Despite its initial public offering in January, Smithfield Foods remains largely under the control of its Hong Kong-based parent company, WH Group.

The 26 million shares of Foods’ common stock that have traded on the Nasdaq Global Select Market in the three months since the Jan. 28 initial public offering collectively account for a roughly 7% stake in the company.

According to an April 18 U.S. Securities Exchange Commission notice announcing the company’s annual shareholders meeting on June 3, nearly 93% of Foods’ more than 393 million total shares remain “beneficially owned” by WH Group, which paid nearly $5 billion to acquire the world’s largest pork producer in 2013.

“Although Smithfield Foods is still almost entirely controlled by WH Group, having a U.S. stock listing brings some clear perks,” Thomas Schneider, a finance professor formerly of Old Dominion University now with the University of Oklahoma, told the Times. “They raised a healthy chunk of cash – over $500 million.”

According to the company’s Jan. 28 news release announcing the IPO, the 26 million shares were valued collectively at just over $520 million. Trading opened at a price of $20 per share under the ticker symbol SFD. 

An SEC filing dated the day before Foods’ stock debut states Wan Long, the chairman of Foods’ Board of Directors and of WH Group, had as of that date “agreed to purchase” 3.2 million shares, or 12%, of the 26 million “at the initial public offering price.”

Over the past three months, the stock has fluctuated from a high of $21.85 per share on Feb. 3 to a low of $18.61 on March 10 and was selling at $19.88 per share as of the morning of April 23, according to the Wall Street Journal.

“Trading on Nasdaq pins a market value on the U.S. business, letting investors tell us what it’s really worth,” Schneider said. “The listing also makes it easier for WH Group to unload more stock anytime they like. If they keep selling in stages, they could eventually exit completely and leave Smithfield as a true standalone company.”

Vice President of Corporate Affairs Jim Monroe said Foods would not “engage in speculation” regarding this possibility.

The SEC Schedule 14A notice states that Foods remains “a controlled company” as defined under Nasdaq’s corporate governance rules, thus qualifies for exemptions from certain corporate governance requirements of Nasdaq, among them that the public entity’s board consist of a majority of independent directors.

“Because WH Group still holds almost the entire stake in Smithfield Foods, adding layers of independent oversight right now would just create extra bureaucracy,” Schneider said. “Stock exchanges, including Nasdaq, set baseline governance rules for their listed companies to protect the investors who trade on their platforms. Those rules typically require a majority‑independent board and independent compensation, nomination and governance committees. But since Smithfield Foods basically has one big majority investor calling the shots, it can skip these requirements under Nasdaq’s controlled‑company exemption. If WH Group keeps selling down, though, the math changes. Once outside investors own a meaningful slice, Smithfield will have to roll out a more traditional governance structure with independent directors and independent committees to protect other investors’ interests.”

Foods’ notice to shareholders states the company “entered into a shareholders agreement” with WH Group on Jan. 21 that “grants WH Group certain rights with respect to the composition of our Board.”

“For so long as WH Group owns, in the aggregate, a majority of our then outstanding common stock, WH Group will have the right to … control the composition of our Board and the approval of actions requiring shareholder approval through their voting power,” the notice states.

On the agenda for the June 3 shareholders meeting is a vote to name WH Group Vice President Zhou Xiaoming, John Quelch and Foods CEO Shane Smith as “Class I” directors for three-year terms through mid-2028. Foods’ “Class II” directors, who will continue in their terms through mid-2026, include Wan Long, Raymond Starling and Hank Shenghua He, the latter who’s served on Foods’ board since 2016 and is described in the April 18 notice as having “played an important role in the post-acquisition transition” following the 2013 purchase by WH Group.

Foods’ “Class III” directors, who will continue in their terms through mid-2027, are Guo Lijun, an executive director of WH Group since 2013 who’s served on Foods’ board since 2015; Wan Hongwei, son of Wan Long and the deputy chairman of WH Group’s Board of Directors since 2021; and Marie Gallagher, who is chief accounting officer for PepsiCo.

Only Gallagher, Quelch and Starling, who together represent one-third of the nine-member board, qualify as “independent” under the rules of Nasdaq, according to the notice. All three are newcomers to Foods’ board and were appointed in January.

“We have a really strong independent side of our board now,” Smith told the Times in a recent interview.

Starling, a lawyer, has served as general counsel to the North Carolina Chamber Commerce and president of the North Carolina Chamber Legal Institute since 2019, according to the notice, while Quelch is a professor at the Duke University Fuqua School of Business in Durham, North Carolina, and executive vice chancellor of Duke Kunshan University, a joint venture of Duke University and Wuhan University in Suzhou, China.

Wan Hongwei was also first appointed to Foods’ board in January.

 

Countering anti-China narratives

Smith said taking Foods public has also helped counter claims by federal lawmakers who in 2024 alleged “infiltration” of the American pork industry by the Chinese Communist Party, a claim Foods has repeatedly denied since the 2013 purchase by WH Group.

“When we meet with legislators, one of the things we do is talk to them about really who we are. We’re an American company,” Smith said. “We’ve been here for 90 years. All of our raw material is sourced here in the U.S. Ninety-five percent of the products that we make are sold to the U.S. consumer. Once you kind of go through that education of who we are and what we do and how we do it, and then you add this data point on the level of transparency we’re now able to provide being public back on the U.S. markets, I think it only helps that conversation, helps people understand who we are and what we do. Will it take it away? No, it won’t. And I don’t think any of us really expect it to end that conversation. But it is a helpful data point that we can now say every three months you get to see everything we’re doing.”

In 2023, state lawmakers passed legislation barring China and other “foreign adversaries” from owning Virginia farmland. Foods, in a statement that year, said it was unaffected by the new law because “we are not owned or controlled by a foreign government” and because WH Group itself is publicly traded with investors from around the world, including in the U.S.

That same year, Foods disputed a state Department of Agriculture and Consumer Services report that listed one of its then-subsidiaries – Murphy Brown – as accounting for 96% of 13,890 acres of Chinese-owned farmland. Foods said it owned less than 4,000 acres statewide that year, and in 2024 reestablished Murphy Family Ventures as an independent pork producer that took ownership of 150,000 sows formerly owned by Foods.

Smith said Foods has divested 40% of its farmland holdings over the past two years and as of March owned roughly 85,000 acres nationwide, down from a high of 145,000 acres. Smith said the sale of land is part of Foods’ efforts to streamline its operations, and not in response to anti-China sentiment.

“We’re less than one-one-hundredth (of 1%) of foreign-owned farmland in the U.S., and the land we have now is land we need to grow pigs on,” Smith said.