In a letter to the board of Whole Foods Market Inc. (WFM), mutual-fund manager Neuberger Berman, which owns a 2.7% stake in the organic grocery chain, urged the company to consider a sale. The letter comes just weeks after Jana Partners LLC disclosed a nearly 9% stake in the company and called for a similar review. Sources say Neuberger and Jana are not working together to put pressure on Whole Foods, although their interests align. A company spokeswoman said, "We remain committed to continuing to take actions to drive shareholder value and position Whole Foods Market for the future." In a recent interview, Neuberger portfolio managers Charles Kantor and Marc Regenbaum acknowledged that Whole Foods' has a valuable brand and a dominant prepared-foods business that set it apart from competitors, but they indicated that it has fallen behind rivals in adopting new retail technology that could help it boost sales and profit margins. The letter from Neuberger raised concerns about CEO John Mackey remaining the company's sole CEO but did not provide any details. Whole Foods already has adopted some of Neuberger's suggestions, including eliminating its dual CEO structure, searching for a new finance chief, naming a new director, and hiring retail experts.
A shareholder rebellion materialized at the annual meeting for Swiss fund house GAM on Thursday. Although investors successfully voted down executive pay and bonuses, a bid to shake up the board failed. RBR Capital, which owns an estimated 4.4% stake in the company, had proposed three new directors. Its choice for the chairmanship, Kasia Robinski, received only 43% of votes, with the majority preferring GAM's proposal to appoint longtime board member Hugh Scott Barrett to the position. However, voters overwhelmingly rejected GAM's non-binding report on pay as well as plans for management bonuses in 2017. The shareholder discontent came after CEO compensation at GAM increased by more than 20% last year, despite flagging profits. Shareholders additionally voted against the reappointment of a member to the compensation committee, after several top advisers to shareholders—including Institutional Shareholder Services—emphasized a lack of transparency in the company's executive pay practices. Barrett on Thursday pledged an investigation into pay arrangements, saying, "The message is clear—that we need to ensure a much better alignment of remuneration with long term success of this business." Thursday's results mean all bonuses paid to management will have to be approved by a future shareholders meeting.
Discount retailer Fred's Pharmacy (FRED) has reached a deal with Alden Global Capital to add two directors—Steven Rossi, CEO of Digital First Media, and Timothy Barton, former CEO of Freightquote.com—to Fred's board. Alden President Heath Freeman applauded the appointments and expressed "great confidence in the future of the business" given Fred's turnaround strategy focused on healthcare. Freeman's sentiments about the company are considerably more upbeat than they were last month, when he said, "Fred's business has persistently underperformed as evidenced by poor comparable store traffic, declining comparable store sales, suboptimal gross margins, and bloated SG&A. Given the company's lackluster operating performance, it is not surprising that Fred's total shareholder return significantly lags behind its dollar store and pharmacy peers." In addition to the appointment of the two new directors, Fred's and Alden have agreed not to disparage or sue one another, subject to certain exceptions. Furthermore, one of Alden's selections will resign from the board if Alden's ownership of Fred's shares—currently a t25%—declines below 10%; the other director will step down if Alden's interest dips below 5%.
An investor group delivered a letter to fellow Praemium shareholders on Tuesday declaring they have "lost confidence" in the company's directors and will proceed with plans to shake up the board. In their letter, Paradice Investment Management, Australian Ethical Investment, and the Abercrombie Group reiterated their intention to oust all incumbent directors—including Chairman Greg Camm—and install three new board members. The shareholder bloc, which owns a roughly 14% stake in Praemium, is also seeking to reinstate the fired former CEO of Praemium, Michael Ohanessian. The group urged fellow shareholders to vote for its resolutions at the extraordinary meeting in May, noting they are concerned about the circumstances surrounding Ohanessian's departure and the board's judgment and ability to direct Praemium. The board cited a number of personal and professional performance issues in its decision to axe Ohanessian. However, the concerned shareholder group believes his employment was "terminated without reasonable justification" and without sufficient explanation from the board. The group argued Ohanessian has strong support from staff, customers, and shareholders. Meanwhile, Australian Ethical and Paradice IM have claimed that "Ohanessian's skillset and knowledge of the company remains vital to Praemium's ongoing success."
On April 25, Akzo Nobel NV rejected a request by Elliott Management Corp. and other investors to hold an extraordinary meeting of shareholders to oust the Dutch paints and chemicals maker's supervisory board chairman, Antony Burgmans. The company, which reiterated its full backing of Burgmans, said Elliott's call for an extraordinary general meeting (EGM) "does not meet the required standards under Dutch law. The request is irresponsible, disproportionate, damaging, and not in the best interests of the company." The dismissal comes a day after PPG Industries Inc. (PPG) submitted its third bid to take over Akzo, increasing its offer from 88.72 euros a share last month to 96.75 euros a share. Elliott called for the EGM two weeks ago, as it pressured Akzo to engage in sale talks with PPG. Burgmans is seen as an obstacle to the takeover. On April 24, Elliott warned that this could be the company's last chance to engage in "friendly discussions" with PPG. "There can be no assurance that a hostile bid—if one were to materialize—would include the same or improved protections and undertakings for Akzo Nobel stakeholders," Elliott said.
Engaged Capital LLC on April 25 called on the board of Rent-A-Center Inc. (RCII) to reverse its latest attempt to manipulate the company's corporate machinery to further entrench the board and disenfranchise stockholders and restore the previously disclosed record date of April 10, 2017. On April 24, RCII revealed in a filing with the Securities and Exchange Commission that it changed the previously established record date for stockholders entitled to vote in connection with the 2017 annual meeting of stockholders originally set as April 10, 2017, to a new record date of April 24, 2017. The board made this change without providing any notice to stockholders until after the market closed on April 24. RCII's lack of proper notice to stockholders (particularly institutional stockholders who participate in stock lending programs) regarding the change in record date will result in many stockholders losing the right to vote in connection with the annual meeting because it will be impossible for them to recall their shares and have them in good voting order as of the new record date. Engaged Capital is concerned that the board may have intentionally attempted to disenfranchise stockholders who may have sold or loaned stock since April 10, 2017, and to include the votes of stockholders friendly to management who acquired shares after that date, but prior to the new record date of April 24, 2017, to further manipulate the stockholder vote. Meanwhile, RCII has yet to respond to Engaged Capital's request for a waiver to RCII's poison pill threshold. Engaged Capital owned approximately 16.9% of RCII's outstanding stock when it made the request, and in the request made clear that it had no intention of mounting a takeover bid, and thus should not be prevented from acquiring up to 19.9% of RCII's outstanding stock.
Marcato Capital Management released a statement Monday claiming that Buffalo Wild Wings (BWLD) made an "astronomical error" in definitive proxy materials it filed with the U.S. Securities and Exchange Commission last week. The investor said the restaurant chain falsely stated that its shares outperformed the S&P 600 Restaurant Index over a five-year period ended Dec. 25, 2016; however, the stock had actually underperformed the index by more than 60% during the period. "This kind of sloppy, self-serving 'analysis,' which has gone uncorrected for three full days, including a trading day, is emblematic of what we believe is management's careless approach to assessment of shareholder value," said Marcato managing partner Mick McGuire. "In our view, shareholders deserve board oversight and accountability, which they will get if they elect Marcato's nominees to the Board on June 2, 2017," he added. Marcato—which owns a 6.1% stake in the company—wants Buffalo Wild Wings to franchise more of its restaurants, CEO Sally Smith to resign, and more representation on the board.
In an April 24 proxy filing and letter to shareholders, Buffalo Wild Wings Inc. (BWLD) took aim at Mick McGuire of Marcato Capital Management, insisting that he has "no credible plan" to take over and run the company. Buffalo Wild Wings set a June 2 date for its annual shareholders meeting and urged shareholders to stay with the company's current leaders. Furthermore, the company refuted criticisms by McGuire, citing several key financial measures—shareholder returns, earnings per share growth, returns on capital, same-store sales, and restaurant margins—that outperformed its casual dining rivals. "And we are not sitting still," the company said. Marcato, which took a 6% stake in Buffalo Wild Wings last year, is the company's largest shareholder. McGuire has urged the company to sell a large number of its company-owned restaurants, proposed his own slate of board nominees—including himself—and recently called for CEO Sally Smith's resignation. Although McGuire has said the company refused to engage with him, Buffalo Wild Wings indicated in the new documents that its executives and directors "have invested significant effort in engaging with Marcato." The company wrote to shareholders, "Given our focus on extending our successful long-term track record, we will not support risky financial engineering strategies that provide an unlikely and modest short-term benefit but create substantial long-term risk. We do not believe that is what you want us to do, nor would you be well-served by it."
Marcato Capital Management LP penned a letter Thursday to shareholders of Buffalo Wild Wings Inc. (BWLD) calling for the resignation of CEO Sally Smith, in addition to the four board seats it was already seeking. The move steps up Marcato's campaign at the restaurant chain, which it is urging to franchise more stores, improve profit margins, and boost sales. The hedge fund, which owns a 6.1% stake, has not proposed its CEO pick. Marcato said it believes that Smith is too optimistic about the company's outlook and has not outlined a plan to improve stunted growth. Although Buffalo Wild Wings shares have skyrocketed since the initial public offering (IPO) in 2003, the stock began to stall in 2015. It has risen about 4.8% over the past year, compared to the S&P 500's 12% gain. Marcato also has publicly complained about Smith's personal stock sales. Buffalo Wild Wings defended Smith in a statement Thursday, saying the company has generated total returns for shareholders of 1,697% since its IPO. Marcato nominated four directors to the company's board in February, but a shareholder meeting has not been scheduled yet.