Ashland mails letter to shareholders highlighting industry analyst and shareholder support
Ashland mails letter to shareholders highlighting industry analyst and shareholder support
Ashland’s highly qualified nominees have expertise critical to its business
Company illustrates commitment to board refreshment and working constructively with shareholders
Urges shareholders to vote "FOR" board’s nominees on the BLUE proxy card
Highlights of the letter include:
- Ashland’s strategy and portfolio transformation are driving strong results
- Ashland is delivering shareholder returns well in excess of the company’s proxy peers1, S&P MidCap 400 and S&P MidCap 400 Chemicals2
- Company is committed to board refreshment, as illustrated by the recent addition of
Craig A. Rogersonto board’s slate of nominees after consulting with multiple shareholders
- Earlier this week, Ashland committed to
Neuberger Berman, one of the company’s largest and long-term shareholders, to appoint two new independent directors, in consultation with them and with input from other shareholders; Neuberger Bermanwill vote for Ashland’s director nominees
- Numerous independent industry analysts have supported Ashland’s strategic plan and expressed confusion regarding Cruiser Capital’s motives given Ashland’s decisive actions to drive value
- Replacing Ashland’s experienced directors with Cruiser’s candidates could derail the company’s strong progress
Ashland’s letter to shareholders, along with the other materials regarding the board’s recommendation for the 2019 Annual Meeting can be found at www.AshlandValue.com.
The full text of the letter follows:
Dear Fellow Shareholder:
Ashland is making substantial and tangible progress in its transformation into a leaner, more cost-competitive and growth-oriented specialty chemicals company. Under the leadership of Ashland’s chairman and chief executive officer
Our plan is working, as evidenced by:
- Strong fiscal 2018 financial results;
Progresson our EBITDA margin acceleration program;
- Significantly reduced costs;
- Total shareholder returns (“TSR”) exceeding the S&P MidCap 400 and our proxy peers1 over the short- and long-term; and
- Support from large Ashland shareholders and independent industry analysts.
Despite this progress, a small hedge fund,
Your board of directors is committed to overseeing the continued execution of Ashland’s strategy and brings the necessary skills and expertise to continue to deliver on our financial and strategic objectives. The board has also made significant refreshment and board changes with input from Ashland’s shareholders, including the addition of
We strongly urge you to protect the value of your investment by voting FOR the election of ALL of your board of directors’ nominees at the
ASHLAND’S BOARD HAS TAKEN DECISIVE ACTION TO REFRESH ITS BOARD IN CONSULTATION WITH SHAREHOLDERS
- The addition of two new independent directors, one to be added following a search beginning after the 2019 Annual Meeting and a second to be appointed during the course of fiscal year 2019. Ashland will create a list of candidates to be considered for appointment to the board, in consultation with
Neuberger Berman, and with input from other shareholders. The two new independent directors will be appointed consistent with the board’s disciplined board process and with the assistance of Russell Reynolds Associates, a leading executive search firm. Michael J. Ward, having provided outstanding service on the Ashland board for 18 years, has indicated he will retire from the board following the appointment of the first new independent director; Jay V. Ihlenfeld, current director with executive, operational and chemical industry experience, will be appointed lead independent director; and Mark C. Rohr, current director, will be appointed chair of the Governance & Nominating Committee and Kathleen Wilson-Thompson, current director, will be appointed chair of the Compensation Committee
ASHLAND REGULARLY ENGAGES WITH ITS SHAREHOLDERS
Further illustrating Ashland’s commitment to engaging with shareholders, in fiscal 2018, Ashland went on eight non-deal roadshows, attended 11 investor conferences and had over 500 interactions with shareholders.
This includes eight interactions in 2018 with Cruiser (five conference calls and three in-person meetings). In 2017, Ashland had 15 interactions with Cruiser (13 conference calls, one in-person meeting at an investor conference and one discussion at our Investor Day).
INDEPENDENT INDUSTRY ANALYSTS RECOGNIZE WE ARE TAKING THE RIGHT STEPS TO DRIVE VALUE…
Importantly, independent industry analysts are also supportive of our strategic plan and board enhancements and believe the board and management team are taking decisive action to drive value.3
…AND ARE DELIVERING ON OUR COST SAVINGS AND DEBT REDUCTION PLANS WHILE IMPROVING PROFITABILITY AND DRIVING GROWTH
ANALYSTS HAVE EVEN EXPRESSED CONFUSION AS TO CRUISER’S MOTIVATIONS GIVEN ASHLAND’S DECISIVE ACTIONS TO DRIVE VALUE
REPLACING ASHLAND’S DIRECTORS WITH CRUISER’S CANDIDATES COULD DERAIL ASHLAND’S STRONG PROGRESS ON A STRATEGY THAT IS DELIVERING RESULTS
Your board’s directors are collectively and individually powerful advocates for shareholders, and they are successfully overseeing the execution of Ashland’s plan.
The interests of each of Ashland’s current board members are closely aligned with shareholders. Do not be misled by Cruiser. Together, the independent members of the Ashland board beneficially own more than 280,000 shares of Ashland common stock.Contrary to Cruiser’s claims that its fund and nominees are invested in Ashland’s future, the most recently reported trading actions of Cruiser and one of its nominees,
Cruiser is seeking to remove four highly qualified Ashland nominees, including Mr. Wulfsohn, Mr. Cummins, Mr. Dempsey, and Mr. Ward. These directors bring unique experience and knowledge to the board and skills critical to the execution of our strategy.
Importantly, Cruiser’s attempt to remove Mr. Wulfsohn, Ashland’s chairman and chief executive officer, from the board of directors would be highly disruptive to Ashland and its ongoing efforts to drive value. The overwhelming majority of CEOs of public companies are members of the board, consistent with basic corporate governance principles. Cruiser’s attempt to remove Ashland’s CEO from the board illustrates its ignorance of corporate governance best practices, despite its effort to paint themselves as experts in that regard.
Ultimately, removing any of these nominees from the board would seriously jeopardize Ashland’s demonstrated success in executing its strategy.
ASHLAND HAS DELIVERED STRONG SHAREHOLDER RETURNS
Since Mr. Wulfsohn became CEO of Ashland in
|Total Return Summary||Last One Year (12/31/17)||Since VVV Spin Completion (5/12/17)||Last Three Years (12/31/15)||Last Five Years (12/31/13)|
|S&P MidCap 400||(11%)||(1%)||25%||34%|
|S&P MidCap 400 Chemicals2||(22%)||(15%)||25%||29%|
ASHLAND’S NOMINEES WHO ARE BEING TARGETED BRING EXPERIENCE CRITICAL TO ASHLAND’S BUSINESS
Chairman and Chief Executive Officer, Ashland
- More than 30 years of global chemicals and industrial experience
- Offers critical continuity through Ashland’s evolution, from the strategic decisions to separate
Valvolineand transform the chemicals portfolio, to the work building a high performing team and establishment of the strategic plan that is driving Ashland’s success today
- Previous CEO experience at
Carpenter Technology Corporation
- Director of
PolyOne Corporation, a publicly-traded, specialized materials company
Former Chief Executive Officer, Ciba Specialty Chemicals
- Highly experienced chemicals industry executive with more than 40 years of industry and leadership experience
- M&A, finance and international expertise
- Former Consultant,
The Valence Group
- Director of
Nanoco Group PLC(publicly-traded), Perstorp Groupand Tom Murphy Car Sales Ltd
- Serves on Audit Committee and served as Chair of the Governance & Nominating Committee for Ashland board
Former Executive Vice President,
- Held various executive positions at
Abbott Laboratoriesfor 25 years
- Significant pharmaceutical and international operations experience
- Chairman of publicly-traded
Hill-Rom Holdingsand Landauer Inc.
- Serves on Audit, Governance & Nominating and Environmental, Health, Safety and Quality Committees for Ashland board
Retired Chairman and CEO,
- Has announced his retirement, effective following the appointment of the first new independent director, which will take place after the 2019 Annual Meeting
- 18 years of service to the Ashland board with significant contributions
- Spent 40 years serving in various executive positions with
CSX Corp., one of the nation's premier transportation and logistics companies
- Affiliated with
The Florida Councilof 100, The Business Roundtable, the Hubbard House Foundation, Edward Waters College Foundationand Michael Ward Foundation
- Director of
PNC Financial Services Group, Inc.and Contura-Energy Inc., publicly-traded companies
- Serves on Compensation and Governance & Nominating Committees for Ashland board
Ashland’s additional nominees up for election are experienced leaders with a broad range of skills that benefit our collective board. This includes
We strongly recommend that you elect the Ashland director nominees by voting the BLUE proxy card today FOR ALL 11 of Ashland’s qualified and experienced director nominees.
ASHLAND EVALUATED CRUISER CAPITAL’S CANDIDATES AND DETERMINED THEY WERE NOT ADDITIVE TO THE COMPOSITION OF THE BOARD
With the assistance of Russell Reynolds, Ashland undertook a thorough review of Cruiser’s four nominees and determined with the unanimous support of the board that the nominees were not additive to the skills and expertise of the existing board members. Importantly, the process followed with respect to the Cruiser nominees is Ashland board’s standard practice for reviewing potential candidates and is the same process that led to Jerome A. Peribere, who was recommended by Cruiser, being appointed to the board last year. Mr. Peribere fully supports Ashland’s slate of nominees for the upcoming Annual Meeting.
In addition, contrary to Cruiser’s incorrect assertions, Ashland chairman and chief executive officer Mr. Wulfsohn, and Governance and Nominating Committee Chair Mr. Cummins, also met with two of Cruiser’s nominees,
ASHLAND’S COMPENSATION COMMITTEE HAS DESIGNED A COMPENSATION PROGRAM TO DRIVE SHAREHOLDER VALUE – AND IT IS WORKING
The Compensation Committee of the Ashland board carefully considers the most effective ways to motivate and incentivize management to accomplish specific strategic goals and drive long-term value. Objective, tailored metrics with challenging performance targets are chosen annually to align our compensation program with our strategic plan and effectively align the interests of management with shareholders.
For instance, in 2018, the Compensation Committee specifically selected Adjusted EBITDA and free cash flow as annual metrics to focus management on profitability and the optimization of cash flow; a cost reduction modifier added to the annual metrics for certain senior leaders in 2019 focuses management on costs and overhead. Half of executive equity awards are tied to long-term profitability and will be forfeited entirely unless Ashland meets meaningful EPS growth thresholds. Ashland has also announced that, beginning in calendar year 2019, it will reinstitute a return on capital metric with respect to such awards as well. As an additional backstop, a relative TSR modifier applies to equity payouts.
All of our compensation plans are designed to create a pay-for-performance culture, and we grant a high percentage of at-risk compensation. In fiscal 2018, our CEO’s total direct compensation was 68% performance-based. We believe our emphasis on a pay-for-performance culture has guided our performance – Ashland’s TSR of 60% has outperformed the S&P MidCap 400’s TSR of 34% over the last five years5.
In fact, we recently announced that the board will appoint Ms. Wilson-Thompson as chair of the Compensation Committee demonstrating our continued commitment to ensuring our compensation practices and policies are evaluated and aligned with shareholder’s interests.
Reflecting our strong governance practices, we have revised our corporate governance guidelines to require that the chair of the Compensation Committee and the Governance and Nominating Committee must rotate at least once every four years. In addition, the board adopted an amendment to the Audit Committee Charter, giving the Audit Committee responsibility for reviewing and assisting the board in its oversight of the company’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to the company’s financial resources, capital structure and investments and uses of cash.
We strongly believe Ashland has the right team and strategy in place to achieve its objectives, and urge you to support our progress. Your board of directors unanimously recommends that you vote FOR the election of ALL of your board of directors’ nominees using the enclosed BLUE proxy card today.
We thank you for your continued support.
The Ashland Board of Directors
YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
If you have any questions or require any assistance with voting your shares, please contact Ashland’s proxy solicitor:
Stockholders may call toll-free: 1 (877) 456-3402
Banks and Brokers may call collect: 1 (212) 750-5833
Remember, your board of directors does not endorse any of the Cruiser nominees and strongly urges you not to sign or return any White proxy card sent to you by Cruiser. If you have previously voted using a White proxy card sent to you by Cruiser, you can revoke that proxy by using the enclosed BLUE proxy card to vote by Internet, by telephone or by signing, dating and returning the BLUE proxy card today.
Only your last-dated proxy will count!
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “objectives,” “may,” “will,” “should,” “plans” and “intends” and the negative of these words or other comparable terminology. Ashland may from time to time make forward-looking statements in its annual reports, quarterly reports and other filings with the
Ashland’s expectations and assumptions include, without limitation, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the program to eliminate certain existing corporate and Specialty Ingredients expenses (including the possibility that such cost eliminations may not occur or may take longer to implement than anticipated), the expected divestiture of its Composites segment and the Marl BDO facility, and related merchant I&S products (including, in each case, the possibility that a transaction may not occur or that, if a transaction does occur, Ashland may not realize the anticipated benefits from such transaction), the impact of acquisitions and/or divestitures Ashland has made or may make, including the acquisition of Pharmachem (including the possibility that Ashland may not realize the anticipated benefits from such transactions); Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); Ashland’s ability to generate sufficient cash to finance its stock repurchase plans; severe weather, natural disasters, cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters); and without limitation, risks and uncertainties affecting Ashland that are described in Ashland’s most recent Form 10-K (including Item 1A Risk Factors) filed with the
CERTAIN INFORMATION REGARDING PARTICIPANTS
Ashland, its directors, director nominees and certain of its officers, including
FOR FURTHER INFORMATION
Investor Relations: Media Relations:
Seth A. Mrozek
+1 (859) 815-3527
firstname.lastname@example.org +1 (212) 355-4449
1 Proxy peers include
2 S&P MidCap 400 Chemicals index consists of 11 chemicals companies in the S&P MidCap 400 index:
3 Permission to use quotes was neither sought nor obtained. Emphasis added.
4 Source: Cruiser Capital’s definitive proxy filed on
Source: Ashland LLC