Activist investor Daniel Loeb's hedge fund Third Point announced its intention Friday to replace Campbell Soup's entire board, the start of what is likely to be intense proxy battle between Loeb and the iconic soup company.
Such a campaign would shine an unprecedented spotlight on the three descendants of Campbell's founder who sit on the board. Two of them, Bennett Dorrance and Mary Alice Dorrance Malone, together hold a 33 percent stake in Campbell. The fiercely private siblings, whose father served as Campbell chairman, have resisted past pressure to sell the company.
"We can only conclude that the board remains beholden to the sentimental agenda of its vocal and empowered minority — the two longstanding family representatives to the Board who have stubbornly opposed options to create maximum value for all shareholders for decades," Loeb wrote in his letter.
The third family member on the board is the siblings' nephew Archie Van Bueren, who is a trustee in the Campbell Voting Trust, through which other descendants together hold a combined 7.9 percent stake.
Campbell requires two-thirds shareholder vote approval for a deal, giving current family board members significant voting power. Further, it is rare for an activist to successfully ouster an entire board.
Shares of Campbell were down slightly in early trading Friday. The stock has fallen nearly 17 percent this year.
The executives Loeb is nominating include: Larry Karlson, former chairman and chief executive of Berwind Financial; Sarah Hofstetter, chairwoman of 360i; Bozoma Saint John, chief marketing officer of Endeavor Co.; Kurt Schmidt, former director and chief executive of Blue Buffalo; Raymond Silcock, chief financial officer of International Nutrition & Wellness Holdings; David Silverman, chief executive of CrossLead; Michael Silverstein, an executive at Carlyle Group; William Toler, former CEO of Hostess Brands; and Franci Blassberg, a lawyer at Debevoise & Plimpton.
Loeb is also nominating Third Point executives Munib Islam and Matthew Cohen.
George Strawbridge, a descendant of the Campbell Soup founder, has also been nominated. Strawbridge earlier this year disclosed his 2.8 percent stake in the company and announced he is teaming up with Loeb in his battle.
Strawbridge served on the Campbell board from 1988 to 2009. A businessman in his own right with ventures that include a stake in the National Hockey League's Buffalo Sabres, Strawbridge was active and quizzical while on the board, according to a person who sat in on the meetings.
Campbell announced last week it is selling its international and fresh food businesses, unwinding efforts by former CEO Denise Morrison to branch into healthier and more fresh foods to double down on the product lines it knows well. The announcement came after a three-month critical review, propelled by disappointing earnings and the surprise departure of Campbell's CEO.
Its executives acknowledged a number of missteps the company has made. It chased too many initiatives at once and had scant reason to get into fresh food, where it had little experience and no reputation. It also more than tripled Campbell's debt load through its $6.1 billion acquisition of pretzel maker Snyder's-Lance, looking for growth to counter slowing soup sales.
Last week's announcement, though, was underwhelming to Third Point.
"Interim CEO Keith McLoughlin [last week] detailed the board's years of failings with an extensive catalogue of the strategic and financial blunders that brought the business to the brink," wrote Loeb.
"Absent from his commentary, however, was any accountability for the damage. No changes to the company's board or senior leadership were announced, making his contrite tone ring hollow."
Campbell on Friday confirmed receipt of Loeb's nominees, which it said it will review. It underlined that, consistent with its message last week, the board "remains open and committed to evaluating all strategic options."