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CALIFORNIA
Farmer Bros. Names Two New Directors
The Torrance coffee firm also announces one board resignation and says
the restructuring establishes a majority of outside members.
By Jerry Hirsch
Times Staff Writer
May 1, 2003
Farmer Bros. Co. named two new independent directors to its
board Wednesday and accepted the resignation of a longtime company insider
in a move that may deflect some criticism by dissident shareholders.
The restructuring of the Torrance-based coffee roaster's board leaves Farmer
Bros. with what it said was a majority of four independent directors,
although at least one of them was not judged to be an outsider in a recent
analysis by a shareholder advisory firm.
Farmer Bros. has been at odds with a group of institutional investors and
other shareholders over the makeup of its board, which they have said is too
cozy with the company's management.
The move comes a day after it was disclosed that Farmer Bros. approached its
biggest institutional investor, Franklin Mutual Advisors,
to discuss what price the company might pay to purchase the
holdings of its public shareholders.
Franklin, which owns nearly 10% of Farmer Bros., said in a regulatory filing
Tuesday that it expected at least $400 a share.
News of the talks sent Farmer Bros. stock up $16, or 5%, to $325.25 on
Nasdaq on Wednesday. The thinly traded company saw 13,600 shares change
hands, a volume more than 60 times as great as Tuesday's and the most in at
least two years.
But in its own regulatory filing made after the market closed Wednesday,
Farmer Bros. characterized the discussion with Franklin as a courtesy and
legal obligation.
"The company never made nor accepted any offer to acquire such shares," John
Simmons, chief financial officer of Farmer Bros., said in the 8K statement
filed with the Securities and Exchange Commission. "The company will
continue to evaluate its strategic options."
During a board meeting Wednesday, Farmer Bros. named Thomas Maloof, chief
financial officer of Irvine-based travel management firm Hospitality
Marketing Concepts, and John Samore Jr., an
independent business consultant and former Arthur Andersen accountant, to
its board.
It also announced the board resignation of John Anglin, 55, who serves as
the company's corporate counsel.
With those changes, Farmer Bros. said a majority of its seven directors are
"independent" as defined by the federal Sarbanes-Oxley Act of 2002, which
mandates stricter corporate governance procedures.
Other members of the board include: Roy. F. Farmer, 86, chairman of the
company; his son, Roy E. Farmer, 50, company president; and Guenter W.
Berger, 65, vice president of production.
The other two directors are Lewis A. Coffman, 83, who is the company's
retired vice president of sales, and John H. Merrell, 58, a Glendale
accountant.
In December, Institutional Shareholder Services of Rockville, Md., urged
stockholders to withhold votes from the two Farmers and Berger because
Farmer Bros. failed to establish an independent nominating committee for the
board.
The action was a protest vote because the Farmers and management controlled
enough shares of the company to ensure their reelection at the company's
annual meeting Dec. 26.
Also in December, another shareholder advisory service, Investor
Responsibility Research Center, judged that only one Farmer Bros. director —
Merrell — met its standards of independence.
Coffman's ties to the company were too close for him to be considered an
outside director, according to the center.
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Copyright 2003 Los Angeles Times
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