WASHINGTON, April 25, 2013 – Splitting Smithfield Foods into
three independent companies by “divesting underperforming and highly volatile hog
production and select European assets” and taking other steps would boost its
share price to $40 within three years, Continental Grain said in a detailed
filed today with the Securities and Exchange Commission.
The filing by Continental Grain, one of the largest
shareholders of Smithfield Foods with 6 percent of its stock, elaborates on its
proposal to the pork producer-processor.
In addition to breaking up the company and using the proceeds to buy back shares, Continental recommends that Smithfield restructure its packaged meats business “to achieve profitability levels in line with peers,” add three new directors with background and experience that “reflect the current business” and align management compensation to shareholder returns.
Management salaries now are “out of line with performance
and peers,” Continental alleged. “Since Larry Pope took over as CEO in
September 2006, he has been paid a total of $58.7 million and senior management
has been compensated a total of $172 million,” it said, an amount 37 percent
higher than the CEOs of its main competitors – Hormel Foods, Tyson Foods and Hillshire
Brands. CEOs of all three competitors “created significant shareholder value
since they became CEOs” whereas
Continental also questioned the independence or
qualifications of many
“We recognize that the international business has been
profitable as of late,” Continental asked, but questioned whether it was
positioned to create shareholder value. It had a “disparate assortment of
assets concentrated in
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