Sandell Recommences Hostilities With FirstGroup, Bob Evans

Jul 1 2014 | 7:24am ET

Activist hedge fund Sandell Asset Management has been quiet for a few months. But the New York-based firm is once again firing upon two of its targets, FirstGroup and Bob Evans Farms.

Sandell has called on FirstGroup to split its U.S. bus operations, including Greyhound Lines, from its British rail and bus operations, complaining that its current structure has led shares to seriously underperform peers. Given that unhappiness, it’s perhaps no surprise that the hedge fund thinks that CEO Tim O’Toole makes too much.

“We strongly believe that management’s and shareholders’ interests should be aligned and that properly structured rewards can incentivize management teams,” the hedge fund wrote. “We simply do not believe that a 94% rise in remuneration package is deserved for Mr. O’Toole’s 2013/14 performance.”

Sandell said it would vote against FirstGroup’s remuneration report at its annual meeting in two weeks. It also pushed the company to name its own nominees for an independent directorship on FirstGroup’s board to provide “sector expertise” on the U.S. The nominee was not identified.

Sandell’s hostilities with restaurant chain Bob Evans were also renewed when the company accused the hedge fund of refusing to compromise to avoid a proxy battle.

Bob Evans has conceded two seats on its board to Sandell nominees. But the hedge fund wants four of the 12 board seats and for Bob Evans to commit to its proposed changes.

Sandell shot back that “Bob Evans is doing nothing more than trying to appear as if they are willing to compromise, all while seeking to entrench themselves and maintain the status quo while failing to unlock value.”


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