Starboard Slams Icahn's Newell Nominees, Pitches Own Slate

(Bloomberg) -- Starboard Value, the activist fund run by Jeff Smith, believes Newell Brands Inc. has entered into a “hastily constructed” agreement with Carl Icahn that may lead to the Crock-Pot maker electing directors to the board who are weaker than its own nominees.

“This agreement was clearly a desperate attempt to hand outsized influence to one shareholder in order to entrench management and disenfranchise shareholders,” Smith wrote in a letter to Newell shareholders Wednesday. “At this critical juncture, shareholders deserve more than just the appearance of ‘change.’”

Starboard, which owns 3.8 percent of Newell, launched a proxy fight at the company in February to replace the entire board. Its efforts were undercut last month when Icahn, who is Newell’s third-largest shareholder with about 7 percent, struck a deal that would give the billionaire investor seats on the board and see the company accelerate its transformation plans.

Newell responded Wednesday by saying the transformation process currently underway is making the company simpler, stronger and faster. The board will eventually include eight new directors who are “laser focused” on improving the company’s performance, Newell said in a statement.

It labeled Starboard’s decision to continue its proxy fight -- in spite of the agreement with Icahn -- as “disruptive” and criticized Starboard for not reaching out to the company before starting its campaign to replace the entire board.

“In a model of poor governance, Starboard did no independent work at all,” Newell said.

Director Block

After the Icahn deal, Starboard reached out to several shareholders who expressed their displeasure with his slate of directors, a person familiar with the matter said. Newell shareholders also expressed concerns that Icahn would create a block of directors on the board, said the person, who asked not to be identified because the details are private.

Representatives for Icahn and Newell weren’t immediately available for comment.

Newell shares rose 0.3 percent to $25.92 on Wednesday, valuing the company at about $12.6 billion.

Starboard is opposing three of the five directors that the company has nominated as a result of the Icahn deal, as well as incumbent director, Michael Todman. The firm isn’t opposing Icahn’s son, Brett Icahn, because it believes it’s appropriate to have one direct representative for Icahn on the board. Starboard also urged shareholders to vote for its own four nominees.

Three direct nominees of any one shareholder “is unnecessary and, frankly, dangerous given the board’s past issues with alienation of directors and the critical nature of the evaluation and transformation needed at Newell,” Smith wrote.

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