Conagra Foods Inc/DE – ‘8-K’ for 9/7/05 – EX-99.1

On:  Wednesday, 9/7/05, at 5:11pm ET   ·   For:  9/7/05   ·   Accession #:  900440-5-66   ·   File #:  1-07275

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         September 7, 2005 8-K                                  3      9K 
 2: EX-99.1     Owen Johnson Ltr to Iss                                4±    16K 

EX-99.1   —   Owen Johnson Ltr to Iss

CONAGRA FOODS, INC.                                                             
                                     ConAgra Foods, Inc.
                                   One ConAgra Drive
                                            Omaha, Nebraska 68102-5001

                                    TEL:  402-595-5315

                                 Owen C. Johnson
                                          Executive Vice President
                                                 Organization and Administration
                                         and Corporate Secretary

             September 7, 2005

Via Email                                                                       

Institutional Shareholder Services                                              

Martha Carter [martha.carter@issproxy.com]                    
Patrick McGurn [patrick.mcgurn@issproxy.com]                  
Kathryn Cohen [kathryn.cohen@issproxy.com]                    
Patricia Tiller [patricia.tiller@issproxy.com]                
Rajeev Kumar [rajeev.kumar@issproxy.com]                      

RE:      ConAgra Foods, Inc.                                                    

Ladies and Gentlemen:                                                           

     We  appreciated  the  opportunity  to talk to you yesterday and welcome the
opportunity  to put forth in writing the matters which we discussed.  During our
conversation,  we  discussed  your views that (1) there is a  potential  for the
appearance  of a conflict of  interest  between the  Company's  Audit  Committee
Chairman and the newly appointed auditor due to his previous  employment at KPMG
which ended more than three years ago, and (2) the Company could have  disclosed
more  information  about  the  process  by  which  potential  audit  firms  were
interviewed and evaluated resulting in the selection of KPMG.                   

Mr. Butler's Independence                                                       

     Stephen Butler has been a member of the Company's Audit Committee since May
2003 and Audit  Committee  Chairman  since May 2004.  Mr.  Butler is a certified
public accountant with extensive auditing experience. He was an employee of KPMG
and its Chairman and CEO until his retirement in June 2002. Mr. Butler ceased to
be an employee of KPMG on the date of his  retirement  in June 2002.  Mr. Butler
has not had an employment relationship with KPMG since that date.               

     Three specific  rules and  regulations  are  applicable to this  particular
situation: (1) SEC (S-X regulation 2.01(c)(2) and Rule 10A-3), (2) NYSE (listing
standard  303A.02) [each have specific  codified  standards for  determining the
independence of directors who formerly had relationships with a public company's
independent  auditor],  and (3) PCAOB standard (interim independence rule 3600T)
for determining auditor independence.  Mr. Butler qualifies as independent under
all three of those standards.  In addition,  a fourth standard is also relevant:
your  preliminary  proxy  analysis  indicates  that Mr. Butler also qualifies as
independent under your standards.                                               

Audit Committee Independence                                                    

     ConAgra  Foods  has four  Audit  Committee  members,  all of whom have been
designated as audit committee  financial  experts  pursuant to SEC  regulations.
Each is independent, and that fact is not in question.                          

KPMG Independence                                                               

     The new engagement partner for KPMG on the ConAgra Foods' account has never
reported to Mr. Butler nor worked  directly for him. In fact, the new engagement
partner did not have any prior significant interaction with ConAgra Foods or Mr.
Butler  until the recent  ConAgra  Foods'  process  for  evaluating  independent
auditor proposals.                                                              

Process of Auditor Selection                                                    

     The process of auditor selection is something that public  companies,  as a
matter of good  governance,  engage in from time to time.  Public  companies are
currently  encouraged to review the selection  process more  frequently and more
vigorously.                                                                     

     In the ConAgra Foods case,  the most senior member of the Audit  Committee,
the former Audit  Committee  Chair Robert Krane,  suggested on his retirement in
September 2004 that in due course the Audit Committee should consider evaluating
the field of potential  auditors.  Mr. Krane noted that while  auditors had been
considered  from time to time,  Deloitte & Touche  had  served as the  Company's
auditors since 1977.                                                            

     Three months later, Frank Sklarsky joined ConAgra Foods in December 2004 as
Executive Vice President and Chief Financial Officer.  John Gehring had recently
become ConAgra  Foods' Senior Vice President and Controller in July 2004.  Given
the suggestion of retiring Audit Committee  Chairman Krane,  and the presence of
new  financial  management,  the Company  elected to seek  proposals  from major
accounting  firms for the following  fiscal year in order to evaluate whether to
retain  the  current  auditor  or to make a  change.  As  part of this  process,
financial management  recommended to the Audit Committee that the process should
seek to enhance  the audit  team's  talent and  experience  for the fiscal  year
beginning  in June  2006,  including  additional  national-level  resources  and
specialized expertise.                                                          

     The  Audit  Committee  reported  the  foregoing  matters  to the  board  of
directors and recommended an evaluation process which would include the services
and staffing available from the "Big 4" accounting firms. The board of directors
was in favor of the process and thereafter the Audit Committee process began. As
reported  by the  company in its proxy  statement  for the  annual  stockholders
meeting on September 22, 2005,  three of the "Big 4" independent  auditing firms
were requested to submit  proposals for the conduct of the company's fiscal 2006
audit.  Proposals  were  received  from  Deloitte  &  Touche  LLP,  KPMG LLP and
PriceWaterhouseCoopers  LLP.  A proposal  from Ernst & Young was not  requested,
since that firm was already providing substantial tax services to the company.  

     The Company's  senior financial  management,  including its Chief Financial
Officer, the Controller, and the Vice President of Internal Audit held extensive
due  diligence  sessions  with each firm to respond to  questions  and to review
qualifications,   staffing  and  proposals.   There  were  significant  staffing
variations in each of the respective  proposals.  For example, KPMG and Deloitte
had offices in Omaha; PWC proposed  locating a partner in Omaha but not staffing
an office in the city.  KPMG was the only firm to propose to have one of its SEC
review partners serve as the lead engagement partner, a partner with significant
packaged food and consumer  product  company audit  experience  who would devote
substantially  full time on site to the audit.  Deloitte and PWC each  disclosed
that their  respective lead engagement  partners would not be as fully dedicated
to the company's audit. As a result,  the Company's senior financial  management
unanimously  recommended  KPMG to the Audit Committee as the firm they viewed as
having the best qualifications and expertise.                                   

     The Company's Audit Committee  conducted its own independent  review of the
proposals following financial management's  assessment.  Deloitte,  KPMG and PWC
each made detailed  presentations to the Audit Committee in July 2005. Each firm
had access to each of the Audit Committee members.  Each accounting firm made on
site  presentations  for several hours in Omaha and participated in face-to-face
exchanges with the Audit Committee  members.  After completing its review of the
proposals and conducting  reference checks, the Audit Committee  deliberated and
based its  unanimous  selection of KPMG on the  comparative  qualifications  and
commitments  of  the  respective   firms.   The  Audit   Committee   shared  its
observations,  as well as the  qualifications  and commitments of KPMG, with the
entire board of directors.  While the selection of the independent  auditors was
solely a  function  of the Audit  Committee,  the Audit  Committee  did seek the
guidance  and  approval  of the  board of  directors.  The  board  endorsed  the
selection of KPMG.                                                              

ISS Recommendation                                                              

     ConAgra  Foods  believes  any company  would be  fortunate to have an Audit
Committee  Chairman of the experience and quality of Stephen Butler.  Mr. Butler
is a highly qualified Audit Committee Chairman by anyone's standards.           

     Moreover, on a comparative basis,  premised on the face-to-face  interviews
and  presentations  of the three  auditing firms which made  proposals,  ConAgra
Foods also believes that the  qualifications and expertise of the new KPMG audit
team  exceeded  those of the other  audit  firms  which made  proposals  for the
ConAgra Foods' account.                                                         

     We do not  believe  it would be in the best  interests  of  ConAgra  Foods'
stockholders  to lose the  professional  skills,  expertise  and services of Mr.
Butler as Audit  Committee Chair or any of the Audit  Committee  members,  or to
lose the professional skills,  expertise and services of the new KPMG audit team
as our independent auditors. We believe the loss of Mr. Butler's services or the
loss of KPMG's  services would be  counterproductive  for our  stockholders  and
contrary to the current objectives of quality corporate governance.             

     We  encourage  ISS to take all of these  factors  into  consideration  when
recommending  its voting  positions.  ConAgra  Foods  conducted  a full and open
evaluation  process in which the three major  accounting  firms  submitted their
best respective proposals. We believe the processes followed by ConAgra Foods in
deciding to seek proposals from auditors, and selecting KPMG as the new auditor,
puts ConAgra Foods in the forefront of good corporate governance.               

                           Yours very truly,

                                   /s/ Owen C. Johnson

                         OWEN C. JOHNSON

cc:      Bruce Rohde                                                            
Frank Sklarsky                                                
John Gehring                                                  
Dave Hefflinger                                               
Jason Benson                                                  

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing		Date		Other Filings
		9/22/05		4,  8-K,  DEF 14A,  PRE 14A
Filed on / For Period End:		9/7/05
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