Tyson Foods CEO’s pay drops in fiscal 2011
Friday, December 23, 2011
SPRINGDALE, Ark. (AP) — The compensation of Tyson Foods CEO Donnie Smith fell 23 percent during the 2011 fiscal year alongside a decline in the meat producer’s annual net income.
An analysis by The Associated Press of a regulatory document filed Thursday shows that the value of CEO Donnie Smith’s salary, options and other compensation was $6,671,224. That’s down from $8,706,504 the year before.
Tyson Foods Inc. is the biggest U.S. meat producer. While Tyson was profitable during the last fiscal year, its net income fell nearly 4 percent from 2010. Tyson raised prices on beef, chicken and pork, but the company could not raise chicken prices enough to offset rising feed and grain costs.
Smith, 52, has made cost-cutting a central focus of his tenure as the company CEO. He is also president of the meat and prepared-foods company. He has been CEO since November 2009.
According to the filing, Smith received a base salary of $900,000 for the year that ended Oct. 1, up from $855,577 in 2010.
Tyson Foods gave Smith option awards valued at $2.5 million, up 2 percent from $2.4 million the prior year. He received other compensation, including personal use of a company aircraft and life insurance premiums, worth $320,782. That’s up 79 percent from last year.
Smith was not paid a bonus for the year. No Tyson executive was paid a bonus in 2011 except for Noel White, senior group vice president over fresh meats. White was paid a $230,000 bonus that the company said was due to him under terms of an amendment made to his employment contract in February.
Smith’s incentive pay was cut 21 percent to nearly $3 million, from $3.8 million last year.
Tyson Foods’ full-year earnings for the 2011 fiscal year dropped to $750 million from $780 million.
Revenue for the year rose 13.5 percent to $32.27 billion from $28.43 billion. Tyson’s revenue increased in part because it lifted prices for meat. Consumers have resisted higher prices since 2008 as a weak job market has cut back their income.
But gains from higher sales were largely wiped out by rising costs. Tyson Foods said feed and ingredient costs jumped $675 million in the year. Corn hit record highs this summer and other crop prices climbed.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive’s stock and option awards for 2011 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.