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Management Response to Request for Board
Explanation of Voting Recommendation
(December 6, 2002)
Copied below is the text of a letter sent by Farmer Bros. Co.
on December 6, 2002, followed by the text of a reply. Management's letter,
limited as it is to stating that the board will not provide requested
information to shareholders, is the first response of any kind to several Forum
requests presented to the company's directors.
The letter from the company's treasurer and corporate
secretary appears to be in response to a December 4, 2002
letter addressed to all of the directors of Farmer Bros.,
requesting their explanation of management's recommendation that shareholders
vote against the proposal presented by Franklin
Mutual Advisers, LLC, for conducting the company's investment business in
compliance with applicable regulations. (Management's December 6th letter
references a letter dated November 29, 2002, which had requested the
identification of individuals appointed by the board to vote 127,154 shares
controlled by the company's recently established ESOP. That information
had not been provided as of November 6, 2002.)
The proposal with its supporting statement is presented in the
company's December 2, 2002 proxy statement, as required by an
SEC decision rejecting management's arguments to
exclude it. Immediately following the proposal, the company states
simply that "Your Board of Directors recommends a vote AGAINST the shareholder
proposal to amend the Company's Bylaws." No reasons or explanations are
offered.
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Text of letter transmitted 12/6/02 2:35PM EST
[letterhead]
Farmer Bros. Co.
20333 South Normandie Avenue
Torrance, California 90502
Executive Offices
Via FAX 212-605-0325
December 5, 2002
Mr. Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, NY 10022
Re: Your November 29, 2002 Letter
Dear Mr. Lutin,
Inclusion in the proxy statement of management’s arguments against the
shareholder proposal would have resulted in delaying the annual meeting for
another 30 days. As you and your employer both know, the shareholder
proposal cannot pass, and management saw no reason to delay the annual
meeting further.
As you may know, having omitted management’s arguments against the proposal
from its proxy statement, management cannot now be making public statements
about the matter. We have been advised by counsel that a response to your
letter would likely constitute an unlawful proxy solicitation under Rule
14a-9.
Sincerely,
FARMER BROS. CO.
John E. Simmons
Treasurer
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| Text of responding 12/6/02 letter
[letterhead]
LUTIN & COMPANY
575 Madison Avenue
New York, New York 10022
Telephone (212) 605-0335
Facsimile (212) 605-0325
December 6,
2002
By telecopier:
310/320-2436
Messrs. John M. Anglin,
Guenter W. Berger,
Lewis A. Coffman,
Roy E. Farmer,
Roy F. Farmer, and
John H. Merrell
c/o Farmer Bros. Co.
20333 South Normandie Avenue
Torrance, California 90502
To the members of the board of directors
of Farmer Bros. Co.:
The accompanying letter was
received this afternoon from Mr. Simmons in apparent response to my December
4th request for an explanation of your recommendation against the
shareholder proposal presented in the company's proxy statement. This
letter would suggest that you have determined that scheduling the annual
meeting for the morning after Christmas is a higher priority than your duty
to inform shareholders. Assuming this was not your intent, clarification
will be welcomed.
Regarding Mr. Simmons'
references to regulatory issues, I am not in a position to address the legal
advice you have been given concerning SEC rules for proxy solicitation. It
is my understanding, though, that the general objective of the SEC is to
support rather than inhibit the disclosure of information to investors. I
have also observed many situations in which a company's management has
expressed its views and solicited proxies in relation to proposals being
presented for a shareholder vote. I therefore encourage you to seek further
legal advice to determine how the management of Farmer Bros. can engage in
these commonplace communications to satisfy your responsibilities to
shareholders.
Finally, to avoid any
confusion resulting from Mr. Simmons' characterization of relationships,
please note that I do not represent or act on behalf of any shareholder.
Very truly yours,
Gary Lutin
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