Tyson Shareholders Rewarded With Record Prices

It’s been 50 years since the late Don Tyson and his father John W. took the family-owned poultry business public in April 1963.

At the time, Tyson issued 100,000 shares at $10.50 each, tapping Wall Street for $1 million in capital to finance the company’s expansion.

In those 50 years, the company has grown its market cap from $1 million to more than $6.59 billion, making it the second largest food company in the Fortune 500.

Tyson Foods Board Chairman John Tyson addressed a few dozen shareholders Friday (Feb. 1) at the company’s 50th annual meeting in Springdale just a mile or two from where his grandfather John W. Tyson first launched the chicken business in 1936.

CEO Donnie Smith and his executive team spent roughly 15 minutes sharing the basics of the company’s recent financial success and outlining the firm’s commitment to continued future growth.

“We can’t just do what got us here and expect that to get us there,” Smith told shareholders.

In the recent quarter, Tyson made great strides to return $150 million in value back its shareholders, with included $50 million in an extra dividend and $100 million in share repurchases, Smith said.

This came on the heels of declining profits in fiscal 2012, but Smith and crew say there are keenly focused on a better 2013. The company repurchased 27.3 million outstanding shares over the past three years, while also paying down $100 million in debt.

“We have repurchased nearly all of the shares we issued back in 2008 and managed to keep strong cash on hand,” Smith said

These stock repurchases added 3 cents a share to the company’s net earnings in the first quarter. On an annual basis, Tyson officials estimate the cumulative repurchases to date will positively impact earnings per share by 14 cents.

Smith said Wall Street is apparently pleased with those results given the rise in share price over the recent months. Tyson’s outlook for 2013 pushed the company stock to a 15.4% rally between October and Dec. 31. Since January, shares have risen to a new high $23 – last closing at $22.82 Friday.

Dennis Leatherby, chief financial officer, told shareholders the return on invested capital during the recent quarter was 17.3%.

Excluding dividends, an original investment of $1,050 at Tyson Foods’ initial public offering in 1963 would be worth approximately $10,255 today. That is a return of 876% over the past five decades or roughly 17.5% annually.

BUSINESS MEETING
During the business meeting portion at Friday’s event shareholders overwhelmingly re-elected nine directors to a one-year term.

PricewaterhouseCoopers was also ratified as the company’s independent auditor for this year and two proposals to amend executive and employee pension plans were also approved by more 97% of the votes cast.

There were no proposals brought by shareholders this year from animal activist groups such as People for Ethical Treatment of Animals or the Humane Society of the United States, who in past years asked the company to adopt additional protocol with respect slaughter operations.