By Louis Lavelle Call it the perk that keeps on giving. Amalgamated Bank, which owns 89,000 shares of Tyson Foods, alleges in a lawsuit filed on Feb. 16 that Tyson has contracts with four members of the Tyson family "and their cronies" that guarantee them consulting fees after they retire -- and even after they die.
One former director, Robert Peterson, was entitled to $400,000 a year plus other perkspayments that went to his estate after he died in May, 2004, according to the suit. Don Tyson, the son of the company's founder, gets $800,000 a year. That's for up to 20 hours of work per month, even though he never earned more than $600,000 a year as chairman and CEO. When he dies, the suit says, the payments will go to his survivors.
TOO CLOSE? "It is difficult to conceive what consulting services a deceased individual might provide to Tyson," deadpans the suit. Don Tyson's consulting deal runs through 2011. The suit didn't specify the length of Peterson's deal. The company declined comment, saying it had not been served with the suit. Don Tyson was unavailable for comment.
Amalgamated also alleges that Tyson Foods has done more than $51 million in business with Tyson family members and directors from 2001 to 2003, including leases for farms, aircraft, and warehouses. At the same time, it says, the board awarded options to executives and directors a few days before favorable announcements that would have pushed up the options' exercise price -- in effect saving them $5 million. Fortuitous timing? That's for a court to decide. Lavelle is Management editor for BusinessWeek in New York