UPDATED: CEO Richard Bond to Leave Tyson Foods

by Arkansas Business Staff  on Monday, Jan. 5, 2009 3:46 pm  

Richard Bond, president and CEO of Tyson Foods Inc. of Springdale, said in a news release Monday that he is leaving the company effective immediately.

D.A. Davidson & Co. analyst Tim Ramey lowered his rating on the stock to "underperform" from "neutral" and said he was conflicted about Bond's departure.

"If things were good, Bond would have kept his job," Ramey said in a note to clients. "New CEOS always lower the bar - but it will be hard to lower the bar further than the company already has."

He said the company will likely be in a state of limbo until a new CEO is named, which could cause weakness in the stock. He lowered his target price to $7.50.

Tollett, the former Tyson CEO, began working for Tyson in 1959 and was part of a close-knit management team including director Don Tyson that aggressively grew the company from a regional poultry producer into the world's largest meat company.

Ramey said he suspects the Tyson family, which still controls a large portion of the company, didn't like Bond's strategy of boosting chicken production levels even as competitors curbed production in the past year to boost pricing.

Tyson, the number two chicken player behind Pilgrim's Pride, increased chicken production 6 percent in its fourth quarter, which ended Sept. 27. The chicken unit posted a $118 million loss in fiscal 2008, as weak pricing limited its ability to compensate for higher production costs.

"We were disturbed by the way Mr. Bond seemed unconcerned with his risky strategy of continuing to overproduce poultry, bringing massive losses in that segment," Ramey wrote in a note to clients Monday.

But Ramey wrote that it's not entirely clear a production cut is among the reasons for Bond's departure. He pointed to the company on Monday naming Donnie Smith as senior group vice president of poultry and prepared foods and said Smith seemed to agree with Bond about not cutting production.

But Tollett has a strong track record of cutting costs, said Bledsoe, who said investors were frustrated Bond apparently decided not to cut chicken production.

The 61-year-old Bond received compensation valued by the company at about $4.9 million in fiscal 2008, according to an analysis of the 2008 proxy the company filed with the Securities and Exchange Commission last week. In 2007 his compensation was valued at $12.9 million. His 2008 compensation tumbled because the value of stock and stock options he was awarded plunged.

Tyson spokesman Gary Mickelson said Monday that the company would file a document with the SEC before the end of the week that will detail terms of Bond's separation.

(The Associated Press contributed to this report.)



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