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Farmer Bros. Seeks To Boost Control
United States – Farmer Bros. Co. (FARM) is seeking shareholder approval on a plan to reincorporate in Delaware and a number of other measures that could tighten management’s control of the company. In a filing with the Securities & Exchange Commission (SEC) this week, the company said the Delaware reincorporation would do away with certain shareholder rights, such as the ability of individuals holding as little as 10% of shares to call special meetings. With reincorporation, said the company, a supermajority vote of 80% of shares will be required to affect any shareholder-proposed revisions of its by-laws. Chairman Roy F. Farmer, along with a handful of other executives, meanwhile hold some 50% of the company’s voting shares. “It is very negative for investors,” said Fred Nesbitt, executive director, the National Conference on Public Employee Retirement Systems (NCPERS), “It runs absolutely contrary to good corporate governance.” The proposals would also allow the company to “stagger” its board of directors. Dissident shareholder Franklin Mutual Advisors, which owns 9.6% of Farmer Bros., introduced a proposal that would limit company directors’ use of Farmer funds for legal services, allowing directors access to legal defense funds only with shareholder approval or a judicial order. If Farmer’s reincorporation efforts succeed, the Franklin proposal will become invalid.
Los Angeles Times, October 25, 2003

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