Hain Celestial Group Inc., the Lake Success organic and natural foods maker, announced Thursday that it is adding six new directors to its board under an agreement with an activist California hedge fund that could trigger a sale of the company.
The deal with Engaged Capital LLC calls for Hain to add six new directors, temporarily increasing the board size to 14 directors. The agreement specifies that three incumbents will not stand for reelection at the 2017 annual meeting, scheduled for Nov. 16, trimming the board to 11 directors. The new directors include Engaged Capital founder Glenn Welling.
Hain said in a government filing that the board would form a four-member working group that, with an advisory firm, will review “the company’s portfolio of businesses, brands and operating strategy” and “evaluate alternatives to create shareholder value.” Members of the working group will include Welling and Irwin Simon, Hain’s president, chief executive and chairman of the board.
In a statement, Simon said the company has “identified and executed upon a number of strategic initiatives” in the last year and is pursuing “our next phase of growth.” We “appreciate the insight, constructive approach and shareholder perspective from Glenn Welling and Engaged Capital throughout this process,” he said.
A statement by Welling said the new directors will provide expertise in “consumer packaged goods, grocery and retail, operations, and capital allocation.”
In June, Engaged Capital, of Newport Beach, California, disclosed a 9.9 percent stake in Hain and said it would seek changes at the company, including the sale of its units or the company as a whole.
Since that disclosure, shares of Hain have rallied about 12 percent. On Thursday, Hain rose about 0.7 percent to close at $40.71.
Hain Celestial’s brands include Celestial Seasonings tea, Earth’s Best baby food, Terra chips and Spectrum oils.