Between 1954 and 1957,
the Foundation became trustee for 21 family trusts. Twelve
of those family trusts remain extant. Currently trustee
for three trusts established in 1934 by George A. Hormel
and for twelve trusts established by Jay C. Hormel.
- These trusts hold approximately 41.7%
of Hormel Foods Corporation outstanding stock (which,
together with 4.7% owned by the Hormel Foundation and
1% held in another trust it administers, gives the Hormel
Foundation over 46.4% voting control).
- The George A. Hormel Trusts terminate on the death of
the grandson benefited by the trust, and the Jay C. Hormel
trusts terminate 21 years after the death of the last
- The Hormel Foundation effectively
holds a remainder in all the trusts.
In order to continue to hold a significant
level of Hormel stock after the Tax Reform Act of 1969,
in 1980 the Hormel foundation amended its articles to
qualify as a public foundation under Section 509(a)(3)
of the IRC. Pursuant to the 1980 Restated Articles of
Incorporation, the purpose of the Foundation is to benefit
and assist in carrying out the purposes of “qualified” organizations.
- Each qualified organization is
a public charity which is named in the Foundation’s articles, and which
designates a director of the Foundation. (Austin Community
Scholarship Committee, Austin Public Education Foundation,
Cedar Valley Rehabilitation Workshop, City of Austin,
Austin Medical Clinic, The Salvation Army, United Way
of Mower County, University of Minnesota – Hormel
Institute, Young Men’s Christian Association)
- There are currently 17 directors, nine of whom are appointed
by qualified organizations and eight of whom are elected.
- The Foundation must always be controlled by the directors
designated by the charitable organizations the Foundation
serves. The appointed directors must always outnumber
the elected directors, and each director has one vote.
- The elected directors fill vacancies in their ranks
by a vote of the elected directors only.
The Foundation was established by
Jay C. Hormel to do three things: 1) retain control of
Hormel stock, 2) do worthwhile things requiring a tax-free
organization, and 3) increase Jay Hormel’s cash
position by reducing his income tax liability.
- Jay Hormel was concerned that
on his death estate taxes would force the sale of Hormel
stock. The Foundation, together with family trusts,
which were established separately, provided a vehicle
to assure Hormel’s independence
after Jay Hormel’s death.
- The tax-free dividends on the stock owned by the Foundation
(not held in the trusts) allowed the Foundation to pursue
projects, which Jay Hormel regarded as beneficial to the
- He also regarded projects such as the Hormel Institute
to have some value for the business.
The benefit the family trusts gave
Jay Hormel’s sons
was clearly a top priority of George and Jay Hormel. However,
those trusts were established independent of the Foundation,
and a clear reason for making the Foundation trustee was
to assure voting control of the Company stock until such
time as that stock reverted to the Foundation as remainder-man
of the trusts.
Relationship to the Company
The Foundation is the primary protection
of the Company’s