Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   ☒   Yes    ☐   No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   ☐   Yes    ☒  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule of the Exchange Act. (Check one):

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule of the Exchange Act).   ☐  Yes    ☒  No

Aggregate market value of the voting and common equity held by of the Registrant computed by reference to the closing sales price of the common equity in The NASDAQ Stock Market on the last business day of the Registrant’s most recently completed second fiscal quarter: $3,109,889,226.

Number of shares outstanding of the Registrant’s common stock as of February 22, 2022: 22,323,097 shares of common stock, $1.00 per share par value.

 

 

 

This Form and other periodic reports filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other written or oral statements made by it or on its behalf, may include forward-looking statements within the meaning of the “Safe Harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These forward-looking statements are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and estimates expressed in such statements. These risks, uncertainties and other factors include, but are not limited to, the risks described in the “Risk Factors” sections of the Original Filing and our most recent Quarterly Report on Form and to the following:

(1) Changes in the market price for the Company’s finished products and feed grains, both of which may fluctuate substantially and exhibit cyclical characteristics typically associated with commodity markets.

(2) Changes in economic and business conditions, monetary and fiscal policies or the amount of growth, stagnation or recession in the global or U.S. economies, any of which may affect the value of inventories, the collectability of accounts receivable or the financial integrity of customers, and the ability of the end user or consumer to afford protein.

 

(3) Changes in the political or economic climate, trade policies, laws and regulations or the domestic poultry industry of countries to which the Company or other companies in the poultry industry ship product, and other changes that might limit the Company’s or the industry’s access to foreign markets.

(4) Changes in laws, regulations, and other activities in government agencies and similar organizations applicable to the Company and the poultry industry and changes in laws, regulations and other activities in government agencies and similar organizations related to food safety.

(5) Various inventory risks due to changes in market conditions, including, but not limited to, the risk that net realizable values of live and processed poultry inventories might be lower than the cost of such inventories, requiring a downward adjustment to record the value of such inventories at the lower of cost or net realizable value as required by generally accepted accounting principles.

(6) Changes in and effects of competition, which is significant in all markets in which the Company competes, and the effectiveness of marketing and advertising programs. The Company competes with regional and national firms, some of which have greater financial and marketing resources than the Company.

(7) Changes in accounting policies and practices adopted voluntarily by the Company or required to be adopted by accounting principles generally accepted in the United States.

(8) Disease outbreaks affecting the production, performance and/or marketability of the Company’s poultry products, or the contamination of its products.

(9) Changes in the availability and cost of labor and growers.

(10) The loss of any of the Company’s major customers.

(11) Inclement weather that could hurt Company flocks or otherwise adversely affect the Company’s operations, or changes in global weather patterns that could affect the supply and price of feed grains.

(12) Failure to respond to changing consumer preferences and negative or competitive media campaigns.

(13) Failure to successfully and efficiently start up and run a new plant or integrate any business the Company might acquire.

(14) Unfavorable results from currently pending litigation and proceedings, or litigation and proceedings that could arise in the future.

(15) Changes resulting from the pandemic, which could exacerbate any of the risks described above, and could include: high absentee rates that have prevented and may continue to prevent the Company from running some of its facilities at full capacity, or could in the future cause facility closures; an inability of contract poultry producers to manage their flocks; supply chain disruptions for feed grains; further changes in customer orders due to shifting consumer patterns; disruptions in logistics and the distribution chain for the Company’s products; liquidity challenges; and a continued or worsening decline in global commercial activity, among other unfavorable conditions.

(16) Risks relating to the Company’s entry into a definitive agreement to be acquired by a joint venture between Cargill, Incorporated (“Cargill”) and Continental Grain Company (“CGC”), including: the timing, receipt and terms and conditions of any required governmental or regulatory approvals of the proposed transaction and the related transactions involving affiliates of Cargill and CGC that could reduce the anticipated benefits of or cause the parties to abandon the proposed transaction; risks related to the satisfaction of the conditions to closing the proposed transaction (including the failure to obtain necessary regulatory approvals), and the related transactions involving affiliates of Cargill and CGC, in the anticipated timeframe or at all; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the Company’s common stock; disruption from the proposed transaction making it more difficult to maintain business and operational relationships, including retaining and hiring key personnel and maintaining relationships with the Company’s customers, vendors and others with whom it

 

does business; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement entered into pursuant to the proposed transaction or of the transactions involving affiliates of Cargill and CGC; risks related to disruption of management’s attention from the Company’s ongoing business operations due to the proposed transaction; significant transaction costs; and the risk of litigation and/or regulatory actions related to the proposed transaction or unfavorable results from litigation and proceedings that could arise in the future.

Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of Sanderson Farms. Each such statement speaks only as of the day it was made. The Company undertakes no obligation to update or to revise any forward-looking statements. The factors described above cannot be controlled by the Company. The words “believes,” “estimates,” “plans,” “expects,” “should,” “outlook,” and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Examples of forward-looking statements include statements about management’s beliefs about future growth plans, future earnings, production levels, capital expenditures, grain prices, global economic conditions, supply and demand factors and other industry conditions.

 

TABLE OF CONTENTS

 

 

 

by-laws,

10-K/A

 

1

Fred L. Banks, Jr.   Independent Director   Age: 79   Director Since: 2007   Committees:   Audit Nominating and Governance		Business Experience:   •  Senior Partner since 2008, and Partner from 2001 to 2008, Phelps Dunbar LLP, Jackson, Mississippi, practicing general commercial litigation   •  Presiding Justice from 1999 to 2001, and Justice from 1991 to 1999, Mississippi Supreme Court   •  Circuit Court Judge, Hinds and Yazoo Counties, Mississippi, from 1985 to 1991   •  Representative, Mississippi House of Representatives, from 1976 to 1985   •  Managing Partner, Anderson, Banks, Nichols and Leventhal and successor firms, from 1968 to 1985   Other Positions:   •  National Board Member, NAACP, since 1982 (chair, legal committee and member of executive, finance, and audit committees)   •  Chairman, Mississippi Civil Rights Museum Advisory Commission, since 2014   •  Chairman, Capitol City Convention Center Commission, since 2006   •  Chairman, Community Foundation for Greater Jackson, from 2007 to 2008   Education:   •  Bachelor of Arts, Howard University   •  Juris Doctor, cum laude , Howard University School of Law   Experience and Qualifications to Serve on the Board:   •  Mr. Banks’ extensive experience in law as a legislator, judge, and practicing lawyer allow him to provide valuable insight to the Board in overseeing legal risk management and adopting and implementing governance best practices.   •  His active legal career in Mississippi, where we are incorporated and have our principal office, makes him eminently qualified to help lead the Board’s Nominating and Governance Committee.   •  Mr. Banks has been a leader in numerous civic and philanthropic organizations in Mississippi and nationally. His experience and perspective in the areas of civil rights and equality of opportunity are invaluable to the Board in fulfilling the Company’s social responsibilities.

 

2

Toni D. Cooley   Independent Director   Age: 61   Director Since: 2007   Committees:   Compensation Nominating and Governance (Vice-Chair) Diversity, Equity, and Inclusion		Current Other Public Company Boards:   •  Trustmark Corporation (Nasdaq), since 2013   Business Experience:   •  Chief Executive Officer since 2020, Systems Automotive Interiors Alabama, LLC, a Tier One Supplier of upholstered seats to Mazda Toyota Manufacturing, USA, Inc.   •  Chief Executive Officer since 2016, and Founder and President from 2011 to 2016, Systems Automotive Interiors, LLC, a Tier One supplier of upholstered seats to Toyota Motor Manufacturing   •  Chief Executive Officer since 2016, and Co-Founder and President from 2001 to 2016, Systems Electro Coating, LLC, a Tier One supplier to Nissan of electrocoated vehicle frames and components   •  Chief Executive Officer since 2011, and President from 2002 to 2011, Systems IT, Inc., an IT training and consulting company   •  Chief Executive Officer since 2016, and President from 1994 to 2016, Systems Consultants Associates, Inc., a management training and consulting firm   Other Positions:   •  Director, Trustmark National Bank, since 2005   •  Former Director, Federal Reserve Bank of Atlanta, New Orleans Branch   •  Mentor and Benefactor, Center for Social Entrepreneurship, since 2016   Education:   •  Bachelor of Business Administration, Stephens College   •  Juris Doctor, University of Minnesota   Experience and Qualifications to Serve on the Board:   •  Ms. Cooley’s experience in founding and growing the Systems Group companies provides the Board with significant executive expertise in the manufacturing sector, including in programs designed to protect the environment from industrial activity.   •  Ms. Cooley’s service on the board of a publicly traded financial institution, including as chair of that company’s enterprise risk management committee, assists our Board in identifying and overseeing risk in areas such as compliance, insurance, employee relations and human resource management.   •  Her leadership at her family-owned management training firm, established with the express purpose of assisting minority businesses with capacity building, provides the Board with valuable insight into promoting diversity and organizational development.

 

3

Sonia Pérez   Independent Director   Age: 65   Director Since: 2019   Committees:   Compensation (Vice-Chair) Nominating and Governance Diversity, Equity, and Inclusion		Current Other Public Company Boards:   •  Hancock Whitney Corp. (Nasdaq), since 2021   Business Experience:   •  President, AT&T Southeast States, since 2018   •  President, AT&T Louisiana, from 2010 to 2018   •  Vice-President, AT&T Houston, from 2005 to 2010   •  General Manager, South Texas, SBC Southwest, from 1997 to 2005   Other Positions:   •  Regent, Louisiana Board of Regents, since 2017   •  Vice Chair and member, Board of Trustees of the National WWII Museum, since 2013   •  Past Chair, Board of Trustees, Xavier University of Louisiana   •  Past Chair, Board of Directors, Louisiana Association of Business and Industry   Education:   •  Bachelor of Journalism with Honors, University of Texas at Austin   Experience and Qualifications to Serve on the Board:   •  As President of AT&T Southeast States, Ms. Pérez is responsible for the development of the company’s overall strategic plan in the Southeast region. In Louisiana, she leads a workforce of 3,500 employees and a roll of 6,500 retirees. Her executive leadership of an organization of that size with multi-state operations makes her eminently qualified for our Board.   •  The Board also benefits from her expertise with the deployment of AT&T’s 5G technology and infrastructure and leadership of teams responsible for matters affecting public policy, government affairs and philanthropy.   •  Ms. Pérez’s commitment to public service, as well as her professional experience working with communities in Texas, Louisiana, and North Carolina, are valuable to the Board as it evaluates our corporate social responsibility initiatives.

 

4

Gail Jones Pittman   Independent Director   Age: 68   Director Since: 2002   Committees:   Audit Compensation (Chair)		Business Experience:   •  Founder and Chief Executive Officer, Gail Pittman Inc., a design company of hand painted dinnerware and home accessories, since 1979   •  Creative Director, Southern Living at Home, from 2005 to 2010   Other Positions:   •  Alliance Member, Ole Miss Women’s Council for Philanthropy, since 2002   •  Member, International Women’s Forum, Mississippi Chapter, since 2015   •  Chair, Metro Jackson Chamber of Commerce, 1999   •  Chair, Madison County Foundation, from 2009 to 2012   •  Member, Advisory Board, Regions Bank, Central Mississippi, from 1998 to 2003   •  Member, Business Advisory Council, University of Mississippi, from 2000 to 2005   Education:   •  Bachelor of Arts, University of Mississippi   Experience and Qualifications to Serve on the Board:   •  Ms. Pittman’s skill, experience and perspective as a successful entrepreneur makes her exceptionally valuable to the Board. She is recognized by many as Mississippi’s preeminent female business executive.   •  The Board benefits from her manufacturing and production experience in its oversight and monitoring of our operational performance, and from her experience in the areas of brand growth and management, product development and sourcing, marketing, and business development.   •  A noted philanthropist, Ms. Pittman provides meaningful insights to the Company on a variety of areas in the Company’s ESG efforts and community involvement.

 

5

David Barksdale   Independent Director   Age: 45   Director Since: 2018   Committees:   Audit (Chair) Compensation Diversity, Equity, and Inclusion		Current Other Public Company Boards:   •  Tristar Acquisition I Corp. (NYSE), since 2021   Business Experience:   •  Principal, Alluvian Capital, a private investment office with diversified holdings in the telecommunications and software industries, since 2014   •  Co-Chairman from 2015 to 2018, and Chief Executive Officer from 2009 to 2014, Spread Networks, LLC, a provider of low-latency fiber optic services to financial and enterprise customers, until its acquisition by Zayo Group Holdings, Inc.   •  Board Member, Servato Corp., a leading supplier of active battery management solutions to telecommunications, power, transportation, and solar companies, from 2014 to 2019   •  Attorney, Cleary Gottlieb Steen & Hamilton LLP, from 2005 to 2007   •  Principal, Barksdale Management Corporation, a private family office, from 2007 to 2014   Other Positions:   •  Member, Board of Trustees of Tulane University, from 2007 to 2021   •  Vice-Chair and former Board Treasurer of the Greater New Orleans Foundation, a non-profit that links philanthropists with charitable, environmental, cultural, and economic development organizations in the New Orleans community (member of the board since 2011)   •  Chair of the Board of Directors, the Idea Village, a globally recognized non-profit dedicated to supporting local entrepreneurs (member of the board since 2017)   Education:   •  Bachelor of Arts, Tulane University   •  Juris Doctor, New York University School of Law   •  National Association of Corporate Directors (NACD) Directorship CertificationTM   Experience and Qualifications to Serve on the Board:   •  Mr. Barksdale’s career as CEO and Chairman of a telecommunications and IT firm, from its start-up through the completion of its groundbreaking Chicago to New Jersey low-latency fiber optic network and expansion of lit fiber services in Chicago and New York, makes him a valuable member of the Board in its oversight of IT and cyber security risks and challenges.   •  The Board also draws on Mr. Barksdale’s extensive investment management experience and his leadership in the negotiation and sale of his company to a publicly traded holding company in overseeing the development and implementation of our strategic plan.   •  Mr. Barksdale has been active in many civic and charitable organizations, making him an excellent fit in our corporate culture.

 

6

Lampkin Butts   President and Director   Age: 70   Director Since: 1998		Business Experience:   •  President of the Company, since 2004   •  Vice President – Sales of the Company from 1996 to 2004, and various other positions at the Company from 1973 to 1996   Other Positions:   •  Director, Federal Reserve Bank of Atlanta, New Orleans Branch, since 2015   •  Director, National Chicken Council, since 1995   •  Director, Mississippi Poultry Association, since 1995   •  Member, Board of Directors, University of Mississippi Foundation, since 2020   •  Director, Southeast Poultry & Egg Association, from 2000 to 2003   Education:   •  Bachelor of Business Administration, University of Mississippi   Experience and Qualifications to Serve on the Board:   •  Mr. Butts’ extensive knowledge of our business from his almost 50-year tenure with the Company makes him an extremely valuable director. He has served the Company in most every aspect of our operations, with roles ranging from shift manager, sales representative, and division manager, to his current role as head of our operations.   •  Mr. Butts has worked at the Company and served as a director throughout several of the profitability cycles that are characteristic of a commodity business like ours. His experience in managing the business through the volatility of our industry is especially helpful to our less senior directors whose tenures have not included a profitability downcycle.   •  Mr. Butts has had leadership roles at several poultry industry organizations, which enable him to share with the Board valuable insights into industry dynamics, developments, and innovations, as well as government and regulatory relations.

 

7

Beverly W. Hogan   Independent Director   Age: 70   Director Since: 2004   Committees:   Compensation Nominating and Governance Diversity, Equity, and Inclusion (Chair)		Business Experience:   •  President Emerita, President from 2002 to 2019, and various other positions from 1997 to 2002, Tougaloo College, a private, historically black, liberal arts college in Jackson, Mississippi   •  Commissioner, Mississippi Workers’ Compensation Commission, from 1987 to 1997   •  Executive Director, Governor’s Office of Federal State Programs, from 1984 to 1987   •  Executive Director, Mental Health Associations of Hinds County and the State of Mississippi, from 1974 to 1983   Other Positions:   •  Institutional Director, United Negro College Fund, since 2002   •  Chair, Board of Directors of the Jackson Medical Mall Foundation, which manages a redeveloped facility that houses healthcare providers for the underserved, since 2017   •  Appointed by President Obama to The President’s Board of Advisors on Historically Black Colleges and Universities, from 2009 to 2016   •  Chair, National Advisory Board, HBCU Capital Financing Program   •  Founding Member and former president, Central Mississippi Chapter, National Coalition of 100 Black Women   Education:   •  Bachelor of Arts, Tougaloo College   •  Master of Public Policy and Administration, Jackson State University   •  Doctoral studies in clinical psychology and human and organizational development   •  Honorary doctoral degrees from four universities, including Brown University   Experience and Qualifications to Serve on the Board:   •  As the first woman and the 13th president of a liberal arts college founded in 1869, Dr. Hogan is known as a visionary and trailblazer in Mississippi higher education. The Board has benefitted from her experience in the leadership, management, and growth of this historic college.   •  Dr. Hogan’s educational and professional experience in the public policy, government, and mental health fields has been valuable to the Board in its efforts to make Sanderson Farms a leader in environmental, social and governance best practices.   •  The Board has also benefitted from Dr. Hogan’s insights from her active involvement for many years in state and national civic and political affairs.

 

8

Phil K. Livingston   Age: 78   Director Since: 1989   Committees:   Audit (Vice-Chair) Compensation Nominating and Governance		Business Experience:   •  Retired Consultant, AmSouth Bank of Alabama, from 1998 to 2001   •  President of South Louisiana, First American Bank of Tennessee, 1998   •  Chairman and Chief Executive Officer, Deposit Guaranty National Bank of Louisiana, from 1995 to 1998   •  Chief Executive Officer from 1973 to 1995, President from 1975 to 1995, and Chairman from 1987 to 1995, Citizens National Bank   Other Positions:   •  President, Louisiana Bankers Association, 1985   •  Founding Director, from 1997 to 2006, and President, from 2006 to 2015, University Facilities, Inc., a non-profit corporation formed to finance and contract for major campus improvements for Southeastern Louisiana University; completed projects during service totaled $115 million   •  Executive in Residence, Southeastern Louisiana University College of Business, since 2016   •  Member, Patient Family Advisory Council, North Oaks Health System   •  Member, Area Advisory Council, Mary Bird Perkins Cancer Center   Education:   •  Bachelor of Science, Mississippi State University   Experience and Qualifications to Serve on the Board:   •  Mr. Livingston’s extensive career in the banking industry, coupled with his leadership roles in a variety of industry and organization boards, make him a valuable member of our Board.   •  His bank executive career included the growth and sale of a community bank of which he was CEO, and involvement in four subsequent bank acquisitions. This experience has been valuable to the Board in its oversight and monitoring of our financial and borrowing risk, accounting and internal controls, and strategic plan.   •  Mr. Livingston also has significant experience in management training and formulation of executive pay structures. He has worked closely with compensation consultants and has been instrumental in the development of our performance-based pay programs.

 

9

Joe F. Sanderson, Jr.   Chairman of the Board and Chief Executive Officer   Age: 74   Director Since: 1984		Business Experience:   •  Chairman of the Board of the Company since 1998, and Chief Executive Officer of the Company since 1989   •  Continuously employed in various positions at the Company since 1969   Other Positions:   •  Co-Chair, Capital Campaign for Children’s of Mississippi (umbrella organization for University of Mississippi Medical Center pediatric hospital and clinics), since 2016   •  Member, Board of Directors, University of Mississippi Foundation, since 2017   •  Member, Board of Trustees of the National WWII Museum, since 2016   •  Past President, Mississippi Manufacturers’ Association, from 1992 to 1993   •  Past Chair, National Chicken Council, from 1993 to 1994   Education:   •  Bachelor of Arts, Millsaps College   Experience and Qualifications to Serve on the Board:   •  Mr. Sanderson is the grandson of one of our company’s founders. Under his outstanding leadership of our company since 1989, the Company has grown exponentially, including growth in annual revenues from $184 million in 1989 to nearly $4.8 billion in 2021. Also during his tenure, the Company has opened eight new plants in four states.   •  Mr. Sanderson is primarily responsible for the overall operation and strategic vision of our business. His role as Chairman of the Board has been key to our long-term success and growth in stockholder value.   •  Adhering to the values of our founders – integrity and ethical business practices, excellence in operations, and conservative financial management – Mr. Sanderson is directly responsible for setting the “tone at the top” of our company that has been a significant driver of our success.

 

10

 

11

 

12

 

13

 

14

Certain information required by this Item regarding our executive officers appears in Part I, Item 4A of the Original Filing under the caption, “Executive Officers of the Registrant.” As Messrs. Butts, Cockrell and Sanderson are also directors of the Company, additional information regarding their experience is set forth above under the caption “Our Board of Directors.”

The Registrant has adopted a code of ethics that applies to its senior financial personnel, including its chief executive officer, chief financial officer and chief accounting officer. The code governs their responsibility for internal controls and full, fair, accurate, timely, and understandable disclosure in our periodic reports. The code of ethics can be found on our website at http://ir.sandersonfarms.com/corporate-governance. Additionally, the Registrant will provide a copy of the code of ethics free of charge to any person upon request to:

Sanderson Farms, Inc.

P.O. Box 988

Laurel, Mississippi 39441

Attn.: Chief Financial Officer

Requests can also be made by phone at (601)

The Registrant’s Board of Directors has a standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act, whose members are David Barksdale (Chair), Phil K. Livingston (Vice Chair), Fred Banks, Jr., Edith Kelly-Green, Suzanne T. Mestayer and Gail J. Pittman. All members of the Audit Committee are independent directors under the listing standards of the NASDAQ Stock Market LLC. The Registrant’s Board of Directors has determined that David Barksdale, Edith Kelly-Green, Phil K. Livingston and Suzanne T. Mestayer are Audit Committee financial experts.

In this section, we describe our compensation philosophy, the factors the Compensation Committee of our Board of Directors considered in developing our compensation packages, and the decision-making process it followed in setting compensation for our named executive officers for our 2021 fiscal year. You should read this section in conjunction with the tables and accompanying narratives that follow. We believe our executive compensation programs reflect our company’s philosophy, assist us in creating long-term value for our stockholders, and are effective in retaining and motivating our executives.

Our “named executive officers” as defined under the SEC’s proxy statement rules for 2021 were:

 

 

 

 

 

15

non-binding

top-level

COVID-19

Compensation Committee Interlocks and Insider Participation

We have employment agreements with the CEO, the President, and the CFO. The agreements provide those executives will remain employed until their agreements are terminated either by the Company or the executive for any reason. Among other benefits, the agreements provide for a severance payment to be paid to the officers if:

 

 

 

The amount of the severance payments will be (i) in the case of Mr. Sanderson, three times, and in the case of Messrs. Butts and Cockrell, two times, the following amounts:

 

 

plus (ii) a portion of fifty percent of the officer’s 2021 maximum bonus opportunity, prorated according to the number of days in the fiscal year that have elapsed through his termination date.

The Committee believes these benefits are important officer retention tools that will protect the Company and its stockholders against an unexpected departure of our most senior management. In addition, the commitment to pay severance is counterbalanced by an agreement from the officers not to disclose confidential information about us during and after their employment, and not to engage in certain competitive activity during their employment and for two years after the termination of their employment for any reason other than poor performance. The Committee also believed it was crucial to structure the agreements so that, except in the case of a change in control, the officers will not be paid severance if they are terminated for poor performance.

In the context of a change in control, the severance is not payable unless the officer is subsequently terminated without cause. This is sometimes referred to as a “double trigger.” In the case of a merger or other transaction that would allow our stockholders to profit from a sale of control of our company, such provisions can help ensure that management will not be distracted in the transaction negotiations by concerns that they will be arbitrarily terminated by new management without any economic protection after the change of control is complete.

The agreements are discussed further below in the narrative following the table entitled, “Grants of Plan- Based Awards.”

Base Salaries

Salaries are used to provide a fixed amount of compensation for the executive’s regular work. The Committee reviews the salaries of the named executive officers annually in October, with input from the outside compensation consultant, and makes final salary decisions at that time. Salary increases are based on an evaluation of Company performance, the individual’s performance, and the individual’s level of pay compared to the pay levels for similar positions in the peer group. Although the peer group suggests a range of competitive levels for base salaries, exact levels are determined by the Committee based on each executive’s merit. The Committee also takes into account years of service, responsibilities, our future growth plans, industry conditions, and our current ability to pay.

 

21

For fiscal 2021, the Committee determined to award a 1.25 percent merit-based salary increase to the President and CFO and a 3.0 percent increase to the Secretary. The CEO declined to be considered for an increase. For more information about the factors the Committee considered in setting fiscal 2021 compensation, see the subsection below entitled “Evaluation of Executive Performance.”

The effective date for salary increases typically is November 1 of each year. Salary increases can also occur upon an individual’s promotion.

Annual Cash Bonus Awards

We maintain a bonus award plan under which our salaried employees, including the named executive officers, are eligible for fiscal cash incentive awards equal to a percentage of their base salary based on the Company’s performance (Bonus Award Program). These awards are designed to reward short-term performance and the achievement of designated operational results. For officers and key management employees, the total award has two components: a percentage based on our achieving certain target earnings per share goals, and a percentage based on our operational performance versus our industry peers as measured by Agristats.

The earnings per share goals under the Bonus Award Program are set annually, and reflect our growth and ability to generate earnings. We have experienced significant growth in production capacity over the past 20 years, and our ability to generate earnings has likewise grown significantly. As a result, the earnings per share targets established under the Bonus Award Program have moved higher over time to reflect our increased earnings capacity.

We have historically performed at or near the top of the industry in operational measures, and the targets set for operational goals under the Bonus Award Program reflect our culture and expectations of achieving superior performance relative to our peers. However, it is possible that even if we operate at the top of the industry, we still might not achieve an acceptable level of profitability due to factors such as the cyclical nature of the industry, external forces that are beyond the control of management, and short- term inefficiencies from our significant internal growth. Unless we achieve at least an 8 percent return on average stockholders’ equity (computed after taking into account any bonus to be paid), no payments are made under the Bonus Award Program even if the operational targets are reached, and payments are not cumulative. As a result of our aggressive targets and the volatility of our industry, the named executive officers have not had a bonus payout in eight of the last 16 years.

For fiscal 2021, the Committee established the maximum earnings per share goal by reference to an earnings level that would result in a 21.5 percent return on average equity.

While the Committee recognizes that there are many factors beyond the control of management that might affect our ability to achieve the plan goals, it has attempted to make the program competitive by awarding a relatively high percentage of salary payouts in years in which we achieve the plan’s aggressive targets. Likewise, the Committee sets aggressive targets when setting operational goals. The operational portion of the bonus is payable if the Company’s chickens rank in the top 30 percent of all chickens included in Agristats in bottom line profit per head. For participants to earn the top bonus, our chickens must rank in the top 10 percent of the industry.

The following table shows, for fiscal 2021, the percentage of base salary that the named executive officers were eligible to receive from each component of the bonus award.

 

22

2021 Bonus Award Opportunities

 

The following table shows, for fiscal 2021, the earnings per share objectives and the corresponding percentages of the earnings per share component of a participant’s bonus award that could have been earned. The earnings per share component of the Bonus Award Program is based on our net income net of the bonus. The program provides that the earnings per share targets will be adjusted to reflect changes in the number of shares outstanding due to business combinations, recapitalizations, stock splits, or other changes in our corporate structure.

2021 Bonus Awards – EPS Component

 

 

 

23

The following table shows, for fiscal 2021, the performance objectives based on our performance versus our industry peers as reported by Agristats and the corresponding percentages of the operational component of a participant’s bonus award that could have been earned.

2021 Bonus Awards—

Operational Performance Component

 

The following table shows, for the 2021 fiscal year, the maximum percentages of base salary that the named executive officers could have received under the Bonus Award Program and the actual awards received. Actual cash awards for past years are shown in the Incentive Plan Compensation” column of the Summary Compensation Table that follows this Compensation Discussion and Analysis.

2021 Bonus Award Payments

 

The Committee normally reviews and reconsiders the Bonus Award Program each January, along with the maximum bonus opportunities, the performance criteria under the program, and the earnings per share targets for the then-current fiscal year. It also receives reports from the outside compensation consultant concerning the level of similar short-term cash incentives paid by the peer group companies, and management’s recommended EPS and operational performance targets.

The Committee generally adopts the program in January for the current fiscal year. The parameters of the program and the performance criteria are then communicated to the participants. In general, once the Committee adopts the program, the bonus awards are determined solely according to the program criteria and are not subject to the discretion of the Committee. The program does provide that adjustments can be made to awards in the event of extraordinary operating conditions, errors in Agristats reporting or significant changes in the number of Agristats participants, changes in law or accounting procedures, or substantial and unforeseen fluctuations in sales pounds or dollars during the year. Bonuses earned for a completed fiscal year are usually paid in December following that fiscal year.

Long-Term Equity Incentive Awards

Equity-based compensation and ownership ensures that our executive officers and directors have a continuing stake in the long-term success of the Company. Generally, the Committee considers equity incentive awards to the named executive officers each October as part of its annual evaluation of

executive pay. The awards, if made, usually become effective in November at the start of the Company’s new fiscal year.

 

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Under the Stock Incentive Plan, the Board may grant restricted stock, performance shares, stock options, stock appreciation rights, phantom stock, management share purchase rights, and other stock-based awards. Since its inception in 2005, awards to the named executive officers under the plan have consisted only of restricted stock, performance shares, and management share purchase rights. The Committee strives to be conservative in the rate of usage, or run rate, of shares under the Stock Incentive Plan.

The Committee, with input from Willis Towers Watson, makes specific grants by comparing each executive’s current long-term incentive levels with the market range established by published survey and peer proxy statement data. Based on market studies, it identifies a typical multiple of the base salary for the individual’s management level that his or her long-term incentives should represent. These multiples are reconsidered annually based on the then-current market data. For fiscal 2021, the multiples were 325 percent for the CEO, 180 percent for the President, 170 percent for the CFO, and 80 percent for the Secretary. In the case of the Secretary, the multiple is applied to the average salary for all positions at the same management level.

The multiple of the officer’s salary yields a target annual long-term incentive award level that is then converted into a recommended number of shares to be awarded using the approximate stock price quoted on NASDAQ at that time. As discussed above, the Committee also bases its final decisions as to the award level on factors such as individual merit, responsibilities, individual and Company performance, and the dilutive effect of the award on our stockholders. The Committee then divides the total recommended share award equally between performance shares and restricted stock.

All of our restricted stock and Management Share Purchase Plan agreements provide that stock awarded under those plans will become fully vested in the event of a change in control of our Company and fully or partially vested upon certain other events, as described more fully in the “Potential Payments Upon Termination or section below. These provisions were adopted because they are customary for equity incentive awards of those types and because the Board of Directors deemed them to be reasonable and fair to our management. In the context of a merger or other transaction that would allow our stockholders to profit from a sale of control of our company, such provisions can help ensure that management will not be distracted in the transaction negotiations by concerns that the value of their awards will decline after the change of control is complete. The potential payments under these provisions played no part in the Committee’s decisions regarding other elements of our executive compensation.

Restricted Stock

Shares of restricted stock are shares granted subject to a vesting period during which the shares may not be transferred. All of our restricted stock awards have a vesting period of four years. The CEO, President, CFO, Secretary, and certain other salaried employees of the Company received restricted stock as part of their long-term incentive award in November 2020 for the 2021 fiscal year. The fiscal 2021 restricted

stock generally will vest on November 1, 2024, as long as the holder remains continuously employed by us during the restricted period.

Recipients of restricted stock have all the rights of a stockholder of the Company, including voting rights and the right to receive dividends, beginning on the grant date. In the event a recipient forfeits shares of restricted stock before such shares vest, the shares are cancelled.

 

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Performance shares provide a material incentive to executives by offering potential increased stock ownership in the Company tied directly to our stockholders’ return. The CEO, President, CFO, Secretary, and certain other salaried employees received performance share grants as part of their long-term incentive awards in November 2020. The performance share program entitles the holder to earn shares of Sanderson Farms common stock if we achieve certain relative levels of performance on stockholder return over a multi-year period following the grant, as long as the holder remains continuously employed by us until the end of the performance period and any additional vesting period. The length of the performance period reflects the cyclical nature of the poultry business, and is designed, generally, to measure our performance over an industry cycle. Currently, the performance period is two years and there is an additional service-based vesting period before the shares are issued.

Performance shares carry no dividend or voting rights until they are issued after achievement of the performance objectives and the expiration of any additional vesting period.

The Board of Directors may pay earned performance shares in cash, shares of Sanderson Farms common stock, or in a combination of both. Once the performance criteria are established and the awards are granted, the payment of earned shares is generally not subject to the discretion of the Committee or the Board, but adjustments can be made in limited circumstances.

Performance share awards are made in a target amount of shares based on our average return on equity (ROE) and a target amount based on our average return on sales (ROS). The award establishes three possible percentages of those target amounts that the recipient could actually receive, depending on our actual performance measured at the end of the performance period.

Because the performance goals are based on our historical performance, years of past outstanding company performance can make the performance goals challenging to achieve in future years. The threshold performance level represents the 33rd percentile of the Company’s performance over 29 periods. The target level represents the 65th percentile of performance during the historical measurement period and the maximum level represents the 83rd percentile. The fiscal 2021 performance share awards were structured as follows:

 

If our average ROE or average ROS is otherwise between the threshold and maximum percentages, the number of performance shares for which the award recipient is eligible will be calculated using a straight- line interpolation. If average ROE or ROS is less than the threshold, the recipient will not be entitled to receive any shares of that portion of the target award measured by that metric.

Average ROE is equal to the mathematical average of the net return on average equity for each of the two years in the performance period. Net return on average equity is computed by adding together stockholders’ equity on our audited financial statements at the beginning and end of each fiscal year and dividing by two. The resulting number is then divided into net income for the fiscal year as reported on our audited financial statements to reach net return on average equity for the year. Average ROS is equal to the mathematical average of the net return on net sales for the two years in the performance period. Net return on net sales is computed by dividing net income by net sales, as both numbers are reported on our audited financial statements for the year.

Since the inception of the Stock Incentive Plan, we have granted 16 cycles of performance shares, one for each of the fiscal years from 2006 through 2021. Only ten of those cycles of performance shares have been earned. Pending the Committee’s formal determination, the fiscal 2020 shares were earned at the

 

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levels shown in the table below. They are subject to an additional holding period before they are paid out. The fiscal 2021 awards are the only other performance share cycle currently in place under our performance share plan, and the payout on those awards, if achieved in accordance with their terms, will occur at the end of fiscal 2023.

 

The following table shows the number of shares earned by each named executive officer according to the percentage payouts reflected in the table above.

 

 

Under our Management Share Purchase Plan, executive officers and other key employees may elect to reduce their annual base salaries by up to 15 percent and their bonuses earned under the Bonus Award Program by up to 75 percent and instead receive those amounts in the form of restricted stock at the current market price. The Company matches 25 percent of the employee’s contribution to the plan to grant additional shares. The shares purchased or granted through the plan generally vest on the third anniversary of their acquisition by the participant. Recipients of the shares purchased or granted have all the rights of a stockholder during the restricted period. If the shares fail to vest, any dividends paid on the Company matched shares must be returned to us. In fiscal 2021, none of the named executive officers participated in the plan. You can find more information about the plan in the narrative accompanying the Grant of Plan-Based Awards table, below.

As mentioned above, we believe strongly in aligning the interests of management with those of our stockholders. We were among the first in our industry to adopt an Employee Stock Ownership Plan, and each of the named executive officers participates in the plan on the same basis as all of our other employees. Participants are automatically enrolled in the plan after one year of service and become fully vested after six years. We contribute funds to the plan in most profitable years, and for the 2021 fiscal year we contributed $20 million to the plan.

 

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We sponsor a 401(k) retirement plan, and participants may contribute to the plan after 90 days of service. The named executive officers participate on the same basis as all other employees. Eligible employees may contribute up to 15 percent of their salary to the plan through payroll deductions. We began matching employee contributions to the plan in 2000, and for employees with one year of service, we match 100 percent of an employee’s contribution up to 3 percent of his or her salary, and 50 percent of such contribution that exceeds 3 percent but does not exceed 5 percent of his or her salary. Sanderson Farms common stock is not an investment option under the plan.

We provide other benefits such as medical, dental, and long-term/short-term disability (up to 66 2/3 percent of salary not exceeding $180,000 per year in long-term disability payments) coverage, as well as vacation and other paid holidays. Beginning with our 2001 fiscal year, we began paying premiums on term life insurance policies for all employees. The death benefit under these policies depends on the amount of the employee’s annual salary, up to a maximum benefit of $100,000 and a minimum of $50,000 for salaried employees. These benefit programs are comparable to those provided at other large companies. They are designed to provide certain basic quality of life benefits and protections to our employees and at the same time enhance our attractiveness as an employer.

In 2008, the Committee adopted a Supplemental Disability Plan for the CEO. The plan provides that if the CEO becomes disabled as defined in our long term disability plan for all our salaried employees, he will receive a monthly benefit equal to 66 2/3 percent of his salary beginning one year from the date of disability and continuing for 12 months. (Before age 70, payments would have continued until the date that he received five years of payments or his 70th birthday, whichever occurred first.) This is the same benefit that is provided to all participants in our long term disability plan who are 60 years or older. Participants who become disabled before their 60th birthday would receive the benefit until they reach age 65. The Committee adopted the supplemental plan because our long term disability plan places an annual dollar limit on the benefit that participants can receive, which would have resulted, if the CEO became disabled at the time the supplemental plan was adopted, in a benefit to him of only 26 percent of his then current salary. The employment agreements that the Company entered into with the President and CFO made those officers participants in the supplemental plan.

The Company’s portion of the cost of health benefits provided in the 2021 fiscal year for the named executive officers was as follows:

 

All employees may elect to continue participating in our health benefit plan following their retirement, but they must pay 100 percent of the premium cost.

 

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In rare instances, we have continued, because of the applicable circumstances, to pay the base salaries of certain key employees for a short period of time after their deaths. None of those employees served at any time as an executive officer of Sanderson Farms. However, our employment agreements with the CEO, President, and CFO provide that we will continue to make base salary payments to their designated beneficiary or estate for a period of one year from the date of the officer’s death.

The 401(k) contribution, health plan, and life insurance premiums, as well as dividends paid on restricted stock and matching charitable contributions, each as disclosed in the proxy statement, are ratified by the Committee in January of the year following the year for which they were made. The Board of Directors approves the annual ESOP contribution, if any, in October of each year.

We provide certain perquisites to our executives, which consist primarily of personal use of our company aircraft by the CEO and his immediate family. This perquisite provides flexibility to the CEO and increases travel efficiencies, allowing more productive use of executive time, in turn allowing greater focus on Sanderson Farms-related activities. The Company also permits the other named executive officers and other employees to use Company aircraft in times of family or other emergencies and to travel for personal reasons, space permitting, on planned Company flights. In some cases, the Company also permits and pays for the named executive officers’ spouses to accompany them on the corporate aircraft. The amounts of these perquisites are ratified by the Committee in January of the year following payment. More detail on our perquisites may be found in the narrative following the Summary Compensation Table, below.

In October 2010, the Committee adopted a policy requiring the Board or the Committee to seek to recoup incentive-based compensation paid to our directors, executive officers or other personnel whenever required by law or the rules of the NASDAQ Stock Market. In addition, the Board or the Committee, in its discretion, may determine, as a result of a restatement of our financial statements or misconduct that adversely affects us by a member of our management executive committee or a director, to take such actions it deems necessary or appropriate and in our best interests with respect to the executive committee member, or the director in the case of director misconduct, to address the restatement or misconduct. Such actions may include, to the extent permitted by law and our charter and

 

 

 

 

 

 

The recoupment policy is in addition to the authority under the Stock Incentive Plan to cancel awards or recoup the value of shares in the event of detrimental activity by the participant.

In October 2004, the Committee recommended and the Board of Directors adopted stock ownership guidelines for our management, in an effort to encourage increased ownership of our company by key employees and directors. Willis Towers Watson has periodically reviewed the guidelines and in 2013, at Willis Towers Watson’s recommendation, the Committee determined to recalculate the

 

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guidelines for officers using fiscal 2014 salaries. We believe that these guidelines are reasonable to achieve and will be a long-term benefit to all of our stockholders by helping to align management and stockholder interests. They also encourage officers and directors to hold purchased shares and vested option shares, restricted stock, and performance shares, as applicable, for long-term investment. “Stock ownership” includes stock owned directly, indirectly through the 401(k) plan or Employee Stock Ownership Plan, restricted stock, and earned performance shares. The guidelines are based on a multiple of base salary and director annual retainer fees, and are set forth in the table below. As of our 2021 fiscal year, each named executive officer and all except two of our newest directors had exceeded the guidelines below.

 

 

It is Sanderson Farms’ policy that our directors and all employees, including the named executive officers, not buy and sell or sell and buy Sanderson Farms stock on a short-term basis (i.e., shares must be held for a minimum of six months). Employees and directors may not purchase Sanderson Farms stock on margin, or hold Company securities in a margin account. Employees and directors may not pledge Company securities as collateral for a loan, although an employee or director can request a waiver of this policy where he or she can clearly demonstrate the financial capacity to repay the loan without resort to the pledged securities.

Our insider trading policy, which applies to officers, directors, the employees who participate in our Stock Incentive Plan and any other personnel who receive or see our monthly financial statements, prohibits hedging transactions. The hedging prohibition in the policy is excerpted below:

Hedging or monetization transactions can permit an individual to hedge against or offset a decline in the market value of a security, while at the same time eliminating much of the individual’s economic interest in any rise in value of the hedged securities. Because hedging transactions can present the appearance of a bet against the Company, hedging or monetization transactions, whether direct or indirect, involving the Company’s securities are prohibited, regardless of whether the Insider possesses material, information.

Transactions involving derivative securities, whether or not entered into for hedging or monetization purposes, may also create the appearance of impropriety in the event of any unusual activity in the underlying equity security. Accordingly, transactions involving Company-based derivative securities are prohibited, whether or not you are in possession of material, information. Derivative securities are options, warrants, stock appreciation rights, convertible notes or similar rights whose value is derived from the value of an equity security, such as Company common stock. Derivative securities include, but are not limited to, variable forward contracts, equity swaps, exchange funds, Company-based option contracts, straddles and collars. Transactions in debt that may be convertible into Company common stock would also constitute a transaction in derivative securities prohibited by this Policy.

 

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•

Without question, fiscal 2020 was an unprecedented year for our company, our nation, and the world. The COVID-19 pandemic presented us with extraordinary challenges we had never before faced in our company’s history. Violence against African-Americans, who make up a majority of our workforce, resulting social and racial unrest, a global recession, significant unemployment in our country, and market disruption in the poultry industry added to the extremely challenging conditions. Nevertheless, our named executive officers did an outstanding job of protecting our people and managing our business through these trying times.

•

Demand for chicken products sold to food service customers was under significant pressure for most of the year because of social distancing restrictions and temporary closures of restaurants and food service establishments and the steep decline in the number of consumers dining outside their homes during the pandemic. On the other hand, demand from our retail grocery store customers surged as consumers prepared more meals at home. Our management team reacted to these conditions quickly, leveraging the flexibility of our operations to increase production for our customers experiencing higher demand and reducing our volume of products sold to customer markets under pressure.

•

Indeed, our operations performed well during fiscal 2020. Despite production cuts we implemented because of the pandemic at our plants servicing food service customers, we had record-high revenues of $3.56 billion and record volumes with 4.81 billion pounds of poultry products sold for the year.

•

We reached full production at our newest processing facility in Tyler, Texas, which processed 60.5 million head of chickens during the year, or about 9.2 percent of the total head we processed in fiscal 2020, and sold approximately 388.0 million pounds of poultry products, or 8.1 percent of our total pounds sold.

•

We benefitted from outstanding operating efficiencies at all of our processing plants, making good progress in meeting our aggressive operational goals for the year.

•

Our sales team did an outstanding job of placing new business during the year, especially in the surging retail grocery store customer market.

•

We made significant progress executing our strategic internal growth plan by evaluating a potential site for a new poultry complex.

•

We paid $31.1 million in dividends to our stockholders and ended the year with a solid balance sheet reflecting little debt, $1.85 billion in assets, stockholders’ equity of $1.42 billion, and net working capital of $354.0 million as of October 31, 2020. Our strong financial position allowed the Board of Directors to approve an increase in our dividend rate to $0.44 per share, for an annual dividend rate of $1.76 per share, and re-authorize and increase our share repurchase program.

•

For the third year in a row, challenging market conditions prevented us from meeting the minimum criteria for bonuses to be paid under our cash bonus plan. Additionally, conditions caused our fiscal 2019 performance shares not to be earned. Because of our 2020 results, our CEO once again declined to be considered for a salary increase, but he recommended that the President and CFO receive a modest salary increase of 1.25 percent in recognition of their outstanding performance managing the Company during the year. Additionally, the CFO recommended that the Secretary receive a 3.0 percent salary increase to bring his salary closer to that of his peers. The Committee adopted these recommendations.

•

The Committee awarded long-term equity awards to incentivize future performance.

•

The Committee considered our three-year total shareholder return, which approximated the 25th percentile of the peer group for the CEO and CFO positions, and the realizable pay for those positions, which was in the 70th percentile for the CEO position and the 45th percentile for CFO position.

		Amount
Annual Stipend		$	25,000
Each Board of Directors meeting attended in person		$	7,500	1
Each telephonic Board of Directors or Board committee meeting attended		$	1,000	2
Each committee meeting attended in person, not in conjunction with a Board meeting		$	6,000
Received annually by Audit Committee Chair		$	15,000
Received annually by Compensation Committee Chair		$	12,500
Received annually by Nominating and Governance Committee Chair		$	10,000
Received annually by the Lead Independent Director		$	25,000

(1)	During the COVID-19 pandemic, regular Board meetings held virtually were treated as “in-person” meetings.

(2)	We also pay this fee to directors who join telephonic committee meetings by invitation, even though they are not committee members. If a telephonic committee meeting is held in conjunction with a telephonic full Board meeting, only one $1,000 fee is paid for directors who participate in both calls.

		The Compensation Committee:
		David Barksdale		Suzanne T. Mestayer
		Toni D. Cooley		Sonia Peréz (Vice Chair)
		Beverly Wade Hogan		Gail Jones Pittman (Chair)
		Phil K. Livingston

•

The 2021 annual total compensation of Mr. Sanderson was $6,895,511.

•

The 2021 annual total compensation of our median compensated employee was $39,334.

•

Accordingly, the ratio of Mr. Sanderson’s annual total compensation to the annual total compensation of our median compensated employee for 2021 was 175 to 1.

Name and Principal Position		Year				Salary ($) 1				Bonus ($) 2				Stock Awards 3 ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation 4 ($)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Joe F. Sanderson, Jr., Chairman of the Board of Directors and Chief Executive Officer			2021				1,518,300				—				2,623,385				—				2,530,551				—				212,893				6,885,129
			2020				1,518,300				—				2,835,740				—				0				—				178,453				4,532,493
			2019				1,518,300				—				2,401,230				—				0				—				228,364				4,147,894
Lampkin Butts, President			2021				761,232				—				735,828				—				1,014,996								81,760				2,593,816
			2020				751,836				—				758,860				—				0				—				91,118				1,601,814
			2019				740,772				—				638,625				—				0				—				62,823				1,442,220
Mike Cockrell, Treasurer, Chief Financial Officer and Chief Legal Officer			2021				652,320				—				575,865				—				761,055				—				89,373				2,078,613
			2020				644,268				—				599,100				—				0				—				52,618				1,295,986
			2019				634,752				—				510,900				—				0				—				71,818				1,217,470
Tim Rigney, Secretary and Controller			2021				349,944				41,993				169,560				—				233,301				—				31,289				826,087
			2020				339,756				—				119,820				—				0				—				16,264				475,840
			2019				334,740				—				94,517				—				0				—				18,353				447,610

(1)	Includes, for Mr. Rigney, $800 for fiscal 2019, $0 for fiscal 2020, and $0 for fiscal 2021, allocated to the Company’s Management Share Purchase Plan, as described in the Grant of Plan-Based Awards table, below.

(2)	Consists of a discretionary bonus paid to Mr. Rigney for work in connection with Company’s entry on August 8, 2021 into a definitive agreement to be acquired by a joint venture between Cargill, Incorporated and Continental Grain Company.

(3)

This column reflects the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718. Performance shares are reflected in the table at values based upon the probable outcome of the performance conditions as of the grant date. Because the Company was unable to determine the probable outcome of the performance conditions for the performance shares as of the grant date, the performance shares are reflected in the Summary Compensation Table at no value. The values of performance shares at the grant date, assuming the highest level of performance conditions is achieved, are as follows:

 

The amounts included in the table above under “All Other Compensation” consist of the following:

 

 

 

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The amounts shown in this column also include the value of other travel expenses incurred by the immediate family of Messrs. Sanderson, Butts and Cockrell while accompanying them on Company business of $2,955, $1,816 and $225, respectively, for fiscal 2019, $97, $1,884 and $0, respectively, for fiscal 2020, and $0, $885 and $906, respectively, for fiscal 2021. Finally, the amounts in this column also include a $1,000 vaccine incentive bonus paid to Messrs. Butts, Cockrell and Rigney in fiscal 2021. Although Mr. Sanderson was entitled to receive the vaccine bonus, he declined it.

 

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two-year

one-year

Shares of restricted stock granted under our restricted stock program vest generally on the fourth anniversary of the award, as long as the holder remains continuously employed by us during the restricted period. Restricted stock granted for fiscal 2021 vests on November 1, 2024.

Shares of restricted stock granted as matching contributions under our Management Share Purchase Plan are subject to a three-year vesting period starting on the date they are acquired by the participant. The participant must remain continuously employed by us during the vesting period.

8-K

The amended agreements provide for a lump sum severance payment to be paid to the officers if:

 

 

 

“Cause” means, among other things, conviction of certain felonies, willful misconduct by the officer, failure or refusal by the officer to comply with our policies or a material breach by the officer of the employment agreement. “Good reason” means, among other things, a material breach of the agreement by us, a reduction of the officer’s base salary or bonus that is not part of a reduction program affecting all senior executives generally, the relocation of the officer’s principal place of employment by more than 40 miles, or after a change in control, the alteration of the officer’s position that results in a material diminution of his position.

The amount of the severance payments will be (i) in the case of Mr. Sanderson, three times, and in the case of Messrs. Butts and Cockrell, two times, the following amounts:

 

 

plus (ii) a portion of fifty percent of the officer’s 2021 maximum bonus opportunity, prorated according to the number of days in the fiscal year that have elapsed through his termination date.

In addition, the agreements provide, in the case of the officer’s death, for the continuation of his annual salary payments for one year from the date of his death. The agreements for Messrs. Butts and Cockrell also designate them as participants in our Supplemental Disability Plan.

The agreements prohibit the officers from disclosing confidential information about us during and after their employment, subject to certain exceptions, and prohibit the officers from engaging in certain competitive activity during their employment and for two years after the termination of their employment for any reason other than poor performance.

 

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Dividends are paid at rates applicable to all our stockholders on performance shares once they are paid out. Dividends (at normal rates) are paid on shares of restricted stock as soon as the shares are issued to the officer.

For fiscal 2021, salary accounted for the following percentages of each officer’s total compensation:

 

 

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Grants of restricted stock usually vest on the fourth anniversary of the award, as long as the holder remains continuously employed by us during the restricted period.

The performance periods for performance shares end on the dates shown below.

 

*These shares are subject to an additional vesting period after the expiration of the performance period before they are issued.

The performance shares granted on November 1, 2019 are shown in the table at the level corresponding to actual performance, pending a formal determination by the Committee. In accordance with Instruction 3 to Item 402(f)(2) of SEC Regulation the performance shares granted on November 1, 2020, are shown in the table at the maximum level for both the ROE criteria and the ROS criteria, based on our actual performance in fiscal 2021, the first year of the performance period.

 

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Restricted shares held in the Management Share Purchase Plan are purchased by the participant on the last business day of each calendar quarter with forgone salary. A participant may also elect to reduce his or her bonus by a certain percentage and instead receive that amount in restricted shares purchased through the plan on the bonus payment date. We match 25 percent of the participant’s contribution in additional restricted shares that we issue simultaneously with the purchased shares. Each share of restricted stock held in the plan vests fully on the third anniversary of its acquisition by the participant, subject to certain exceptions that are described below under “Potential Payments Upon Termination or

 

 

We have employment agreements (amended on August 8, 2021) with the CEO, President and CFO as described above. We have no other employment agreements with any other employees of our Company. However, our annual cash bonus and Stock Incentive Plan awards provide for accelerated payments in the circumstances described below, and we have company policies that provide for severance payments for all our salaried employees generally. Except as described below, the named executive officers receive no payments upon the termination of their employment or a change in control of Sanderson Farms that are not received by all salaried employees generally.

The term of each agreement began on November 1, 2015, and ends when the officer’s employment terminates under the provisions of the employment agreement. Each agreement provides for the officer’s fiscal 2016 salary and bonus to be paid in accordance with the levels and bonus program that we disclosed in our current report on Form filed on October 27, 2015. The officers’ compensation is reassessed annually.

 

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The agreements provide for a lump sum severance payment to be paid to the officers as soon as practicable following a qualifying termination if:

 

 

 

“Cause” means, among other things, conviction of certain felonies, willful misconduct by the officer, failure or refusal by the officer to comply with our policies, or a material breach by the officer of the employment agreement. “Good reason” means, among other things, a material breach of the agreement by us, a reduction of the officer’s base salary or bonus that is not part of a reduction program affecting all senior executives generally, the relocation of the officer’s principal place of employment by more than 40 miles, or after a change in control, the alteration of the officer’s position that results in a material diminution of his position.

The amount of the severance payments will be (i) in the case of Mr. Sanderson, three times, and in the case of Messrs. Butts and Cockrell, two times, the following amounts:

 

 

plus (ii) a portion of fifty percent of the officer’s 2021 maximum bonus opportunity, prorated according to the number of days in the fiscal year that have elapsed through his termination date.

If any severance payments are due, the officer is also entitled to the continuation of medical benefits that the officer would otherwise be eligible to receive as an active employee of the Company for 24 months or, if earlier, until such time as the officer becomes eligible for substantially similar benefits from a subsequent employer.

In addition, the agreements provide, in the case of the officer’s death, for the continuation of his annual salary payments for one year from the date of his death according to the Company’s regular payroll schedule.

The agreements prohibit the officers from disclosing confidential information about us during and after their employment, subject to certain exceptions, prohibit the officers from engaging in certain competitive activity with us during their employment and for two years after the termination of their employment for any reason other than poor performance and contain a mutual clause. The officers are also prohibited from soliciting the Company’s customers and employees during their employment and for the two years after the termination of their employment for any reason.

If the officers breach the foregoing provisions, the agreements provide that they must return any portion of the severance payments we have already paid them and their entitlement to continued medical benefits ceases. We are also entitled to pursue other equitable and legal remedies such as restraining orders or damages. The severance payments are conditioned upon the officer signing (and not revoking) a release of claims in favor of Sanderson Farms and complying with applicable restrictive covenants.

An employee must be employed with the Company through October 31 to earn any bonus that may be payable under the Bonus Award Program for that fiscal year. However, if a Bonus Award Program participant dies, becomes disabled or retires before that time, and if the participant had been employed in a designated position at Sanderson Farms for at least nine months, he or she will still receive a cash bonus award for the fiscal year (assuming the performance criteria are met). The participant’s base salary during the portion of the fiscal year in which he or she was employed in the designated position is used to calculate the amount of the bonus award.

 

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If a change in control of our Company occurs, or if a holder dies or becomes disabled, before the end of the restricted period, all shares of restricted stock become fully vested. If a holder ends employment after attaining retirement eligibility during the restricted period, a pro rata percentage of the shares will immediately vest based on the number of years of the restricted period that have passed before retirement, and the unvested portion is forfeited.

If an employee dies, becomes disabled or terminates employment after attaining eligibility for retirement, or if there is a change in control of Sanderson Farms, in each case before the end of the restricted period, all unvested shares of restricted stock held through the plan become fully vested. If an employee’s employment terminates for any other reason, then any unvested shares we granted to the employee through matching contributions are forfeited and dividends paid on those shares must be returned, and we have the right to repurchase all shares that the employee purchased through the plan with salary or bonus at the price the employee paid for them, less the amount of dividends paid. If we do not exercise that right, the purchased shares will vest on the third anniversary of their acquisition.

If a holder of unpaid performance shares dies, becomes disabled or terminates employment after attaining eligibility for retirement, or if there is a change in control of Sanderson Farms, the holder is entitled to receive a pro rata portion of the number of performance shares he would have been entitled to in proportion to the number of months he was employed during the performance period, assuming the performance criteria are met.

If the Board of Directors determines that a holder of restricted stock or performance shares has engaged in certain competitive activity against us while employed by us or during the two years after the holder’s voluntary termination or termination by us for cause, then he or she forfeits all unvested shares of restricted stock and all unissued performance shares. If restricted shares have already vested or performance shares have been issued, the holder must repay us the fair market value of the shares on their grant or issue date, respectively. In the case of the Management Share Purchase Plan, unvested shares of matching stock are forfeited and dividends paid on those shares must be returned, and we have the right to repurchase all shares that the employee purchased through the plan with salary or bonus at the price the employee paid for them, less the amount of dividends paid. If Company matching shares have already vested, the holder must repay us the fair market value of the shares on the date they were issued and any dividends paid.

We pay severance to all our salaried employees generally upon their termination of employment, except in cases of retirement, death, disability or termination for cause. We pay up to two weeks of severance to employees who resign after at least one year of service. If an employee is dismissed without cause, we pay two weeks of severance, plus one additional week for every year of the employee’s service, up to three months.

 

44

On August 8, 2021, in connection with the Merger Agreement described below, we adopted a severance plan that will take effect upon a change of control of the Company. Under the plan, each of our regular, full-time salaried employees as of the date immediately preceding a change in control (other than employees who are covered by another plan or agreement providing severance benefits in connection with a change of control, such as Messrs. Sanderson, Butts and Cockrell) will be entitled to a lump sum payment upon a qualifying termination of employment, with the payment based on the employee’s years of service with us. A qualifying termination means a termination that occurs upon a change in control or during the nine months following the change in control, in each case by us without “cause” or by the employee for “good reason.” The lump sum payment will consist of two weeks of salary for each completed and partial year of service with us, with a minimum of 13 weeks and a maximum of 52 weeks. An employee must sign and not revoke a release of claims in favor of us in order to be entitled to receive the severance payment. Under its terms, the plan does not apply to salaried employees who are part-time, temporary or seasonal, but we have no such employees as of the date of this Form

On August 8, 2021, we agreed to be acquired by a joint venture between Cargill, Inc. and Continental Grain Company pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with Walnut Sycamore Holdings LLC, a Delaware limited liability company (“Parent”), Sycamore Merger Sub LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Parent (“Merger Sub”), and solely for purposes of certain provisions specified therein, Wayne Farms LLC, a Delaware limited liability company, pursuant to which, among other things, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as an indirect wholly owned subsidiary of Parent. At the effective time of the Merger, each share of our common stock outstanding immediately before the effective time (other than certain excluded shares) will automatically be cancelled and converted into the right to receive $203.00 per share in cash, without interest (the “Merger Consideration”).

The Merger Agreement provides that if the Merger is completed, the named executive officers will be entitled to certain payments that differ from the payments they would have ordinarily received as described above, as follows:

 

 

 

 

 

45

•

Company Performance Share Awards for Messrs. Sanderson, Butts and Cockrell . At the effective time of the Merger, each outstanding performance share award held by each of Messrs. Sanderson, Butts and Cockrell will vest and be earned at the maximum level of performance, meaning 200% of the target number of shares covered by the awards (such maximum number of shares is equal to 76,500, 21,000 and 16,500, respectively), and each earned share will be converted into a right to receive an amount in cash equal to the Merger Consideration, which amount will be payable no later than the fifth business day following the effective time.

•

Fiscal Year 2022 Cash Bonuses . If the effective time of the Merger occurs on or after November 1, 2021, Sanderson Farms employees employed as of the effective time shall receive fiscal year 2022 bonuses calculated at the target performance level and pro-rated for the portion of the fiscal year that has elapsed through the later of the effective time and April 1, 2022.

•

Transaction Bonus . Mr. Rigney is eligible to receive a cash transaction bonus conditioned upon the successful completion of the Merger. The aggregate amount of Mr. Rigney’s bonus is equal to $174,972. Fifty percent of the bonus will vest and be payable immediately before the effective time, and the remaining 50% will vest and be payable upon the one-year anniversary of the effective time, in each case, subject to Mr. Rigney’s continued employment through the applicable vesting date; provided that, in the event Mr. Rigney experiences a qualifying termination prior to the first-year anniversary of the effective time, the unvested portion of the transaction bonus will vest and become payable upon the date of such qualifying termination.

Name		Value of Fully Vested Restricted Stock				Value of Earned Performance Shares				Total
Mr. Sanderson		$	14,871,825				5,445,551				20,317,376
Mr. Butts		$	3,978,450				1,481,310				5,459,760
Mr. Cockrell		$	3,173,288				1,165,875				4,339,163
Mr. Rigney		$	694,334				271,671				966,005

Name		Value of Fully Vested Restricted Stock				Value of Earned Performance Shares 1				Transaction Bonus 2				Total
Mr. Sanderson		$	15,935,500				15,529,500				0				31,465,000
Mr. Butts		$	4,263,000				4,263,000				0				8,526,000
Mr. Cockrell		$	3,400,250				3,349,500				0				6,749,750
Mr. Rigney		$	743,995				437,871				87,486				1,269,352

(1)	Mr. Rigney would be entitled to receive an additional $404,579 not reflected in the table above upon the first anniversary of the closing date of the Merger or upon an earlier qualifying termination of employment, subject to continued employment through such date.

(2)	Mr. Rigney would be entitled to receive an additional $87,486 not reflected in the table above upon the first anniversary of the closing date of the Merger or upon an earlier qualifying termination of employment, subject to continued employment through such date.

Name		Severance Payment				Continuation of Medical Benefits				Total
Mr. Sanderson		$	10,628,100				20,764				10,648,864
Mr. Butts		$	3,349,421				20,764				3,370,185
Mr. Cockrell		$	2,674,512				20,764				2,695,276
Mr. Rigney		$	0				0				0

(1)	Prior to a change in control, severance is not payable in the case of termination for poor performance.

(2)	Consists of (i) for Mr. Sanderson, three times, and for Messrs. Butts and Cockrell, two times, his fiscal 2021 base salary plus 50 percent of the maximum bonus he could have earned for fiscal 2021, plus (ii) a pro rata portion of 50 percent of the officer’s maximum 2021 bonus opportunity.

(3)	Consists of 24 months of continued medical benefits assuming the officer does not earlier receive similar benefits from a subsequent employer. Benefits would be paid monthly.

Name		Value of Fully Vested Restricted Stock				Value of Earned Performance Shares				Bonus Awards Payment				Total
Mr. Sanderson		$	5,446,688				5,445,551				2,530,551				13,422,790
Mr. Butts		$	1,420,875				1,481,310				1,014,996				3,917,181
Mr. Cockrell		$	1,148,541				1,165,875				761,055				3,075,471
Mr. Rigney		$	215,499				271,671				233,301				720,472

Name		Value of Fully Vested Restricted Stock				Value of Earned Performance Shares				Bonus Award Payment				Supplemental Long Term Disability 1				Total
Mr. Sanderson		$	14,871,825				5,445,551				2,530,551				1,012,200				23,860,127
Mr. Butts		$	3,978,450				1,481,310				1,014,996				507,488				6,982,244
Mr. Cockrell		$	3,173,288				1,165,875				761,055				2,138,160				7,238,378
Mr. Rigney		$	694,334				271,671				233,301				0				1,199,306

(1)

Due to their respective ages, Messrs. Sanderson, Butts and Cockrell are entitled to a monthly long term disability benefit equal to 66 2/3 percent of their salary beginning one year from the date of disability until the earlier of the date they have received five years of payments or their 70th birthday. In each case the benefit is paid for at least 12 months. The amount shown in the table represents the total amount payable under this benefit assuming payments begin on October 31, 2022.

Name		Continuation of Salary 1				Value of Fully Vested Restricted Stock				Value of Earned Performance Shares				Bonus Awards Payment				Total
Mr. Sanderson		$	1,518,300				14,871,825				5,445,551				2,530,551				24,366,227
Mr. Butts		$	761,232				3,978,450				1,481,310				1,014,996				7,235,988
Mr. Cockrell		$	652,320				3,173,288				1,165,875				761,055				5,752,538
Mr. Rigney		$	0				694,334				271,671				233,301				1,199,306

(1)	This total amount would be paid in equal monthly installments over the course of the year following the date of death.