Solicits Votes to Elect Six Highly Qualified,
Independent Director Nominees at Upcoming Annual Meeting
Urges Shareholders to VOTE the GREEN Proxy Card
to Stop Continued Value Destruction under Current Board
Blackwells Capital LLC (together with its affiliates,
“Blackwells Capital” or “Blackwells”), an alternative investment
management firm with an approximate 7.73% ownership interest in
Supervalu Inc. (NYSE: SVU) (“Supervalu” or the “Company”), today
announced it has mailed definitive proxy materials and a letter to
Supervalu shareholders to solicit votes for the election of six
highly qualified candidates to Supervalu’s Board of Directors (the
“Board”) at the upcoming 2018 Annual Meeting of Shareholders.
Copies of the proxy statement and accompanying letter, as well
as Blackwells’ prior detailed analyses and presentations on
Supervalu, are available at www.SaveSupervalu.com.
Jason Aintabi, Managing Partner at Blackwells Capital, said, “We
have lost faith in the current Supervalu Board, but not in
Supervalu. Blackwells has attempted to actively engage with the
current Board and management in good faith and offered solutions
and skills that would help stem the constant decline at Supervalu.
Each time, our efforts have been rejected, misrepresented, or, in
our view, coopted incompetently. The current Board even refuses to
sit down, face-to-face, with our highly qualified, independent
nominees, who offer decades’ more relevant experience than the
current directors.
“To protect the investment of all shareholders and help
Supervalu achieve its full potential, Blackwells has recruited and
nominated six extremely talented professionals to the Company’s
Board. With their extensive industry and public board experience,
we are confident these nominees will better set Supervalu’s future
course and more effectively oversee it. We strongly encourage you
to join us in voting for change on the enclosed GREEN proxy
card.”
The full text of the letter accompanying the definitive proxy
statement is below:
July 2, 2018
Dear Fellow Supervalu Shareholder,
Over the last ten years, Supervalu has lost more than $5 billion
of shareholder value, with its stock declining more than 90%.
During those ten years – and the tenure of five different CEOs –
the Company has alternated strategies, including several complete
reversals in strategy, but has yet to find a winning formula.
In 2016 and 2017, the current Board and management team claimed
to have implemented yet another sure-fire strategy and turnaround
plan, encapsulated by the less than inspiring, three-prong
statement to “retain existing customers,” “sell more to all
customers” and “serve more customers.” Unsurprisingly, the results
bear the same discouraging hallmarks of the past: In Fiscal Year
2018, Supervalu’s stock fell a further 50%.
We beneficially own 7.73% of Supervalu’s outstanding stock.
While we have lost all confidence in Supervalu’s Board, we believe
strongly in Supervalu’s opportunities under the proper
leadership.
In February 2018, we released a detailed strategic plan for the
Company. While the mere prospect of our value-creating plan being
implemented has led the stock to rally by more than 40%, we do not
believe it is wise to entrust the future of Supervalu to the same
individuals who have failed for so long to create long-term
shareholder value. This Board has, in our view, repeatedly shown
that they lack any measure of agility, expertise or
independence.
To protect the investment of all shareholders and help Supervalu
achieve its full potential, we have recruited and nominated six
talented professionals to the Company’s Board, with critical
experience in food wholesaling, retail grocery, transportation and
logistics, turnaround management and sustainability. In our view,
shareholders finally have an opportunity to vote for seasoned
professionals who are qualified to lead Supervalu.
We therefore urge you to vote at this year’s
annual meeting of Supervalu shareholders
using the enclosed GREEN proxy card.
Supervalu’s Share Price Has
Underperformed for Over a Decade
Over any meaningful time period, Supervalu’s stock has performed
worse than every relevant index and peer group, and worse than
nearly every company in the Russell 2000 index.
Share Price Performance(a) 1 - Year
3 - Year 5 - Year 10 - Year Absolute
Performance S&P 500 15% 28% 75% 98% Russell 2000 8% 23% 64%
113% Russell 2000 Consumer Staples (3%) 5% 66% 130% Proxy Peers(b)
(15%) (14%) 53% 140% Grocery Peers(c) (15%) (21%) 44% 80% Wholesale
Peers(d) (24%) (27%) 17% 61%
Supervalu (47%)
(80%) (48%) (92%) Source: Bloomberg.
Note: For each time period, peers excludes companies not publicly
traded throughout that entire period. a) As of February 5, 2018
unaffected date, before Blackwells’ public presentation, adjusted
for dividends.
b) Proxy peers consist of companies used
in Supervalu's 2017 proxy statement for assessing relative total
shareholder returns: CASY, CORE, IMKTA, SFS, SPTN, SFM, SPLS, SYY,
CHEF, KR, UNFI,
VLGEA, WMK, WFM
c) Grocery peers consists of: KR, SFM, VLGEA, WMK and IMKTA d)
Wholesale peers consists of: SPTN, UNFI
It did not have to be this way: Other large food distribution
businesses – and retail grocers – have done substantially better
than Supervalu. Among Supervalu’s own self-selected group of 14
peer companies, Supervalu had the worst shareholder return in
Fiscal 2018. Over the last two years, companies as diverse as
Sysco, US Foods, Performance Foods, and United Natural Foods have
all generated positive returns, while Supervalu’s shareholders lost
hundreds of millions of dollars.
Supervalu’s Stock Price Decline is a
Direct Result of the Wrong Strategy and Poor Financial and
Operational Performance
Supervalu’s earnings per share have declined dramatically since
Fiscal 2014 and the Company has eliminated its dividend. By
contrast, each of Supervalu’s grocery peers and each of its
wholesale peers have achieved EPS growth, increased their
dividends, or both during that period. Supervalu is the only
company among its peers to have no capital return policy for its
shareholders.
Practically the only thing to increase in recent years at
Supervalu is CEO compensation, which has increased more than 20%
since Fiscal 2014. Over the last ten years, Supervalu’s five CEOs
have been paid more than $78 million in total. In contrast,
Supervalu’s shareholders have lost more than $5 billion.
Supervalu’s notable underperformance stems from what we believe
are many strategic and operational failures, including:
O A misguided and unfocused strategy attempting to manage
the complexities of both wholesale and retail businesses, which has
led to managerial and capital allocation issues as well as clear
execution shortcomings;
O Value-destroying deals, demonstrated by major strategic
acquisitions such as Albertson’s that were later sold at steep
discounts, as well as poorly structured transactions that created
unnecessary tax liabilities, confusing and misleading financial
statements and valuation concerns;
O Repeated recruiting failures, including the appointment
of five CEOs in a seven-year period, hiring of executives with poor
track records and, in our view, questionable business ethics, and
nominating or re-nominating board members who lack relevant
experience to assist management in strategy development and others
that had significant conflicts of interest;
O A misaligned culture and compensation system that has
rewarded growth and business size, over profitability, operational
excellence, and shareholder value creation; and
O A lack of planning and investment in key operational
areas, such as logistics, data systems, store maintenance, and
promotional deals with key suppliers.
Even Supervalu’s Board of Directors and management appear to
have been surprised by Supervalu’s dramatic underperformance. Since
September 2015, in every quarter, except one, Supervalu has been
forced to lower the full-year EBITDA guidance it gave investors at
the previous year-end. (Notably, the one non-year-end quarter
without a guidance adjustment was disappointing in other ways,
leading to a two-day stock price decline of 19%.)
Though we believe Supervalu’s directors undoubtedly want to do
better, they lack the critical grocery and logistics experience
that would help inform sound strategic judgment and capable
oversight. Three of the last four Chairmen of Supervalu, for
example, came from the oil and gas, department store retailing and
toy businesses. On this current Board, who can shareholders rely
upon to know Supervalu’s business, customers, suppliers,
competitive dynamics and strategic landscape?
Our Nominees Are Accomplished
Executives Who Can Help Supervalu Succeed
If Supervalu shareholders are to expect a different trajectory
for our stock in the future, we must demand a different
Board. Blackwells has nominated six talented professionals,
having extensive industry and public board experience, whom we
believe can better determine the optimal strategy for Supervalu and
more effectively oversee it.
Nominee Name Experience
Executive Relevant
Corp. Board Company Rick Anicetti
CEO Retail, Grocery 2
Public, 2 Private The Fresh Market, Food Lion; 99
Cents Only Stores; Hannaford Bros. Co. Steven Baer
CEO Operational turn-arounds 1 Public
High Ridge Partners; Rally Capital Services; Koenig
& Strey Financial Services Chris Kreidler CFO
Food distribution 1 Public, 1 Private
Sysco; C&S Wholesale Grocers; Yum! Brands Frank
Lazaran CEO Retail grocery
1 Public, 1 Private Marsh Supermarkets;
Winn-Dixie Stores; Randalls Food Markets; Ralphs Grocery Company
Jim Martell CEO Transportation &
logistics 2 Public, Multiple Private
XPO Logistics; FedEx; UPS Sandra Taylor Senior
Executive Social responsibility 2
Public Starbucks Coffee; Eastman Kodak; Sustainable
Business International
To best serve shareholders, the Blackwells nominees are
committed to:
- Creating a culture of
accountability that is demonstrated through executive hiring
and retention decisions, as well as the executive compensation
program;
- Allocating shareholder capital in an
optimal fashion, making decisive and timely decisions about the
relative attractiveness of various investment and divestment
opportunities, including business segments, real estate, Supervalu
stock, dividends and other available options;
- Insisting upon a performance-driven
operational approach that is efficient and sustainable,
eliminating waste (such as the use of the corporate jet for the
personal convenience of executives) and considering the interests
of Supervalu’s shareholders in all decisions;
- Supporting management and
applying the directors’ considerable industry expertise and
contacts, in addition to managerial, operational and strategic
experience, to drive operational excellence and unlock shareholder
value;
- Eliminating conflicts of
interest that may jeopardize the Company’s economic success
(and the Company’s proprietary information and trade secrets) and
ensuring that the highest standards of integrity are instilled
among the Company’s leadership; and
- Carefully reviewing, and objectively
assessing, all avenues of value creation, including those that
involve strategic transactions.
The professionals we have nominated have studied Supervalu’s
businesses carefully and have specific suggestions and initiatives
to discuss with shareholders and management. In the coming weeks,
Blackwells and its nominees will share more with you about these
plans for Supervalu’s promising future.
We need better than a Board that only recognizes the Company’s
failures when shareholders protest, and then must crib a new
strategy from those same shareholders. The current Board has, in
our view, continued to prove itself to be unimaginative,
intractable and lackadaisical stewards of the Company, to the great
detriment of Supervalu’s shareholders
We strongly encourage you to join us in
voting for change on the enclosed GREEN proxy card.
I welcome any feedback or questions you may have. Please email
me at Supervalu@Blackwellscap.com. For more information, including
our past presentations on the Company, go to SaveSupervalu.com. For
any questions about how to vote, please contact our proxy
solicitor, Morrow Sodali, at Blackwells@morrowsodali.com or (800)
662-5200.
Sincerely,
/s/
Jason Aintabi
Managing Partner
Blackwells Capital LLC
About Blackwells Capital
Blackwells Capital is an alternative investment manager
dedicated to global fundamental and special situation investing
across capital structures. Founded in 2016 by Jason Aintabi, its
Managing Partner, Blackwells’ investment approach is
research-intensive, value-oriented and concentrated.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180709005281/en/
Investors:Morrow SodaliMike
Verrechia800-662-5200Blackwells@morrowsodali.comorMedia:Gagnier
CommunicationsDan Gagnier / Jeffrey Mathews646-569-5897
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