Investor Pushes Parkland to Shake Up Board
CALGARY, Alberta — Parkland Corp. added a new member to its board of directors shortly after an activist investor called for an even broader change to the company's leadership and strategy.
On Dec. 31, 2023, Simpson Oil Ltd. nominees Michael Christiansen and Marc Halley stepped down from the board, leaving Simpson without a seat on the board despite being Parkland's largest shareholder, with approximately 20% of Parkland shares. Simpson also waived its previously agreed-upon right to nominate two members to Parkland's board.
At the time, Parkland noted it was in discussions with Simpson about its shareholding.
[Read more: Parkland Lays Out Refreshed Five-Year Plan]
On Jan. 22, Engine Capital LP — which owns 2.5% of Parkland's outstanding shares — sharply criticized Parkland, noting it was "very concerned" about the departures of Halley and Christiansen after only eight months on the board and urging a total refreshment of the board.
According to Engine, Parkland's board can choose between acting in a "self-serving manner" by fighting with its largest shareholder and other advocates for change, or opting for an "orderly boardroom refreshment" focused on individuals with strong track records of value creation and relevant industry experience.
One day after the letter was published, Parkland announced the appointment of energy industry veteran Michael Jennings to its board of directors. His experience includes nearly 20 years with HF Sinclair Corp. and its predecessor companies Holly Frontier and Frontier Oil.
"Michael is a seasoned chief executive officer and board member with over three decades of international integrated energy experience. We are delighted to welcome him to our board of directors," said Steven Richardson, Parkland's chairman of the board. "Michael brings extensive executive and public board experience. His track record as a CEO underscores his industry knowledge and strategic acumen. Our board and Parkland's shareholders will benefit greatly from his expertise as we advance our strategy to deliver long-term value to all shareholders."
The company added that the appointment of Jennings is part of Parkland's ongoing and strategic board renewal process.
[Read more: Shareholder Urges Parkland to Make Value-Enhancing Changes]
However, this is unlikely to be enough for Engine, which accused Parkland of being "out of touch with reality" and using legal strategies to shield itself from shareholder accountability. While noting that it is "not optimistic," Engine urged Parkland's board to "work collaboratively" with its large shareholders and not against them.
RBC Capital Markets analyst Luke Davis told Canada's Global News that while he does not expect a material shift in Parkland's corporate strategy, Engine's letter highlights that Parkland shares trade at a discount and the dispute with Simpson adds uncertainty to the situation.
"Overall, we believe continued disagreement could present an overhang on the stock, though we do not have clarity on Simpson's intentions at this point," Davis said.
Calgary-based Parkland Corp. is an independent supplier and marketer of fuel and petroleum products and a convenience store operator. Parkland currently services customers across Canada, the United States, the Caribbean region and the Americas through three channels: retail, commercial and wholesale.