An investor has established a significant position in Fortune Brands Innovations (NYSE: FBIN) and is pursuing governance changes that include seeking to remove the company's incoming chief executive, people familiar with the matter said.
Garden Investments has moved into the ranks of Fortune Brands' largest shareholders and is aiming to become the single largest holder over time, according to the people. The firm's involvement triggered a 5.2% rise in Fortune Brands stock in premarket trading after the investor's intentions became public.
Representatives for Garden Investments confirmed that the group has privately submitted a slate of director nominees to challenge the current board at Fortune Brands' next annual shareholder meeting. The company operates with a staggered board structure - only three directors are scheduled for election this year - meaning any change to board control would be phased over multiple years.
Fortune Brands is best known for a portfolio of home and building products, including Moen faucets, House of Rohl kitchen and bath fixtures, Master Lock padlocks and SentrySafe waterproof safes.
The company currently has a market capitalization of roughly $6.5 billion. That market value follows a near-30% decline in the company's share price over the past five years; by comparison, its largest competitor, Masco - maker of Delta faucets - has gained close to 40% over the same period.
Earlier this month Fortune Brands announced that CEO Nicholas Fink would be departing to pursue another leadership opportunity. The company disclosed that same day that quarterly results had fallen short of expectations, prompting an 18% drop in the share price. The board said it would appoint Amit Banati - an existing director with a background in consumer products - as CEO effective in May.
Garden Investments is reported to be concerned that the board acted hastily in naming Banati, given that the appointment was announced one day after Fink informed the company of his intention to leave. The investor views Fink as having lacked leadership and industry experience and believes the choice of Banati reflects a similar shortfall, according to the people familiar with Garden's stance.
Context and next steps
Garden's nominees and any proxy contest would play out against the company's staggered board structure and upcoming annual meeting timetable. With only a subset of directors up for election this year, any campaign to change the board's composition could require persistent engagement over multiple years.