Tyson Foods marks 80 years as a company, set for shareholder meeting

by The City Wire staff (info@thecitywire.com) 220 views 

When Springdale-based Tyson Foods holds its annual shareholders meeting Jan. 30, the company will also mark 80 years of continued business in one form or another. This milestone is thanks to a Tyson family decision in 1957 to grow their business instead of accept a buyout offer from Swanson. (Swanson, by the way, would sell to Campbell foods in April 1995.)

The Tyson family opted to build a processing plant in 1958, and from that decision the company became one of the world’s largest food companies with $37.58 billion in annual sales last year.

Tyson Foods founder John W. Tyson began hauling live chickens for sale to Kansas City, St. Louis and Chicago in 1935. His son, Don Tyson, who ran the company for nearly five decades credited Tyson Foods’ earliest origins to his father’s live chicken hauls to midwestern markets as far north as Chicago.

The Tyson family incorporated in 1947 as Tyson Feed & Hatchery and they took the company public in 1963 changing the name to Tyson Foods, issuing 100,000 shares at $10.50 on the public offering. Since that time Tyson Foods has grown its market cap from $1 million to roughly $16 billion.

Don Tyson died in January 2011 at 80 years old. One of his closest friends Buddy Wray told The City Wire last year that Don Tyson would be very proud of how the company has grown. Wray said the former Tyson CEO and chairman would approve of how it’s being run today as it continues to digest the $8.5 billion recent acquisition of Hillshire Brands.

EARNINGS PREDICTION
Tyson Foods shareholders have done well amid the Hillshire Brands purchase as share prices have climbed back above the $40 level after dipping as low as $34 per share when the Hillshire bidding war began to heat up in the spring of 2014.

Wall Street analysts expect Tyson Foods to report solid first quarter earnings of 74 cents per share, up slightly from the 72 cents earned in the year-ago period. The 2015 first quarter estimates range from 65 cents on the low end to 77 cents per share on the high end.

Revenue is expected to come in at $10.29 billion, a 17.5% gain from a year-ago thanks in part to the Hillshire Brands acquisition. Tyson Foods will report its first quarter earnings on Jan. 30, ahead of the market opening.

SHAREHOLDER CONCERNS
The shareholders meeting will convene the same day at 10 a.m. at the Northwest Arkansas Convention Center in Springdale. While shareholders are expected to benefit from continued company growth in 2015, not all of them are happy with the company operations. Three separate shareholder proposals have been filed and are noted in the company’s Proxy filing with the Securities and Exchange Commission.

Shareholder Proposal No. 1 asked for a policy to address water impacts of business operators and suppliers. The shareholder asked the company to implement a water stewardship policy that will improve water quality for all the company-owned facilities and those under contract to Tyson Foods.

Tyson Foods’ board does not believe this proposal is in the best interest of the company or its shareholders citing numerous initiatives already in place that address water conservation.

Proposal No. 2 strikes at the heart of the dual stock system at Tyson Foods that allows restricted Class B shareholders, the Tyson Family, to get a 10-to-1 voting advantage over the Class A shares. Proposal No. 2 asks the board to give each shareholder an equal vote.

The Tyson family trust owns 99.98% of the class B shares and through the limited partnership control 72% of the Tyson Foods total votes, according to the Proxy proposal. The shareholders point out that the family — a select few — controls the company regardless of what might be best for the shareholders at large.

Tyson’s board, which is comprised of two Don Tyson heirs, is against this proposal. The company notes that the dual-stock system has been in place since Tyson Foods was incorporated. Tyson said investors are aware this structure in place and there are no plans to move away from it. The board also notes that strong leadership and vision from the Tyson family has helped to propel the company to its success.

Proposal No. 3 involves asking asking the company to prepare a report on its use of Palm Oil and its efforts to source that commodity in a sustainable manner. This shareholder group wants to see the report by May. 1.

The group notes that Tyson competitors such as Hormel, ConAgra and General Mills have already announced commitments to eliminate deforestation and human rights violations from their palm oil supply chain and to regularly report on their progress.

The board said it is against this proposal citing that it “only purchases palm oil-containing raw materials from suppliers who are members of the Roundtable on Sustainable Palm Oil, a multi-stakeholder organization working worldwide to ensure that palm oil production is economically viable, environmentally appropriate and socially beneficial.”

Tyson said the company purchased less than 19 million pounds of palm oil in fiscal year 2014 (which is less than 0.02% of worldwide output based on the most recent available data) and it is committed to the sustainable and responsible development of agricultural resources, including palm oil.

OTHER BUSINESS
Tyson shareholders will also elect their board of nine directors at the annual meeting.
• John Tyson, 61, chairman of the board and grandson of the founder
• Kathleen Bader, 64, former president and CEO of NatureWorks
• Gaurdie Banister Jr., 57, CEO of Aera Energy, a $5 billion oil and gas producer jointly owned by Shell and ExxonMobil
• Jim Kever, 62, is the founding partner of Voyent Partners, an investment partnership founded in 2001
• Kevin McNamara, 58, is the founding principal of McNamara Family Ventures, a family investment office providing venture and growth capital to health care companies
• Brad Sauer, 55, retired, served as executive vice president, 3M Industrial Business
• Donnie Smith, 55, president and CEO Tyson Foods appointed to that position in November 2009
• Robert Thurber, 67, retired, served as vice president of purchasing for Sysco Corporation from 1987 to 2007
• Barbara Tyson, 65, served as vice president at Tyson Foods until 2002, after which she became a consultant to the company through 2011.

The board had 15 positions during 2014. Board members were paid annual stipends ranging from $82,500 to $130,626. The pay relates specifically to the number of meetings attended and the committee duties on which they serve.

RELATED PARTY TRANSACTIONS
The Proxy filing also noted two agreements that Tyson Foods has during 2014 that involved insider relationships.

Tyson Foods has lease agreements with wastewater treatment plants that service the company’s chicken processing plants in Nashville and Springdale, Ark. These water treatment plants are owned by the Donald J. Tyson Revocable Trust of which John Tyson, board chairman, is a trustee. The Berry Street Waste Water Treatment plant is owned by the Tyson Limited Partnership benefiting John Tyson and his three sisters, Carla Tyson, Cheryl Tyson and Joslyn J. Caldwell-Tyson.

The Tyson family partnership and trusts were paid $750,000 for the lease in Nashville and $450,000 in Springdale.

On Nov. 14, 2013, Tyson Foods purchased a 9.82 acre parcel of land adjacent to the company’s headquarters in Springdale for $550,000 from JHT, LLC, of which the Donald J. Tyson Revocable Trust and the Randal W. Tyson Testamentary Trust are the members and John Tyson is the manager. The land is to be used for expansion of the corporate office complex.

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