NYC comptroller calls on SEC to investigate Tyson Foods

Dive Brief:

  • New York City Comptroller Scott M. Stringer is calling for the U.S. Securities and Exchange Commission to investigate Tyson Foods for making misleading disclosures to investors by “flagrantly misrepresenting its poor pandemic response.” Stringer asked for the probe in a letter sent to the SEC Tuesday. 
  • As comptroller, Stringer is investment advisor and a trustee of the five New York City Retirement Systems, which are substantial long-term Tyson shareholders. He said the company’s 10-K form was “misleading and inaccurate” because it didn’t assure investors that issues reported earlier this year are “a thing of the past.” 
  • Early on in the pandemic, Tyson and other major meat companies were criticized for waiting too long to implement safety precautions and to close processing plants as thousands tested positive for coronavirus. A Tyson spokesperson said in an email that the company has not yet reviewed Stringer’s documentation, but referred to a release that outlined Tyson’s protective measures.

Dive Insight:

The NYC comptroller’s call for an SEC investigation is the latest development in a difficult week for Tyson. The meat giant announced it fired seven plant managers at its pork plant in Waterloo, Iowa, after an independent investigation confirmed accusations that they were betting on employees catching the coronavirus. The same day, news broke that the family of a plant worker who died of the coronavirus was suing the company for not implementing proper safety precautions. 

Stringer is asking the commission to immediately open a probe into Tyson’s “dubious claims” that they are adhering to safety guidelines from OSHA and CDC. He said shareholders need a transparent account of Tyson’s workplace safety precautions. 

“There is human cost to Tyson’s failures — preventable deaths, hospitalizations and sick workers. These failures have material impacts on its business operations that carry serious risks for shareholders,” Stringer said in a statement. 

Tyson will soon be filing definitive proxy materials ahead of its annual meeting, which is typically held in February. Stringer said investors need an accurate disclosure of Tyson’s COVID-19 exposure and risk because infections are projected to rise in the winter and the incoming Biden Administration is expected to deliver on its commitment to strictly enforce occupational health and safety regulations. 

Stringer said Tyson was slow to respond to the pandemic and the early steps it took to protect workers were “grudging and minimal,” which led to more infections. Employees and activists have also claimed that meat companies such as Tyson didn’t respond to the pandemic fast enough. More than 11,500 Tyson workers have tested positive and at least 36 have died, according to the Food and Environment Reporting Network

Despite this turmoil, the company appears to be having a strong year. In Tyson’s most recent earnings report, quarterly sales increased more than 5% and net income increased more than 80% from the same time period last year. 

But Stringer said in his statement that Tyson’s annual disclosures include inaccurate statements. The company has recorded at least $540 million in direct incremental COVID-19 costs for fiscal year 2020, including precautions, bonuses and other benefits for workers. Stringer said that although that amount is significant, “it is difficult to determine from this bare description how effective the Company’s current program may be in preventing additional costs.”

Tyson announced in July it was starting a new weekly testing and monitoring program at all 140 of its production facilities. The company also created a chief medical officer position, bought more than 150 infrared walkthrough temperature scanners and has more than 500 social distance monitors in its facilities to track social distancing efforts and ensure PPE is worn correctly. Tyson also said it is piloting seven medical clinics, which will open in 2021, near its meat plants. Although the virus is still spreading, large outbreaks and plant closures have slowed

Big investors and comptrollers in New York have forced companies to make changes before. In March, the New York State Comptroller announced Coca-Cola would consider the wages it pays all of its employees when setting executive salaries, seeking to closer align them. After the announcement, the New York State Common Retirement Fund withdrew a shareholder resolution against the company.

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