Edgar Filing: ALICO INC

SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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Filed by a Party other than the Registrant [ ]

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[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12

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ALICO, INC.
(Name of Registrant as Specified in its Charter)

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ALICO, INC.
Post Office Box 338
La Belle, Florida 33975

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Notice of Annual Meeting of Shareholders
To be held December 4, 2003
---------------------

November 10, 2003

To the Shareholders of ALICO, INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ALICO,
INC., a Florida corporation (the "Company"), will be held at the Alico Arena on
the campus of Florida Gulf Coast University, 10501 FGCU Boulevard, South, Fort
Myers, Florida, 33965 at Ten O'clock A.M., on Thursday, December 4, 2003, for
the following purposes:

1. To elect nine Directors to serve until the next Annual Meeting of
Shareholders or until their respective successors have been elected
and qualified.

2. To transact such other business as may properly come before the
meeting or any and all adjournments thereof.

Only shareholders of record on the Company's books at the close of
business on October 17, 2003, will be entitled to notice of, and to vote at,
said meeting and any and all adjournments thereof.

If you are unable to attend the meeting in person but wish your shares to
be voted upon the matters to come before it, please complete, sign and date the
accompanying proxy card and mail it in the enclosed envelope. Postage is not
required if mailed in the United States.

A copy of the Company's Forty-Fourth Annual Report to Shareholders, dated
November 10, 2003, is enclosed herewith.

By Order of the Board of Directors

Denise Plair
Secretary

ALICO, INC.
Post Office Box 338
La Belle, Florida 33975

PROXY STATEMENT
SOLICITATION

November 10, 2003
La Belle, Florida

The Board of Directors of ALICO, INC. (the "Company") hereby solicits
proxies to be used at the Annual Meeting of Shareholders of the Company to be
held on December 4, 2003, and at any and all adjournments thereof, and this
proxy statement is furnished in connection therewith. Every proxy may be
revoked at any time prior to the exercise thereof by any shareholder giving
such proxy, by giving written notice of revocation to the secretary of the
Company at or before the annual meeting, by duly executing a subsequent proxy
relating to the same shares or by attending the annual meeting. In addition to
the use of the mails, directors, officers and regular employees of the Company
may, without additional compensation, solicit proxies in person or by
telephone, mail or telegraph. All costs of solicitation will be borne by the
Company. Brokerage houses, bankers and others holding stock in their names or
names of nominees or otherwise will be reimbursed for reasonable out-of-pocket
expenses incurred by them in sending proxies and proxy material to the
beneficial owners of such stock.

It is anticipated that this proxy statement and accompanying notice, form
of proxy card and Company's Annual Report to Shareholders will be first sent to
the Shareholders of the Company on or about November 10, 2003.

VOTING SECURITIES

The Company has only one class of voting securities outstanding, its
Common Stock, par value $1.00 per share, of which 7,141,197 were outstanding as
of October 17, 2003. Each share entitles the holder thereof to one vote per
share. Only shareholders of record at the close of business on October 17, 2003,
will be entitled to vote at the meeting or at any and all adjournments thereof.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF OCTOBER
17, 2003:

(a) Beneficial Ownership of more than 5 percent of Voting Securities:

The following table sets forth certain information as of October 17, 2003,
relating to the beneficial ownership of shares of Common Stock of the Company
by any person known to the Company to be the beneficial owner of more than five
percent (5%) of the outstanding Common Stock of the Company. To the best
knowledge of the Company, there are no other persons who own beneficially more
than five percent (5%) of the Company's outstanding Common Stock.

Amount and Nature of Percent of
Name and Address of Beneficial Owners Beneficial Ownership Class
--------------------------------------- ---------------------- -----------
Ben Hill Griffin, III ................. 3,536,226 (1) 49.52
P.O. Box 127
Frostproof, FL 33843
Beck, Mack & Oliver ................... 600,450 8.41
Madison Ave
New York, NY 10017

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(1) Includes 3,493,777 shares held through Alico Holding, LLC (639 Isbell Road,
Suite 390, Reno, NV 89509), a wholly owned subsidiary of Ben Hill Griffin,
Inc., of which Mr. Griffin, III may be considered to be the indirect
beneficial owner by virtue of his power to direct the voting and
disposition of such shares of the Company's Common Stock.

(b) Security Ownership of Management:

Amount and Nature of Percent of
Name and Address of Beneficial Owners Beneficial Ownership Class
--------------------------------------- ---------------------- -----------
All Directors and Executive Officers
as a group (9 persons) ............... 3,547,611 (1) 49.68

ARRANGEMENTS REGARDING POSSIBLE CHANGE OF CONTROL

Ben Hill Griffin, III, Chairman of the Board, was a party to a lawsuit
involving the families of his four sisters, most of whom were members of a trust
(the "Trust") of which Mr. Grifffin, III acted as trustee. The terms of the
settlement agreements related to this litigation and other related lawsuits
provide for the distribution of certain of the assets of the Trust to the
families of the four sisters, including the Company stock beneficially owned by
the Trust. Subject to review and approval by the Internal Revenue Service the
stock transfers contemplated by the settlement agreements, will shift control of
Alico from Mr. Griffin, III to The Four Sisters Protectorate and the
Protectorate Family Trusts, trusts for the benefit of Mr. Griffin, III's four
sisters and their lineal descendants. See "LITIGATION PROCEEDINGS INVOLVING
DIRECTORS OR NOMINEES."

SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To the Company's knowledge, based solely upon a review of Forms 3, 4 and 5
and amendments thereto, furnished to the company during its most recent fiscal
year, all statements of beneficial ownership required to be filed with the
Securities and Exchange Commission in fiscal 2003 were timely filed, except that
William L. Barton filed one late Form 4 related to the sale of 500 shares in the
Company and Amy Gravina filed one late Form 3 related to the initial acquisition
of shares in the Company by a family member.

NOMINEES FOR ELECTION AS DIRECTORS

At the Annual Meeting nine Directors will be elected to hold office for
the ensuing year or until their respective successors are duly elected and
qualified. Unless authority is withheld on the attached form of proxy card,
such proxy will be voted FOR the election of the nominees set forth below to
serve as such Directors. All nominees are currently members of the Board of
Directors and have consented to being named in this proxy statement and have
notified management that they will serve, if elected. If any of the nominees
should be unable to serve as a Director, the persons designated as proxies
reserve full discretion to cast their votes for another person in his place. A
plurality of the votes received will elect each director. Abstentions will not
be counted for the purpose of determining whether a quorum exists.

The Board of Directors recommends that the shareholders vote FOR the
proposal to elect the nine nominees listed below as Directors of the Company.

The information set forth below as to age, shareholdings, and business
experience for the past five years, including principal occupation or
employment (other than with the Company), has been furnished by each nominee.

Shares of Company
Common Stock
Beneficially
Position with Company, if any, Owned as of Percent
Nominee Age Principal Occupation October 17, 2003 Class
------------------------------- ----- ------------------------------------------ ------------------ ------------

Ben Hill Griffin, III ......... 61 Chairman of the Board Chief Executive 3,536,226(1) 49.5200
Frostproof, Florida (2) Officer; Director since 1973. Chairman
and Chief Executive Officer of Ben
Hill Griffin, Inc. (citrus production and
packing, fertilizer manufacturing and
ranching company)
Richard C. Ackert ............. 61 Director since 1998. President and 300 .0042
Fort Myers, Florida Chief Executive Officer of SouthTrust
Bank, Southwest FL (1994 to Present)
William L. Barton ............. 64 Director since 1998. Chairman/CEO 0 .0000
Naples, Florida Wilson, Miller, Inc. (1995 to 1999)
(Retired) Director and President
Mitigation Land Partners, Inc.
(1999 to Present)
Walker E. Blount, Jr. ......... 83 Director since 1973. Business Advisor 500 .0070
Bartow, Florida to Wright, Walker & Company, P.A.
(1980-1987). Vice President & Director,
Citrus and Chemical Bancorporation,
Inc. (1980 to Present) Director, Citrus
& Chemical Bank. (1965 to Present)
Monterey Campbell ............. 73 Director since February 2001. Of 2215 .0310
Bartow, Florida Counsel, Gray Robinson (2001 to
Present) Chief Judge, Second District
Court of Appeal (1980 to 2001) (Retired)
Amy Gravina ................... 48 Director since 2002. President, Gravina, 500 .0070
Fort Myers, Florida Smith & Matte (1986 to Present)
Director, Florida Gulf Bank
(2001 to Present)
K. E. Hartsaw ................. 77 Director since 1991. Partner KPMG LLP 1,000 .0140
Orlando, Florida (Retired 1987) Consultant KPMG LLP
(1986 to 1991)
W. Bernard Lester ............. 64 Director since 1987. President (1998 6,820 .0955
La Belle, Florida to Present) Chief Operating Officer
(1988 to Present) Executive Vice
President (1988 to 1997)
Thomas E. Oakley .............. 61 Director since 1992. President, 50 .0007
Winter Haven, Florida Oakley Transport, Inc. (1968 to Present)
(international food transportation
company)

REPORT ON BOARD SELECTION/INCLUSIVENESS REVIEW

In recognition of the fact that our employees, customers and shareholders
represent a greater diversity of backgrounds than ever before, in 2002 we
adopted a Policy for Board Inclusiveness Review to ensure that, in seeking
qualified candidates to fill vacancies on our Board of Directors, the Company
makes a greater commitment to locate candidates whose backgrounds reflect the
diversity we see in our employee, shareholder and customer base. While we have
never discriminated against any employee, applicant, board candidate, or anyone
on the basis of race, color, religion, sex, national origin, age, ancestry or
disability, we found that often, in order to achieve diversity, we need to take
affirmative steps to identify qualified candidates who can enhance our Board by
bringing a different perspective. This does not mean that we will solicit for
association with Alico, Inc. anyone other than those whose skills, education,
experience and performance are of the highest caliber. However, it does mean
that we will actively seek to ensure that our candidate pool includes persons
with diverse backgrounds.

Typically, Board vacancies are filled after considering nominees proposed
by Board members or who come to the attention of the Board through their
performance in areas of benefit to the Company. Each nominee's qualifications
are reviewed by the Board, and the final selection is made on the basis of the
nominee whose experience and background are deemed to provide a more valuable
contribution to the Board. On an annual basis, at the shareholder's meeting,
the slate of Board members is put to the shareholders for re-election. Board
members are selected to serve on those committees where their individual
talents and background would most benefit the Company. For the audit committee
in particular, committee members are selected based on their expertise in
accordance with current SEC and Nasdaq rules. These processes will remain the
same, but we have made an increased effort to enlarge our initial candidate
pool. Our Policy of Inclusiveness Review will thus ensure that the candidate
pool is itself diverse, thus making it more likely that the composition of the
Board will also be diverse.

LITIGATION PROCEEDINGS INVOLVING DIRECTORS OR NOMINEES

Ben Hill Griffin, III, Chairman of the Board, was a party to a lawsuit
filed against him in Polk County, Florida Circuit Court by the families of his
four sisters, most of the members of whom are beneficiaries of a trust,
entitled the Ben Hill Griffin, Jr. Revocable Inter Vivos Trust #1 (the
"Trust"). The plaintiffs in the lawsuit (The Four Sisters Protectorate, et al.
v. Ben Hill Griffin, III, Trustee, Case No. GC-G-0054, Section 81) sought to
impose judicial sanctions on Mr. Griffin, III, including his removal as Trustee
of the Trust based on allegations of over-compensation and receipt of an
illegal bonus. The Company has been informed by Mr. Griffin, III that he has
executed a "Settlement Agreement" with the families of his four sisters, The
Four Sisters Protectorate, and that the enforceability of the Settlement
Agreement was affirmed by both the Circuit court, Case number GC-G-0054, and
the second District Court of Appeals for the State of Florida, Case numbers
2D01-5407 and 2D03-0499. A second litigation challenging the enforceability of
the Settlement Agreement, Case number 4:01CU432-RH, was dismissed with
prejudice by the United States District Court for the Northern District of
Florida, Tallahassee Division. The Settlement Agreement had been entered into
subject to certain conditions, including Internal Revenue Service approval of
the proposed transaction as a tax free split-off for federal income tax
purposes and judicial termination of the Trust. Mr. Griffin, III has informed
the Company that (a) the issues related to the mechanism and terms of the
proposed distribution of certain of the assets of the Trust to the families of
the four sisters, including the Alico stock beneficially owned by the Trust,
have been worked out between the representatives of the four sisters and Ben
Hill Griffin, III and are set forth in a definitive separation agreement, and
(b) the parties have received a favorable IRS Revenue Ruling related to the
original "Settlement Agreement".

On June 11, 2003, BHG Investments, a wholly owned subsidiary of Ben Hill
Griffin, Inc. ("BHG") and the record owner of 3,493,777 shares of The Company
(the "Alico Shares") was merged into Alico Holding, LLC (the "Merger"), another
entity wholly owned by BHG. Also on June 11, 2003, Mr. Griffin, III,
individually and as trustee of the Trust, BHG, BHG Investments (prior to
consummation of the Merger) and certain beneficiaries of the Trust entered into
a supplemental settlement agreement (the "Griffin Agreement"), which set forth
certain actions to be performed by Mr. Griffin, III, as Trustee, to facilitate
the performance of a separate supplement agreement that had been executed on
June 5, 2003, by and among other of the Trust's beneficiaries and members of
their respective families (the "2003 Mediated Settlement Agreement"). The
purpose of both the Griffin

Agreement and the 2003 Mediated Settlement Agreement, each resulting from
further mediation, was to finally settle all disputes among the parties to the
Mediation Settlement Agreement, thereby facilitating final performance of the
Settlement Agreement. On August 6, 2003, an order Approving Supplemental
Mediation Settlement Agreements was entered by the Tenth Judicial Circuit Court
in and for Polk County, Florida, Case No. GC-G-0054, approving the Griffin
Agreement and the 2003 Mediated Settlement Agreements as being in the best
interests of all persons having any interest in the Trust and authorizing Mr.
Griffin, III, as Trustee, to perform all of the actions required of him under
each Agreement. Those actions, following receipt of a favorable revised private
letter ruling from the Internal Revenue Service that takes into account
the changes to the Griffin Agreement and the "2003 Mediated Settlement
Agreement", will result in the transfer and assignment of the Alico Shares to a
Florida corporation formed for the purpose of transferring and assigning of
substantially all shares of that corporation's issued and outstanding voting
stock to Atlantic Blue Trust, Inc. ("ABT"), an entity to be formed as a
subsidiary of BHG Investments. BHG Investments will then distribute the stock of
ABT up to B.H.G., Inc., the parent company of BHG Investments, which will then
transfer such stock to The Four Sisters Protectorate and the Protectorate Family
Trusts, trusts for the benefit of Mr. Griffin, III's four sisters and their
lineal descendants, so as to cause control of Alico to shift from Mr. Griffin,
III to such trusts.

The Company opted out of the Florida Business Corporation Act's provision
on Affiliated Transactions and Control Share Acquisitions (currently Sections.
607.0901 and 607.0902, Florida Statutes) under the predecessor statutes to such
sections, and therefore transactions contemplated by the Settlement Agreement
may not be subject to shareholder approval or review by the Company's Board of
Directors.

DIRECTORS' COMPENSATION, COMMITTEES OF THE
BOARD OF DIRECTORS AND CERTAIN MEETINGS

The Company's Board of Directors held 13 meetings in fiscal 2003. Each
member of the Board of Directors, including employees of the Company, received
$1,000 for each board meeting attended. During the year ended August 31, 2003,
no director attended fewer than 75% of the aggregate of (1) the total number of
meetings of the Board and (2) the total number of meetings of all the
Committees of the Board on which he or she served.

The Company has the following standing committees: an Executive Committee,
an Audit Committee and a Compensation Committee. The Company does not have a
Nominating Committee.

The Executive Committee, which exercises, to the extent permitted by
Florida law, all the powers of the Board of Directors during intervals between
Board meetings, consists of Ben Hill Griffin, III, and W. Bernard Lester. The
Executive Committee met 12 times during fiscal 2003. No compensation is paid
for meetings of the Executive Committee.

The Audit Committee, which is composed of five independent non-employee
directors, met six times during fiscal 2003. The principal functions of the
Audit Committee are to recommend to the Board of Directors the engagement of
the Company's independent public accountants, to review with such accountants
the plan for and results of their examination of the financial statements of
the Company, to determine the independence of such accountants, and to review
the adequacy of the system of internal accounting controls, procedures and
practices.

The Audit Committee operates pursuant to a Charter approved by the Board, a
copy of which was attached to the proxy statement relating to the Annual Meeting
of Shareholders held in 2001. All members of the Audit Committee are independent
directors as defined by Rule 4200(a)(15) of the National Association of
Securities Dealers listing standards. Each outside director received $1,000 for
each committee meeting attended, and the chairman received $1,250. The Company's
Board of Directors has determined the Mr. Walker E. Blount, Jr. is qualified to
serve as a financial expert to the Audit Committee. Mr. Walker E. Blount, Jr.
has the relevant education and experience and has also supervised other persons'
performance of such functions.

The Compensation Committee reviews the compensation of the executive
officers of the Company and makes recommendations to the Board of Directors
regarding such compensation. The Compensation Committee met two times during
the fiscal year 2003. Outside directors were paid $1,000 for each committee
meeting attended, and the chairman was paid $1,250.

Audit Committee Report

The Committee has prepared the following report on its activities with
respect to the Company's audited financial statements for the fiscal year ended
August 31, 2003 (the "audited financial statements").

o The Committee has reviewed and discussed the audited financial
statements with management of the Company.

o The Committee has discussed with KPMG LLP, the Company's independent
auditors, the matters required to be discussed by Statement on Auditing
Standards No. 61.

o The Committee has received the written disclosures and the letter from
KPMG LLP required by Independence Standards Board Standard No. 1, and has
discussed with KPMG LLP its independence from the Company.

o Based on and relying on the review and discussions described above, the
Committee has recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2003, for filing with the U.S. Securities and
Exchange Commission.

AUDIT COMMITTEE

Richard C. Ackert, Chairman
William L. Barton
Walker E. Blount, Jr.
Monterey Campbell
Thomas E. Oakley

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board is composed of six directors:
Walter E. Blount, Jr., Chairman, Richard C. Ackert, William L. Barton, Monterey
Campbell, Amy Gravina and Thomas E. Oakley. With the exception of Mr. Oakley,
who is a Director and Vice Chairman of Agri-Insurance Company Ltd., none of the
others are an officer or employee of the Company. In addition, there are no
interlocking relationships between any of these directors and any other
executive officer of the Company.

Compensation Committee Report

The Company's general compensation philosophy aims to provide base
compensation comparable with similar Florida businesses, allowing the Company
to attract and retain qualified employees. In addition, the Company provides
incentive compensation through a bonus program which is dependent on the
individual's performance and which will also vary with the Company's
performance. Accordingly, while the executive compensation program provides an
overall level of compensation that is competitive within the Florida
agribusiness industry, actual compensation levels in any given year may be
greater or less than average competitive levels in comparable companies,
depending on the Company's overall performance for such year and on the
specific individual's performance or contribution to the Company. As additional
incentive compensation, the Company adopted the 1998 Incentive Equity Plan,
pursuant to which employees of the Company may be selected by the Board, in the
Board's sole discretion, to receive stock options, restricted stock awards, or
stock appreciation rights.

The Compensation Committee, comprised of independent directors on the
Company's Board of Directors, reviews executive compensation and determines
compensation levels which it then recommends to the Board of Directors. In
determining the base compensation and any bonuses to be awarded to its
executives, the Compensation Committee uses no set formula but rather evaluates
a series of factors, including but not limited to (i) industry performance for
such year, (ii) the Company's performance as compared to others in the industry
that year, (iii) the Company's performance for such year as compared to the
Company's performance with the previous year, and (iv) the individual's
performance or contributions for such year as compared with such individual's
performance or contributions the previous year, if applicable. In addition, the
Compensation Committee will, in its discretion, evaluate other external and
internal factors affecting performance, including individual circumstances.

The Chief Executive Officer's compensation is established using the same
criteria as set forth above generally for executive compensation. For fiscal
2003, Mr. Ben Hill Griffin, III's base salary was comparable to that of the
previous year, with a bonus award reflecting the Company's performance vis a
vis comparable businesses and Mr. Griffin's contribution to such performance.
In addition to his base salary and bonus, pursuant to the terms of the
Company's 1998 Incentive Equity Plan, Mr. Griffin received a grant of options
to purchase 12,500 shares of the Company's common stock on September 10, 2002.
The exercise price was based on the market price of the Company's common stock
on August 31, 2002. Other Company employees also received stock options as part
of their compensation during 2003.

Certain non-performance-based compensation to executives of public
companies in excess of $1,000,000 is not deductible for tax purposes. It is the
responsibility of the Compensation Committee to determine whether any actions
with respect to this compensation limit should be taken by the Company. During
fiscal year 2003 no executive officers of the Company received any compensation
in excess of this limit nor is it anticipated that any executive officer will
receive any such compensation during fiscal year 2004. Therefore, the
Compensation Committee has not taken any action to date to comply with this
limit.

COMPENSATION COMMITTEE

Walker E. Blount, Jr., Chairman
Richard C. Ackert
William L. Barton
Monterey Campbell
Amy Gravina
Thomas E. Oakley

EXECUTIVE OFFICERS

The following table sets forth certain information on the executive
officer named in the Summary Compensation Table who was not listed in the table
for Nominees for Election as Directors:

Name and Age of
Executive Officer Position and Background with the Company
-------------------------- -------------------------------------------
L. Craig Simmons ......... 51 Vice President and Chief Financial Officer
La Belle, Florida (since February 7, 1995)

EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid or to be paid by
the Company to the executive officers of the Company, identifying those whose
cash and non-cash compensation exceeded $100,000:

SUMMARY COMPENSATION TABLE

Annual Compensation Securities
Fiscal -------------------------- Underlying All Other
Name and Principal Position Year Salary (a) Bonus (b) Options/SAR (c) # Compensation (d)
------------------------------- -------- ------------ ----------- ------------------- -----------------

Ben Hill Griffin, III ......... 2003 $331,700 $260,000 12,500 $45,923
Chairman and 2002 335,000 206,000 12,500 44,371
Chief Executive Officer 2001 281,767 222,000 12,500 44,107

W. Bernard Lester ............. 2003 265,360 210,000 12,500 85,097
President and 2002 251,200 171,000 12,500 84,097
Chief Operating Officer 2001 235,600 202,000 12,500 83,847

L. Craig Simmons .............. 2003 93,333 26,200 5,000 31,655
Vice President and 2002 86,666 20,275 5,000 30,974
Chief Financial Officer 2001 77,200 23,450 5,000 32,999

------------
(a) Represents total cash compensation earned.

(b) Represents compensation for discretionary cash bonuses which are based on
individual and company performance.

(d) Represents Company contributions to the Employees' Profit Sharing Plan, a
nonqualified defined benefit retirement plan and Directors' Fees for
Messrs. Griffin, III and Lester (2003 - $13,000 each; 2002 - $15,000 each;
2001 - $15,000 each, respectively.)

The following table sets forth stock options granted during fiscal 2003 to
each of the Company's executive officers named in the Summary Compensation
Table. The table also sets forth the hypothetical gains that would exist for
the options at the end of their ten-year terms for the executive officers named
in the Summary Compensation Table and for all employees as a group (assuming
their options had ten-year terms) at assumed compound rates of stock
appreciation of 5% and 10%. The actual future value of the options will depend
on the market value of the Company's Common Stock. All option exercise prices
are based on market price on the date of grant.

Option/SAR Grants in Last Fiscal Year

Individual Grants (a)
--------------------------------------------------
Potential Realizable Value
Number of Percent of Total at Assumed Annual Rates
Securities Options/SARs of Stock Price Appreciation
Underlying Granted to Exercise for Option Term (b)
Options/SARs Employees in or Base ------------------------------------
Name Granted (#) Fiscal Year Price ($Sh) 0% ($) 5% ($) 10% ($)
------------------------------- -------------- ----------------- ------------- -------- --------- ----------

Ben Hill Griffin, III ......... 12,500 23.46 $15.68 -- $123,264 $312,365
W. Bernard Lester ............. 12,500 23.46 15.68 -- 123,264 312,365
L. Craig Simmons .............. 5,000 9.38 15.68 -- 49,306 124,946

------------
(a) Options and stock appreciation rights granted under the Incentive Equity
Plan (the "Plan") to the Company's executive officers named in the Summary
Compensation Table, are first exercisable on August 31, 2003. The Company
issued stock appreciation rights, during fiscal 2003, to each of the
executive officers named in the Summary Compensation Table.

(b) These amounts, based on assumed appreciation rates of 0% and 5% and 10%
rates presented by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the Company's
stock price.

Option Exercises and Year-End Option Values

The following table shows information regarding the value of options
exercised during fiscal year 2003 and certain information about unexercised
options at year-end.

Options Exercised
FY 2003 Number of Securities Value of Unexercised
----------------------- Underlying Exercised In-the-Money Options on
Shares Value Options on August 31, 2003 August 31, 2003 ($) (2)
Acquired Realized ----------------------------- -----------------------------
Name on Exercise (#) (1) Exercisable Unexercisable Exercisable Unexercisable
------------------------------ ------------- --------- ------------- --------------- ------------- --------------

Ben Hill Griffin, III ........ 0 $ 0 47,064 0 $617,446 0
W. Bernard Lester ............ 0 0 45,614 0 597,500 0
L. Craig Simmons ............. 5,000 62,745 5,000 0 63,100 0

Common Stock Performance

The following graph compares the value of $100 invested on September 1,
1998 in the Company's common stock, the S&P 500 and a Company-constructed peer
group. The S&P 500 index represents a broad equity index and the peer group
index consists of four companies, all of which are agribusiness concerns, one
of which is based in Florida: Alexander & Baldwin, Inc., Consolidated Tomoka
Land Co., Scheid Vineyards, Inc., and Tejon Ranch Co. The total return includes
the reinvestment of dividends. There can be no assurance that the Company's
stock performance will continue in the future with the same or similar trends
depicted in the graph below:

[The following information was represented as a line chart in the printed
material.]

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

Base
Period Years Ending
Company Name / Index Aug98 Aug99 Aug00 Aug01 Aug02 Aug03
-------------------------------------------------------------------------------------------------

ALICO INC $100 $ 94.89 $ 96.00 $180.36 $187.24 $188.16
S&P 500 INDEX 100 139.82 162.64 122.98 100.85 113.02
PEER GROUP 100 116.58 120.18 131.21 117.50 155.36

Peer Group Companies
---------------------------
ALEXANDER & BALDWIN INC
CONSOLIDATED TOMOKA LAND CO
SCHEID VINEYARDS INC
TEJON RANCH CO

------------
(1) Total return calculations for the S&P 500 Index were performed by Standard
& Poor's Compustat Services, Inc.

(2) Total return calculations for the peer group index (consisting of four
companies) were performed by Standard and Poor's Compustat Services, Inc.

Contingent Compensation

1998 Incentive Equity Plan

The Company maintains an incentive equity plan (the "Incentive Equity
Plan") pursuant to which Board members and employees selected by the Board of
Directors may receive options to purchase Company common stock, awards of
restricted stock, and stock appreciation rights (SARs). The purpose of the
Incentive Equity Plan is to advance the interests of the Company and its
shareholders by offering participants an opportunity to acquire or increase
their proprietary interests in the Company, and thereby receiving additional
incentives to achieve the Company's objectives. No stock options, SARs or
restricted stock may be granted under the Incentive Equity Plan on or after the
tenth anniversary of the Incentive Equity plan's effective date. The Incentive
Equity Plan is administered by the Board of Directors.

Pension and Profit Sharing

The Company operates a Profit Sharing Plan under Section 401(k) of the
Internal Revenue Code (the "Plan"). Under this Plan a regular employee of the
Company becomes eligible to participate upon employment provided he or she
continues such employment through the following August 31. Vesting of the Plan
begins after two (2) years of service with the Company at which time an
employee becomes 20% vested. Vesting increases by 20% with each additional year
of service. Employees become fully vested upon completion of six (6) years of
service.

The Plan is fully funded by contributions by the Company, except for such
contributions of employees electing to take advantage of the salary reduction
feature. Contributions by the Company are determined by its Board of Directors
from time to time with allocations to employee accounts based on each
participant's salary. The Plan also includes a voluntary employee contribution
provision pursuant to Section 40l(k) of the Internal Revenue Code which allows
employees to contribute up to 20% of their salary, or a maximum of $11,000. All
40l(k) accounts are 100% vested.

Employees will be deemed 100% vested and receive full benefits from the
Plan, regardless of their standing on vesting schedules, upon retirement on or
after age 65, death or permanent disability. Benefits commence within 60 days
after request following one of the qualifying events, referred to above, and
can be taken as periodic payments or in a lump sum. For the year ended August
31, 2003, the Company contributed a total of $350,153 to this Plan.

Additional Plan

The Company has a nonqualified defined benefit retirement plan, which
covers officers of the Company, as well as certain management and key personnel
(the "Nonqualified Plan"). The Nonqualified Plan is being funded by the
purchase of insurance contracts and is designed to provide a set monthly
benefit after the participant reaches age 65. The participants are required to
pay a portion of the cost of the Nonqualified Plan and the Company pays the
remaining amount. The expense and monthly benefit amount are based on the
participant's annual salary and age at the date of entry into the Nonqualified
Plan.

Pension expense for the additional retirement benefits was approximately
$350,153, $488,000 and $395,000 for the years ended August 31, 2003, 2002 and
2001, respectively.

INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Effective November 2, 1983, the Company entered into a continuing
marketing contract covering the majority of its citrus crop with Ben Hill
Griffin, Inc., a company which is controlled by Ben Hill Griffin, III, the
Company's Chairman of the Board and Chief Executive Officer. This contract
provides for modifications to meet changing conditions and cancellation by
either party by giving notice prior to August 1 preceding the next fruit
season. Modifications to the terms of the contract are made upon the mutual
agreement of both parties and can relate to numerous provisions of the contract
including the quantity of fruit to be delivered and service fees to be
collected by Ben Hill Griffin, Inc. Such modifications may be necessary
depending on factors such as weather and general market conditions. During the
year ended August 31, 2003, approximately 75% percent of the

Company's crop was marketed under this contract. Under the terms of this
contract, the Company's fruit is harvested, packed and/or otherwise processed
and sold along with fruit from other growers, including Ben Hill Griffin, Inc.,
and the proceeds distributed on a pro rata basis as sales of the finished
product are made by the buyer. The Company bears the cost of harvesting. The
co-mingling of fruit with other growers permits the Company to participate in
the negotiation of higher prices from buyers that would not likely be available
if price negotiations were limited only to the Company's fruit. The marketing
contract also permits the Company's fruit to be sold in either fresh or
processed form, in whichever market will provide the highest return.
Historically, this contract has provided highly competitive returns. Ben Hill
Griffin, Inc. receives a handling fee and a marketing fee out of sales
proceeds. The assistance provided for by the contract is considerable and
reduces the number of staff which the Company would otherwise have to employ.
Additionally, the Company may receive advances on sales which are then deducted
from its share of the distributed proceeds. Essentially the same amount of the
2003-2004 citrus crop will be marketed under the terms of this contract; also,
Ben Hill Griffin, Inc. provides harvesting services for citrus sold to
unrelated processors. The total amount paid to Ben Hill Griffin, Inc., under
the terms of the marketing contract, for harvesting and other costs was
$6,232,237 during the year ended August 31, 2003. In addition Ben Hill Griffin,
Inc. was paid $2,120,899 for harvesting citrus sold to unrelated processors.
These charges are comparable to similar services available in the industry.

The Company purchased from Ben Hill Griffin, Inc., on a competitive bid
basis, fertilizer, spray, herbicides and other miscellaneous supplies at a
total cost of $6,378,156 during the year.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The firm of KPMG LLP, Certified Public Accountants, 111 North Orange
Avenue, Suite 1600, Orlando, Florida 32801, has served as the Company's
independent certified public accountants since January 1, 1984. In addition to
performing the year-end audit of the financial statements, the independent
public accountant: (1) performs a limited review of the quarterly financial
statements, reviews the financial information included in the Annual Report to
Shareholders and the Forms 10-Q and 10-K filed with the Securities and Exchange
commission; and (2) prepares the federal and state income tax returns. All
services performed by the independent accountants are approved by the Audit
Committee of the Board of Directors prior to performance.

Representatives of KPMG LLP are expected to be present at the Annual
Meeting of Shareholders and will be given an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions from
shareholders. Upon the Audit Committee's recommendation, the Board of Directors
reaffirmed continuation of KPMG LLP as auditors.

The following list details the aggregate fees billed by KPMG LLP for
professional services during fiscal 2003:

Audit Fees ................ $ 92,500
Tax Fees .................. $ 51,300
Total Fees ................ $143,800

There were no fees billed or paid for financial information systems design
and/or implementation or for any other fee for services rendered to the
Company.

Audit Fees. Consists of fees billed for professional services rendered for
the audit of the Company's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided in connection with statutory and regulatory
filings or engagements. The amounts billed to the Company by its independent
public accountants in fiscal 2003 and fiscal 2002 are $106,683 and $92,500,
respectively.

Audit-Related Fees. Consists of fees billed for assurance and related
services that were related to the performance of the audit or review of the
Company's consolidated financial statements. (There were no fees billed in
fiscal 2002 or 2001 for such services).

Tax Fees. Consists of fees billed for professional services rendered for
Tax compliance, tax advise and tax planning. The amounts billed to the Company
by its independent public accounts in fiscal 2003 and fiscal 2002 are $69,196
and $54,500, respectively.

Consulting Fees. Fees in fiscal year 2002 consisted of $287,150. There
were no Consulting fees in fiscal year 2003.

All other Fees. There were no fees billed or paid in fiscal 2003 or fiscal
2002 in connection with products and services other than the services reported
above.

The Audit Committee of the Board of Directors has determined that the
provision of the non-audit professional services is compatible with maintaining
KPMG LLP's independence.

SHAREHOLDERS' PROPOSALS

Shareholders' proposals intended to be presented at the next annual
meeting should be sent by certified mail, return receipt requested, and must be
received by the Company at its principal executive offices (Attention:
Corporate Secretary) by July 13, 2004, for inclusion in the proxy statement and
the form of proxy for that meeting. Such proposals may be made only by persons
who are shareholders, beneficially or of record, on the date the proposals are
submitted and who continue in such capacity through the 2004 annual meeting
date, of at least 1% or $1,000 in market value of securities entitled to be
voted at the meeting, and have held such securities for at least one year.

For any shareholder proposal that is not submitted for inclusion in the
2004 Proxy Statement, but is instead sought to be presented directly at the
2004 Annual Meeting, management will be able to vote proxies in its discretion
if the Company: (i) does not receive notice of the proposal prior to the close
of business on July 23, 2004; or (ii) receives notice of the proposal before
the close of business on July 23, 2004, and advises shareholders in the 2004
Proxy Statement about the nature of the matter and how management intends to
vote on such matter.

OTHER BUSINESS

The Board of Directors is aware of no other matter that will be presented
for action at the meeting. If any other matter requiring a vote of the
shareholders properly comes before the meeting, the persons authorized under
management proxies will vote and act according to their best judgment.

By Order of the Board of Directors

Denise Plair
Secretary

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FORM 10-K

A copy of the 2003 Annual Report on Form 10-K for the fiscal year ended August
31, 2003, as filed with the Securities and Exchange Commission, may be obtained
upon request and without charge, by writing:

Alico, Inc.
P.O. Box 338
La Belle, Florida 33975
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