By Svea Herbst-Bayliss
NEW YORK (Reuters) – Monro Inc on Wednesday said it plans to refresh its board of directors and will consider restructuring its equity shares after calls from an activist investor for governance reforms and the possible sale of the U.S. auto service company.
Monro Chief Executive Officer Michael Broderick, who took the top job at the company last year, told investors and analysts on an earnings call that the board had hired a search firm to help find new director candidates and was looking to hire a financial advisor to discuss options to recapitalize its shares.
The financial advisor would help work on changes that “would provide for all of Monro’s outstanding stocks to have one vote per share and for the elimination of veto power of one class of stock over another,” Broderick said.
While no final decisions have been reached, Wednesday’s announcement resonated with investors who have been frustrated by Monro’s sagging share price and the tight grip of the company’s controlling investor, investment banker Peter Solomon.
The company is currently valued at $1.5 billion and its stock price has tumbled 22% since January.
Investors have long signaled they want each share in the company to have one vote, but Monro has said it could not change its share structure without Solomon’s consent.
Solomon, 84, is able to overrule votes from all other shareholders because he owns all of Monro’s outstanding Class C Preferred shares.
Pressure has been building on Monro since investment firm Ides Capital began pushing for changes two years ago. It ratcheted up in August when shareholders refused to re-elect two board directors.
Ides, founded in 2015 by Dianne McKeever and Rob Longnecker, began by asking for better returns, improved operations and a more diverse boardroom and workforce. More recently, Ides called for a strategic review committee to be formed to explore alternatives for the company.
(Reporting by Svea Herbst-Bayliss; Editing by Paul Simao)
