After an activist investor group said last month that it was fielding its own slate of candidates for three seats on SpartanNash's board of directors, the Grand Rapids, Mich.-based retailer and distributor is urging shareholders to stay the course with the company's board selections and strategic plans.
In a letter to shareholders on April 18, SpartanNash said its "financial results make it clear that the company’s transformation is well underway and that its strategy is working." An overview of that transformation can be found on the newly launched, board-challenge-rebutting website SpartanNashTransformation.com.
SpartanNash CEO Tony Sarsam, who took the reins at the company September 2020, has overseen a C-suite overhaul in the past 18 months, including the appointments of new finance, supply-chain, strategy, communications, customer engagement and marketing chiefs.
At the board level, SpartanNash embarked on a board "refreshment process" last summer with the help of an executive search firm. That process resulted in SpartanNash appointing three new board members—Julien Mininberg, Jaymin Patel and Pamela Puryear—in February and stating that three current board members would not stand for reelection at the company's upcoming shareholder meeting, now set for June 9. The board refreshment, SpartanNash said, was undertaken "to ensure the board continues to have the right combination of skills, experience and diversity to oversee value creation for shareholders."
But minority investors Macellum Advisors and Ancora Holdings Group voiced frustration in March with, among other things, the company's real-estate management, and announced they were seeking to replace current SpartanNash board chair Douglas Hacker as well as directors Margaret Shan Atkins and William Voss with their own nominees—two Walmart veterans, John Fleming and Michael Lewis; and the founder and CEO of Macellum Capital Management, Jonathan Duskin. "Our analysis suggests there is still substantial interest from outside parties willing to pay a meaningful premium for the whole company, its real estate or its assets," the investors said at the time.
SpartanNash, in its new letter to shareholders, said its director nominees "are superior to Macellum and Ancora’s candidates and are best suited to advance the company’s transformation."
"Collectively, SpartanNash’s directors possess extensive public company board leadership and operating experience, as well as financial and industry expertise spanning food distribution, retail and consumer goods," the company stated. In addition, SpartanNash wrote, current directors lend "skills across strategy, business and culture transformation, supply chain and technology, and other areas that are directly relevant to SpartanNash’s business and reflective of shareholder input." Macellum and Ancora's nominees, if elected, "would reduce the board’s diversity with directors who are not additive," the company concluded.
"Over the past two years, the company has generated increased revenue and adjusted EBITDA, effectively allocated capital to the business and to shareholders, and significantly de-levered its balance sheet," SpartanNash stated. In February, the company reported that it tallied better-than-expected retail sales at the end of fiscal 2021, with retail comps up 7.3% in the fourth fiscal quarter, helping to pare down SpartanNash's full-year comparable-sales decline to 0.5%.
Macellum and Ancora's moves, SpartanNash claimed, represent an attempt "to apply the same cookie-cutter approach at SpartanNash that [the group] has attempted to use at multiple apparel, discount and department store retailers, demonstrating, at best, a lack of understanding of the company’s vastly different business model as a distribution and food retail company and, at worst, a blatant disregard of how SpartanNash’s business operates."
SpartanNash shareholders of record at the close of business on April 11 will be eligible to vote at the company's June 9 meeting.