Tyson Foods Inc. Chairman John Tyson ranks first among Fortune
100 company officials for compensation for personal jet travel,
highlighting his family's grip on the meatpacking giant founded by
his grandfather.
Mr. Tyson, who last served as a Tyson Foods executive a decade
ago, received the most aircraft-related compensation in each year
from 2012 through 2014, according to data compiled by Equilar Inc.,
which researches executive pay.
Mr. Tyson's total of $859,129 for private use of corporate
aircraft in 2014—the most recent year for which Equilar compiled
the statistics from proxy filings—was nearly 28% higher than that
of Eric Schmidt, executive chairman of Google parent Alphabet Inc.,
who ranked second. Officials at Alphabet didn't respond to a
request for comment.
The air-travel perks reflect how Tyson Foods, the largest U.S.
meatpacker by sales, remains under the control of its eponymous
family, corporate-governance specialists said. The Tyson family
owns nearly all of the company's Class B "supervoting" shares—which
each have 10 votes and give the family about 71% of voting power
among all shareholders, according to federal filings. The family
owns a stake equivalent to about 18% of all Tyson Foods stock,
according to FactSet.
A Tyson Foods spokesman said Mr. Tyson declined to comment.
Shareholders of the Springdale, Ark., company are set to meet
Friday for its annual meeting, where investors will vote on a
proposal seeking to eliminate its dual-class structure, giving each
share one vote, and another proposal to install an independent
chairman. Proxy-advisory firms Institutional Shareholder Services
Inc. and Glass Lewis & Co. in recent weeks backed both
proposals.
The proposals are expected to fail, however, given the Tyson
family's voting control. A similar one share, one vote proposal
failed in 2015.
The stock structure, which Tyson Foods has had in place for
about 30 years, isn't uncommon among publicly listed U.S.
companies. Advocates say it can shield management from short-term
pressures from Wall Street, promote longer-term investment and help
prevent unwelcome takeovers. But some investors and proxy-advisory
firms say it leaves other shareholders with comparatively little
voice in how the company is run.
"It's certainly not a phenomenon that's going away," said Paul
Hodgson, a principal at corporate-governance consultancy BHJ
Partners LLC, citing younger technology companies like Alphabet and
Facebook Inc. that maintain similar structures. For public
shareholders, he said, "there are fewer pluses."
Tyson Foods, which traces its roots to a chicken-delivery
business founded by John W. Tyson in 1935, ranks among the world's
largest family-controlled companies by revenue, a list that also
includes Wal-Mart Stores Inc., Volkswagen AG and Cargill Inc.,
according to data from the University of St. Gallen in
Switzerland.
Tyson Foods listed shares in 1963. Don Tyson, John W. Tyson's
son, took over as CEO and chairman in 1967 and led the business
until 1991. John Tyson, son of Don Tyson, became chairman in 1998
and served as CEO from 2000 to 2006.
Tyson Foods defends its founding family's control in filings
with the Securities and Exchange Commission.
"Every investor purchasing a share of our Class A common stock
is aware of this capital structure, and many are attracted to our
stock by the long-term stability that the Tyson Limited Partnership
(TLP), our controlling shareholder, and the Tyson family provide to
the company," said its proxy filing in December. "We believe our
success is owed in large part to the leadership and vision the
Tyson family has provided over the last 80 years."
Tyson Foods has registered six jets with the Federal Aviation
Administration, and Mr. Tyson's contract allows him to use company
planes for up to 275 hours each year, including flying other
passengers when he isn't present, according to Tyson filings.
The Tyson spokesman said that while U.S. securities regulations
require companies to disclose executives' personal aircraft use,
there isn't a uniform methodology for calculating this, and other
companies may calculate their totals differently than Tyson. Mr.
Tyson's 2014 compensation for private jet use was nearly eight
times that of Donnie Smith, Tyson Foods' CEO. Mr. Tyson's roughly
$1 million in 2013 aircraft compensation was about $400,000 more
than the next-highest executive, A.G. Lafley, then CEO of Procter
& Gamble Co. Mr. Tyson also topped the list in 2012 with
$860,520, according to Equilar.
A P&G representative said that for security reasons, its CEO
is required to use company aircraft for all air travel.
ISS and Glass Lewis, which advise mutual funds and pension plans
on how to vote in corporate governance matters, said Tyson Foods'
setup leaves nonfamily shareholders without an equal voice in the
boardroom.
The company has taken heat over corporate perks before. In 2005,
the Securities and Exchange Commission alleged that Tyson Foods
failed to disclose more than $1 million in perks, and made
misleading or inadequate disclosures about other benefits. Tyson
Foods, which didn't admit or deny wrongdoing, paid $1.5 million to
settle the charges.
Analysts surveyed by Thomson Reuters expect Tyson Foods' fiscal
first-quarter earnings per share to jump 16% to 89 cents when the
company reports results Friday, despite revenue projected to
decline 7% to $10.1 billion. Tyson shares have climbed 33% over the
past 12 months, though they are down 2.6% since the end of last
year.
Though investors may grumble over executive perks and dual-class
shareholding structures, such companies often quell complaints by
delivering results, according to Paul Lapides, director of the
corporate governance center at Kennesaw State University.
"Oftentimes shareholders don't mind if you're treating yourself
well, if you're treating everybody else well," Mr. Lapides
said.
(END) Dow Jones Newswires
February 04, 2016 21:55 ET (02:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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