Photography by Vito Palmisano
As chief executive officer of Tyson Foods, Donnie Smith is out to do the right thing for consumers, employees, the environment and the animals at the company's core.
His goal is to deliver more than they expect and to do it responsibly.
Faced with higher input costs, Smith has been driving out inefficiencies while bolstering product quality, food safety and innovation. "In this environment, your customer simply cannot afford to pay for your inefficiencies, so we have to drive those inefficiencies completely out of our business," he says.
At the same time, Smith is committed to making Tyson's products better than ever. The company's FarmCheck program, launched in October, involves in-person audits at the farms supplying Tyson and is indicative of Smith's genuine concern for the way animals are treated as well as his commitment to transparency. "Number one is we care enough to check," Smith says. Through an advisory committee of experts, Tyson also aims to learn about better ways of raising animals.
The FarmCheck program is just one of a string of improvements and innovations at Tyson since Smith took the helm in November 2009, becoming the company's fourth nonfamilial CEO. The Springdale, Ark.-based company was founded in 1935 by chicken farmer John Tyson, and the founder's grandson of the same name is currently chairman of the board. Tyson Limited Partnership controls about 72 percent of the total voting power of Tyson's stock, which trades on the New York Stock Exchange under the symbol TSN and is a member of the S&P 500.
Perhaps still best known as a center-of-the-plate protein processor, Tyson Foods has branched out far beyond chicken, pork and beef to market a variety of products to retailers and food service providers. Ethnic foods are becoming a specialty, and the company now produces 15 million to 20 million corn and flour tortillas per day.
The 53-year-old Smith, who started at Tyson more than 32 years ago after graduating in December 1980 with a degree in animal science from the University of Tennessee, says he once wanted to be a veterinarian but didn't have the grades. "There is nothing special about Donnie Smith," he says candidly, and he recounts that as a boy, he was "the skinny little kid who lived in the little bitty house" in Arrington, Tenn. Yet he recalls that his father inspired his work ethic by telling him if he worked harder than everyone else, eventually he would be everybody else's boss.
Smith's servant leadership style has helped to motivate workers, spur innovation and improve the company's financials. Tyson reported revenue of $33.28 billion in fiscal 2012, up from $32.27 billion the prior year and from $26.70 billion in fiscal 2009, ended Oct. 3, 2009. Net income attributable to Tyson was $583 million in fiscal 2012, down from $750 million in fiscal 2011, but considerably rosier than the $537 million loss the company reported in fiscal 2009, just before Smith was named CEO.
In the first half of 2013, ended March 30, the company reported net income attributable to Tyson of $268 million, down from $322 million a year ago, while sales rose 1.3 percent to $16.82 billion. While the company's second-quarter results fell short of expectations, analysts at Little Rock, Ark.-based Stephens Inc. are maintaining their $26 stock price and $2 earnings-per-share targets for fiscal 2013, while boosting the earnings forecast for fiscal 2014 due to strong fundamentals in the chicken industry. Continued demand for chicken, coupled with limited supplies and declining grain costs, are expected to bolster results in 2014, while Tyson's prepared foods profits also are expected to improve as the company finishes renovating a lunchmeat plant in Houston and costs moderate, Stephens analyst Farha Aslam said in a May 7 research bulletin. Smith says he is confident the company's full-year fiscal 2013 results will increase from 2012.