DEF: South Dakota Soybean Processors Announces Annual Meeting of Members and Proxy Statement

South Dakota Soybean Processors will hold its annual meeting on June 17, 2025, to discuss company performance, elect board members, and conduct an advisory vote on executive compensation.

Summary

• South Dakota Soybean Processors, LLC will hold its Annual Meeting of Members on June 17, 2025, in Volga, South Dakota.
• The meeting will include a report from management on the company's business and audited financial statements for the fiscal year ended December 31, 2024.
• Members will elect three members to the board of managers, one from each of the three geographical districts.
• An advisory vote will be held on the compensation of the company's named executive officers (Say-on-Pay).
• Members can vote in person or by mail-in ballot, which must be received by June 17, 2025, at 10:00 a.m. CDT.
• The proxy statement and annual report are available on the company's website.
• As of May 1, 2025, there were 30,411,500 Class A units outstanding and 2,234 Class A members of record, each member having one vote.
• A quorum requires the presence of at least 117 members, either in person or through a properly executed ballot.
• The board of managers consists of nine persons representing three geographical districts.
• The company has three committees: finance/audit, governance, and nomination.
• The finance/audit committee held ten meetings, the governance committee held two meetings, and the nomination committee held two meetings in 2024.
• Eide Bailly LLP billed $149,004 for audit fees and $60,050 for tax fees for the fiscal year ended December 31, 2024.
• The company's compensation philosophy aims to attract, retain, and reward associates, link compensation to financial performance, and balance risk.
• The principal components of executive compensation include base salary, incentive cash bonuses, deferred compensation bonuses, and other personal benefits.
• The CEO's base salary is $400,000 per year through 2027, as per his employment agreement.
• The median annual total compensation of all employees (excluding the CEO) was $78,261 in 2024.
• The CEO's annual total compensation was $640,780, resulting in a CEO pay ratio of 8.2:1.
• In 2024, the company purchased approximately $646,000 in soybeans from Brandon Hope and $558,000 from Craig Weber, who are members of the board.

Sentiment

Score: 7

Explanation: The document is primarily informational and procedural, with a neutral to slightly positive tone due to the company's focus on member value and performance-based compensation.

Positives

• The company has a compensation philosophy designed to attract and retain skilled associates.
• The compensation program links pay to financial performance and increased capital unit value.
• The board includes members with experience in the company's core business and ancillary markets.
• The company has an insider trading policy and a code of ethics in place.
• The finance/audit committee is actively involved in overseeing the company's accounting and financial reporting process.

Negatives

• The company does not have a financial expert serving on its finance/audit committee.
• Two members of the finance/audit committee are not independent because they received payments from the company for the sale and delivery of soybeans.
• The company purchased soybeans from board members, which could present a conflict of interest.

Risks

• Potential conflicts of interest arising from transactions with related persons, such as soybean purchases from board members.
• The absence of a financial expert on the finance/audit committee could impact the quality of financial oversight.
• Economic conditions could impact the company's financial performance and ability to provide incentive compensation.

Future Outlook

The board intends to consider the outcome of the Say-on-Pay vote when making future compensation decisions for named executive officers.

Industry Context

As a producer-based agricultural entity, South Dakota Soybean Processors' governance structure and compensation practices reflect the unique characteristics of the agricultural industry, including the involvement of farmer members in governance and the importance of aligning executive compensation with the company's financial performance.

Comparison to Industry Standards

• The company's board structure, with nine members representing three geographical districts, is typical for agricultural cooperatives.
• The absence of a financial expert on the audit committee is a deviation from best practices for publicly traded companies but is not uncommon for smaller, privately held entities.
• The CEO pay ratio of 8.2:1 is relatively low compared to larger corporations in other industries, reflecting the company's focus on member value and operational efficiency.
• The company's compensation philosophy, which emphasizes performance-based pay, is consistent with industry trends.

Related Party Transactions

• In fiscal year 2024, the company purchased soybeans in the approximate amount of $646,000 from Brandon Hope and $558,000 from Craig Weber, who are members of our board.

Stakeholder Impact

• Shareholders will vote on key governance matters, including the election of board members and executive compensation.
• Executive officers' compensation is tied to the company's financial performance, aligning their interests with those of the members.
• The company's operations impact soybean producers and the agricultural community in South Dakota and Minnesota.

Next Steps

• Members should review the proxy statement and cast their votes by June 17, 2025.
• The board will consider the outcome of the Say-on-Pay vote when making future compensation decisions.
• The nomination committee will select new members for the 2026 Annual Meeting.

Key Dates

Keywords

annual meeting, proxy statement, board of managers, executive compensation, soybean processors, corporate governance, financial statements, election of managers, say-on-pay, South Dakota