Institutional coffee roaster Farmer Bros. Co. said Monday
that it had filed to reincorporate in Delaware and that the company planned
to implement a 10-for-1 stock split soon.
The Torrance-based company also said shareholders at its annual meeting
approved takeover protections and the reelection of incumbent directors.
Farmer Bros. has been beset by lawsuits and other criticisms from major
shareholders, who complain that the founding Farmer family runs the business
like a private enterprise for the benefit of insiders.
Indeed, dissidents claim that the outcome of the proxy voting was a foregone
conclusion because an 18.7% stake in the company held by Farmer's employee
stock ownership plan gives voting control to the company's chairman,
87-year-old Roy F. Farmer. The ESOP holdings were acquired using company
loans.
Voting power of the 300,000 ESOP shares is not controlled by management, the
company said. Rather, 1,100 employees directed Farmer to cast a majority of
votes in favor of the proposals. The Farmer family, which controls 39% of
shares, also backed the proposals.
In a "state of the company" report, Chief Financial Officer John Simmons
told shareholders that the recent decline in quarterly profit reflected
competition and a weak economy after several years of record earnings.
He also said measures such as fully computerizing operations for the first
time in the company's 92-year history should help results.
Shares of Farmers Bros. rose $1.85 to $323.35 on Nasdaq. The company said
the stock split would create more of a market for its thinly traded shares.
Copyright 2004 Los Angeles Times
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