SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of October 2, 2004,
regarding the only persons known by the Company to own, directly or indirectly, more than 5% of either of its two classes of Common Stock:
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Name and Address of Beneficial Owner
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Title of Class
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Number of Shares
Beneficially Owned
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Percent of
Class
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Don Tyson and Tyson Limited Partnership
2210 West Oaklawn Drive
Springdale, AR 72762-6999
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Class B Common Stock
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101,598,560
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(1)
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99.97
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%
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Barclays PLC
54 Lombard Street
London, England EC3P 3AH
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Class A Common Stock
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31,965,400
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(2)
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12.76
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%
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Goldman Sachs Group, Inc.
85 Broad St.
New York, NY 10004
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Class A Common Stock
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19,187,781
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(3)
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7.66
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%
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Archer-Daniels-Midland Company
4666 Faries Parkway
Decatur, IL 62525
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Class A Common Stock
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15,142,940
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(4)
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6.04
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%
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(1)
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Includes 750,000 shares of Class B Common Stock owned of record by Don Tyson, a director of the Company; 91,848,560 shares of Class B Common Stock owned of record
by the Tyson Limited Partnership, a Delaware limited partnership (the “Tyson Limited Partnership”); 3,000,000 shares of Class B Common Stock owned of record by TLPCRT, LP, a Delaware limited partnership controlled by the Tyson Limited
Partnership; and 6,000,000 shares of Class B Common Stock owned of record by TLP Investment, LP, a Delaware limited partnership controlled by the Tyson Limited Partnership. Don Tyson has approximately a 54% combined interest as a general and limited
partner in the Tyson Limited Partnership and the Randal W. Tyson Testamentary Trust has approximately a 45% interest as a limited partner in the Tyson Limited Partnership. Barbara A. Tyson, the widow of Randal W. Tyson and a director of the Company,
has limited dispositive power with respect to, and is the principal income beneficiary of, the Randal W. Tyson Testamentary Trust. John Tyson, Chairman and Chief Executive Officer of the Company, is one of the contingent beneficiaries of such trust.
The managing general partner of the Tyson Limited Partnership is Don Tyson. The other general partners, who have approximately a 1% interest in the Tyson Limited Partnership, are Leland E. Tollett, a director of the Company; Barbara A. Tyson; John
Tyson; James B. Blair and Harry C. Erwin, III. Don Tyson, as managing general partner, has the exclusive right, subject to certain restrictions, to do all things on behalf of the Tyson Limited Partnership necessary to manage, conduct, control and
operate the Tyson Limited Partnership’s business, including the right to vote all shares or other securities held by the Tyson Limited Partnership, as well as the right to mortgage, pledge or grant security interests in any assets of the Tyson
Limited Partnership. The Tyson Limited Partnership terminates December 31, 2040. Additionally, the Tyson Limited Partnership may be dissolved upon the occurrence of certain events, including (i) a written determination by the managing general
partner that the projected future revenues of the Tyson Limited Partnership will be insufficient to enable payment of costs and expenses, or that such future revenues will be such that continued operation of the Tyson Limited Partnership will not be
in the best interest of the partners, (ii) an election to dissolve the Tyson Limited Partnership by the managing general partner that is approved by the affirmative vote of a majority in
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percentage interest of all general partners, and (iii) the sale of all or substantially all of the Tyson Limited Partnership’s assets and properties.
The withdrawal of the managing general partner or any other general partner (unless such partner is the sole remaining general partner) will not cause a dissolution of the Tyson Limited Partnership. Upon dissolution of the Tyson Limited Partnership,
each partner, including all limited partners, will receive in cash or otherwise, after payment of creditors, loans from any partner, and return of capital account balances, their respective percentage interests in the Tyson Limited Partnership
assets. In addition to Don Tyson’s direct and indirect interest in the Class B Common Stock, he is also the beneficial owner of 117,805 shares of Class A Common Stock, as described in the Security Ownership of Management table.
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(2)
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Based solely on information obtained from a Form 13F filed by Barclays PLC (“Barclays”) with the Securities and Exchange Commission (“SEC”) on or about November
12, 2004. The foregoing information has been included solely in reliance upon, and without independent investigation of, the disclosures contained in Barclays’s Form 13F.
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(3)
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Based solely on information obtained from a Form13F filed by Goldman Sachs Group, Inc. (“GSG”) with the SEC on or about November 15, 2004. The foregoing information has
been included solely in reliance upon, and without independent investigation of, the disclosures contained in GSG’s Form 13F.
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(4)
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Based solely on information obtained from a Form 13D filed by Archer-Daniels-Midland Company (“ADM”) with the SEC on or about October 9, 2001. The foregoing information
has been included solely in reliance upon, and without independent investigation of, the disclosures contained in ADM’s Form 13D.
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4
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of Class A Common Stock and Class B
Common Stock, as of October 2, 2004, by the Company’s directors, nominees for election as directors, named executive officers and by all directors and executive officers as a group:
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Name of Beneficial Owner
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Shares of
Class A Common
Stock Beneficially
Owned(1)
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Percent of
Outstanding
Class A Common
Stock
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Shares of Class B
Common Stock
Beneficially Owned(1)
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Percent of Outstanding
Class B Common Stock
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Aggregate
Voting
Percentage
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Don Tyson(2)
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117,805
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*
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101,598,560
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99.97
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%
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80.21
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%
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John Tyson(3)
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2,831,153
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1.13
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%
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*
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Richard L. Bond
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1,523,288
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*
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*
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Greg W. Lee
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923,607
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*
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*
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Eugene D. Leman
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380,488
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*
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*
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Dennis Leatherby
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93,119
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*
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*
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Leland E. Tollett(3)
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3,398,034
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1.36
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%
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*
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Barbara A. Tyson(3)
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167,095
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*
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*
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Lloyd V. Hackley
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13,510
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*
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*
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Jo Ann R. Smith
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6,932
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*
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*
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Jim Kever
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2,621
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*
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*
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David A. Jones
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2,492
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*
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*
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Albert C. Zapanta
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-0-
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*
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*
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All Directors and Executive Officers as a Group (15 persons)
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9,494,048
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3.79
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%
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101,598,560
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99.97
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%
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80.95
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%
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*
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Indicates percentage of less than 1%.
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(1)
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Includes beneficial ownership of shares with respect to which voting or investment power may be deemed to be directly or indirectly controlled. Accordingly, the shares shown in the
foregoing table include shares owned directly, shares held in such person’s accounts under the Company’s Employee Stock Purchase Plan and Retirement Savings Plan, unvested restricted shares, shares owned by certain of the individual’s
family members and shares held by the individual as a trustee or in a fiduciary or other similar capacity, unless otherwise disclaimed and/or described below. Also includes shares subject to options exercisable on or within 60 days of October 2,
2004, held by the directors and executive officers as a group in the amount of 1,471,099, and held by the named individuals in the amounts as follows: John Tyson (375,000); Leland E. Tollett (300,000); Richard L. Bond (405,177); Greg W. Lee
(200,000); Eugene D. Leman (147,856); Dennis Leatherby (34,600) and the other executive officers (8,466). Does not include performance shares that vest only upon the achievement of performance criteria (see “Long Term Incentive
Plans—Awards in Last Fiscal Year”).
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(2)
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Includes all shares of Class B Common Stock owned of record by the Tyson Limited Partnership, TLPCRT, LP and TLP Investment, LP as described in Footnote 1 to the Security Ownership
of Certain Beneficial Owners table.
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(3)
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Does not include any shares of Class B Common Stock owned of record by the Tyson Limited Partnership of which John Tyson, Leland E. Tollett and Barbara A. Tyson have a partnership
interest, as described in Footnote 1 to the Security Ownership of Certain Beneficial Owners table.
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5
ELECTION OF DIRECTORS
Nominees
The Board for the ensuing year is currently set at ten members and may be fixed from time to time by or in the manner provided in the Company’s
Bylaws. Directors are elected for a term of one year or until their successors are duly elected and qualified. The following slate of ten nominees has been chosen by the Board, and the Board recommends that each nominee be elected at the Annual
Meeting.
Don Tyson, 74, served as Senior
Chairman of the Board from 1995 to October 2001 when he retired and became a consultant to the Company. Mr. Tyson has been a member of the Board since 1952.
John Tyson, 51, is Chairman of the Board and Chief Executive Officer of the Company and has held his current title since October 2001. He
served as Chairman of the Board, President and Chief Executive Officer from April 2000 to October 2001, and as Chairman of the Board from 1998 to April 2000. Mr. Tyson has been a member of the Board since 1984.
Leland E. Tollett, 67, a private investor, served as
Chairman of the Board and Chief Executive Officer from 1995 to 1998 when he retired and became a consultant to the Company. Mr. Tollett is also a director of J. B. Hunt Transport Services, Inc. Mr. Tollett has been a member of the Board since
1984.
Barbara A. Tyson, 55, served as Vice
President of the Company until October 1, 2002, when she retired and became a consultant to the Company. Ms. Tyson has served in related capacities since 1988. Ms. Tyson has been a member of the Board since 1988.
Lloyd V. Hackley, 64, is President and Chief Executive
Officer of Lloyd V. Hackley and Associates, Inc., which provides programs for the development of ethics and character, and has served in that capacity since 1997. Mr. Hackley is also a director of Branch Banking and Trust Corporation headquartered
in Winston-Salem, North Carolina. Mr. Hackley has been a member of the Board since 1992.
Jim Kever, 52, is the Founding Partner of Voyent Partners, LLC (“Voyent”), an investment partnership. Before forming Voyent in
2001, Mr. Kever served as a director of Quintiles Transnational (“Quintiles”) and had served as Chief Executive Officer of Envoy Corporation (“Envoy”), a subsidiary of Quintiles, since Envoy was acquired by Quintiles in March
1999. Mr. Kever served as President and Co-Chief Executive Officer of Envoy from August 1995 until March 1999 and as a director from Envoy’s incorporation in August 1994 until March 1999. Mr. Kever is also a director of Transaction System
Architects, Inc., 3D Systems Corporation and Luminex Corporation. Mr. Kever has been a member of the Board since 1999.
David A. Jones, 55, is Chairman and Chief Executive Officer of Rayovac Corporation, and has served in that capacity since 1996. Mr. Jones
is also a director of Rayovac Corporation, Pentair Inc. and Simmons Co. Mr. Jones has been a member of the Board since 2000.
Richard L. Bond, 57, is the Company’s President and Chief Operating Officer and has held his current title since February 2003. Mr.
Bond served as Co-Chief Operating Officer and Group President, Fresh Meats and Retail from October 2001 until February 2003, and as President and Chief Operating Officer of IBP, inc. (“IBP;” now known as Tyson Fresh Meats, Inc.) from March
1997 until the merger of IBP into a wholly owned subsidiary of the Company (the “IBP Merger”) on September 28, 2001. He was a director of IBP from 1995 to 2001. Mr. Bond has been a member of the Board since 2001.
Jo Ann R. Smith, 65, is President of Smith Associates, an
agricultural marketing business, and has served in that capacity since 1993. She was a director of IBP from 1993 to 2001. Ms. Smith has been a member of the Board since 2001.
6
Albert C. Zapanta, 63, is President and CEO of the United States-Mexico Chamber of
Commerce based in Washington, D.C., and has served in that capacity since 1993. He has been member of the Board since May 18, 2004.
Each of the foregoing nominees is currently serving as a director of the Company and, with the exception of Albert C. Zapanta, was elected at the last
Annual Meeting. John Tyson, Chairman and Chief Executive Officer, initially identified Mr. Zapanta as a candidate for election to the Board. Mr. Zapanta then met individually and collectively with all other Board members. On May 18, 2004, Mr. Tyson
nominated Mr. Zapanta for election to the Board and in a special meeting of the Board that day, Mr. Zapanta was elected. John Tyson is the son of Don Tyson. Barbara A. Tyson is the widow of Randal W. Tyson, who was the brother of Don Tyson and uncle
of John Tyson. There are no other family relationships among the foregoing nominees. By reason of their beneficial ownership of the Company’s common stock, Don Tyson and the Tyson Limited Partnership are deemed to be controlling persons of the
Company. Except for IBP, none of the companies or organizations listed in the director biographies above is a parent, subsidiary or affiliate of the Company.
In March 2004, the Company was advised that the SEC had commenced a formal, non-public investigation concerning the Company’s disclosures of
executive perquisites. In August 2004, the Company announced that it had received notice that the staff of the SEC intended to recommend that the SEC bring a civil enforcement action against the Company and that it was considering seeking a monetary
penalty. The notice alleged that the Company’s proxy statements for fiscal years 1997 through 2003 had failed to comply with SEC regulations with respect to the disclosure and description of perquisites totaling approximately $1.7 million
provided to Don Tyson, former Senior Chairman of the Company, and that the Company had failed to maintain an adequate system of internal controls regarding the personal use of Company assets and the disclosure of perquisites and personal benefits.
The SEC staff also advised the Company it was considering recommending that the SEC bring administrative cease-and-desist actions against two Company non-executive employees for allegedly causing these failures. In addition, Don Tyson received
notice the staff intended to recommend that the SEC bring a similar civil enforcement action against him. The Company was subsequently advised that the staff had withdrawn its proposed recommendation with respect to the two employees, and that it
intended to recommend that the SEC seek monetary penalties against the Company and Don Tyson. In December 2004, following discussions with the staff regarding resolution of this matter, the Company and Don Tyson proposed that the Company, without
admitting or denying wrongdoing, would pay a civil penalty of $1.5 million and consent to the entry of an administrative cease and desist order and that Don Tyson, also without admitting or denying wrongdoing, would pay a civil penalty of $200,000
and consent to the entry of an administrative cease and desist order. These settlement proposals are subject to mutual agreement on the language of the order. The SEC staff has agreed to recommend both of these offers of settlement to the SEC. The
proposed settlements and the proposed order are subject to final approval by the SEC.
Unless otherwise designated, the enclosed proxy will be voted for the election of the foregoing ten nominees as directors. To be elected as a director, each nominee must receive the favorable vote of a majority of the
votes cast at the meeting. Shareholders are not entitled to cumulate voting with respect to the election of directors. The Board does not contemplate that any of the nominees will be unable to stand for election, but should any nominee become
unavailable for election, all proxies will be voted for the election of a substitute nominated by the Board.
The Company qualifies as a controlled company due to the ownership by the Tyson Limited Partnership of shares allowing it to cast more than 50% of votes
eligible to be cast for election of directors. Therefore, the Board is not required to nor has it chosen to have a standing nominating committee. In light of the Tyson Limited Partnership’s voting power, the Board has determined that the Board
is the most appropriate body for selecting
7
Board nominees and that no policy with respect to consideration of candidates recommended by shareholders would be appropriate.
However, the Board
will consider suggestions by shareholders for names of possible future nominees delivered in writing to the Secretary of the Company on or before September 30 in any year.
Information Regarding the Board and its Committees
The Board has a Compensation Committee (the “Compensation Committee”) whose primary function is to oversee the
administration of the Company’s employee benefit plans and establish the Company’s compensation policies. See “Report of Compensation Committee” contained herein. The Compensation Committee consists of independent directors Jo
Ann R. Smith, Chairperson, Lloyd V. Hackley, David A. Jones and Albert C. Zapanta. The Compensation Committee held four regularly scheduled meetings and 18 telephonic meetings in fiscal 2004. On November 19, 2004, the Board elected Albert C. Zapanta
to the Compensation Committee.
The Board has an Audit
Committee (the “Audit Committee”) whose primary function is to assist the Board in fulfilling its responsibilities by regular review and oversight of the Company’s financial reporting, audit and accounting processes. See “Report
of Audit Committee” contained herein. The Audit Committee consists of Jim Kever, Chairman, David A. Jones and Jo Ann R. Smith. Each of these individuals qualifies as an “independent” director under the regulations adopted by the SEC
pursuant to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and the New York Stock Exchange (“NYSE”) listing standards relating to audit committees. The Board has determined each of the members of the Audit Committee is
knowledgeable and qualified to review financial statements. In addition, the Board has determined that Jim Kever, the current Chairman of the Audit Committee, qualifies as an “audit committee financial expert” within the meaning of the
regulations of the SEC. The Audit Committee held four regularly scheduled meetings and four special telephonic meetings in fiscal 2004.
The Board has a Governance Committee (the “Governance Committee”) whose primary functions are to (i) oversee and review related party and
other special transactions between the Company and its directors, executive officers or their affiliates; (ii) review and recommend to the Board Corporate Governance Principles applicable to the Company; and (iii) review and recommend to the Board a
Code of Conduct applicable to the Company. The Governance Committee consists of independent directors Lloyd V. Hackley, Chairman, Jim Kever, Jo Ann R. Smith and Albert C. Zapanta. The Governance Committee held four regularly scheduled meetings and
one telephonic meeting during fiscal 2004. On November 19, 2004, the Board elected Albert C. Zapanta to the Governance Committee.
The Board has an Executive Committee (the “Executive Committee”) whose primary function is to exercise all powers of the Board, except as
otherwise provided by law and the Company’s Bylaws, during the intervals between meetings of the Board. All actions taken by the Executive Committee between meetings are ratified by the Board at the following Board meeting. The members of the
Executive Committee are Don Tyson, John Tyson and Leland E. Tollett. The Executive Committee acted by written consent 19 times during fiscal 2004.
The Board held four regularly scheduled meetings and one special telephonic meeting in fiscal 2004. All directors except Barbara A. Tyson attended at
least 75% of the Board and committee meetings they were eligible to attend during fiscal year 2004. The Board expects all directors to attend each Annual Meeting of Shareholders. All directors nominated by the Board for election to the Board in
2004, with the exception of Barbara A. Tyson (who was ill), attended the Annual Meeting of Shareholders held on February 6, 2004.
Non-management directors met in executive session without management present two times during fiscal 2004. Leland E. Tollett is the presiding director for
the executive sessions of non-management directors.
8
The Board has adopted Corporate Governance Principles, and each of the Audit Committee, Compensation
Committee and Governance Committee have adopted a written charter.
The Board has also adopted a Code of Conduct applicable to all directors, officers and employees. Copies of these corporate governance documents are available on the
Company’s website at
www.tysonfoodsinc.com
under “Investors” or in print to any shareholder who sends a request to Tyson Foods, Inc., Attention: Corporate Secretary, 2210 West Oaklawn Drive, Mail Stop AR058124, Springdale, AR
72762-6999.
In accordance with a provision in NYSE rules for
controlled companies, the Company has elected not to comply with NYSE corporate governance rules that provide for (i) a majority of independent directors, (ii) a nominating committee comprised solely of independent directors to identify and
recommend nominees to the board of directors, and (iii) a compensation committee with power to determine the compensation of the CEO. The Company qualifies as a controlled company due to the ownership by the Tyson Limited Partnership of shares
allowing it to cast more than 50% of votes eligible to be cast for election of directors.
The Board has determined that each of Lloyd V. Hackley, David A. Jones, Jim Kever, Jo Ann R. Smith and Albert C. Zapanta qualify as independent directors in accordance with the NYSE corporate governance rules. The
Board has also designated Leland E. Tollett to act as the presiding director of executive sessions to be held on a regular basis by non-management directors. If you desire to communicate with Mr. Tollett, you may do so by mailing him at Tyson Foods,
Inc., Attention: Leland Tollett, 2210 West Oaklawn Drive, Mail Stop CP001, Springdale, AR 72762-6999.
In making its independence determinations, the Board has reviewed an indirect investment by John Tyson in DigiScript, Inc. (“DigiScript”). Jim
Kever is presently Chairman of the Board of DigiScript and owns approximately 15% of DigiScript’s outstanding stock. DigiScript is a privately held company that specializes in making live presentations available on demand via the internet or
CD-Rom. Mr. Tyson’s indirect investment of approximately $204,000 constitutes approximately 0.9% of DigiScript’s outstanding stock. Neither the Company nor Mr. Tyson presently has any business relationship with DigiScript, and Mr. Tyson
has no role on DigiScript’s board of directors or as an officer thereof. Based on these facts, the Board has determined that this relationship is not material and does not affect Mr. Kever’s independence. There were no other relationships
involving the independent directors and the Company that required an assessment of materiality by the Board.
9
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