Tyson Foods Inc.’s CEO Donnie Smith will collect a golden parachute worth at least $24 million when he steps down on Dec. 31, including a three-year consulting agreement that will yield him a minimum $5,800 per hour.
Smith will get a $3.53 million severance, comprising his current salary paid out for three years, according to a regulatory filing. His exit package also includes restricted shares and stock options that will vest early. The equity and options are worth about $5.55 million, as of close on November 21.
Additional shares, valued at $6.69 million, will vest if his successor achieves certain performance goals.
He also had $8.16 million in retirement benefits as of Oct. 3, 2015. Companies typically don’t pay executives severance when they step down voluntarily, unless it’s for reasons such as diminished responsibilities or a material reduction in base salary or performance incentives.
Smith’s exit contract binds him to serve as a consultant to Tyson, the largest U.S. meat producer, through 2019, working a maximum of 33 hours per month in exchange for a $2.3 million annual fee. That equals about $5,800 per hour, assuming he doesn’t take any time off. Gary Mickelson, a company spokesman, didn’t respond to a call and an e-mail seeking comment on the package.
Monday’s announcement that Smith, 57, will step down at the end of the year after leading the company since 2009 which resulted in the biggest sell-off in the stock since the 2008 financial crisis.
The decline knocked at least $20 million off Smith’s personal stake in the company, which includes stock options granted to him in prior years that haven’t been exercised yet, according to data compiled by Bloomberg.
When asked yesterday on an analyst call about his decision to step down as the company is among the defendants in a series of lawsuits alleging price collusion in the poultry industry, Smith said that it’s an “excellent” time to make the transition and that it isn’t related to the litigation. Springdale, Arkansas-based Tyson disputes the claims about price manipulation and will defend itself in court, he said.
Tom Hayes, who was named president of Tyson in June, will take over as CEO. He will get a $1.15 million annual salary and may receive annual awards under Tyson’s long-term incentive plans and stock option program at the discretion of the board’s compensation committee. He’ll also be eligible to use Tyson’s corporate aircraft for certain personal trips.
By Anders Melin and Megan Durisin