The proxy fight between Ingles Markets and Sackler-affiliated investment firm Summer Road LLC escalated this week as all three major independent proxy advisory firms recommended shareholders vote for Summer Road’s director nominee, while Ingles responded with an open letter alleging deeper ties between the nominee and the Sackler family than previously disclosed.
Proxy Advisors Support Held
Institutional Shareholder Services, Glass Lewis and Egan-Jones each recommended that shareholders elect Rory A. Held to Ingles’ board at the April 30 annual meeting. The firms cited concerns about the company’s corporate governance, capital allocation, disclosure practices and shareholder returns.
ISS wrote that Ingles’ governance structure “appears to be a quintessential example of a public company managed as if it were a private enterprise” and noted that the board “has long been complicit in disenfranchising Class A shareholders.” Glass Lewis said Ingles’ declining returns “seem to be attributable to structural weakness rooted in the Company’s status quo, rather than cyclical headwinds.” Egan-Jones noted that the company deployed approximately $1.5 billion in capital expenditures over the past decade “with no meaningful improvement in operating income.”
Summer Road, which holds approximately 3 percent of Ingles’ Class A shares, said the recommendations validate its case for boardroom change.
Ingles’ Response
Ingles countered with an open letter to shareholders arguing that Held’s connections to the Sackler family are far more extensive than Summer Road has represented. The company said public records show Held serves as a successor co-trustee of multiple Sackler family trusts, including Crystal Trust and Data Trust, both formed in Wyoming with beneficiaries that include Richard Sackler and his heirs. Richard Sackler served as co-chairman of Purdue Pharma’s board during the years leading to the OxyContin crisis.
The company argued that Held’s trustee roles create legal duties of loyalty to the Sackler family that would conflict with fiduciary duties to Ingles shareholders if he were elected to the board. Ingles said Summer Road has “materially misrepresented” Held’s role in the Sackler family’s network of trusts and entities, some of which were used to hold assets derived from Purdue Pharma.
“Summer Road’s assertion that Rory Held ‘never worked for Purdue Pharma’ is misleading because it fails to mention the significant role that he has played in securing and managing the arguably ill-gotten wealth of the Sackler family, derived primarily from Purdue Pharma,” the company stated.
Ingles also disputed Held’s claims about the company’s undeveloped real estate, saying its 29 undeveloped holdings amount to about one-third of the acreage Held has cited. The company warned that Summer Road’s capital allocation recommendations could mirror strategies that contributed to the failures of other grocery chains.
What’s at Stake
The contest centers on two seats on Ingles’ eight-member board. Ingles is urging shareholders to vote for its nominees, Rebekah Lowe and Dwight Jacobs, on its white proxy card. Summer Road is urging support for Held on its gold proxy card. The annual meeting is scheduled for April 30.
Ingles Markets operates 197 supermarkets across six Southeastern states.