Charles J. Arntzen(3)................................ 4,362 .562 -- --
Allan Aves(4)........................................ 12,634 1.611 -- --
Bruce P. Bickner(5).................................. 53,548 6.506 -- --
Richard T. Crowder(6)................................ 1,667 .216 -- --
Tod R. Hamachek(7)................................... 9,640 1.234 -- --
Paul H. Hatfield(8).................................. 8,678 1.112 -- --
Virginia Roberts Holt(9)(10)......................... 136,470 17.681 10,168 .230
Thomas R. Rauman(11)................................. 4,634 .597 100 .002
Douglas C. Roberts(10)(12)........................... 136,954 17.690 14,021 .317
John T. Roberts(10)(13).............................. 141,617 18.222 9,500 .215
Richard O. Ryan(14).................................. 24,464 3.078 4,150 .094
H. Blair White(15)................................... 19,051 2.426 -- --
John H. Witmer, Jr.(16).............................. 19,600 2.478 -- --
All of the above and all other executive officers as
a group (17 persons)(17)........................... 589,041 62.473 37,989 .859
- ---------------
(1) Unless otherwise noted, the named individual has sole voting and investment
power with respect to the shares of Class A (voting) Common Stock and sole
investment power with respect to the shares of Class B (non-voting) Common
Stock listed.
(2) The Securities and Exchange Commission defines the beneficial owner of a
security as including any person who has sole or shared voting or
investment power with respect to such security.
(3) Includes 4,362 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(4) Includes 12,484 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
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(5) Includes 51,250 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(6) Includes 1,667 shares of Class A Common Stock subject to an option which
may be acquired on or prior to January 29, 1996.
(7) Includes 9,640 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(8) Includes 8,678 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(9) Includes 17,598 shares of Class A Common Stock and 2,800 shares of Class B
Common Stock held in trusts for the benefit of the children of Virginia
Roberts Holt of which she or her spouse is the trustee. Includes 700 shares
of Class B Common Stock held by her spouse.
(10) Douglas C. Roberts, John T. Roberts and Virginia Roberts Holt are brothers
and sister.
(11) Includes 4,634 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(12) Includes 22,618 shares of Class A Common Stock held in trusts for the
benefit of the children of Douglas C. Roberts of which he or his spouse is
the trustee. Includes 2,367 shares of Class A Common Stock subject to
options which may be acquired on or prior to January 29, 1996.
(13) Includes 18,699 shares of Class A Common Stock and 2,100 shares of Class B
Common Stock held in trusts for the benefit of the children of John T.
Roberts of which he or his spouse is the trustee. Includes 700 shares of
Class B Common Stock held by his spouse. Includes 5,337 shares of Class A
Common Stock subject to options which may be acquired on or prior to
January 29, 1996.
(14) Includes 23,000 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(15) Includes 600 shares of Class A Common Stock as to which investment power is
shared. Includes 13,411 shares of Class A Common Stock subject to options
which may be acquired on or prior to January 29, 1996.
(16) Includes 19,100 shares of Class A Common Stock subject to options which may
be acquired on or prior to January 29, 1996.
(17) Includes 171,041 shares of Class A Common Stock subject to options which
may be acquired on or before January 29, 1996.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long term compensation paid
by the Company and its subsidiaries for the fiscal years indicated to the Chief
Executive Officer and the four most highly compensated executive officers other
than the Chief Executive Officer, serving at the end of fiscal 1995 (the "Named
Executive Officers"):
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- --------------------------------
AWARDS PAYOUTS
NAME AND ---------------------- -------
PRINCIPAL POSITION OTHER ANNUAL NUMBER OF SECURITIES LTIP ALL OTHER
AT AUGUST 31, 1995 YEAR SALARY BONUS COMPENSATION(1) UNDERLYING OPTIONS(2) PAYOUTS COMPENSATION(3)
- --------------------------- ---- -------- -------- --------------- ---------------------- ------- ---------------
Bruce P. Bickner........... 1995 $285,016 $225,000 $20,389 3,750 $ 0 $28,277
Chairman and Chief 1994 269,992 55,800 14,782 0 0 17,300
Executive Officer 1993 266,539 0 18,093 0 0 9,925
Richard O. Ryan............ 1995 231,369 119,250 7,952 6,000 0 16,860
President and Chief 1994 196,969 41,850 6,765 0 0 7,631
Operating Officer 1993 214,308 0 8,149 0 0 6,922
Richard T. Crowder......... 1995 171,514 52,400 0 5,000 0 94,893
Senior Vice President, 1994 -- -- -- -- -- --
International(4) 1993 -- -- -- -- -- --
John H. Witmer, Jr......... 1995 164,885 43,000 331 0 0 14,135
Senior Vice President 1994 144,723 39,825 1,089 0 0 6,054
and General Counsel 1993 133,323 6,550 0 0 0 4,290
Thomas R. Rauman........... 1995 153,093 33,500 6,472 4,500 0 10,623
Vice President, Finance 1994 116,185 20,000 17,797 2,000 0 21,451
and CFO(5) 1993 78,769 5,000 0 1,700 0 2,572
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(1) Other Annual Compensation for fiscal 1995 arose from the following sources:
Taxable income for executive car participants (Mr. Bickner -- $6,428, Mr.
Ryan -- $7,637, Mr. Rauman -- $6,472); Personal use of company airplane (Mr.
Bickner -- $11,989, Mr. Ryan -- $315, Mr. Witmer -- $331) (pursuant to
Compensation Committee guidelines); reimbursement to Mr. Bickner for income
taxes related to benefit plan of $1,972.
(2) No restricted stock or stock appreciation rights (SARs) were awarded to the
Named Executive Officers during fiscal 1993, 1994 and 1995.
(3) All Other Compensation for fiscal 1995 arose from the following sources:
Company contributions to the Company's Deferred Compensation Plan (Mr.
Bickner -- $11,449, Mr. Ryan -- $7,393, Mr. Crowder -- $2,713, Mr. Witmer --
$4,783, Mr. Rauman -- $1,385); Company contributions to the Company's
Savings and Investment Plan (Mr. Bickner -- $9,000, Mr. Ryan -- $9,000, Mr.
Crowder -- $9,000, Mr. Witmer -- $9,000, Mr. Rauman -- $9,000); and
Reimbursement for life insurance premiums (Mr. Bickner -- $7,828, Mr. Ryan
-- $467, Mr. Crowder -- $197, Mr. Witmer -- $352 and Mr. Rauman -- $238);
and Company payment to Mr. Crowder of $25,000 for relocation and $57,983 as
reimbursement for benefits lost at his previous employer.
(4) Mr. Crowder's employment with the Company began October 26, 1994.
(5) Mr. Rauman's employment with the Company began January 1, 1993.
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OPTION GRANTS DURING FISCAL 1995
The following table sets forth the number of shares of Class A Common Stock
that were granted subject to options during fiscal 1995 to each Named Executive
Officer receiving such a grant:
INDIVIDUAL GRANTS
-----------------------------------------------------------------
PERCENTAGE OF
TOTAL SHARES
NUMBER OF SECURITIES GRANTED TO EXERCISE
UNDERLYING OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL 1995 SHARE DATE PRESENT VALUE(2)
- ----------------------------- -------------------- -------------- --------- ---------- ----------------
Bruce P. Bickner............. 3,750 6.49% $ 27.00 01/16/05 $ 45,225
Richard O. Ryan.............. 6,000 10.39% $ 27.00 01/16/05 72,360
Richard T. Crowder........... 5,000 8.66% $ 29.75 10/25/04 69,450
Thomas R. Rauman............. 4,500 7.79% $ 27.00 01/16/05 54,270
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(1) These options to purchase Class A Common Stock of the Company were granted
under the Company's Long-Term Incentive Plan (LTIP) at an exercise price of
100 percent of fair market value on the date of grant. The options are
exercisable over a period of not more than ten years from the date of grant.
The stock option grants to Messrs. Bickner, Ryan and Rauman were made
effective January 17, 1995. Vesting is over a three-year period from the
date of grant, with one-third of the options vesting on January 17, 1996,
one-third vesting on January 17, 1997 and the final one-third vesting on
January 17, 1998. Mr. Crowder's stock option grant was made effective
October 26, 1994. Vesting is also over a three-year period with one-third of
the options vesting on October 26, 1995, one-third vesting on October 26,
1996 and the final one-third vesting on October 26, 1997.
(2) Grant date present value is based on a Black-Scholes option pricing model
adapted for use in valuing executive stock options. In calculating the grant
present values set forth in the table, a factor of 40% has been assigned to
the volatility of the common stock, the annual dividend assumption is $0.80
per share, the interest rate has been fixed at 8.00% and the exercise of
options has been assumed to occur at the end of the actual option term of
ten years. There is no assurance that these assumptions will prove to be
true in the future. Consequently, the actual value, if any, an executive may
realize will depend on the common stock price on the date the option is
exercised, so that there is no assurance the value realized by an executive
will be at or near the value estimated by the Black-Scholes model.
AGGREGATED OPTION EXERCISES DURING FISCAL 1995 AND
FISCAL 1995 YEAR-END OPTION VALUES
The following table sets forth the number of shares of Class A and Class B
Common Stock that were purchased pursuant to options exercised, and the number
and value of shares subject to unexercised options at August 31, 1995, for each
of the Named Executive Officers:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS AT
SHARES AUGUST 31, 1995(2) AUGUST 31, 1995(1)(3)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ----------- ----------- ------------- ----------- -------------
Bruce P. Bickner......... -0- -0- 50,000 3,750 $ 1,293,398 $48,281
Richard O. Ryan.......... -0- -0- 21,000 6,000 $ 520,285 $77,250
Richard T. Crowder....... -0- -0- -0- 5,000 $ -0- $50,625
John H. Witmer, Jr. ..... -0- -0- 19,100 -0- $ 485,012 $ -0-
Thomas R. Rauman......... -0- -0- 1,866 6,434 $ 23,591 $82,071
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(1) Market value of underlying securities at exercise or year-end, minus the
exercise price.
(2) No employee of the Company holds any SARs relating to Class A or Class B
Common Stock.
(3) Assumed August 31, 1995 fair market value of $39.875 per share of Class B
Common Stock.
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LONG-TERM INCENTIVE -- AWARDS DURING FISCAL 1995
The following table sets forth the long-term incentive awards made during
fiscal 1995 to each Named Executive Officer receiving such an award:
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE NON-STOCK PRICE BASED PLANS
PERFORMANCE UNITS PERIOD UNTIL -------------------------------
NAME AWARDED(1) MATURATION THRESHOLD TARGET MAXIMUM
------------ ----------------- ------------ --------- ------- -------
Bruce P. Bickner..................... 53,600 08/31/97 -0- $53,600 $93,800
Richard O. Ryan...................... 32,000 08/31/97 -0- $32,000 $56,000
Richard T. Crowder................... 10,000 08/31/97 -0- $10,000 $17,500
John H. Witmer, Jr................... 13,600 08/31/97 -0- $13,600 $23,800
Thomas R. Rauman..................... 16,000 08/31/97 -0- $16,000 $28,000
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(1) These awards are performance units covering the performance during the 1995,
1996 and 1997 fiscal years. The targeted value of each performance unit is
$1.00 with a maximum payout of $1.75 per unit. The performance units vest
over a three-year period with one-third vesting at the end of the first
year, one-third vesting at the end of the second year and the final third
vesting at the end of the third year. For all Named Executive Officers, the
payment is based on earnings per share for fiscal year 1997.
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR YEARS OF SERVICE
The following table sets forth the estimated annual retirement benefits
payable upon retirement pursuant to the Company's retirement plans for the
indicated levels of remuneration and years of service for each Named Executive
Officer:
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------
COMPENSATION 10 15 20 25 30
- ------------ -------- -------- -------- -------- --------
$150,000...................... $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000
175,000...................... 35,000 52,500 70,000 87,500 105,000
200,000...................... 40,000 60,000 80,000 100,000 120,000
225,000...................... 45,000 67,500 90,000 112,500 135,000
250,000...................... 50,000 75,000 100,000 125,000 150,000
275,000...................... 55,000 82,500 110,000 137,500 165,000
300,000...................... 60,000 90,000 120,000 150,500 180,000
325,000...................... 65,000 97,500 130,000 162,500 195,000
350,000...................... 70,000 105,000 140,000 175,000 210,000
375,000...................... 75,000 112,500 150,000 187,500 225,000
400,000...................... 80,000 120,000 160,000 200,000 240,000
425,000...................... 85,000 127,500 170,000 212,500 255,000
450,000...................... 90,000 135,000 180,000 225,000 270,000
475,000...................... 95,000 142,500 190,000 237,500 285,000
500,000...................... 100,000 150,000 200,000 250,000 300,000
The defined benefit plan for executives is based upon the average
annualized salary (consisting of salary and bonus) of the last 36 consecutive
months prior to October 1, 1993, at which time the pension plan was suspended.
Compensation earned after that date and future service shall not be included
when calculating pension benefits. At October 1, 1993, average annualized salary
for each of the Named Executive Officers who are eligible to participate is as
follows: Bruce P. Bickner -- $380,590; Richard O. Ryan -- $250,452; John H.
Witmer, Jr. -- $227,836; Thomas R. Rauman -- $128,782.
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The credited years of service for each of the Named Executive Officers is:
Bruce P. Bickner............................................... 18
Richard O. Ryan................................................ 14
John H. Witmer, Jr............................................. 15
Thomas R. Rauman............................................... 23
Richard T. Crowder is not eligible to participate in the pension plans.
The benefits are calculated by determining the average annualized earnings
of the applicable 36 months and multiplying this by the number of years of
service times two percent. These benefits will be reduced by social security
benefits, qualified pension plan benefits and benefits from a profit sharing
plan previously provided by the Company. The benefit table assumes that the
participant will retire at age 65. If not, the benefit will be reduced by three
percent for every year retirement takes place before age 65.
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with all of the
Named Executive Officers. Each employment agreement provides for a one-year term
and is subject to successive one-year extensions unless notice of termination is
given. The employment agreements provide for the following base salaries for
fiscal 1996 to be paid to the executive officers: Mr. Bickner ($295,000), Mr.
Ryan ($240,000), Mr. Crowder ($215,000), Mr. Witmer ($165,000) and Mr. Rauman
($160,000). Those executive officers will have Company performance-related bonus
opportunities which have been set for a target bonus of $225,000; $155,000;
$85,000; $53,000 and $60,000 respectively, which could be exceeded if
performance merits. Each employment agreement provides that if the executive is
terminated prior to the expiration of the term of the agreement such executive
officer will also be entitled to termination pay equal to 24 months' base salary
and target bonus in the case of Messrs. Bickner and Ryan, 12 months' base salary
and target bonus in the case of Mr. Crowder and 12 months' base salary in the
case of Messrs. Witmer and Rauman. Messrs. Bickner, Ryan, and Crowder are
subject to noncompete limitations for periods of time equaling the length of
their termination pay.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
With input on competitive and recommended practices from external
independent consultants, the Compensation Committee of the Board of Directors
has overseen the development and implementation of Company compensation programs
which seek to enhance Company profitability and shareholder value. The Company's
objective is to closely align the senior managers' financial interests with
those of the Company's shareholders. The Company subscribes to a total
compensation theory in which base salary, annual bonus, benefits, perquisites
and long-term incentives as components of the compensation package are
considered individually and in total. The Company considers three factors in
determining the levels and proportions of these compensation components for
executive managers.
The most important element is the Company's past and expected financial
performance and whether bonus payments are consistent with shareholder return.
Primary factors in determining shareholder return are net earnings and the
accomplishment of specific strategic objectives that will enhance earnings and
asset return. These specific strategic objectives include goals such as market
share gains, new product development, strategic plan development and marketing
plan accomplishment.
Secondly, consideration is given to the competitive practice of like-sized
companies and similar industries for paying positions with equivalent
responsibilities. The Company uses both a seed industry survey and general
industry surveys in determining external pay levels. The seed industry survey is
conducted by the American Seed Trade Association ("ASTA") and covers pay
practices of 22 competitive seed companies.
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