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(Sharecast News) - Whitbread urged investors on Monday to vote against Corvex Asset Management's resolution to appoint one of its partners to the board, insisting that the activist investor's proposals are not a "superior alternative" to the company's five-year plan.
Corvex, which owns around 6.4% of Whitbread's ordinary shares and has an economic interest of roughly 7%, is seeking to appoint James Gemmel to the board. It said in September that it had spent the last year seeking to engage privately with the board.
Corvex said it had become increasingly concerned about Whitbread's strategic direction, structural complexity and approach to capital allocation, arguing that its recent strategy review had failed to address underlying challenges.
Corvex said it was no longer calling for a sale of Whitbread - having pushed for one earlier this year - or seeking control of the company - but rather aiming for a single board seat and a "rigorous, fact-based review" of all credible strategic alternatives.
"Whitbread is a unique collection of assets anchored by the iconic Premier Inn brand with a leading market position," Corvex managing partner Keith Meister said at the time. "What has changed is our growing concern with the company's strategic direction, continued commitment to the status quo, and, in particular, the structural complexity of the business and its approach to capital allocation."
However, Whitbread urged its shareholders to vote against Corvex's resolution on Monday.
The Premier Inn owner argued that its five-year plan was already delivering, with the first-half performance "clearly demonstrating early evidence of progress".
"It is crucial that execution and delivery are not compromised or delayed," it said.
"Whitbread has a highly experienced board with all requisite skills to oversee delivery of the five-year plan and increase returns for shareholders. Adding Corvex's proposed additional director would only serve to add a board member with no clear plan of action, risk reopening and repeating work already comprehensively completed, and create significant distraction during a critical delivery -putting shareholder value at risk.
"Corvex has not articulated a superior alternative to the five-year plan or demonstrated how the proposed appointment of the Corvex nominee, James Gemmel, to the board would enhance the five-year plan, its execution or the capabilities of the board."
Whitbread's five-year plan, announced in April, involves the sale and leaseback of £1.5bn of its freehold properties, targets £2bn of free cash flow, and will result in the loss of around 3,800 jobs as it does away with its chain of branded restaurants.
At 1408 BST, the shares were down 1.9% at 2,561p.
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