JANA Partners, an influential shareholder of Lamb Weston Holdings, Inc. (NYSE:LW), has called for a substantial shake-up of the company's board and leadership. In a letter released on Monday, the activist investor group urged for changes to enhance shareholder value and suggested that Lamb Weston should consider selling if these changes are not made.
The group, which holds over 5% of Lamb Weston's shares, voiced disappointment with the company's recent performance. JANA highlighted Lamb Weston's underperformance relative to the S&P 500 and its peers over the past five years, including a notably weak earnings report in 2024 described as one of the worst for a large-cap food producer in recent times.
JANA's letter pinpointed several areas where it believes Lamb Weston's leadership has failed, including financial and operational issues that allegedly led to a near $400 million EBITDA loss over the last two and a half years. The investor criticized the company for customer relationship errors, inaccurate forecasting, a problematic ERP project, and product quality issues that have caused significant financial losses and damaged Lamb Weston's reputation.
The activist investor also took aim at Lamb Weston's capital allocation and executive compensation practices, arguing that they do not align with shareholder interests. JANA outlined concerns over questionable capital expenditures, stock buybacks preceding earnings disappointments, and executive pay targets that do not match the company's actual performance.
Additional concerns were raised regarding the use and transparency of Lamb Weston's aviation assets. JANA's examination of flight records raised questions about the business use of the company's corporate plane.
This push for change follows reports from last week that Post Holdings (NYSE: NYSE:POST) is in discussions with bankers to consider acquiring Lamb Weston. JANA's previous announcement of its stake in the company on October 18, 2024, was said to have prompted a $1 billion increase in Lamb Weston's market value, signaling market interest in a new direction for the company.
The letter concluded with JANA offering to collaborate with Lamb Weston's Board to implement changes and improve company performance. However, the investor group warned that if the Board is unwilling to make significant changes, Lamb Weston should look into a sale to provide the best return for its shareholders.
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