Pilgrim's Chicken Fat

Pure economics may be the proximate reason for Pilgrim's Pride's bankruptcy, announced Monday. Costs are way up; retail prices are way down. But Footnoted.org's Michelle Leder, who spends her days digging through financial filings, says that the company's eyebrow-raising, self-dealing transactions over the years also deserve scrutiny.

"The bottom line," Leder writes, "is that while rising feed costs and weak prices for chicken may have forced the company's hand yesterday, all of those related party transactions certainly didn't help."

Among the "crazy number" of such transactions: A company run by Pilgrim's Pride Chairman Lonnie "Bo" Pilgrim got $54 million in 2005 for chickens. The next year, that company, Bo's Pilgrim Poultry, got just $790,000. The difference, according to Leder, was "as sure of a sign as any that something just wasn't quite right about those numbers."

Also, the company leased an airplane owned by Bo Pilgrim, paying $400,000 for it in 2006. And Vice Chairman Clifford Butler last year got $55,000 a month in consulting fees in exchange for his 20 hours of work.

There are several more such tidbits, spread across several posts at Footnoted over the past few years.

"Granted," Leder writes, "some of this seems to be par for the course in this particular industry, where lucrative side deals for executives and directors are almost as common (and about as fattening) as chicken wings. But even given that, all of this self-dealing certainly raised questions."