Friday, September 30, 2022

DIVE BRIEF
Tyson heir CFO pick draws ethical fire

Published Sept. 30, 2022
By
Elizabeth Flood
Associate Editor
“Tysons Food Donation 2012” by Central Texas Food Bank is licensed under CC BY-ND 1.0

Dive Brief:Tyson Foods, Inc.’s promotion of John R. Tyson, son of board chairman John H. Tyson, to the CFO seat could potentially be a conflict of interest, legal experts have said. Tyson, the world’s second largest processor and marketer of chicken, beef and pork announced the promotion in a Tuesday filing.
Tyson, 32, has minimal experience in executive financial leadership positions compared to his predecessor, Stewart Glendinning, who took his first CFO position back in 2005 at Molson Coors UK, according to his LinkedIn profile.
 
Tyson previously served as chief sustainability officer for the group from September 2019 until the present. His move to CFO is set to take effect Oct. 2. The promotion comes as the company is struggling to fulfill customer orders amid rising labor, feed ingredients, live animal and freight costs.

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Dive Insight:

Experts say the promotion raises questions about a potential conflict of interest, although it does not directly violate any securities regulations.

The main concern lies in whether or not the board will be able to terminate Tyson should he not perform, given the father-son relationship that exists between the chairman and the finance chief.

“A conflict may exist if a situation arises where a Team Member’s or a family member’s personal interest conflicts with the interests of Tyson Foods, or a Team Member uses his or her position at Tyson Foods to achieve personal gain,” reads the company’s Code of Conduct from what appears to be filed with the Securities and Exchange Commission (SEC). Donnie Smith, then-CEO of the Springdale, Ark.-based company noted in the filing that these guidelines are drawn from existing policies and procedures and that there is “no single document” that can address every situation that may arise. The company asserts that, “You have a duty to avoid a conflict of interest or even the appearance of a conflict,” per the company website.

“Research on cognitive biases demonstrates that we often think of decisions as ‘business decisions’ rather than ethical ones. One risk here is a ‘slippery slope,’ where the CFO might make small lapses (such sharing company documents that only the CFO might have access to with family members) that grow into larger ones,” said Nicole Coomber, assistant dean and professor of management & organization at the Robert H. Smith School of Business at the University of Maryland in an emailed response to questions.

Another concern around the appointment is Tyson’s age. The average age for CFOs at the top 1,000 U.S. companies by revenue is 54, according to a Korn Ferry study. The younger John Tyson will take the financial helm at just 32.

“I think we will see more C-suite leaders in their 30s. Experience is a double-edged sword; it can lead us to think we know the right answer when we are faced with situations similar to what we have already experienced,” said Coomber.

Although Tyson has experience as chief sustainability officer at the company, his financial industry experience is limited to various roles in investment banking, private equity and venture capital, including J.P. Morgan from 2012 to 2017, said the company in the SEC filing.

“We can have blind spots when it comes to our loved ones,” said Coomber in an email. “Typically, any family run business where a family member is appointed to leadership needs to make sure they have a transparent governance model, and a family charter that specifically addresses how they will manage any conflicts of interest,” she said.

Former WeWork CEO Adam Neumann notoriously appointed his wife to a high-level marketing position and then allowed her to start a school using company funds, noted Coomber. This is not to say that family members should never be appointed to high level positions, she said.

Tyson Foods has a long history of placing family members in positions of power, making them one of the wealthiest lineages in the U.S., according to Forbes.

Barbara A. Tyson, board director and the elder John Tyson’s aunt, has “substantial personal interest” in Tyson Foods as the sole income beneficiary of the BT 2015 Fund, which is a limited partner in the Tyson Limited Partnership, according to her biography on the company website.

Additionally, John H. Tyson, the new finance chief’s father and chairman of the board has been at his position since 1984 and also has “substantial financial interest” in the company through his interest in the partnership.

The company did not respond to requests for comment.




Conflict Of Interest


You have a duty to avoid a conflict of interest or even the appearance of a conflict. A conflict of interest arises when you have a financial or personal interest that could interfere with your obligation to act in the best interests of the Company, or when you use your position with the Company for personal gain. If we don’t handle potential conflicts of interest properly, these situations can impact the decisions we make, create the appearance of a lack of fairness and integrity, and harm the Company’s reputation. Our Conflict of Interest Policy requires team members and Directors to disclose both actual and perceived conflicts of interest so that others do not question their integrity.
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