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HSY » Topics » Was the Company a participant in any related person transactions in 2007, or does the Company currently contemplate being a participant in any related person transactions in 2008, involving a stockholder owning more than 5% of any class of the Companys se

This excerpt taken from the HSY DEF 14A filed Mar 10, 2008.

Was the Company a participant in any related person transactions in 2007, or does the Company currently contemplate being a participant in any related person transactions in 2008, involving a stockholder owning more than 5% of any class of the Company’s securities?

We engage in certain transactions with Milton Hershey School, the Milton Hershey School Trust and companies owned by the Milton Hershey School Trust. As discussed in the next question, many of these transactions are immaterial, ordinary course transactions and are not considered related person transactions. However, from time to time we also engage in certain related person transactions with the Milton Hershey School Trust and its affiliates. These related person transactions are generally of two types:

 

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Transactions not in the ordinary course of business that do not relate to our capital stock; and

 

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Transactions that relate to our capital stock.

Effective December 4, 2007, our Board directed that a special subcommittee composed of the directors elected by the holders of the Common Stock voting separately as a class review and

 

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make recommendations to the Board regarding these transactions. Prior to December 4, 2007, this special committee was empowered by the Board to review only transactions with the Milton Hershey School Trust or its affiliates relating to our capital stock. Another Reviewing Committee, composed of the independent members of the Executive Committee, reviewed all other transactions not in the ordinary course of business between the Company and these entities. The Board believes that having a single Reviewing Committee for all transactions involving the Milton Hershey School Trust and its affiliates will reduce the possibility of inconsistent decision making and avoid any potential for conflicts of interest. However, the Board also directed that if there are no directors on the Board who were elected by the holders of our Common Stock voting separately, such transactions will be reviewed by the independent members of the Executive Committee who have no affiliation with the Milton Hershey School Trust or its affiliates.

During 2007, the Company was not a participant in any related person transactions with the Milton Hershey School Trust, its affiliates or any other stockholder owning more than 5% of any class of the Company’s securities. However, we are contemplating entering into two real estate transactions with the Milton Hershey School Trust that, if completed, would most likely occur in 2008. Those transactions are as follows:

 

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The Company would purchase from the Milton Hershey School Trust a 2.2 acre parcel of land in Hershey, Pennsylvania, adjacent to another property currently owned by the Company, for approximately $825,000. The parties retained an independent appraiser to determine the fair market value of the property.

 

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The Company would convey to the Milton Hershey School Trust a small parcel of land it owns in Hershey, Pennsylvania. The Milton Hershey School Trust would, in turn, convey to the Company an adjacent parcel of land of similar size owned by the Trust. The exchange is being made to better align the boundaries of other lands each party owns in the same vicinity. Each parcel is less than one-fourth acre in size. The properties are considered to be of equal value and therefore an independent appraisal was not obtained.

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