Furniture Brand faces proxy fight from key investor
A tussle is developing between Furniture Brands International Inc. and a major shareholder.
The Clayton-based furniture maker says it is "disappointed" that Sun Capital Partners, its No. 2 shareholder, is considering pursuing what the company calls a "costly and disruptive" proxy contest.
Last week, SCSF Equities LLC, a division of Sun Capital Partners of Boca Raton, Fla., sent a letter to Furniture Brands demanding a list of shareholders, apparently to seek a presence on the company’s board of directors.
That move followed the private investment group’s push to start discussions with Furniture Brands about taking over the company. Furniture Brands — the parent of Lane, Broyhill, Thomasville, Drexel Heritage, Henredon and other nameplates — rebuffed the proposal, noting that there was no offer price.
As Sun Capital has taken an aggressive stance, Furniture Brands has dug in its heels.
"A proxy context can only serve as a distraction to the company when attention and resources would be better used in creating value for stockholders by implementing our strategic plan," W.G. "Mickey" Holliman, company chairman, said Monday in a statement.
The company tried to trace Sun Capital to a conflict of interest, noting that Sun Capital has "significant" positions in several furniture manufacturers and retailers that compete with Furniture Brands, as well as a "mixed record of performance" in the home furnishings industry.
In a news release, the
company expressed concern about the election of Sun Capital-backed directors, arguing that giving Sun Capital access to "proprietary and confidential information" about its strategy and operations could hurt its competitiveness. The company said one of Sun Capital’s bankrupt entities owes Furniture Brands more than $2 million.
Sun Capital and Furniture Brands executives did not return phone calls seeking comment.
In a statement, Ralph Scozzafava, chief executive, said Furniture Brands is building momentum "in a challenging operating environment."
Furniture Brands had a rough 2007, losing money and weathering shrinking sales cash till payday. But it touts recent successes: slashing inventory, paying down debt and completing a $75 million sale of an office furniture unit.
The country’s largest publicly traded furniture manufacturer, long beset by turnover near the top of the organizational chart, has restocked its corner offices. Since May 2007, it has added a new CEO, chief financial officer, chief marketing officer, general counsel and presidents of its four major brand groups.
Also on Monday, Furniture Brands disclosed how much it paid its top executives in 2007. Transitioning into the CEO’s office, Scozzafava made $1.07 million in total compensation, according to a document filed with the Securities and Exchange Commission. That total included a salary of nearly $377,000, a bonus of $350,000 and "all other compensation" totaling about $342,000 — mostly relocation assistance.
Phasing into retirement, Holliman made about $1.3 million in total compensation, up from $1.08 a year ago, despite taking a voluntary cut in salary in April as the company’s business slid. Holliman’s compensation included $756,000 in salary, $392,000 in change in pension value and nonqualified deferred compensation, and $153,000 in other compensation.
The Post-Dispatch’s calculation of compensation excludes unvested stock awards and unexercised options grants to give a better sense of actual money received, rather than potential earnings.
jmcwilliams@post-dispatch.com
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