No chicken jokes here…
Late Friday, around the time when some people were no doubt sitting down to a chicken dinner, Tyson Foods (TSN) filed a new 10-year contract for Chairman of the Board John Tyson. Under the agreement — the press release is here — Tyson will retain his title but morph into a non-executive officer as CEO Richard Bond inherits his remaining executive duties.
To be sure, it’s nice to see the board cutting back in several key places: Tyson’s salary drops from $1.17 million to $300K and he’s no longer eligible for a bonus, his restricted stock hoard shrinks from 1.56 million shares to 780K shares (though he keeps all his stock options), his unvested performance shares are canceled and the company gets out of its promise to offer him a new 10-year executive employment agreement.
So why am I not feeling happy?
Perhaps it’s the description of the 54-year old Mr. Tyson’s duties for the next 10 years that’s making me grumpy: “Mr. Tyson may be required to provide up to twenty (20) hours per month of advisory services to the Company and perform certain public relations duties… Such hourly requirement shall not be cumulative, and Mr. Tyson shall have no obligation to the Company to provide over twenty (20) hours of services in any month.”
Twenty hours per month, maximum; there is no minimum. Still, unlike your average part-timer the lucky man gets full benefits, including what seems to be lifetime health coverage for himself and his family.
Then again, the guy will probably be way too busy using his perks to hang out at the office. Let’s see, he’s allowed up to 120 hours personal use of company aircraft per year, and may invite along “such number of additional passengers…as seating permits, and Mr. Tyson need not be one of the passengers.” Party on. He gets a car (gas and maintenance included), home phone and internet service, “email and other communication devices” and secretarial, administrative and bookkeeping services. The list goes on: personal use of the company’s “entertainment assets” (not sure exactly what this means, but it sounds good), country club dues, tax and estate planning advice and a $7.5 million life insurance policy. And it’s all grossed up for taxes.
This spectacle leaves me too exhausted even to crack a chicken joke.
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October 2nd, 2007 at 12:59 pm
The son carries the mantle for his father Don as the anti-stewards. The extremely unfriendly shareholder practices of this company have been well covered, but it is still a public service to point them out.
If your fund invests in Tyson, you should consider a new fund. The real problem here, of which nepotistic avarice is a symptom, is that Tyson is a dual share company: the Tyson family has all of the voting shares. The spineless board (lower b to denote their chicken-like status) member are shamelessly in management’s pocket. Please don’t ever invest behind dual shares . Why hasn’t somebody sued the compensation committee “independents” and, for that matter, how does the comp committee qualify as independent. On a lighter note, thank you for sparing us a chicken joke. Do you know why John Tyson crossed the road? B/c the company pays him millions for the little things…
October 2nd, 2007 at 1:01 pm
Then again, it may have been cheaper for Tyson to do this than to leave John Tyson in his prior role. That said, it was probably the easiest thing for the board to do from a relational standpoint. Boards are little invitation-only clubs, typically, and it is hard to turn on “one of your own,” unless the straits are dire.
October 2nd, 2007 at 2:22 pm
David,
I wouldn’t argue with you collegial boards (although if you’ve been to a board mtg where each board member brings an attorney, it tends be a little chillier)…as an NYSE traded company, the comp committee members cannot be affiliated (they certainly aren’t tyson’s own). Their duty, their proper relational standpoint, is to the shareholders. The board exist to locate the natural, appropriate tension between managements and the shareholders’ agents (I know you know that, i don’t mean to patronize). The minute that this *natural, inherent* tension becomes, in any way, morphs into air cover (an excuse) for less than rigorous oversight, the board members cease to be adults capable of distinguishing between friends and, you know, responsible roles. Which, btw, they are handsomely paid, i didn’t look at the filing, but all-in, at least I bet $100k a year.