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 son.
• 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.

Purpose

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 community.
• 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 independence.