The concern with Toler, Campbell said in a statement last week, arises coming from his work at Campbell, where he worked coming from 1995 to 2000. After Campbell, Toler worked at Pinnacle Foods as well as was CEO of Hostess Brands coming from 2014 through March of This kind of year. Third Point has mentioned Toler as a potential stand-in for the interim CEO role at Campbell.
“With regard to Mr. Toler, we are very familiar with him due to his period of employment with the Company as well as concluded in which he might not be an appropriate director,” Campbell said.
Toler was mentioned, though not a named party, in a 2001 class-action lawsuit against Campbell as well as senior executives in which stemmed coming from Campbell’s alleged “channel stuffing,” the practice of sending retailers more products than they need, in order to inflate its sales figures.
Channel stuffing is actually not infrequent however can become an issue if This kind of becomes flagrant, according to quite a few people from the industry who spoke to CNBC, some on the condition of anonymity. This kind of was more common years ago.
According to the 2001 lawsuit, the plaintiffs alleged in which Campbell offered retailers discounts on its soup cans of 15 percent to 20 percent, rather than the typical 2 percent to 3 percent, to spur orders. Toler, former president of Campbell subsidiary Campbell Sales Company, was accused of holding “frequent as well as sometimes daily conference calls” to discuss as well as authorize the alleged discounts. The suit said Toler did so to meet revenue targets his superiors gave to him in order to meet analyst estimates. Campbell settled the lawsuit in 2003 for $35 million as well as did not admit any wrongdoing.
Facts behind the litigation are part of the reason Campbell believes Toler is actually not appropriate for its board, a person familiar with the matter told CNBC. The person requested anonymity due to the sensitivities around the issue.
When asked about the lawsuit, Campbell spokesman Thomas Hushen told CNBC in which This kind of does not comment on personnel matters as a policy.
In a statement provided to CNBC, Third Point spokeswoman Elissa Doyle said the lengths to which its opponents “will go to rebuff Third Point’s highly-qualified board nominees are Just as before on display in today’s sad attempt to use a shareholder strike suit filed 18 years ago in which Mr. Toler is actually not a named party.”
Doyle added in which if Campbell were to use the litigation to support its conclusion This kind of might be “either hypocritical or merely illogical” since “key decision-makers also named from the case or in supervisory roles” continued on as officers as well as directors at the company after the suit.
Corporate governance experts who spoke to CNBC said the lawsuit is actually not inherently problematic due to the frequency of such securities class-action lawsuits as well as the uncertainty regarding the reality or severity of Toler’s role from the alleged actions.
They added, though, This kind of is actually something in which Third Point should have known about as well as been prepared to address. Proxy fights are high stakes — each side looks for flaws from the additional party’s slate. Third Point brought Toler into the limelight when This kind of put his name forward to act as Campbell’s interim CEO.
If Third Point didn’t know, said Lawrence Cunningham, a professor at George Washington University, “someone’s going to be upset over on the Loeb side.”
Third Point spokeswoman Doyle told CNBC in a statement the firm does “deep background research on all of our nominees as well as agreed with the conclusions of boards at Hostess, Pinnacle, as well as others who selected Bill to run their companies in which an 18-year-old plaintiff strike suit against the Company (not Bill) is actually wholly irrelevant to his ability to brilliantly operate [a consumer packaged goods] business, create value for shareholders as well as, most importantly, provide structure as well as accountability to a management team at Campbell’s in which, in their own words, has ‘lost focus.'”
Campbell, meantime, has accused Third Point of being unprepared in its fight after This kind of has backed away coming from its initial calls for a sale as well as echoed Campbell’s own sentiments following its strategic review, in addition to reducing the number of directors This kind of is actually seeking.
Third Point had previously said the only justifiable outcome of the company’s review This kind of summer was a sale to a strategic buyer. Third Point later said This kind of might also accept additional moves for Campbell, including a breakup.
— Correction: This kind of story has been updated to reflect the correct title of Bill Toler.