Tyson CEO gets $1.3 million extra bonus for IBP merger

Amount is questioned since his firm fought deal

January 03, 2002|By Ameet Sachdev | Ameet Sachdev,SPECIAL TO THE SUN

The on-off-on-again takeover drama that unfolded last year between Tyson Foods Inc. and meatpacker IBP Inc. has one clear beneficiary: Tyson Chief Executive Officer John H. Tyson.

A year ago, Tyson agreed to buy IBP for $3.2 billion, only to call it off less than three months later after an investigation of financial irregularities at IBP's DFG Foods subsidiary in Chicago. IBP sued, and a judge ordered Tyson Foods to complete the merger.

Tyson Foods revealed yesterday that it gave its chief executive a larger bonus than the company's compensation guidelines called for, awarding him a $2.1 million bonus last year.

The bonus is $1.3 million more than he was eligible for under Tyson Foods' guidelines for senior executives, according to the company's proxy statement filed with the Securities and Exchange Commission.

The compensation committee of Tyson Foods' board said in the filing that the purchase of IBP "was an accomplishment which warranted a bonus payment in excess" of the amount determined by the plan.

But shareholder activists scoffed at that reasoning, considering that a Delaware judge in June ordered the shotgun wedding.

Despite the inflated profits reported for DFG, the judge ruled that Tyson Foods had no legal ground to back out of its plan to buy IBP, the nation's biggest beef packer. Two weeks after the judge's order, the two companies reconciled, agreeing to a $2.7 billion deal, plus the assumption of $1.5 billion in IBP debt.

Ameet Sachdev is a reporter for the Chicago Tribune, a Tribune Publishing newspaper.

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