Lots of pork!

A quick skim of Smithfield Foods’ (SFD) recent proxy shows that the pork isn’t limited to the company’s factory farms. Chairman and CEO Joseph Luter, for example, walked away with a bonus that was more than 10 times his annual salary of $850K last year, or $9.8 million. The fiscal 2005 bonus was 50% higher than he received in fiscal 2004 and more than 10 times what he received in fiscal 2003.

Indeed, 3 of the 5 top execs saw their bonuses increase 10-fold between 2003 and 2005. Granted, the stock did well during that period, up over 40%, compared with the 17% increase in the S&P Midcap 400. But it didn’t exactly increase 10-fold.

What’s also interesting is that in the proxy, the compensation committee notes that Luter’s 2005 bonus was equal to 92% of his total cash compensation — the maximum allowed under the company’s plan. But the size of his total cash compensation is almost entirely dependent on the bonus, which makes it a sort of chicken and egg situation.

Finally, the long list of disclosures under “other transactions” which most companies describe as “related party transactions” includes millions of dollars in dealings — $22 million here, $11 million there — between the company and various members of the Murphy clan, one of whose members, Wendell Murphy, sits on Smithfield’s board.