Tyson Foods shareholders will vote on a slew of proposals Friday that address social impact and transparency within the company.
The Tyson board of directors recommends that shareholders vote against all of six proposals submitted by shareholders. Any shareholder who owns $2,000 worth of stock or more can file a proposal.
"We recognize that consumer trust is tied to corporate transparency and we believe we're making significant progress in being more transparent about how we operate, sharing more information about such important areas as water usage, energy conservation and animal well-being," the company said in a statement.
Green Century Funds, a mutual-funds company that advocates for environmental policies, submitted a proposal asking Tyson to disclose the risks of using gestation crates in the company's supply system.
Tyson cited its Office of Animal Well-Being and FarmCheck program in its opposition to the proposal.
"We believe the most important aspect of animal health is the care they receive from farmers, and we believe the family farmers who supply us share our commitment to proper animal treatment and desire for continued improvement," the board said in the proxy statement.
Kate Kroll, a shareholder advocate at Green Century, said Tyson will start limiting its potential consumers if the company doesn't address issues like gestation crates. Green Century also filed an opposition statement after the Tyson board of directors opposed their proposal in the company's annual proxy statement.
"The bottom line is Tyson may be at risk of losing its market if it ignores the changed economic landscape," she said. "Consumers have continued to seek companies with more ethical practices."
Price and taste are still the main factor for consumers when making food-purchasing decisions. But the niche market that considers safety, social impact and transparency in a food company is growing, according to a report by Deloitte, a consulting firm with headquarters in New York.
"There's been a growing literature on this in the marketing field," said Rodolfo Nayga, a professor of agricultural economics and agribusiness at the University of Arkansas. "Transparency and social responsibility, which would include philanthropic, legal, economic and ethical responsibility, could indeed significantly influence how consumers perceive food companies and consequently consumer purchase behavior."
About half the consumers surveyed by Deloitte said values including social responsibility, health, safety and social impact are playing an increasingly significant role in the food they buy.
"This means that each and every consumer targeted by food manufacturers has changed in a fundamental and impactful way," according to the report.
Other shareholder proposals include a request to reduce risk of water contamination, to create an independent board chairman, to file a report on worker conditions and to release a report on company lobbying activities.
Tyson has reported water usage as part of its sustainability report since 2005, and the company will take part in the Carbon Disclosure Project Water Questionnaire in 2016, an industry survey. Tyson has also participated in the Business Benchmark on Farm Animal Welfare, which provides an annual review of how leading food companies are managing and reporting their farm-animal-welfare policies and practices over the past four years.
None of the proposals is likely to pass. The Tyson family, which is represented on the board of directors by Chairman John Tyson and his aunt Barbara Tyson, controls about 70 percent of voting shares.
Most Tyson shareholders have Class A stock, which means they have one vote per share. Class B stock gives the holder 10 votes per share but pays a lower dividend.
Most Class B stock -- 99.8 percent -- is owned by the Tyson Limited Partnership.
In the early 1990s, the Tyson family pooled Class B stock into the Tyson Limited Partnership, which has an automatic majority when voting on shareholder proposals, the approval of board members and the re-approval of senior executive officers' compensation plans.
There is also a proposal for Tyson to negotiate with Class B shareholders to break down the two-tiered system, which the board also recommends shareholders vote against.
"As a direct result of the dual-class structure, the Tyson family has a special interest in the success of the company and provides stability in the face of short-term market pressures and outside influences," Tyson's annual proxy report says.
SundayMonday Business on 02/01/2016