Tyson Foods Inc. is splitting the duties of CEO and president into two roles with Donnie Smith remaining as CEO and Tom Hayes to be president for the Springdale-based meat giant.
Tyson Foods board of directors approved the management changes this week, according to a Gary Mickelson, corporate spokesman for the Tyson Foods.
Hayes has worked as chief commercial officer and president of foodservice at Tyson Foods. Before that, he was the chief supply chain officer for The Hillshire Brands Company, responsible for operations including procurement, manufacturing, food safety and quality, engineering, and logistics.
Tyson said in Hayes’ new role, he will lead Tyson Foods’ transition reflecting the company’s strategic focus on its hybrid model of branded prepared foods and fresh meats. Hayes will be based in Springdale.
“Tom Hayes is an exceptional leader who’s played a key role in creating a united company and in our continued development of our branded products. He has a distinguished track record of strategic, operational and commercial accomplishments, and I am pleased to have an opportunity to work closely with him as we continue to leverage our scale and nine core brands to drive industry-leading growth in attractive market segments.” Smith said in the statement.
The 56-year old Smith has held the dual role of president and CEO of Tyson Foods since 2009. Since that time the company has expanded to more than $40 billion in annual sales revenue last year and completed the $8.5 billion acquisition of Hillshire Brands in 2014.
“Under Donnie Smith’s leadership, Tyson Foods has delivered excellent results for shareholders and experienced significant growth,” said Tyson Board Chairman John Tyson. “As we look toward the future of our business and its next phase of growth, succession planning is the board’s responsibility.”
Chairman Tyson said the board is focused on leaders with the right skills to help Tyson Foods capitalize on favorable market trends in the U.S. and abroad, continue improving the company’s portfolio mix and margins, and drive innovation in an expanded range of branded products.
This separation of duties is part of the company’s efforts to morph into a consumer products food company from the commodity food processor it has been for decades. This metamorphosis was amplified with the acquisition of HIllshire Brands, which was a portfolio of higher margin, branded foods. Smith has said the talent also acquired with the Hillshire deal is key in helping Tyson realize its 2.0 conversion.
This is a major promotion for the 50-year-old Hayes who has held the chief commercial officer role at Tyson Foods since June 2015. Hayes has 29-years experience in the consumer products industry. He was formerly the president of Tyson’s food service business and chief supply chain officer for Hillshire and Sara Lee.
“I am honored to serve as president of Tyson Foods,” Hayes noted in the release. “I appreciate the confidence the board has placed in me and look forward to working closely with Donnie and the board to help our company become a global leader in protein-centric branded foods.”
Hayes has a bachelor’s degree from University of New Hampshire and a master’s degree from Northwestern.
Alan Ellstrand, expert on corporate governance and professor at the University of Arkansas, said he’s not surprised to see Tyson divide the top two executive roles given the company’s size and complexity of the business. He said when a company typically splits up the duties of CEO and president they are not doing so to take away power from the CEO but to groom another executive who also brings expertise with him to the executive suites.
“This move by Tyson Foods says a lot about how they view their relationship with Hillshire Brands. Tyson has been merging company’s into its business for years and here they are putting top Hillshire talent nearly on par with existing Tyson talent,” Ellstrand said. “It’s also a good sign for other younger talent in the Hillshire ranks that there is opportunity to advance into Tyson’s top management circle.”
Wall Street remains bullish on Tyson Foods for steady growth in 2016. Tyson Foods shares (NYSE: TSN) closed Monday (June 13) at $59.93, down 64 cents on the heels of triple digits losses in the broader markets. In aftermarket trading when the news broke on Hayes’ promotion, shares traded up 44 cents to $60.37.
Over the past 52 weeks Tyson shares have traded from a $39.05 low to a high of $70.44. Analysts have a one-year target price on Tyson Foods of $75.27. There was one recent downgrade of Tyson shares by BMO Capital Markets to “market perform” from “outperform.” The analysts cited concerns of higher soybean prices and the stock’s already high valuation supported mostly by non-operating items.