It looks like the battle between Omnova Solutions and an activist investor is heading to a vote.
Barington Capital Group LP on Jan. 27 filed a preliminary proxy statement with the Securities & Exchange Commission, asking that their three candidates for Omnova's board be voted on at the firm's upcoming annual meeting. No date for the meeting has been set, but last year's event was held on March 19.
New York-based Barington is nominating Joseph Gingo — former CEO of plastics materials firm A. Schulman Inc. — as well as management consulting veteran Javier Perez and Barington chief James Mitarotonda for three open spots on the board of Omnova, a maker of plastic products and specialty chemicals based in Beachwood, Ohio.
According to the Omnova website, the board terms of CEO Kevin McMullen, Homax Corp. CEO Larry Porcellato and former A. Schulman executive Robert Stefanko expire this year. Stefanko held a number of executive positions at Schulman for 34 years before retiring as the firm's chairman in 2006.
Barington previously has cited financial underperformance at Omnova. In the proxy filing, Barington officials said that Omnova's share price performance “has, in our opinion, been disastrous for shareholders.”
“In our opinion, the incumbent directors have been given more than an adequate amount of time to create value for shareholders, and must take responsibility for the company's disappointing share price performance on their watch,” they added.
Barington owns more than 2 percent of Omnova's common stock. In the proxy filing, the firm supplied data showing that in the year ended Jan. 23, Omnova's per-share stock price fell 22 percent, while prices of stocks on the S&P 500 Chemicals Index rose 14 percent. Other data showed that stock prices on that index have more than tripled since McMullen became Omnova's CEO in December 2000, while Omnova's per-share price in that span is up less than 40 percent.
In the proxy, Barington recommends that Omnova rationalize its portfolio of businesses, engage in a strategic review, invest in its sales force and more effectively manage expenses. “We believe that Omnova operates in too many end markets and suffers from a lack of strategic focus,” they said.
Omnova officials declined to comment on the proxy filing. On Jan. 20, the firm released full-year financial results for 2014, showing that sales for the year fell 3 percent to $987 million and that profit fell more than 40 percent to $11.5 million.
“We have taken, and will continue to take, decisive actions to respond to recent market declines in our traditional core businesses,” chairman and CEO Kevin McMullen said in a news release.
Plastic products made by Beachwood, Ohio-based Omnova include polymer emulsions and plastic laminates for kitchen, bath, window and home furnishing applications. The firm employs 2,300 at 23 locations worldwide.
On Wall Street, Omnova's per-share stock price was near $8.40 in late December, but it had fallen to just under $7 in late trading Jan. 28.