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NEW YORK (Reuters) – The activist investor pushing for board seats at Freshpet (NASDAQ:FRPT) Inc wants the pet food company to roll back a recent governance change and said it may take the matter to court unless the decision is reversed, according to a letter seen by Reuters.
Jana Partners, Freshpet’s largest investor with a 9.3% stake, argues a decision to cut the number of directors standing for re-election at this year’s annual meeting harms shareholders and hinders its ability to run a proxy fight.
In the letter, Jana said it “intends to exercise any and all available means to remedy the board’s blatant breaches of fiduciary duties,” after the company last week said only three, not four, directors will be voted on.
The board has 11 members and the annual meeting is scheduled for July 25.
Jana said the company, which specializes in selling refrigerated high-end pet food and is valued at $3.2 billion,
made the move last week after months of negotiations when it was clear a board room challenge was coming.
A Freshpet representative was not immediately available for comment.
News that one director will retire and his replacement will join a class of directors that won’t stand for election in 2023 and moving up the annual meeting by months chills shareholder activism, Jana contends. It may take the matter to Delaware Chancery Court where corporate battles are decided.
For months, Jana criticized Freshpet’s capital allocation and corporate governance, including executives’ roles at Hive Brands, which offers competing pet foods. It nominated four director candidates to better supervise capital expenditures and position the company more favorably for a possible sale.
Freshpet’s board “has a track record of poor decision making, lax oversight and apparent disregard for corporate governance,” Jana’s founding partner, Barry Rosenstein, told Reuters. “The latest stunt—reducing the number of directors up for election amid a contested annual meeting and abruptly accelerating its date—is an overt attempt to influence the shareholder vote, and underscores why board change is desperately needed,” he added.
The company has said Jana wants to force a sale of the company without considering other ways to boost the share price.
Jana is putting pressure on Freshpet at a time of industry consolidation. Previously, it pushed for changes at Whole Foods Market, which sold itself to Amazon.com Inc (NASDAQ:AMZN) in 2017, and Pinnacle Foods, which was sold to Conagra Brands (NYSE:CAG) in 2018.
