Some Ace owners to challenge board's director slate
(Crain’s) — Some Ace Hardware Corp.’s owners, concerned about the company’s future, are vying for positions on the company’s board and are challenging nominees that will be handpicked by the cooperatives’ nominating committee.
The move, seen more often in public companies when activist shareholders challenge a company’s board nominees, is also in response to the co-op’s push to transition into a corporation and the resulting $154-million accounting snafu discovered during that process in August.
A group of dealers, who call themselves Concerned Ace Owners, have tapped four candidates for dealers to consider for the four open spots that will be voted on in June 2008.
“Now, more than ever, it is critical that the Owner-Members of Ace be able to engage their board of directors and management in a meaningful dialog, to ensure our expectations regarding the handling of this loss and the future of our company, are being fully addressed,” the group said in a letter, obtained by Crain’s, to dealers who own about 4,600 stores nationwide. “We must protect our investment in this company.”
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An Ace spokesman wasn’t immediately available to comment.
After discovering the accounting shortfall just as it was considering moving from being a co-op to a corporation, CEO Ray Griffith told his dealers that Ace may have to restate earnings going back at least five years. And the co-op may have to forgo returning profits to store owners this year, which has dealers anxious about how the accounting discrepancy happened and how it has been handled.
Mr. Griffiths said at the time that no money or inventory was missing.
New board members will be voted on at the annual meeting next June. According to the letter, the company’s board has had a long-standing practice of selecting and promoting one nominee for each open position.
