Gobble, gobble…

December 28, 2006

images-11.jpegIt’s always amazing when you look at the proxy for a fairly large publicly traded company, and the related party transactions stretch on for several pages. But that’s exactly the case at Pilgrim’s Pride (PPC) which filed this proxy yesterday. Maybe it has something to do with the meat processing industry, since Tyson Food (TSN), a competitor which filed its proxy earlier in the week, also has a fairly extensive list of related transactions.

Among the more interesting disclosures in Pilgrim’s filing were the long list of interlocking business relationships between Chairman Lonnie "Bo" Pilgrim, who also happens to chair the compensation committee, and various other companies that he owns or controls. For example, there’s the $790K that Bo’s Pilgrim Poultry G.P received from the company for "chickens produced" and another $62.5K a month to rent egg production facilities. There’s also the nearly $400K the company spent to lease a plane from Bo and the $130K that Bo received in "other compensation" for his personal use of the plane. (One interesting side note here: Bo’s plane usage went up sharply last year, but the amount of money spent on providing him with a car declined). And there’s a bunch of family members that either have high-paying jobs, including three of Bo’s grown children, or other business relationships with the company.

To be fair, the $790K that Bo received for the chickens is down dramatically from the $54 million he received for similar services in 2005. But the bottom line is that companies whose market cap is in the billions shouldn’t be run like a family’s personal piggy-bank.

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