NEW YORK—Barington Capital Group L.P. said it intends to nominate three people to Omnova Solutions Inc.'s board of directors at the firm's 2015 Annual Meeting of Shareholders in mid-March—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 Kevin McMullen, Omnova chairman and CEO, criticizing Omnova's financial performance during the 14 years that McMullen has led the Beachwood, Ohio-based firm. Barington owns more than 2 percent of Omnova's common stock.
“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. As a result, Barington has nominated a slate of three highly qualified individuals to assist the company in improving long-term shareholder value,” Barington said in a statement.
“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.”
Gingo took the leadership of Fairlawn, Ohio-based A. Schulman in 2008 after a similar challenge from Barington and investment firm Ramius Capital Group L.L.C. Gingo had previously served on A. 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.
Omnova and Schulman occupied headquarters just a few miles apart in Fairlawn for many years. Omnova recently spent $17 million on its new headquarters in Beachwood, a move Barington branded as a “showpiece” headquarters in its letter given the firm's poor financial performance and weak returns to shareholders.
Perez 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 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 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.