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The board of directors has adopted these policies as a general framework to assist the board in carrying out its responsibilities. The board, on behalf of the company and its stockholders, oversees and provides general direction to the management of the company.
As disclosed in our filings with the Securities and Exchange Commission, Pilgrim's Pride Corporation has been and in some cases continues to be a party to certain transactions with Lonnie "Bo" Pilgrim, its Senior Chairman, Clifford E. Butler, its former Vice Chairman, O.B. Goolsby, its former CEO and President, and a law firm affiliated with James G. Vetter, Jr., one of its Directors, and/or certain members of their families. These transactions, along with all other transactions between Pilgrim's Pride Corporation and affiliated persons, require the prior approval of the Audit Committee of the Board of Directors, and the Audit Committee has approved each of these transactions. Set forth below is a summary of transactions involving the Company and its officers and Directors:
At certain times during previous years, the Company has entered into risk transfer transactions with Lonnie "Bo" Pilgrim whereby Mr. Pilgrim purchased certain amounts of the Company's live chickens and hens, feed inventory and veterinary and technical services during the grow-out process and then contracted with the Company to re-sell the birds at maturity. Chicks, feed and services were purchased from the Company for their fair market value, and the Company purchased the mature chickens from Mr. Pilgrim at a market-based formula price subject to a ceiling price calculated at Lonnie "Bo" Pilgrim's cost plus two percent. No purchases have been made by the Company under this agreement since the first quarter of fiscal 2006.
We have entered into chicken grower contracts involving farms owned by certain of our officers, providing the placement of Pilgrim's Pride-owned flocks on their farms during the grow-out phase of production. These contracts are on terms substantially the same as contracts we enter into with unaffiliated parties and can be terminated by either party upon completion of the grow-out of each flock. The aggregate amount paid by us to Lonnie "Bo" Pilgrim under these grower contracts during fiscal 2008 was $1,007,865. In fiscal 2008, we paid Clifford E. Butler, $341,795 under such a grower contact.
Additionally, we process the payroll for certain employees of Lonnie "Bo" Pilgrim and Pilgrim Poultry G.P. ("PPGP") as well as perform certain administrative bookkeeping services for Mr. Pilgrim's personal businesses. Lonnie "Bo" Pilgrim is the sole proprietor of PPGP. During fiscal 2008, PPGP paid the Company $542,418 for general supplies and the services described above.
PPGP also rents facilities to us for the production of eggs. On December 29, 2000, we entered into an agreement with PPGP to rent its egg production facilities for a monthly amount of $62,500. During fiscal 2008, we paid rental on the facilities of $750,000 to PPGP. Our management believes that the terms of this agreement with PPGP are substantially similar to, and contain terms not less favorable to us than, agreements obtainable from unaffiliated parties.
The Company also maintains depository accounts with a financial institution of which Lonnie "Bo" Pilgrim is a major stockholder. Fees paid to this bank in fiscal 2008 are insignificant, and as of September 27, 2008, we had bank balances at this financial institution of approximately $2.4 million.
Since 1985, we have leased an airplane from Lonnie "Bo" Pilgrim under a lease agreement which provides for monthly lease payments of $33,000 plus operating expenses, which terms our management believes to be substantially similar to those obtainable from unaffiliated parties. During fiscal 2008 we had lease expenses of $396,000 and operating expenses of $59,970 associated with the use of this airplane. On November 18, 2008, we cancelled this aircraft lease.
A portion of the Company's debt obligations have been guaranteed by Pilgrim Interests, Ltd., an entity related to the Company's Senior Chairman, Lonnie "Bo" Pilgrim. In consideration of such guarantees, the Company has paid Pilgrim Interests, Ltd. a quarterly fee equal to 0.25% of one-half of the average aggregate outstanding balance of such guaranteed debt. During fiscal 2008, we paid $4,904,301 to Pilgrim Interests, Ltd.
Certain members of the family of Lonnie "Bo" Pilgrim are employed by us, including: his son, Lonnie Ken Pilgrim, our Chairman; his son, Pat Pilgrim; and his daughter, Greta Pilgrim-Owens, who received total compensation for fiscal 2008 of $544,077, $220,281 and $227,669, respectively.
From time to time, the Company has purchased grain from Pat Pilgrim in transactions pre-approved by the Audit Committee. We paid him $392,398 for such purchases in fiscal 2008. The Company has committed to purchase an additional $338,250 as of May 5, 2009. Pat Pilgrim also provided hauling services to us in fiscal 2008, for which he was paid $47,962. He also paid the Company $27,696 in fiscal 2008 for land he leases from us. On November 30, 2005, the Audit Committee pre-approved us entering into three contracts with Pat Pilgrim, including a general services agreement, a transportation agreement and a lease. On January 28, 2008, the Audit Committee approved the new ground lease agreement with Mr. Pilgrim. In February 2008, we entered into the new ground lease agreement pursuant to which Mr. Pilgrim rents 1,731 acres of land from the Company for annual lease payments totaling $27,696. The lease agreement, which is for a one year term, renews for an additional year at the end of each term, but the agreement can be terminated by either party without cause. At the end of each year, the Company and Mr. Pilgrim may reevaluate the acreage and the rental rate under the lease and may amend those items, but only after pre-approval by the Audit Committee. Management believes the terms of these contracts and transactions are substantially similar to those obtainable from unaffiliated parties.
James G. Vetter, Jr., is of counsel to GodwinRonquillo PC, a Dallas law firm that represents us in connection with a variety of legal matters. We did not pay any fees to GodwinRonquillo PC in fiscal 2008.
We also employ Blake Lovette's son-in-law, Ted Lankford, our Complex Manager at Athens, AL, who was paid total compensation of $132,350 in fiscal 2008.
We also employ Clifford E. Butler's son, Shane Butler, our Senior Vice President, Prepared Foods Regional Operations, who was paid total compensation of $240,967 in fiscal 2008. In addition, we employ O.B. Goolsby's daughter, Melissa Goolsby-Cooney, Sales Field Representative, who was paid total compensation of $53,766 in fiscal 2008, son-in-law Scott Cooney, Director HACCP/Regulatory Compliance, who was paid total compensation of $86,606 in fiscal 2008, and purchased landscape services from Mr. Goolsby's son, Greg Goolsby, who was paid a total amount of $6,615 in fiscal 2008.
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