JANA Partners, which along with its affiliates and partners owns 9.5% of Freshpet, filed a complaint in the Court of Chancery of the State of Delaware against Freshpet and the company’s board of directors. The complaint seeks a declaratory judgment and a determination that the board’s recent actions to entrench itself, and refusal to reverse them, constitute breaches of fiduciary duties; and an order requiring that the number of directors up for election at the company’s 2023 Annual Meeting of Stockholders be returned to its original size, such that four director seats, rather than three, stand for election at the meeting.
JANA filed the complaint in response to the highly entrenching actions Freshpet took on May 17, 2023, which included changing the size and composition of its board such that the number of directors up for election at the meeting was reduced from four to three, and unexpectedly accelerating the date of the meeting—in the midst of settlement discussions with JANA regarding board composition, conflicts and governance issues—from its usual mid-Fall meeting date to July 25, 2023.
JANA’s filing contends that the board’s extraordinary actions, taken well after JANA publicly disclosed its interest in obtaining representation on Freshpet’s board, constitute a breach of the board’s fiduciary duties, and that JANA should have the opportunity to nominate four Class III directors at the meeting.
JANA has also filed a motion to expedite these proceedings to resolve this critical issue ahead of the recently-advanced deadline to nominate directors for consideration at the meeting. The board’s decision to accelerate the date of the 2023 Annual Meeting, announced on May 17, 2023, required that stockholders submit any director nominations within just nine days of the announcement, a clear entrenchment tactic by the board to avoid accountability to Freshpet’s shareholders.
Barry Rosenstein, managing partner at JANA, commented, “The Freshpet Board’s recent entrenchment actions constitute a clear breach of its fiduciary duties, leaving us with no choice but to seek expedited relief in Delaware Court so that a truly fair and democratic election of directors is allowed to proceed. In our view, the Board's blatant misuse of corporate machinery obstructs the legitimate efforts of shareholders to exercise their rights and cannot stand. Further, we believe the Board has repeatedly failed to properly supervise management as performance worsened, liquidity deteriorated and shareholder value plummeted—while allowing more than half of Freshpet’s independent directors to pursue outside interests with corporate resources and key members of leadership. It is clear now, more than ever, that change is desperately needed at the Board level.”
On May 24, 2023, JANA announced that it will be nominating four highly qualified candidates to Freshpet’s board at the company’s 2023 Annual Meeting, scheduled for July 25, 2023.
Shareholders with questions can contact JANA’s proxy solicitor, Innisfree M&A Incorporated, at (212) 750-5833.