Food solutions company SpartanNash has sent a letter to company shareholders confirming the company’s success, while discussing internal conflicts with its investment partner.
The Grand Rapids, Mich.-based company sent the letter to highlight achievements made in the past year. Recent accomplishments by SpartanNash include renewing its military contract, expanding its presence in California, and taking several steps towards its ESG goals. SpartanNash owns and operates 145 supermarket locations under several banners including Family Fare, Martin’s Super Markets, D&W Fresh Market and more, along with a private label collection. The company offers distribution in all 50 states.
Highlights from the letter include:
- SpartanNash’s transformation is delivering positive results and driving shareholder value: Over the past two years, SpartanNash said it has generated increased revenue and adjusted EBITDA, effectively allocated capital to the business and to shareholders, and significantly de-levered its balance sheet. SpartanNash’s total shareholder return has been 251% since the Board transitioned the management team in the summer of 2019, and 88% since September 2020 when Tony Sarsam was announced as CEO2. The company has also significantly outperformed the S&P 500 over those same time periods.
- Significant board changes have already been made: SpartanNash appointed three new directors in February 2022 as part of a “deliberate and thorough” refreshment process that began in the summer of 2021. The directors were recruited and vetted with the assistance of a leading executive search firm that took into consideration feedback from shareholders. In connection with this refreshment, three current directors will not stand for reelection at the company’s 2022 Annual Meeting of Shareholders.
- SpartanNash’s director nominees are superior to Macellum and Ancora’s (the “Investor Group”) candidates and are best suited to advance the company’s transformation: SpartanNash’s board is “confident” that the skillsets of the company’s nominees outmatch the Investor Group’s slate in every critical area. The company says its board also brings 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.
- The Investor Group has only one playbook and a short-term focused, predetermined agenda: The letter claims that The Investor Group is “attempting to apply the same cookie-cutter approach at SpartanNash that it 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’s board says it believes the Investor Group’s nominees would implement a short-term focused, predetermined agenda and distract the company from its current path.
- SpartanNash has attempted to reach a constructive resolution with Macellum and avoid a costly proxy contest: Finally, SpartanNash says it has engaged extensively with Macellum since November 2021 and attempted to reach a constructive resolution that would avoid a costly proxy contest. As part of the constructive efforts, SpartanNash offered to appoint one of Macellum’s candidates with grocery retail and distribution experience despite the board and management team already having significant experience in these same areas. In addition, SpartanNash proposed forming a transformation committee of the board to review aspects of the business, including strategic matters, which would have included Macellum’s director designee. However, Macellum rejected this offer outright and refused to allow SpartanNash to interview any of its director nominees. SpartanNash said that this “further demonstrates that Macellum has had a self-serving, predetermined agenda all along and not a genuine desire to do what is best for all shareholders.”