Religious groups want Tyson Foods to conserve water. A retirement fund wants a report on palm oil use. And a pair of investors wants to limit the Tyson family's voting power.
Proposals by activist investors are on the agenda at Tyson Foods' shareholder meeting at the end of the month. While the proposals are likely to be voted down, one of the investors said they raise awareness about issues important to small shareholders.
"With this type of proposal you have to look at it both ways -- insider and outsider shares," investor John Chevedden said. "That's how you gauge the success."
Tyson is in favor of none of the proposals, according to a statement filed with the U.S. Securities and Exchange Commission, and therefore none are likely to be adopted. Only proposals supported by management have been adopted since at least 2006, according to Proxy Monitor, a website sponsored by the Manhattan Institute's Center for Legal Policy.
The religious organizations -- along with activist investment management firm Calvert Investments -- are asking Tyson to implement a water stewardship policy.
Stu Dalheim, vice president of shareholder advocacy at Calvert Investments, said it doesn't take a majority vote to be heard.
"It does serve a valuable purpose as a catalyst for public discussion and public examination of these challenges," he said. "The result might be a community in one of the areas asking for better protection of their watershed."
In response to the water stewardship proposal, Tyson said in filings that it had formed a water council in 2013 to create water management plans for the company and review conservation practices and scarcity risks. The company also said it did not have responsibility for daily operations at the independent farms it contracts with to raise meat.
Dalheim said an acidic compound spill in southwest Missouri and a study based on data from the EPA's Toxic Release Inventory tell a different story.
"It's not going to be an easy proposal to get a majority vote on," he said. "But that's beside the point on some levels."
The New York State Common Retirement Fund wants the company to publish a report on palm oil use. Tyson said in an SEC filing that it purchased less than one-fifth of 1 percent of the world's output and only bought from suppliers that are members of the Roundtable on Sustainable Palm Oil, which the company said ensures production is responsible.
And Chevedden and investor William Steiner are pushing Tyson to end the increased voting power of the stock class largely owned by the Tyson family.
Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. in Little Rock, said he was skeptical of the effects of proposals that are almost guaranteed not to be adopted.
"To me, an activist investor isn't really active until they accomplish something," he said. "If they never have any impact or effect, all that does is provide publicity."
Chevedden began submitting shareholder proposals in the 1990s after he was laid off from Hughes Aircraft Company. In 1994, he petitioned General Motors, Hughes' parent company, to release more information about the employment practices at Hughes.
About that time, Chevedden met John Gilbert, who spent more than 50 years fighting for shareholder rights and filed more than 1,000 proxy statements.
"He showed me some of the ropes in 1994," Chevedden said. "It was good fortune to meet one of the pioneers."
Chevedden and his father, Ray, filed more proxy statements than any other individual investor from 2006 to 2014, according to Proxy Monitor. Since 2006, the younger Chevedden has filed more than 180 proposals.
He said he focuses on improving corporate governance through measures such as requiring an independent chairman of the board, directors to have majority votes to be elected and shareholders' rights to call special meetings.
The problem with Tyson, he said, is since certain stocks have more voting power than other stocks, Tyson takes public shareholder money but does not allow shareholders to have equal voices in company management.
Part of the reason the shareholder proposals are extremely unlikely to be adopted is because the shares of stock owned by the Tyson Limited Partnership have 10 times the voting power compared to the stocks available to the public.
According to Chevedden, that's 72 percent of Tyson votes.
"Potentially the market would subtract from the value of the stock when there's a larger insider holding," he said. "That's something for the insiders to think about. Maybe the stock would do better otherwise."
Williams said a large investor might pay attention to dual class stock structure -- but the average investor, with little voting power, wouldn't notice much of a difference.
"They're much more active and vocal in their investments," he said. "But I don't think a Franklin Templeton is necessarily going to make a determination to purchase the stock purely based on the dual classes."
Various public companies, including Ford Motor Co. and The New York Times, have dual classes of stock, where insiders have far greater voting power.
For its part, Tyson argues that family control through the dual classes of stock is one of the company's greatest strengths.
"We believe our success is owed in large part to the leadership and vision the Tyson family has provided over the last 70 years," Tyson said in a filing. "As a direct result of the dual-class structure, the Tyson family has a special interest in the long-term success of the Company and provides stability in the face of short-term market pressures and outside influences."
SundayMonday Business on 01/18/2015