Human Capital & Careers

Tyson Settles with SEC over Perks

The perquisites paid out to the food company's ex-chairman and his friends included $20,000 for oriental rugs, $18,000 for antiques, a $15,000 Lond...
Stephen TaubApril 29, 2005

The Securities and Exchange Commission settled charges against Tyson Foods, Inc. and its former chairman and chief executive officer, Donald Tyson, stemming from $3 million in perquisites and personal benefits paid out to Tyson and other family members.

Under the deal, Tyson Foods will pay a $1.5 million penalty and Donald Tyson will pay a $700,000 penalty.

The SEC charged that in proxy statements filed with the commission from 1997 to 2003, the company made misleading disclosures of perks and personal benefits provided to Donald Tyson before and after his retirement as senior chairman in October 2001. The regulator also charged the company with failing to maintain adequate internal controls over Donald Tyson’s personal use of company assets.

The perks included $689,016 in personal expenses for him and two of his friends. The expenses including a $20,000 purchase of oriental rugs, an $18,000 purchase of antiques, a $15,000 London vacation, an $8,000 horse, and other substantial outlays for clothing, jewelry, artwork, vacations and theater tickets.

The SEC asserted that the perks also included $464,132 in personal use of company-owned homes in the English countryside and in Cabo San Lucas, Mexico by Donald Tyson and his family and friends. Those expenses included payouts for the company-paid chauffeur, cook, and housekeeper at the English home and the company’s crewed boat in Cabo San Lucas.

The former CEO was separately charged with causing and aiding and abetting the company’s disclosure violations. Both parties also agreed to stop violating the proxy-solicitation and periodic-reporting provisions of the federal securities laws. The SEC also ordered Tyson Foods to cease and desist from violating the internal-controls parts of the securities laws.

The 70-year-old company and Don Tyson agreed to the settlements without admitting or denying the findings or allegations in the SEC’s Order and complaint.

“Our company has cooperated fully with the SEC in an effort to resolve this matter and are pleased to be moving forward,” said John Tyson, chairman and CEO of Tyson Foods. “We’ve also put additional controls and procedures in place to help ensure executive perquisites are being properly tracked and disclosed in the future.”

The SEC charged that from 1997 to 2001, while Don Tyson was senior chairman, the company provided about $3 million of perks and personal benefits to him, his wife, his daughters, and three people with whom he had close personal relationships.

Don Tyson has already paid $1.516 million to the company for certain items the independent board members identified in their own probe, the company noted.

The SEC also asserted that many of the perquisites were neither raised with nor authorized by the company’s compensation committee or its board. Since his retirement in 2001, Tyson has continued to serve as a consultant to the company and as a board member.

“We value Don Tyson’s leadership and his continued service to the company he helped build,” said Jo Ann R. Smith, chair of Tyson’s board compensation committee. “Our committee will continue its efforts to ensure Tyson’s benefit plans and compensation practices are appropriately administered.”