Tyson Foods investors attending its online annual shareholder meeting this week will consider several proposals to increase oversight of the company, all of which stem from the company’s handling of the Covid-19 pandemic. Thousands of Tyson workers have contracted the virus and dozens have died at plants around the country.
Proposals from religious groups, a union, and the New York state pension fund seek more robust disclosure from Tyson on its lobbying practices and commitment to human rights, as well as a change to its shareholder structure that would redistribute voting power away from the Tyson family, which controls about 70 percent of the company’s voting rights.
The company has advised its investors to vote against all of the proposals, which seek to give shareholders more leverage over the company’s strategy and political activity in the wake of the Covid-19 pandemic. The annual meeting will be held virtually on Feb. 11.
As of early February, nearly 12,500 Tyson workers have contracted Covid-19 — over 12 percent of the company’s meatpacking workforce — and at least 39 have died, according to FERN’s tracker. Tyson accounts for over 20 percent of all worker cases in the sector.
American Baptist Home Mission Society and 22 other religious groups want Tyson to produce a report that shows how it protects the human rights of its workers and lays out strategies to address any shortcomings. Their proposal cites the high number of Tyson workers who have contracted Covid-19 during the pandemic, complaints against the company for racial discrimination, and poor relationships with its contract growers —evidence that the company needs to improve.
“Investors who filed this proposal really wanted to raise awareness for the fact that Tyson has failed to respect workers’ most basic human rights during the Covid-19 pandemic,” said Gina Falada, senior program associate at Investor Advocates for Social Justice, which represents a network of faith-based investors, including the filers. Though Tyson has conduct policies for workers and suppliers, “the company hasn’t disclosed any evidence to investors that they’re effectively implementing their policies or that these policies are improving human rights outcomes for workers or communities,” Falada says.
The International Brotherhood of Teamsters, which represents more than 3,300 Tyson workers, is also concerned about how the pandemic has embattled the company’s workforce. Its proposal seeks annual reporting from the company on its lobbying and political activities to mitigate any potential “reputational risk” that Tyson’s political actions or those of its member associations, like the National Chicken Council (NCC), may pose to shareholders or the company.
“For example, Tyson states it is committed to protecting food safety and worker health and safety, yet the NCC lobbied to have the meat industry designated an essential industry while at least six Tyson workers died,” the proposal says. “The NCC also lobbied the USDA to increase line processing speeds that increase dangerous conditions for meatpacking workers, the majority of which are people of color.”
“Sometimes there’s a real misalignment with sustainability and [lobbying], whether it’s in their name … [or] whether from trade associations or other political organizations that get money from Tyson,” says Louis Malizia, the assistant director of capital strategies at Teamsters.
Having more information on the company’s political activity would “[give] investors the ammunition they need to engage in serious conversations with company officials and particularly the board,” he says, which would allow for a more rigorous assessment of whether the company’s management of a crisis like the Covid-19 pandemic was aligned with its corporate mission.
A third proposal from the New York Common Retirement Fund, which holds Tyson shares worth over $30 million, would see the company change its dual class stock structure by giving each share in the company one vote. Currently, the Tyson family’s shares each count for ten votes, which is how the family controls about 70 percent of the voting power over shareholder proposals and other company activity.
This type of stock structure is becoming less popular among investors. In fact, the S&P 500 no longer includes companies with dual class stocks, but Tyson was grandfathered in.
“Investors have serious concerns about COVID-19 outbreaks among Tyson’s employees and closures of the company’s plants hurting its bottom line,” said New York State Comptroller Thomas P. DiNapoli in a written statement. “Tyson’s voting structure denies shareholders’ any meaningful oversight or input and has insulated its board and management from having to answer for its failure to quickly address the impacts of the COVID-19 crisis.”
A change to the company’s stock structure could have a significant impact on future investor proposals. Both the human rights and lobbying proposals were brought to Tyson shareholders in 2020, where they each received 60 percent approval from independent, non-family investors. If the family’s power over voting were lessened, it could drive up investor approval for company reforms.
In response to the proposals, Tyson wrote in its proxy statement that it is “strongly committed to promoting social responsibility and human rights in every area of its operations,” that the outsize power of the Tyson family over the company has added “significant stability to the business,” and that its current policies “ensure the transparency and accountability sought by the [lobbying] proposal.”
Tyson is facing other challenges too. Last December, New York City comptroller Scott Stringer asked the Securities and Exchange Commission to investigate the company for including “materially false or misleading information regarding Tyson’s response to the global Covid-19 pandemic” in its annual report. And a lawsuit filed in early February alleges the company misled shareholders about Covid-19 protocols at its meatpacking facilities.
Investors have been applying pressure to meat companies throughout the pandemic. In June, 129 investors with a combined $2.4 trillion in assets called on the major meatpackers, including Tyson, to “demonstrate how they will meet the dual challenges of maintaining meat production while prioritizing worker protection and safety in the coming months and beyond.” Their letter called for physical distancing in packing plants, wage increases, mandatory worker testing, and other protective measures.
Tyson has said that it spent $540 million to address the pandemic in 2020, including hiring medical staff and updating facilities to reduce worker exposure to the virus.
Though the rate of new outbreaks has slowed at meatpacking plants compared to the spring months, cases among workers continue to rise. Meat companies have declined to disclose detailed information about worker illness, testing, or vaccination. A recent investigation by the House Subcommittee on the Coronavirus Crisis, which cites FERN’s reporting, seeks to obtain more information from meatpackers on how the virus has affected their workers and what companies have done to address it.