Barington nominates three to Omnova's board, including Gingo

Activist investor Barington Capital Group LP is continuing to pressure plastic materials and products firm Omnova Solutions Inc. by nominating three directors for that firm's board — including Joseph Gingo, who helped steer a turnaround at materials firm A. Schulman Inc.

The nominations of Gingo, management consulting veteran Javier Perez and Barington chief James Mitarotonda come less than a week after New York-based Barington sent a letter to Omnova Chairman and CEO Kevin McMullen criticizing Omnova's financial performance during the 14 years that McMullen has led the Beachwood, Ohio-based firm. Barington owns more than two percent of Omnova's common stock.

Barington officials repeated some of their concerns in a Dec. 9 news release announcing their nominees, who will be officially nominated at Omnova's annual meeting in mid-March.

“Barington has been disappointed with Omnova's share price performance, which has underperformed its peers and the market as a whole over the past 14 years,” they said. “As a result, Barington has nominated a slate of three highly qualified individuals to assist the company in improving long-term shareholder value.

“If elected, these directors will seek to work constructively with Omnova's other directors to improve, among other things, the company's profitability, strategic focus, organic growth, corporate governance and executive compensation practices.”

Barington's nomination of Gingo, 69, for the Omnova board is somewhat ironic, since he took the leadership of Fairlawn, Ohio-based Schulman in 2008 after a similar challenge from Barington and investment firm Ramius Capital Group LLC. Previously, Gingo had served on Schulman's board for several years.

Under Gingo, Schulman has made 10 acquisitions and exited lower-profit commodity work for higher-end specialties. The firm's annual sales have recovered from a recession-low of $1.6 billion to $2.1 billion for fiscal 2013, while the firm's earnings per share also have soared from 87 cents in fiscal 2007 to $2.36 for fiscal 2014.

Gingo will retire as Schulman's president and CEO on Dec. 31, with Schulman veteran Bernard Rzepka assuming those roles. Prior to leading Schulman, Gingo held a number of management roles at Goodyear Tire & Rubber Co. for more than 40 years.

Omnova and Schulman occupied headquarters just a few miles apart in Fairlawn for many years. Omnova recently relocated its HQ to Beachwood, about 30 miles away.

Perez, 58, is a former partner at consulting giant McKinsey & Co. During his 14 years at McKinsey, he worked with numerous chemicals firms, including Hoechst Celanese, Norton Chemical Process Products, Hanwha Chemical and Pequiven. He has also held senior strategy positions at Estée Lauder and McGraw-Hill, and began his career as a project manager at Chevron Corp.

Mitarotonda, 60, is Barington's chairman, president and CEO. He currently is a board member for Schulman and for auto parts supplier Pep Boys. Mitarotonda co-founded Barington in 1991 and previously served on the boards of several other publicly traded firms.

Omnova officials this week declined to comment on the Barington nominations.

Omnova had responded to Barington's initial claims on Dec. 3, with McMullen saying in a statement that Omnova officials “are taking aggressive actions to strengthen the company.” According to McMullen, these actions include investment in higher-growth and higher-margin specialty businesses, improving profitability of traditional core businesses and optimizing the structure and use of capital.

Omnova's plastic products include polymer emulsions and plastic laminates for kitchen, bath, window and home furnishing applications. The firm employs 2,300 at 23 locations worldwide.

For the nine months ended Aug. 31, Omnova's sales were down 5 percent to $744 million, while profit fell 45 percent to $6.4 million. In its 2013 fiscal year, Omnova posted sales of almost $1.02 billion. That total represented a drop of about 9.5 percent from fiscal 2012. The firm's profit fell almost 29 percent to $19.6 million in the same comparison.

On Wall Street, Barington's actions drove Omnova's per-share stock price up from $6.73 on Dec. 2 to $7.74 on Dec. 5. The price closed at $7.42 on Dec. 8 — up more than 10 percent from its price before the Barington letter.

Omnova's per-share stock price began 2014 just above $9 and had been near $10 as recently as early June.