8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 30, 2006

SMITHFIELD FOODS, INC.

(Exact name of registrant as specified in its charter)

Virginia	1-15321	52-0845861
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 Commerce Street Smithfield, Virginia	23430
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (757) 365-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Compensation for Named Executive Officers for fiscal 2007, as amended

As previously disclosed, on August 31, 2006, Joseph W. Luter, III relinquished the title of Chief Executive Officer of Smithfield Foods, Inc. (the “Company”) and, effective September 1, 2006, the Company’s Board of Directors elected C. Larry Pope as Chief Executive Officer and confirmed his continuing position as President of the Company. Mr. Luter remains Chairman of the Board of Directors. On August 30, 2006, the Company’s Compensation Committee amended the compensation arrangements with Mr. Pope to reflect his change in office and approved the Company entering into a consulting agreement with Mr. Luter. (See the description of Mr. Luter’s Consulting Agreement below.) The schedule detailing the compensation for Named Executive Officers for fiscal 2007, as amended, is attached hereto as Exhibit 10.1, the contents of which are incorporated herein by reference.

Consulting Agreement

On August 30, 2006, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Joseph W. Luter, III. Under the Consulting Agreement, Mr. Luter agrees to provide consulting services to the Company for a period of one year, with such period subject to extension by the consent of both parties (the “Consulting Period”). The consulting services to be provided by Mr. Luter include cooperating with the management transition at the Company due to Mr. Luter’s retirement, providing strategic advice on major acquisitions, and providing strategic and operational advice on the execution of the corporate commodity hedging strategy. In addition to providing the consulting services, Mr. Luter also agrees to serve as non-executive Chairman of the Board during the Consulting Period if he is elected as such.

Under the terms of the Consulting Agreement, the Company will pay Mr. Luter $83,333.33 per month plus such compensation and benefits as are afforded to the Company’s non-employee directors. Mr. Luter will also be entitled to (i) an office with secretarial and other support, (ii) use of the Company’s aircraft within specified policies for business and personal use (provided that he reimburses the Company for its incremental cost for any personal use), (iii) health care coverage comparable to that received by him prior to his retirement, and (iv) cash incentive awards if and to the extent determined by the Board of Directors to be merited.

During the Consulting Period, Mr. Luter agrees that he will not, without the prior written consent of the Company, engage in competition with the Company by being associated with any business entity which engages in the business of hog production, cattle feeding or meat processing anywhere in the world where the Company has operations or sales. Mr. Luter also agrees, during the Consulting Period and for a period of two years following the Consulting Period, not to solicit employees or customers of the Company for the purpose of competing with the Company.

The Consulting Agreement is filed as Exhibit 10.2 to this report and the foregoing summary description of such agreement is qualified in its entirety by reference to the complete text of such agreement.

Compensation for Non-Employee Directors as of August 30, 2006

On August 30, 2006, the Company’s Board of Directors, upon the recommendation of the Nominating and Governance Committee, changed the compensation for Non-Employee Directors effective August 30, 2006. The approved compensation for the Company’s Non-Employee Directors is attached hereto as Exhibit 10.3, the contents of which are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibit 10.1	Compensation for Named Executive Officers for fiscal 2007, as amended.
	Exhibit 10.2	Consulting Agreement, dated August 30, 2006, by and between the Company and Joseph W. Luter, III.
	Exhibit 10.3	Compensation for Non-Employee Directors as of August 30, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SMITHFIELD FOODS, INC.
Date: September 6, 2006	/s/ Michael H. Cole
	Michael H. Cole
	Vice President, Chief Legal Officer and Secretary

EXHIBIT INDEX

Exhibit 10.1     Compensation for Named Executive Officers for fiscal 2007, as amended.

Exhibit 10.2     Consulting Agreement, dated August 30, 2006, by and between the Company and Joseph W. Luter, III.

Exhibit 10.3     Compensation for Non-Employee Directors as of August 30, 2006.

EX-10.1

EXHIBIT 10.1

COMPENSATION FOR NAMED EXECUTIVE OFFICERS, AS AMENDED

Name	Principal Position	Annual Base Salary for fiscal 2007	Bonus Awards for fiscal 2007(1)
Joseph W. Luter, III	Chairman of the Board (2)	(3)	(3)
C. Larry Pope	President and Chief Executive Officer (4)	$800,000(5)	(5)
George H. Richter	President of Farmland	$620,000	(6)
Jerry H. Godwin	President of Murphy-Brown	$750,000	(7)
Richard J.M. Poulson	Executive Vice President	$600,000	(8)

(1) All bonus awards are subject to adjustment downward at the Compensation Committee’s discretion based on an officer’s individual performance. In those cases where bonuses are derived from a formula based on profits, profits are determined on a pre-tax, pre-bonus basis.

(2) Mr. Luter served as Chairman of the Board and Chief Executive Officer until August 31, 2006. Effective September 1, 2006, Mr. Luter ceased to be an employee of the Company and entered into a consulting agreement (the “Consulting Agreement”) with the Company, which has been filed as Exhibit 10.2 to this Current Report on Form 8-K. Mr. Luter continues to serve as Chairman of the Board.

(3) Effective for services rendered on or after September 1, 2006, Mr. Luter’s compensation will be determined in accordance with the Consulting Agreement.

(4) Mr. Pope served as President and Chief Operating Officer until August 31, 2006. Effective September 1, 2006, Mr. Pope was elected President and Chief Executive Officer.

(5) Effective for services rendered on or after September 1, 2006, Mr. Pope’s base salary will be at an annual rate of $800,000 and he will be eligible for a bonus award for fiscal 2007 determined under a formula based on Company-wide profits.

(6) Derived from a formula based on Farmland’s profits during fiscal 2007.

(7) Derived from a formula based on Murphy-Brown’s ability to control hog raising costs.

(8) Derived from a formula based on Company-wide profits during fiscal 2007.

EX-10.2

EXHIBIT 10.2

CONSULTING AGREEMENT

This CONSULTING AGREEMENT (the “Agreement”) is made as of August 30, 2006 between SMITHFIELD FOODS, INC. (the “Company”) and JOSEPH W. LUTER, III (the “Executive”).

RECITALS:

The Board of Directors of the Company (the “Board of Directors”) recognizes that the Executive has provided outstanding management of the Company for many years. The Company acknowledges that the Executive is eligible to retire and the Company wishes to retain the continuing services of the Executive as a consultant following retirement. To accomplish this, the Compensation Committee of the Board of Directors (the “Committee”) has recommended, and the Board of Directors has approved, entering into this Agreement with the Executive. The Company and the Executive are entering into this Agreement to provide access to the Executive’s services as a consultant following the Executive’s retirement, including during a management transition period. The Executive has agreed to provide consulting services following his retirement under the terms and conditions below.

NOW, THEREFORE, in consideration of the foregoing and the mutual undertakings contained in this Agreement, the parties agree as follows:

1. Post-Employment Consulting Services. Upon his termination of employment with the Company, including by voluntary retirement, the Executive agrees to provide consulting services to the Company for a period of one (1) year (the “Consulting Period.”). With the Executive’s consent, the Company may extend the

Consulting Period annually by an additional year by providing a notice at least 30 days before the end of the Consulting Period (initially or as it may have been previously extended). The consulting services will consist of the following activities:

(a) the Executive’s cooperation with the Company in the transition of management of the Company following the Executive’s retirement,

(b) providing strategic advice on major acquisitions,

(c) providing strategic and operational advice on the execution of the corporate commodity hedging strategy, and

(d) such other special projects and activities as may be requested by the Board of Directors or the Chief Executive Officer and agreed to by the Executive, which agreement may not be unreasonably withheld by the Executive.

The Company acknowledges that the consulting services to be rendered will be done at times and in the manner as determined by the Executive. The Company also acknowledges that it is expected that the Executive will devote less than half of his available working time to the consulting services.

In addition to the consulting services, if elected as a member of the Board of Directors and as non-executive Chairman of the Board, the Executive also agrees to serve as non-executive Chairman of the Board during the Consulting Period; provided that in such event the Executive shall also be entitled to receive compensation and benefits afforded to non-employee directors under the Company’s director compensation policy as in effect from time to time.

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2. Payment for Consulting Services. In exchange for the Executive providing the consulting services and, if applicable, serving as non-executive Chairman of the Board, the Company agrees to take the following actions during the Consulting Period:

(a) The Company will pay the Executive the amount of $83,333.33 per month, payable once a month in arrears.

(b) The Company will provide the Executive with an appropriate office located in proximity to his current office with appropriate furnishings and secretarial support. The Company will also provide the Executive with information technology (cell phone, blackberry or similar device, computer, etc.), information technology support and any other similar support necessary for the completion of the consulting services. The Company will reimburse the Executive for his actual, reasonable, out-of-pocket expenses incurred in connection with his provision of consulting services under this Agreement. The Executive shall submit accurate and complete supporting documents for reimbursement of such expenses and shall follow any Company policies relating thereto as in effect from time to time.

(c) The Executive will be entitled to use Company aircraft on Company business under the Company’s aircraft policies and will be entitled to personal use of Company aircraft based on the Company policies for personal use by senior executives as in effect from time to time; provided, however, that the Executive will be required to reimburse the Company promptly for the incremental cost to the Company of such personal use.

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(d) The Company shall make available to the Executive coverage that is comparable to the coverage provided to Executive under the Company’s health care plan immediately prior to his retirement.

(e) The Executive will be entitled to receive cash incentive awards based on the Executive’s consulting services, if and to the extent that the Board of Directors determines that the Executive’s performance as a consultant merits payment of an incentive award.

(f) To the extent required to avoid any penalties on the Executive under Section 409A of the Code, payments to the Executive under this Agreement, and under any other agreement with the Executive, upon termination of employment shall be distributed on the later of (i) the dates specified in this Agreement or any other agreement, and (ii) six (6) months and one (1) day after the date of termination.

3. Post-Employment Noncompetition and Nonsolicitation. In exchange for the payments from the Company under Section 2, the Executive and the Company agree as follows.

(a) During the Consulting Period, the Executive agrees that he will not, without the prior written consent of the Company, engage in competition with the Company by being associated with any business entity which engages in the business of hog production, cattle feeding, or meat processing anywhere in the world where the Company has operations or sales. The Executive will be deemed to have associated with a business entity if he serves as an officer, director, consultant or in any managerial or executive position with respect to the business entity, or, directly or indirectly and whether or not for compensation, is a shareholder owning beneficially or of record more than five percent (5%) of the outstanding shares of any class of shares or other type of ownership interest in a business entity.

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(b) The Executive agrees that, during the Consulting Period and for a period of two years following the termination of the Consulting Period for any reason, he will not solicit or attempt to solicit any employees or customers of the Company, or other persons or entities with or through whom the Company has done business, for the purpose of providing goods and services, or engaging in other activities, in competition with the Company. The Executive agrees that, during the Consulting Period and for a period of two years following the termination of the Consulting Period for any reason, (A) he will not solicit, aid or encourage, directly or indirectly any employees of the Company to leave the Company or work elsewhere, and (B) he will not solicit, aid or encourage, directly or indirectly, any of the Company’s customers to move their business from the Company or to place business elsewhere.

(c) If the Company determines that the Executive has violated the provisions of Section 3(a) or (b), the Company may immediately terminate all payments due to the Executive under Section 2 and the Executive shall have no further rights to any payments under Section 2.

4. Independent Contractor. The Company and the Executive intend that the Executive perform the consulting services as an independent contractor and not as an employee. Accordingly, with respect to all services covered by this Agreement, the Executive and the Company each acknowledge and agree that the Executive will not be treated as an employee for purposes of the Federal Insurance Contributions Act, the Social Security Act, the Federal Unemployment Tax Act, federal and state income tax

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withholding, state unemployment taxes, State Workmen’s Compensation Insurance and similar laws covering the employer-employee relationship. The Executive further acknowledges that he is responsible for the payment of any state or federal income tax or self-employment tax with respect to the payments made to the Executive under this Agreement.

WITNESS the following signatures:

SMITHFIELD FOODS, INC.
By:	/s/ C. Larry Pope
	C. Larry Pope
	President
By:	/s/ Ray A. Goldberg
	Ray A. Goldberg
	Chairman, Compensation Committee
EXECUTIVE
By:	/s/ Jospeh W. Luter, III
	Joseph W. Luter, III

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EX-10.3

EXHIBIT 10.3

COMPENSATION FOR NON-EMPLOYEE DIRECTORS

As of August 30, 2006

Directors who are not employees of the Company or any of its subsidiaries receive an annual retainer of $50,000, an additional annual retainer of $10,000 for the chairperson of the Audit Committee, an additional annual retainer of $5,000 for each director serving as chairperson of any committee other than the Audit Committee, and $2,000 for each board and committee meeting attended.

Each non-employee director has the ability to participate in the Company’s 2005 Non-Employee Directors Stock Incentive Plan (the “Directors Plan”) which allows participating non-employee directors to defer receipt of a portion or all of the retainer and meeting fees the Company provides for Board services and receive such retainer and meeting fees in the future as shares of the Company’s common stock. In addition, non-employee directors are eligible for a deferred stock grant under the Directors Plan consisting of a number of stock units determined by the Board of Directors. Each stock unit awarded will entitle the participant to receive one share of Common Stock. Deferred stock grants of 1,500 stock units are made to each non-employee director immediately after each annual meeting of shareholders. The Board of Directors may modify the amount or timing of such additional deferred stock grants at any time. Distributions from the accounts will commence on the director’s separation from service from the Board of Directors for any reason (including resignation or death) or a specified number of years (between one and five) following the director’s separation from service. A director may also elect to have distributions commence upon a change in control (as defined in the Directors Plan). Distributions will be made in a single lump sum or in annual installments of up to 10 years, as previously elected by the director. While a non-employee director is a member of the Board of Directors, all of the director’s benefits under the Directors Plan will be maintained in stock units. Following separation from service, a director may elect to transfer all or any part of his or her stock units into one or more deemed investments approved from time to time by the Nominating and Governance Committee. Such transfers and any further reallocations among stock units and deemed investments may be made subject to restrictions determined appropriate by the Nominating and Governance Committee.