Tyson Foods’ net income gains boost executive bonus pay in 2016

by Kim Souza (ksouza@talkbusiness.net) 94 views 

Tyson Foods grew net profits by 45% in 2016 to top $1.768 billion and resulting in more bonus pay for the company’s top five executives, according to the meat giant’s Proxy filed Thursday (Dec. 22) with U.S. Securities and Exchange Commission.

Tyson CEO Donnie Smith, who is retiring from that post Dec. 31, earned a base salary of $1.171 million, up about 4% from a year ago. His stock awards totaled another $3.828 million and bonus pay rose to $3.097 million. Two areas where Smith’s compensation declined were the value of stock options issued to executives and retirement funds contributed by the company. Overall Smith’s total compensation package for 2016 was valued at $11.472 million, down slightly from the $12.627 million reported a year. Again, the decline relates to the options awarded (performance pay) and retirement benefits.

When the 57-year-old Smith retires he will continue to serve as a consultant to the company for the next three years earning $2.3 million annually. He also will walk away with stock positions valued at $27.425 million, not counting options and deferred income which will vest on Dec. 31.

Tom Hayes, president since June and soon-to-be CEO, saw his base pay rise 42% from a year ago as he rose through the company’s executive ranks. Hayes earned a total salary of $712,954 in 2016. Between January and June, Hayes’ salary was $500,000 prior to him being named president. His salary rose to $950,000 when he became president in June. Hayes received a retention cash bonus of $591,568 which was negotiated during the Hillshire Brands acquisition in 2014, according to the filing. Hayes also received stock awards valued at $1.033 million and another cash bonus valued at $1.519 million. Hayes became eligible for option awards in 2016 and those totaled $421,626. For the full year, Hayes’ compensation totaled $4.639 million. A year ago, the 51-year-old Hayes was not among the top earning executives at Tyson.

Board chairman and grandson of Tyson Foods founder John Tyson, 63, earned $9.616 million in total compensation in 2016. His salary of $928,818 increased 2% from 2015. As board chairman Tyson is not involved in the day-to-day management of the company, but works as its goodwill ambassador, convening and overseeing the board’s meetings, and consulting for the company.

John Tyson’s employment contract expires in November 2017, until that time he is to earn a base salary of no less than $850,000 annually. He also participates in the company bonus incentive plan for which he earned $2.448 million in 2016. Tyson’s contract entitles him to stock and option awards which were $3.068 million and $1,252 million, respectively, in 2016. Another part of Tyson’s compensation is his personal use of the corporate aircraft which totaled more than $1.285 million in fiscal 2016, up from $818,000 a year ago. The company also pays the premiums on his $7.5 million life insurance policy and reimburses his tax liabilities. The total other compensation paid on behalf of Tyson in fiscal 2016 totaled $1.724 million, up from $1.189 million a year ago.

Chief Financial Officer Dennis Leatherby earned less than the other four executives noted in the filing. Leatherby’s total compensation in 2016 was $4.314 million, down from $4.477 million earned in 2015. Leatherby’s total income included a higher base salary of $660,390, up 3% from a year ago. His stock and option awards totaled $1.45 million and his bonus of $1.279 million rose 37.5% from a year ago. Leatherby’s other compensation totaled $304,423, which consisted of tax reimbursements, life insurance premiums paid along with contributions on his behalf to the company’s executive savings and retirement plans.

Donnie King, who oversees Tyson Food’s North American division which includes the merger of Hillshire Brands in 2014, earned total compensation of $7.992 million in 2016. His total earnings rose 2% from the prior year. His base salary increased to $856,946 with $4.043 million in stock and option awards. King’s bonus pay increased to $1.962 million, up from $1.355 million in 2015. The other compensation King received last year totaled $233,896, most of that was personal use of the corporate aircraft.

Noel White, who took over Tyson Foods’ poultry division management following the Hillshire Brands acquisition, had total compensation of $6.02 million, down from $8.525 million a year ago. White’s base salary rose to $777,716, up 3% from a year ago. Like the other executives the options awards were lower in 2016, but cash bonuses were higher. White’s cash bonus pay totaled $1.781 million in 2016, compared to $.1.295 million a year ago. Other compensation paid to White was valued at $383,083, about one-third of that is attributed to use of the company’s corporate aircraft.

Also noted in Tyson’s proxy filing is the amount paid to members of the board of directors. In 2016, Tyson board members earned a base retainer fee of $100,000 paid in quarterly installments. Directors have the option to take payment in cash or stock. Additional stipend pay is earned by directors who serve in various capacities such as committee chair. Total compensation paid to directors in 2016 ranged from $290,000 to $225,000. Director Jim Kever retired after serving one quarter on the board last year. His pay was $50,000. The board recently selected Jeffrey Schonberger and Cheryl Miller as new directors added in December. Hayes was appointed to board in June after rising to the role of company president. The Tyson Board has expanded to 11 directors, Smith is not on the slate for election for fiscal 2017. Tyson Foods will convene its shareholders meeting in Springdale on Feb. 9 to elect directors for the next year.