Second shareholder advisory firm backs shakeup of Pantry's board

03/03/2014 2:08 PM

03/03/2014 2:09 PM

A second shareholder advisory firm has recommended that The Pantry’s shareholders support the election of three independent candidates for the company’s board of directors.

The candidates have been submitted by a group of dissident shareholders who argue that the Cary convenience store chain is undervalued and needs better corporate governance.

In its report, Institutional Shareholder Services pointed to The Pantry’s poor performance over the past decade in relation to its peers and the Nasdaq index.

“Given the long tenure of the three targeted incumbent directors ... and the company’s poor performance over a sustained period, it appears that the dissidents have met their burden of proving that change on the board is warranted,” the report said.

Glass Lewis, another shareholder advisory firm, came to a similar conclusion in an earlier report.

The Pantry has responded to both reports by issuing its own releases saying it strongly disputes the firms conclusions. It has also mailed additional materials to stockholders highlighting its successes in recent years.

The Pantry officials said Glass Lewis’ report “contains numerous inaccuracies that illustrate Glass Lewis’ fundamental lack of understanding of our business.” In response to the ISS report, The Pantry defended its existing group of board members.

“The Board’s director nominees are actively engaged and together possess significant retail, convenience store, consumer packaged goods, foodservice, fuel and financial experience – all areas that are highly relevant and critical to The Pantry’s business,” the release said.

The company argues that CEO Dennis Hatchell and his team have been executing the company’s strategy to improve performance.

The dissident shareholder group includes JCP Investment Management and Lone Star Value Management, which own about 1.9 percent of The Pantry’s outstanding shares.

The Pantry has 1,538 stores in 13 states throughout the Southeast, primarily under the Kangaroo Express brand. The company’s annual stockholders meeting is scheduled for March 13.

The Pantry shares closed Monday at $14.76, down 32 cents. The stock is down 12 percent this year.

Staff writer David Bracken

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