Monday, June 04, 2007

More Than Just Chicken In Every Tyson Family Pot

The share price of Tyson Foods (TSN-$22.22) has responded to profitable chicken prices (more than offsetting higher production costs, including corn feed) this year, rising about 37 percent since January.

Then again, even in an unprofitable year, if your last name is Tyson, chicken is always a lucrative business:

Don Tyson, 76, served as Senior Chairman of the Board from 1995 to 2001 when he retired and became a consultant to the Company. He entered into a contract with the Company on July 30, 2004, which provides that Mr. Tyson will furnish up to 20 hours per month of advisory services to the Company (for a term expiring on October 19, 2011). In consideration for his ‘advisory services,’ Mr. Tyson receives $1,200,000 per annum.

Mr. Tyson is also entitled to receive non-cash compensation, including: (i) personal use of Company aircraft for himself and/or his designated passengers for up to 150 hours per year, (ii) reimbursement for costs incurred relating to tax and estate planning advice or services from an entity recommended by the Company, (iii) personal use of Company-owned skyboxes and vacation homes, and (iv) up to 1,500 hours per year of security services (which the Company estimates will cost $40 per hour).

And, lest we forget, Mr. Tyson will be reimbursed, too, for any and all tax liability imposed on him in connection with the provision of the aforementioned non-cash compensation.

In fiscal 2006, non-cash compensation for Mr. Tyson included $247,182 attributable to personal use of Company aircraft, $141,633 attributable to tax and estate planning advice or services, $105,000 attributable to a split dollar insurance policy, $45,000 attributable to Company matching contributions to the Company’s Employee Stock Purchase Plan, and $126,850 for taxes paid on his behalf by the Company.

John Tyson, 53, the son of Don, is Chairman of the Board and has served in this capacity since 1998. Mr. Tyson served as Chairman and Chief Executive Officer from 2001 until May 2006.

In fiscal 2006, John Tyson earned $1.17 million in salary, $500,000 in options, and $673,363 in Other Annual Compensation (including 323,659 attributable to personal use of Company aircraft, $203,536 for taxes paid on his behalf by the Company, and $57,359 of reimbursement for certain insurance premiums).

Given John Tyson’s recent retirement from active employment with the Company, he recently entered into an ‘advisory’ contract (for a period of ten years), which will pay him to him—in the aggregate—$33.36 million.

And, not to be left out, Barbara A. Tyson, a sister-in-law to Don Tyson and aunt of John Tyson, is a consultant to the Company, too. In consideration for her advisory services, Ms. Tyson receives annual compensation of $7,200.

Related Party Transactions

During fiscal 2006, the Company leased certain farms (swine farrowing and rearing facilities) from Don Tyson, John Tyson, and other family memebers with aggregate lease payments totaling more than $880,000.

The Company has an aircraft lease agreement with Tyson Family Aviation, LLC, of which Don Tyson, John Tyson and other Tyson’s are members, with aggregate lease payments to Tyson Family Aviation, LLC during fiscal 2006 of $2,043,552.

The Company has an agreement with entities of which Don Tyson is a principal, with respect to the operation of a wastewater treatment plants, located adjacent to and services the Company’s chicken processing facility in Nashville and Springdale, Arkansas, with aggregate payments by the Company of $2,472,675 and $2,153,070, respectively, for fiscal 2006.
As our readers can tell, chicken is no joke to the Tyson family.

In Italy, chicken is called pollo; chicken in Finnish is kukko; and, chicken in Swedish is kyckling—but no matter where a Tyson lives, chicken translates into “money.”
Editor David J. Phillips holds no financial interest in any poultry concerns. The 10Q Detective has a Full Disclosure Policy.

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