Tom Hayes announced Monday (Sept. 17) he will step down effective Sept. 30 as president and CEO of Tyson Foods citing personal reasons. The board of directors has chosen Tyson Foods veteran Noel White to succeed Hayes as CEO and president and board member.
Hayes’ tenure as Tyson Foods CEO was short having only had that role since November 2016. Hayes was chosen to replace Donnie Smith, who retired after spending his entire career at Tyson Foods. Hayes joined Tyson Foods with the Hillshire Brands acquisition in August 2014. He was quickly tagged by leadership as someone who could grow Tyson’s brand through marketing and continued acquisitions.
The contract Hayes signed with Tyson Foods in November 2016 was a two-year deal with an out-clause for Hayes if he presented “good reason” with board acceptance. Hayes merely cited “personal reasons” for his departure.
Hayes was not seen as a long-time hire given his desire to spend most of the time residing outside of Northwest Arkansas. Wall Street, however, mulled over the news a bit with Tyson Foods shares (NYSE: TSN) trading down roughly 2% when news broke, only to recover most of that by mid-morning. Shares were trading at $63.20, down 20 cents, in the mid-morning session at a steady average volume.
Historically, outsiders do not have long track records at Tyson Foods. The last time the company promoted a CEO outside its own legacy pipeline was in 2006, when Dick Bond took the reins from John Tyson, now chairman of the board. Bond was a long-time executive with IBP, which Tyson acquired in 2001. Bond ran Tyson Foods’ red meat business prior to assuming the CEO role. During Bond’s two years and nine-months tenure, Tyson Foods lived through a severe chicken glut, record grain prices and a beef industry shuttering plants amid a rapidly shrinking herd.
In January 2009, the board of directors called former CEO Leland Tollett out of retirement to replace Bond on an interim basis which he did for most of that year until Donnie Smith was promoted to CEO, a role he held for seven years. Smith was credited with turning Tyson Foods around, growing company earnings, and pushing the blockbuster Hillshire Brands deal.
When Hayes took over in November 2016, shares were trading at $67.18, rising as high as $83.63 by the end of year 2017. But since that time, Tyson Foods has reduced its earnings guidance due to export woes and excess U.S. meat supplies. Tyson Foods shares have been on a downward trajectory for most of this year, dipping as low as $57.75 in late July. Since then, shares have climbed back to the $63 range. For the near-two year period under Hayes’ leadership, Tyson Foods shares are down about 5.9%.
Tyson Foods reaffirmed its earnings per share guidance for fiscal 2018 ending Sept. 30 of $5.70 to $6, but gave no further indication of fiscal 2019 expectations.
“It is a very difficult decision to leave Tyson Foods, but after careful consideration and discussions with my family and the board, I know it is the right thing to do. I am appreciative of support from my family and the board for my decision and am confident that Tyson Foods has a bright future with Noel White, along with our enterprise leadership team, as its leader,” Hayes noted in the release.
Board Chairman John Tyson credited Hayes with accelerating the strategic transformation of Tyson Foods’ product portfolio and playing an important role in the company’s continuing development from a commodity food processor to a branded food company. He thanked Hayes for his service and bid him well-wishes.
White is seen as a proven leader who has played an integral role at Tyson Foods for the past 17 years after joining the company with the 2001 acquisition of IBP, according to John Tyson.
“He has run our beef, pork, and poultry businesses and is now helping Tyson Foods capitalize on international opportunities. His deep institutional knowledge and a stellar track record over his more than 30-year career at Tyson Foods and a predecessor company give the board the utmost confidence in his ability to drive the business forward, accelerate global growth and create long-term value for shareholders,” John Tyson said.
Stephens Inc. Analyst Farha Aslam said Tyson Foods has about 20% upside potential and that’s why she rates it a “buy.” She’s also confident in White’s ability to lead Tyson Foods in a manner that meets board approval given his long tenure at the company.
White was seen as the next CEO following Smith by some long-time Tyson followers given his experience running the company’s complex beef and poultry operations – jobs Hayes never held. White has served in various leadership roles during his Tyson Foods career, including chief operations officer. As group president of beef, pork and international, he was responsible for delivering top and bottom line growth for the company’s beef and pork segments as well as the international business.
Previously, he was president of poultry from 2013 to 2017 and has also served in numerous sales, management and company officer positions. White is a graduate of Bemidji State University and earned a master’s degree in business administration with an emphasis in economics from Oklahoma City University.
“I am honored to serve as Tyson Foods’ next CEO, and I am excited by the many opportunities that lie ahead. It has been a privilege to contribute to this company’s evolution over the course of many years and to be a part of its becoming one of the world’s largest food companies.
“I look forward to accelerating the current trajectory of growth as a global modern food company through our operational excellence, innovative thinking and focus to sustainably feed the world. With the company’s strong portfolio of fast-growing brands, diverse capabilities, exceptional enterprise leadership team and dedicated team members, we are well-positioned for continued success.” White noted in the release.
Hayes shook up management about two months into his tenure as CEO with several longtime Tyson Foods executives leaving the company. Those departures included Donnie King, president of Tyson’s North American Operations; Sara Lilygren, executive vice president of corporate affairs; and Gary Cooper, chief information officer.
Hayes told Talk Business & Politics during an April 2017 interview his role was to create a new face for Tyson Foods and he did expand the role of marketing at Tyson Foods. Hayes said Tyson’s operational division was incredibly focused, but marketing was managed in somewhat isolated pockets. The company decided to create a full-on business unit structure for retail and foodservice. He said then that customer activation and marketing strategies are under one umbrella led by Andy Callahan for food service and Sally Grimes for retail. Callahan has since left the company in an August 2017 management restructure.
Hayes said a new marketing strategy didn’t change the core of how Tyson Foods operates, but it placed the company in a better position to plan for the future and be more sensitive about what its customers and consumers want. Part of that marketing plan included changing the company logo to reflect more than just chicken. Hayes, outspoken about his desire to make Tyson Foods a more sustainable company, also hired a chief sustainability officer.