Changes in the Executive Suite Lead to Expensive Consulting Deals
Widely seen by analysts as one of the weaker performers in the U.S. meat sector, Tyson Foods, Inc. has its third CEO in as many years. In early 2009, Richard Bond quit after less than three years on the job, and was replaced by former CEO Leland Tollett, who returned to the company to serve on an interim-basis. Finally, last November, Donnie Smith, a 30-year veteran of the company was appointed the new permanent chief executive. It is not uncommon for executive turnover to drive up near-term compensation with sign-on/promotional awards or severance payouts. At Tyson, however, the true cost of exit pay is not reflected in the compensation tables, but rather is buried in the employment agreement section of the proxy statement, taking the form of lengthy and lucrative consulting arrangements. For instance, Bond is one year into a 10-year consulting agreement, paying him $758,000 for the first five years, and $379,000 for the next five years. On top of that, the company will continue to pay the annual premium on his life insurance policy ($85,000 in FY2009) for the duration of the contract and he will retain access to personal use of the company aircraft until January 2012. Meanwhile, Tollett – who, after retiring as CEO in 1998, entered a 10-year consulting agreement – was granted a lifetime consulting deal following his short stint as interim-CEO. The deal provides for $300,000 per year. What’s more – these agreements appear to have been largely negotiated by Don Tyson, the company’s founder and controlling shareholder. Don Tyson and his son Jon Tyson, both former CEOs of the company, enjoy similarly well-paying consulting deals. Under a seven-year deal, due to expire in October 2011, Tyson senior receives $1.2 million a year, up to 150 hours of personal aircraft use ($353,000 in FY 2009), estate planning ($222,000 in FY2009) and life insurance premiums ($45,000 in FY2009).
For further information contact Allie Monaco Head of Research at Manifest’s US partners, Proxy Governance Inc