headquarters from California to Texas, net income per share has swung from a profit of $4.35 per share in fiscal 2016 to a loss of $(4.36) per share in fiscal 2019.ii The Company’s shares have lost 59% of their value during that period, compared to a 45% rise in the S&P 500.iii
TO SUCCEED AGAIN, FARMER BROS. MUST RETURN TO ITS ROOTS
The reason the current Board is unable to turn around the Company and stop these sad results is apparent to anyone on the outside: they do not understand Farmer Bros.’ unique business model, customer focus and approach to high-quality service. They all share similar professional backgrounds and seem to share perspectives that prevent them from entertaining alternative solutions that could be beneficial to the Company. Despite mounting financial evidence that many mistakes have been made, they evidently do not understand what it actually takes to turn the now-flailing Company around to profitability.
At the upcoming Annual Meeting, the Company has nominated the new CEO, D. Deverl Maserang, and renominated two current directors, Christopher P. Mottern and Charles Marcy, for election to the Board. We support Mr. Maserang and are hopeful that he can return Farmer Bros. to its core values, customer focus and winning strategy. But to succeed, he needs an active, experienced and committed Board.
As such, we cannot support Mr. Mottern and Mr. Marcy, who we believe are emblematic of the problems at our Company. As the longest current serving Board members (both appointed in December 2013) and despite their extensive resumes, they have overseen a steady erosion of the Company and a 35% net decline in the share price.iv In fact, during his just-ended four-month tenure as interim CEO, Mr. Mottern led the Company’s share price to a 41% decline.v
OUR NOMINEES BRING EXPERIENCE AND VALUES THAT THE CURRENT BOARD LACKS
As a result of the current situation and as concerned Farmer Bros. stockholders acting on behalf of all stockholders, we have nominated Thomas William Mortensen and Jonathan Michael Waite, two new director candidates who are deeply familiar with Farmer Bros., its core values and its business. They have seen the Company succeed in the past and can effectively oversee and support our new CEO as he executes a turn-around plan.
Tom Mortensen contributed 37 years of service to Farmer Bros., where he worked from 1978 to 2015. During his tenure at the Company, Tom occupied several positions including branch manager, sales promotion, division manager, regional sales manager, national sales manager, vice president (western region) and senior vice president of route sales. We believe that Tom’s extensive knowledge of coffee, tea and culinary product sales and distribution, long-term interest in the success of the Company, exemplary leadership and employee relationship skills, and process improvement would make him a valuable addition to the Board.
Jonathan Waite spent 13 years with Farmer Bros., where he worked from 2004 to 2017. During his time at Farmer Bros., Jonathan held various positions including special projects manager, director of green coffee operations, vice president of coffee and vice president of construction development. In 2005, after the loss of the Company’s then CEO, Jonathan was solely responsible for building the Company’s green coffee division. We believe that Jonathan’s extensive knowledge of the Company’s products, operations, quality assurance, vendors and customers and long-term interest in the success of the Company would make him a valuable addition to the Board.
ii
See Part II, Item 6 of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on September 11, 2019.
iii
Based on closing prices of the Company’s stock and the S&P 500 between November 1, 2016, and November 1, 2019.
iv
Based on closing prices of the Company’s stock between December 5, 2013, and November 1, 2019.
v
Based on closing prices of the Company’s stock between May 7, 2019, and September 12, 2019.