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TYSON

Mike

Well-known member
Tyson Shareholders Plan for Trial
This article was published on Tuesday, February 6, 2007 9:57 PM CST in Business
By Kim Souza
The Morning News
A Delaware court ruled Tuesday that Tyson Foods Inc. shareholders can proceed with a case against 18 Tyson directors and the Tyson Limited Partnership controlled by former chairman Don Tyson.

Because Springdale-based Tyson Foods is a Delaware corporation, any resulting trial in the case against will be heard in a Wilmington, Del., Chancery Court.

Chancery Judge William B. Chandler III found reasonable cause for the plaintiffs -- shareholders Amalgamated Bank and Eric Meyer -- to go forward with three of the nine counts fully intact and three more partially intact, despite the defendants argument for dismissal. The court did fully dismiss three counts on the statute of limitations violation.

Amalgamated Bank, an institutional shareholder of Tyson Foods, introduced the case against Tyson Foods in February 2005. Meyer brought suit against the company alleging corporate waste and unjust enrichment in September 2005. The plaintiffs challenged the legality of $163 million in payments by Tyson Foods to members of the Don Tyson family and Tyson Foods' board members.

Judge Chandler heard oral arguments in September and on Tuesday released his 78-page ruling. In the ruling, Chandler noted that the counts represent "a lengthy and complex complaint that includes almost a decade's worth of challenged transactions."

The heart of the complaint charges Tyson directors with breach of fiduciary responsibilities, favoring their own personal interests and those of controlling shareholders -- the Tyson family -- ahead of the company's minority shareholders.

Still alive are three counts which allege wrongdoing in the way the company paid its executives prior to a 2004 investigation by the federal Securities and Exchange.

In August 2004 the SEC revealed a settlement for the company's noncompliance with federal regulations for the years 1997 through 2003. Tyson Foods paid a noncompliance penalty covering the $1.5 million of perquisites given to Don Tyson relating to inadequate internal controls over payments and personal use of Tyson assets.

The company said in a recent SEC filing Don Tyson voluntarily repaid the company $1.5 million in 2004. Neither the company or Don Tyson admitted any wrongdoing.

In commenting on potential problems with stock options grants identified in Count III, Chandler suggests the plaintiffs have cause for action.

"Certainly at this state of the litigation, plaintiffs are entitled to the reasonable inference of conduct inconsistent with a fiduciary duty," Chandler noted in the ruling.

Both sides on Tuesday said they were pleased with Chandler's ruling.

"The bulk of our claims and the heart of our case remain intact. We look forward to taking discovery, gathering evidence and going to trial," Megan McIntyre, partner with Grant & Eisenhofer, lead council for the plaintiffs, said Tuesday.

Tyson Foods on Tuesday released the following statement: "We're extremely pleased with today's Delaware court decision, which completely dismissed three counts, severely cut back three others, and only allowed three of the original nine counts to remain in their entirety. We're confident that much, if not all, of what remains in the case, can be handled with additional motions, including those requesting summary judgment. Such motions may negate the need for any trial."

Judge Chandler allowed the plaintiffs to move forward with their complaints involving corporate waste and unjust enrichment stating that individual directors or company executives who profited from timed option grants or improper payments could be liable.

Shareholders were made aware of the alleged improprieties in the 2004 SEC investigation and the judge disallowed Tyson Foods' move for dismissal based on statute of limitations.

That particular ruling was "big" for the plaintiffs because it allows some of the more serious charges to proceed, McIntyre said.

The next phase is discovery as both sides will prepare for trial in Judge Chandler's court, McIntyre said.

AT A GLANCE

Delaware Chancery Court ruling on nine counts in a shareholder action against Tyson Foods Inc.

* Counts Granted

Count 2: Breach of fiduciary duty for award of "Other Compensation"

Count 6: Breaches of contract

Count 9: Unjust enrichment

* Counts Partially Granted

Count 3: Grant of options between 1999 and 2001

Count 4: Related party transactions

Count 5: Breach of fiduciary duty for inadequate disclosure of perquisites leading to SEC sanctions and fines.

* Counts Dismissed

Count 1: Consulting contracts for Robert Peterson and Don Tyson

Count 7: Contempt prior to 2002

Count 8: Material misrepresentations in the 2004 proxy statement

SOURCE: Delaware Chancery Court, New Castle County.
 

Mike

Well-known member
CattleNetwork_Today 2/6/2007 2:36:00 PM


Court Won't Dismiss Holder Suit Over Tyson Spending



WILMINGTON, Del. (Dow Jones)--A Delaware judge Tuesday refused to throw out a shareholder lawsuit over corporate spending by the founding family of Tyson Foods Inc. (TSN).



Chancellor William B. Chandler III of Delaware's Court of Chancery dismissed some parts of the lawsuit that took aim at some of the pay and benefits Tyson paid retired Chairman and Chief Executive Don Tyson, but left several counts standing.



"We just received the decision and are in the process of reviewing it. We do not currently have a comment," said Tyson Foods spokesman Gary Mickelson in an email. In court papers the company denied wrongdoing and said much of the case was too old to consider, or aimed at the wrong targets.



Tuesday's decision clears the way to trial in the case, which was filed in 2005 and is the latest in a long line of troubles stemming from the handling of executive perquisites at Tyson Foods.



The Securities and Exchange Commission fined Tyson Foods and Don Tyson in 2004, after finding fault with "travel and entertainment" costs on the company books.



Shareholders say Tyson Foods supplemented Don Tyson's pay to make up for his portion of the SEC fine. They want the Tysons to pay the fine themselves.



"The company got screwed twice: once because they had to pay an SEC fine and then because they had to reimburse Don Tyson," said Stuart Grant, the shareholder attorney who brought the lawsuit.



One part of the lawsuit involves allegations that Tyson's leaders breached a contract they made earlier with worried shareholders. To ward off suspicions that Tyson Foods corporate funds were being misspent, the board agreed to oversee future deals involving family and friends. Shareholder attorney Grant said Tyson's directors failed to make good on their end of the contract.



"They cut a deal. Tyson's board was supposed to approve all of these interested party transactions. Basically, there were millions of dollars that they didn't bother reviewing and approving," Grant said.



Left standing are some of the allegations of wrongdoing connected to what shareholders say were $163 million worth of related-party transactions between 1998 and 2004, deals that allegedly enriched members of the Tyson family and their friends at the expense of the Arkansas meat and poultry company.



Chandler highlighted what he called "the logo vendor affair," a transaction in which the company bought almost $5 million worth of product from "a close personal friend of Don Tyson" without a bidding process.



Don Tyson gave the same supplier a company credit card, the judge noted. Tyson Foods' compensation committee later canceled the card.



Shareholders can also continue to pursue recovery for alleged wrongfully granted consulting contracts, options and other benefits, the judge said.



Don Tyson remains employed as a consultant to the firm, where he held a seat on the board for nearly half a century, beginning in 1952. His son and Tyson Foods' current chairman, John Tyson, is also named as a defendant in the case.



Source: Peg Brickley, Dow Jones Newswires; 302-656-8830
 
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