Blog: Andy CoyneThe need to win hearts and minds as well as votes

Andy Coyne | 16 November 2018

Campbell set for crunch AGM on 29 November

Campbell set for crunch AGM on 29 November

The only word I have written more than Brexit over the last few weeks is Campbell.

Barely a day goes by without another statement from the US canned soup giant or the activist investor trying to instigate radical change at the company.

It's all building up to Campbell Soup Co.'s annual meeting on 29 November when the company's board stands for re-election. That aforementioned investor, Third Point, unhappy at the way the company has been run in recent times, is aiming to replace at least some of the board with its own picks.

And it would be fair to say it has all got a bit messy with the to and fro between company and investor at times becoming a bit 'he said this, she said that'. The on-going debate is generating a lot of heat but not always much light.

To quickly recap what it's all about and why some people are getting so aeriated.

Back in May, Campbell CEO Denise Morrison left the company suddenly after the company announced a huge third-quarter loss of US$475m - compared to a $298m profit for the equivalent period last year.

The company, which has been without a permanent CEO since then, instigated a major review of its business but, within a couple of months of Morrison's departure, activist investor Daniel Loeb, who runs Third Point, which has a (relatively) small stake in the company, was calling for drastic action, up to and including a sale of the business.

When the results of Campbell's review came back at the end of August they revealed a plan to concentrate on its core US business and a desire to move away from international markets and fresh foods. It is probably accurate to say that this went down like a lead balloon with its critics at Third Point.

From the summer until the present day Third Point and its supporters have continued to call for change at Campbell and that is now focused on the make-up of the company's board, which leads us to that annual meeting at the end of this month.

First, Third Point wanted to replace the entire 12-person board and then whittled that down to five nominees. Campbell said it would accept two of the investor's nominations and revealed - much to Third Point's disgust - that the two parties had been talking.

We appear to be at stalemate.

But entering the fray at a late stage like the Prussians at Waterloo are advisory groups ISS and Glass, Lewis & Co.

They have backed Third Point's director nominee choices, a point trumpeted by the investor and dismissed by Campbell.

There are sure to be plenty more twists and turns before 29 November.

But what is also certain is that date won't signal the end of the issue. The descendants of John T. Dorrance, a chemist who invented condensed soup, own more than 40% of the company's shares and support the current board so it would be a major surprise if Third Point carried the day.

But a battle is not a war and Campbell will know that post-29 November it has plenty of work to do to turn around market sentiment. The speedy appointment of a well-respected name as its new CEO would certainly help to placate those people who are looking for decisive leadership in a difficult time and not seeing it at present.

Campbell might also want to look at the example of Premier Foods in the UK. It fought a difficult battle with an activist investor this summer that criticised the way the company was run.

It wanted to replace CEO Gavin Darby and pushed for the company to sell off assets.

Darby won the day at the company's annual meeting in July but this week, just a few months on, it was announced that Darby is stepping down and that the company plans to sell one of its leading brands (Ambrosia).

The lesson here is clear: it is important to win what is in effect a vote of no confidence but it is just as important to listen to criticism and to instigate a gameplan that all shareholders can get behind.

29 November may be a key date in the calendar but it would be unwise to see it as a decisive one.


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