[A] Texas man who was seeking to oust the top executive of Casella Waste Systems threw in the towel just two days before the company’s annual shareholders meeting.
JCP Investment Management, led by James C. Pappas, announced in a news release Wednesday that the company would no longer seek to have its nominees elected to the board of Casella Waste Systems Inc., which trades on NASDAQ as CWST.
Pappas said his proxy contest pushed the company to improve its corporate governance, and shareholders and the board will continue to hold the company accountable for how it governs the company. However, he will not seek to oust John Casella from his post as chief executive officer at the annual shareholders meeting in Vermont on Friday.
The decision follows a months-long effort by JCP Investment Management, which owns 5.8 percent of Casella shares, to overhaul the company’s corporate governance. JCP said the company was routinely making loans to its board, and had paid $80 million over 10 years to Casella Construction in Mendon, also owned by the brothers John and Doug Casella.
“We are gratified to have served as the catalyst for these positive first steps in the right direction and are inclined to give the new Board a chance to deliver on its promises to shareholders,” Pappas said in the release. “In that regard we have decided to withdraw our nomination of directors ensuring the election of the incumbent slate.”
Nonetheless, he said the firm’s proxy fight gained supporters and sent the following message to the board: “the Board must either deliver fully on their plan or shareholders expect to see a full strategic review process for the sale of the Company, not just undertaken but completed in a value-maximizing manner for Class A shareholders. JCP intends to remain a vigilant and vocal shareholder of Casella.”
Among his demands, Pappas asked the board to improve the representation of Class A shareholders — who have 80 percent of voting power — to more than one of nine board seats. Class B stock, in contrast, is wholly owned by John and Doug Casella and gives them super-sized voting power.
Most recently, three different firms backed John Casella’s team, urging shareholders to vote against Pappas and maintain the current leadership. One firm, Proxy Mosaic, said JCP’s plan to fix the company in 100 days “reads like a laundry list of steps that the Company has taken or will take as part of its 2012 transformation.”
Casella’s current leadership issued its own statement in response to the JCP Investment Management decision, saying that the company has been improving since 2012, before the proxy fight started.
“JCP’s 11th-hour concession reflects the feedback we, and undoubtedly JCP, have received regarding Casella’s strategic direction, the substantial progress we have achieved in improving our financial and operating performance, our refreshed Board and the new independent Board leadership that is now in place to oversee our strategic trajectory,” the statement said.
The annual shareholders meeting will be held at the Mountain Top Inn in Chittenden on Friday. Casella Waste Systems stock was trading in the $6 range Thursday, up from about $4 in January.
