ATLANTA - The Home Depot said Monday that its board of directors will oppose a shareholder group's request for an independent committee to review the company's strategic direction, but also said the directors will meet with the shareholder group early next year to discuss it.
The company said in a statement it has received a notice that Relational Investors LLC, an investment firm, plans to submit the proposal at the company's next annual meeting. The group will ask the company's directors "to appoint a special committee of independent directors to evaluate the strategic direction of the company, the performance of management and strategic alternatives" for the nation's largest home-improvement store chain.
Relational plans to solicit proxies to have its proposal adopted, and may nominate one or more directors at The Home Depot's 2007 annual meeting.
The Home Depot declined to comment further, and officials from Relational did not immediately return a request for comment Monday.
In a Dec. 13 letter to the company, Relational - headed by Ralph V. Whitworth - said it owns 12,966,438 shares of The Home Depot common stock. According to the company, that amounts to 0.6 percent of common shares outstanding.
Mr. Whitworth said in a cover letter to The Home Depot CEO Bob Nardelli that Relational wants "to reverse the company's chronic inferior stock price performance experienced since 2000. We attribute this performance to deficient strategy, operations, capital allocation and governance."
Relational said it sees "an opportunity for substantial appreciation" in common stock value "through changes in the company's strategic direction, restructuring and recapitalization, a partial or complete sale or buyout of the company and/or a major recomposition of the executive team."
The Home Depot's statement said its board unanimously supports the current management team and its strategic plans.
But it also said it will arrange a meeting shortly after the first of the year to discuss Relational's concerns, "consistent with The Home Depot's policy of engaging in an open and direct dialogue with shareholders."
Earlier this month, the company said in a regulatory filing that it hasn't had any discussions about a buyout.
Last month, The Home Depot blamed a slowing housing market and a relatively calm hurricane season as it reported a 3.1 percent drop in third-quarter profit. The company also lowered its earnings-per-share growth guidance for the year and said 2007 will be challenging, too.
In March, Mr. Whitworth joined the board of directors of Sovereign Bancorp Inc. - the nation's third-largest thrift - as part of a deal that resolved outstanding legal issues between them.
© 2016. All Rights Reserved. | Contact Us