The trustees of the pensions funds of Premier Foods have publicly expressed their support for Gavin Darby, the company’s chief executive officer (CEO), amidst the looming opposition from its second-largest shareholder.
Oasis Management has petitioned for Darby to be removed from his position for what it termed “shareholder value destruction.” The firm is based in Hong Kong Kong.
Last Friday, the trustees of the three biggest pension funds of Premier wrote a letter that was addressed to the company and the Pensions Regulator in which they said that they were “concerned” at the petitions for the dismissal of Darby.
The total pension liabilities of the company currently stand at £4 billion, far exceeding its market capitalisation that is amounting to £437m.
The trustees stated that “they wish to place on record that we consider the risks associated with a change in leadership at this current point could be destabilising from an employer covenant perspective.”
They disclosed that “if Oasis was successful, there was a risk that shareholder returns and short-termism will become of increased importance” which they added they would consider being “extremely negatively”.
They advised that the defined benefit pension scheme was “significantly underfunded” and said that “anything which jeopardises our ability to deliver on past promises may result in out of cycle action by the trustees to protect members’ positions.”
Premier owns food brands Batchelors and Oxo. On Monday, it is set to release a circular to its shareholders that will reiterate its support for Darby and urging for shareholders to support him at the company’s upcoming annual general meeting (AGM).
Chair Keith Hamill stated: “There is no certainty that should Oasis successfully remove Gavin, that they can find someone with better skills at an acceptable cost and within a reasonable timeframe. Nor is it certain someone will do it. This is a difficult sector, a big challenge and there is an aggressive activist on the shareholder register.”
Last Friday, an Oasis spokesperson stated: “Shareholders, pensioners, employees, and customers deserve their Company to be led by someone who believes, like we do, in the brands and in a better future for Premier Foods.”