Activist investor Starboard Value LP said March 14 that three of its director nominees will buy a total of $25 million worth of Newell Brands Inc. stock if Starboard successfully replaces Newell's board as part of a proxy fight it has waged against the consumer and commercial products company.
The purchasing parties are former Jarden Corp. executives Ian Ashken, Martin Franklin and James Lillie, who were nominated by the activist investor Feb. 12. The three joined Starboard's campaign to replace the board and current Newell CEO Michael Polk after becoming concerned about how Jarden was integrated with Newell, according to a report by The Wall Street Journal on Feb. 8.
The three Starboard nominees have also committed to not sell any of their purchased shares during the entire period they serve as company directors unless the share price exceeds Newell's share price on April 15, 2016 — the closing date of Newell's acquisition of Jarden.
As of March 5, Starboard had nominated 12 directors for election to Newell's board.
The proxy fight heated up again on March 14 when the current Newell independent directors sent a letter to shareholders, defending their plans and accusing Franklin, the co-founder of Jarden, and the others of "poor governance" and "turmoil."
The directors said in the letter that Franklin, who was also a Newell board member and unsuccessfully made a bid to become chairman of Newell, made a decision to leave the board with Ashken and another board director, Domenico Sole, in January after the board rejected his bid to become chairman. They said Franklin subsequently secured activist support on the day their resignations were made public.
Newell directors charged that Franklin has offered "no substantive plan for the company."
"Their rumored approach would copy the model used on the legacy Jarden business, which relied upon an acquisition led strategy during an entirely different retail, interest rate and acquisition value environment," the Newell directors said of Starboard's strategy.
They also dismissed Starboard's plan to replace Polk with Lillie as Newell's CEO, arguing that he has "never run a business as large or complex as Newell Brands, has never integrated a portfolio of this size and has never led a cost transformation as significant as the one currently underway."
They added that the current board is "committed to executing our transformation plan to improve operational performance and enhance value for all shareholders."
Finally, the independent directors recommended that shareholders discard Starboard's blue proxy cards or voting forms, which the activist investor will send to them soon. In addition, the board will give the shareholders the company's own white proxy card and more details about the accelerated transformation plan.
