Tyson shareholders to meet Friday

It’s been a full year since Tyson Foods’ patriarch Don Tyson lost his battle with cancer, but the meat company he built continues to persevere through a tough operating climate.

Shareholders will convene at 10 a.m. Friday (Feb. 3.) at the company’s annual meeting in Springdale. The stage is set for a brief event where directors will be re-elected and management will kick off what they hope is a more profitable 2012.

Tyson Foods’ top management is credited with a respectable 2011, producing annual profits of $750 million. This net income was compromised by negative operating margins in the chicken segment for most of the year and $675 million spent in added grain costs.

Tyson CEO Donnie Smith told analysts during the last earnings call Tyson had cut chicken production in excess of 6% in an effort to stem losses and take excess meat out of the marketplace. He expected those cuts to remain through early 2012. Despite a rough 2011, Smith displayed optimism about 2012 saying, “We feel good about our business model.”

Tyson Foods will also report its first quarter 2012 earnings before the market opens Friday. Wall Street analysts expect Tyson pocketed $122.4 million in the recent quarter, tumbling 57% from a year ago.

EXEC PAY
These leaner times also took a toll on executive pay in 2011.

According to Tyson’s annual proxy filed with the Securities and Exchange Commission, only one of the company’s top five executives earned more money in 2011. Executive bonuses, which are tied to company profits, averaged 27% decreases from 2010. But, the salary component of the annual compensation package included base pay raises from 3% to 5% for the management team.

Non-employee director compensation included more than $1.27 million paid to Don Tyson, and subsequently his three children following his death just three and half months into fiscal 2011. The senior Tyson had an advisory contract to provide 20 hours per month for a $1.2 million annual fee. His children inherited a pro-rata portion of those proceeds in 2011 before the contract expired in October.

In fiscal 2011 the compensation included $319,048 paid in cash, $87,066 for personal use of the company-owned aircraft, $582,111 for tax preparation and estate planning fees, $105,000 in life insurance premiums, $7,976 as a matching contribution under the employee stock option plan and $141,688 for tax reimbursements as well as personal security, medical reimbursement and event tickets.

DIRECTOR PAY
Board Chairman John Tyson earned $3.92 million in cash and other compensation in 2011. He is under contract for 20 hours of advisory services per month for $500,000 annually.

His pay included in part, $288,260 as surviving child of Don Tyson, $1.58 million discretionary bonus awarded by the board compensation committee. His use of the company aircraft was valued at $449,737, while retirement contributions, tax reimbursements and event tickets totaled roughly $365,000.

The other eight directors earned between $14,874 to $185,000 for their services to the company, according to the proxy.

Don Tyson’s estate continues to conduct related-party transactions with the publicly traded company, which are disclosed by law in the proxy filing. Tyson Foods leased an aircraft from Tyson Family Aviation paying $969,000 to the Donald J. Tyson Revocable Trust (of which John Tyson is one of the trustees). The aircraft is not segregated from other personal property at the aircraft facility for personal property tax purposes, however, the company estimates the personal property tax for the aircraft is $173,739, which it paid.

The company also paid $1.31 million to Don Tyson’s estate for leases of wastewater treatment plants used by chicken processing facilities in Nashville and Springdale.

BOARD NOMINEES:
John Tyson  58, chairman, former CEO and grandson of the company founder.

Brad T. Sauer 52, executive with Health Care Business for 3M

Kathleen M. Bader 61, retired President of Nature Works

Robert Thurber 64, retired executive from Sysco Corp.

Gaurdie E. Banister Jr. 54, CEO of Aera Energy, jointly-owned by Shell and ExxonMobile

Barbara A. Tyson, 62, former officer, advisor and aunt to John Tyson

Jim Kever  59, founding partner with Voyent Partners

Albert C. Zapanta 70, CEO and president for the U.S. – Mexico Chamber of Commerce

Kevin M. McNamara  55, retired vice chairman of Leon Medical Centers in Miami-Dade, Fla.