SEC staff to urge action against Tyson Foods
Aug. 17, 2004, 12:36 PM UTC / Source: The Associated Press
The Securities and Exchange Commission staff plans to seek a civil enforcement action and possible monetary penalties against Tyson Foods Inc. over benefits the company paid some executives, Tyson Foods said late Monday.
The world's largest meat producer also said its former senior chairman had repaid the company $1.5 million.
Springdale-based Tyson disclosed in March that the agency was investigating company benefit payments, and said that it was cooperating with the probe.
The notice said SEC staff would recommend the agency take enforcement action against the company, Tyson Foods said.
The staff alleges that company proxy statements for fiscal years 1997 through 2003 did not fully describe or disclose about $1.7 million in perquisites enjoyed by former senior chairman Don Tyson and the company failed to maintain adequate internal controls on the personal use of company assets and the disclosure of perquisites and personal benefits.
In the spring, the company noted in its proxy report that Tyson regularly engages in transactions with company officials and board members. It went on to list millions of dollars in business the company does with Tyson officials. Included are farm operations, an aircraft lease agreement with Tyson family members and a $5.35 million wastewater treatment agreement with an entity in which Don Tyson is a principal.
In a statement Monday, Tyson said independent members of its board reviewed the allegations and that Don Tyson voluntarily paid $1.516 million to the company for certain items board members identified as pertinent to the years under review. Don Tyson is also a member of the board.
Tyson spokesman Ed Nicholson declined to discuss what sort of benefits had been investigated. He said he did not know why Don Tyson had paid the company $1.5 million.
"The company is presently unable to predict the outcome of this matter or the terms upon which it might eventually be resolved," the statement said. "However, the company does not believe the amounts at issue in any potential SEC action are material to the company's financial position or results of operations."
In addition, Tyson said, the SEC staff may recommend the commission bring administrative cease-and-desist actions against two Tyson employees for the alleged noncompliance. Neither of the two employees are executive officers, the company said.
Don Tyson also has received notice the staff intends to recommend the SEC bring a similar civil enforcement action against him, the company said.
The company said it "intends to respond to this notice fully and promptly."