Newell Brands Independent Directors Issue Open Letter to Shareholders
The full text of the letter follows:
Dear Fellow Shareholders:
As you may know,
Among Starboard’s candidates are Mr. Franklin and
Mr. Franklin continues to divide his time among his many personal interests and businesses, including his service on four other boards, two of which have designated him as Chairman. He has now decided he wants to lead
While Starboard and Mr. Franklin have not yet produced plans to create shareholder value, 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. They plan to replace Mr. Polk as CEO with
Mr. Franklin’s Self-Fulfilling Prophecy
Mr. Franklin and Starboard’s criticisms about the Newell Brands Board departures, which they attribute to “governance” concerns, are nearly entirely the direct result of Mr. Franklin’s own actions. Messrs. Franklin and Ashken abruptly left the Board, apparently convincing Mr. De Sole to support their plans to secure activist support when it became clear they would not be able to bring the Board to their point of view. Ms. L’Esperance, a former Jarden Director with longstanding ties to Messrs. Franklin and Ashken, left the Board given the inherently conflicted situation their departure and subsequent hostile actions created for her. In the case of the most recent departure,
Through all of this turmoil, put in motion by Mr. Franklin’s actions, the only poor governance that has taken place relates to the decisions of those Directors who were unsuccessful in making their case to the rest of the Board, abruptly resigned their duties, and somehow secured activist support on the very day their resignations were made public.
It is worth noting here that, during Mr. Franklin‘s time leading
At the time of the company’s acquisition of Jarden, twice as many of Jarden's shareholders voted against Mr. Franklin’s change of control bonuses (a “golden parachute”) as voted to support them. He was ultimately paid almost
In 2016, advisory firm Institutional Shareholder Services stated, “[T]he sheer magnitude of [Jarden Named Executive Officer] golden parachute payments, at nearly
As part of the transaction Mr. Franklin also insisted upon additional compensation in the form of
Since the close of the deal, Mr. Franklin has liquidated approximately 70% of the
Mr. Franklin and Starboard: Where is Your Plan for Value?
Mr. Franklin and Starboard are requesting that shareholders trust them to develop a better plan to create value than your current Board and management team. Yet neither Mr. Franklin nor Starboard has produced even an outline of a plan to deliver any sustainable value creation.
Indeed, prior to giving notice of the attempt to take over the company through its board nominations, Starboard did not once approach management or the Board to seek engagement or better understand our performance or the environment in which we are operating. Instead, Starboard apparently adopted Mr. Franklin’s description of recent events and the company’s performance without question.
Why should Newell Brands’ shareholders be burdened
with the significant risk of Starboard’s missing plan?
The Board and management team recognize that Newell Brands’ recent performance has fallen short of expectations. This team understands that the company must do more to perform and match the speed of change in the retail market. The retail industry is facing sector-wide challenges, and the entire
The Board believes this expert management team, which comprises some of the most talented, hardworking leaders in the consumer products industry, is far better equipped to adapt to the rapidly evolving retail environment than any alternative Mr. Franklin could suggest.
Absent any strategy whatsoever, we must only presume that Mr. Franklin and Starboard’s intent is to undo years of proven organizational progress and unravel an integration plan that we, including all of your former Board members, Mr. Franklin, Mr. Ashken, Mr. De Sole, Ms. L’Esperance, and Mr. Conroy, unconditionally supported at the time of the Jarden acquisition and consistently supported thereafter until late 2017.
We have a clear plan in place to position
- We are simplifying our company, de-levering our balance sheet and accelerating returns to shareholders.
- Our accelerated transformation plan will enable us to focus on the portions of our portfolio best positioned to leverage our competitively advantaged product design and eCommerce capabilities and build our brands in a way that our competitors simply cannot.
- This simplification is also intended to make us more efficient and generate savings. These expected savings will fund growth and also strengthen margins, accruing to shareholders in competitive levels of earnings and cash flow growth.
- Our divestiture plan is expected to generate approximately
$6 billion in net proceeds after taxes, following the successful execution in 2017 of eight divestitures at 12x EBITDA in aggregate; these proceeds will be used to deleverage the balance sheet to our targeted range while simultaneously returning value to shareholders in the form of dividends and share repurchases. - We are expanding our eCommerce capabilities to take advantage of changing consumer habits.
- We are deploying our exceptional design, innovation, insights and marketing firepower across our entire portfolio to expand our market share, grow our categories and extend our relative advantage.
- We are leveraging the environmental, social and governance leadership
Newell Rubbermaid had established not just to attract important customer groups but to protect our reputation and extend our commitment to sustainability.
We believe this plan positions
We Are Acting with Confidence, Experience and Urgency
There is much work to be done at
Ask yourself – do you truly believe Mr. Franklin and his affiliates will deliver the most value for all
Or do you believe in a Board and management team that has delivered for you in the past and remains well positioned to do so again?
We are very optimistic about our future. We believe that no one who has analyzed our business can deny we have succeeded in building an incredible value opportunity. Looking forward, the Board and management team are committed to executing our transformation plan to improve operational performance and enhance value for all shareholders.
Newell Brands Shareholders: No Action is Required at this Time
In the meantime, if you would like additional information or have questions on how to vote Newell Brands’ WHITE proxy, feel free to reach out to our proxy solicitor, Morrow Sodali, toll-free at (800) 662−5200 or by e-mail at NWLinfo@morrowsodali.com
As a
Sincerely,
The Independent Directors of
/s/
About
This press release and additional information about
Additional Information
In connection with Newell Brands’ 2018 Annual Meeting of Shareholders,
Participants in Solicitation
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the 2018 Annual Meeting. The participants in the solicitation of proxies in connection with the 2018 Annual Meeting are currently anticipated to be the Company,
As of the date hereof, Dr. Clarke beneficially owns 64,358 shares of common stock of the Company, par value
Certain information concerning these participants is also set forth in the Company’s definitive proxy statement, dated
Caution Concerning Forward-Looking Statements
Statements in this press release other than those of historical fact, particularly those anticipating future financial performance, business prospects, growth, operating strategies and similar matters, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other federal securities laws. These statements generally can be identified by the use of words such as “intend,” “anticipate,” “believe,” “estimate,” “project,” “target,” “plan,” “expect,” “will,” “should,” “would” or similar statements. The Company cautions that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. In addition, there are no assurances that the Company will complete any or all of the potential transactions, and other initiatives referenced in this release. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to:
- uncertainties regarding future actions that may be taken by Starboard in furtherance of its stated intention to nominate director candidates for election at Newell Brands’ 2018 Annual Meeting;
- potential operational disruption caused by Starboard’s actions that may make it more difficult to maintain relationships with customers, employees or suppliers;
- the Company’s dependence on the strength of retail, commercial and industrial sectors of the economy in various parts of the world;
- competition with other manufacturers and distributors of consumer products;
- major retailers’ strong bargaining power and consolidation of the Company’s customers;
- the Company’s ability to improve productivity, reduce complexity and streamline operations;
- the Company’s ability to develop innovative new products, to develop, maintain and strengthen end-user brands and to realize the benefits of increased advertising and promotion spend;
- risks related to the Company’s substantial indebtedness, potential increases in interest rates or changes in the Company’s credit ratings;
- the Company’s ability to effectively accelerate its transformation plan and explore and execute its strategic options;
- the Company’s ability to complete planned acquisitions and divestitures, to integrate Jarden and other acquisitions and unexpected costs or expenses associated with acquisitions or dispositions;
- changes in the prices of raw materials and sourced products and the Company’s ability to obtain raw materials and sourced products in a timely manner;
- the risks inherent to the Company’s foreign operations, including currency fluctuations, exchange controls and pricing restrictions;
- a failure of one of the Company’s key information technology systems or related controls;
- future events that could adversely affect the value of the Company’s assets and require impairment charges;
- the impact of
United States or foreign regulations on the Company’s operations, including environmental remediation costs; - the potential inability to attract, retain and motivate key employees;
- the resolution of tax contingencies resulting in additional tax liabilities;
- product liability, product recalls or related regulatory actions;
- the Company’s ability to protect its intellectual property rights;
- significant increases in the funding obligations related to the Company’s pension plans; and
- other factors listed from time to time in the Company’s filings with the
SEC including, but not limited to, the Company’s most recent Annual Report on Form 10-K.
The information contained in this press release is as of the date indicated. The Company assumes no obligation to update any forward-looking statements as a result of new information, future events or developments.
____________________________ |
i Permission to use quotes neither sought nor obtained. Emphasis added. |
ii Calculated using Company records with respect to Mr. Franklin’s shareholdings following the Company’s acquisition of Jarden in 2016 and publicly available sales information. |
iii Reflects period beginning June 23, 2011 and ending on February 8, 2018. Calculated using the following peer group, which delivered an average total shareholder return of 86%: Church & Dwight Co., Inc., The Clorox Company, Colgate-Palmolive Company, Dorel Industries Inc., Edgewell Personal Care Company, Kimberly-Clark Corporation, Mattel, Inc., The Procter & Gamble Company, Reckitt Benckiser Group PLC (ADRs), Unilever PLC (ADRs), and Whirlpool Corporation. |
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Source:
Investors:
Newell Brands
Nancy O’Donnell, 1 (201) 610-6857
SVP, Investor Relations and Corporate Communications
nancy.odonnell@newellco.com
or
Morrow Sodali
Charlie Koons / Mike Verrechia, 1 (212) 300-2473
NWLinfo@morrowsodali.com
or
Media:
Michael Sinatra, 1 (551) 574-8031
Director, External Communications
michael.sinatra@newellco.com
or
Joele Frank, Wilkinson Brimmer Katcher
Joele Frank/Jim Golden / Ed Trissel, 1 (212) 355-4449
ETrissel@joelefrank.com