Tyson Foods is drawing more criticism from some corporate governance experts who say the company should have taken more aggressive and quicker action to address the arrest of its newly-minted CFO.
John R. Tyson was arrested over the weekend on charges of public intoxication and criminal trespassing, according to the Washington County, Arkansas Sheriff Department.
Tyson, 32, who took the food company’s CFO seat about six weeks ago, is scheduled to appear in court on Dec. 1. Tyson is the son of the Springdale, Ark.-based company's chairman and great grandson of its founder, according to a company spokesperson.
“I do believe the board needs to act quickly, like today or yesterday,” said Keith Meyer, CEO of recruiting firm Allegis Partners in an interview Tuesday with CFO Dive.
In most situations like these, at a minimum, “an independent committee of the board or an independent subgroup of the audit committee should do a very rapid review of the matter and report back with their findings. And typically, you put the individual on administrative leave until the review is complete,” Meyer said.
Tyson Foods sent a statement to CFO Dive on Monday stating that the issue was a “personal matter” and declining to comment as to whether the family heir will remain at the finance helm of the company. Again on Wednesday the company spokesperson reiterated that it had no further comment.
On Monday morning Tyson’s CFO sent a company-wide email to his colleagues apologizing for his actions, a company spokesperson confirmed. “I am embarrassed for personal conduct that is inconsistent with my personal values, the company’s values and the high expectations we hold for each other here at Tyson Foods,” the company-wide memo stated, according to a Nov. 7 Associated Press report, which also said he was getting counseling for alcohol abuse. “I made a serious mistake and this has caused me to reflect deeply on the impact my actions can have on others,” he wrote, according to the report.
Tyson is not the only food industry C-suite executive to make such headlines in recent months. In September, Beyond Meat’s chief operating officer Douglas Ramsey was arrested on charges of terroristic threatening and third degree battery after he allegedly bit a man’s nose in a parking garage following a football game. However, the company responded by swiftly suspending Ramsey from his executive position.
Held to a high standard
Tyson Food’s assertion that Tyson’s arrest was a private matter drew criticism from some experts.
“Irrespective of it being a personal matter or not, it is the role of the CFO that is of crucial concern here,” Meyer said. “This is a Fortune 100 public company that I believe should have a CFO that instills confidence.”
This issue has implications for the company’s branding, according to Nicole Coomber, assistant dean and professor of management & organization at the University of Maryland’s Robert H. Smith School of Business. It will affect the CFO’s relationship with investors and shareholders, she said.
Tyson Foods has one of the largest and most robust protein portfolios in the food industry, according to their company website. The meat industry is very mature, and the company has a market capitalization of $24.14 billion, according to Yahoo Finance.
Being that the CFO is a member of the executive team, Tyson should be held to a high standard, according to Karen Sedatole, an accounting professor at Emory University’s Goizueta Business School. “He is responsible for financial disclosures and filings with the SEC. It’s incredibly important for his role that he is seen above reproach in order to maintain the trust of those that rely on his judgment — most importantly, investors, given this is a publicly-traded company,” she said in an emailed response to questions to CFO Dive.
If action is not taken in regard to Tyson’s CFO position, he will likely be on the company’s fourth quarter earnings call which is scheduled for Nov. 14.
“How the company reacts in response to this is going to be the most important factor in this story, because this does position the board to either be an independent player in this response or just fall back to the company line,” said Meyer.
Potential regulatory action
The promotion of the younger Tyson from his previous role of chief sustainability officer to CFO sparked nearly immediate concerns surrounding the potential conflict of interest issues it raised, CFO Dive previously reported. The main concern was how or whether the board would be able to terminate Tyson should he not perform, despite family ties to the company.
From Meyer’s 20 years of experience in recruiting CFOs, he believes that with Tyson’s experience stacked up against the normal qualifications for a financial executive position at a company of this scale and scope, the appointment “was a bit of a stretch,” he said. If no internal action is taken, there is potential for regulatory action to be taken, according to Meyer. “I wouldn’t be surprised to see the SEC take some action here,” he said.
Editor’s note: This story has been updated to correct the relationship of John R. Tyson to Tyson Foods' founder. Tyson is the great grandson of the company's founder, according to a company spokesperson.