The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup — Proxy Contest (October 2018)
58 slides from The Campbell's's proxy contest presentation, Oct 1, 2018
Slide 1: Campbell's Leadership Should be Held Accountable for Failing Shareholders
Campbell’s Leadership Should be Held Accountable for Failing Shareholders The dismal stock performance is a report card on the Company’s leadership, which has made a series of blunders. We believe the past year has been particularly disastrous. Campbell’s key brands are rapidly losing market share.
Slide 2: The Independents: Refresh the Recipe & Reclaim Your Lost Value
The Independents www.RefreshCampbells.com TO VOTE: OKAPI PARTNERS LLC (212) 297-0720 or (855) 208-8902 REFRESH THE RECIPE & Reclaim Your Lost Value This Proxy Season Campbell’s Brochure.Cover_Final.indd 1-2 9/27/18 6:24 PM
Slide 3: Campbell's Entrenched Board Has Failed You And Cost You Money
Campbell’s Entrenched Board Has Failed You And Cost You Money $1 invested on August 31, 1998 would be worth: • $4.43 if invested in the S&P 500 $4.46 if invested in the S&P 500 Consumer Staples Index Your $1 invested in Campbell would be worth only $1.34 Footnote: Total shareholder return includes d
Slide 4: Campbell's Interim CEO Admits That Years Of Leadership Missteps Caused This Value Destruction
Campbell’s Interim CEO Admits That Years Of Leadership Missteps Caused This Value Destruction Simply put we lost focus. We lost focus strategically. ‘‘ We had too many initiatives that made the company unnecessarily complex. We were in the food business and the ag business. We had growth businesses
Slide 5: Campbell Faces Big Trouble Today
Campbell Faces Big Trouble Today Losing market share Earnings are declining fast Recent Snyders – Lance Deal will dilute shareholder value, despite leadership’s earlier promises Company is saddled with excessive debt No permanent CEO and troubled board did not plan for smooth succession Smart Money
Slide 6: You Deserve Better: Meet The Independent Slate
You Deserve Better Meet The Independent Slate The Independent Slate Can Fix Campbell with Expertise and Relevant Experience Nominees and Understand Who Have It’s Challenges Worked with Campbell’s First-Hand CPB Experience GEORGE STRAWBRIDGE, JR. Family member, former Campbell Board member WILLIAM D.
Slide 7: The Independent Slate Will Turn Campbell Around With Expertise in Various Areas
The Independent Slate Will Turn Campbell Around With Expertise in Various Areas The Independent Slate is Aligned With You FOOD Kurt T. Schmidt Blue Buffalo, Nestlé, Gerber CORPORATE GOVERNANCE & LEADERSHIP David Silverman CrossLead, McChrystal Group Franci Blassberg Debevoise & Plimpton MARKETING Bo
Slide 8: The Independent Slate Sees Multiple Paths to Value
The Independent Slate Sees Multiple Paths to Value SLATE HONEST STRA TEGIC REVIEWS ACTION BOLD LEADERSHIP NEW Third Point has a History of Helping Shareholders Reclaim Value at Some of America’s Most Iconic Companies Third Point helped create approximately $15 billion of value for shareholders; shar
Slide 9: How To Vote
• How To Vote VOTE THE INDEPENDENT SLATE FOR A BETTER CAMPBELL WHITE VOTE CARD THE REJECT CAMPBELL’S STALE ARGUMENTS AND CAN THE COMPANY’S CARD For Questions, Call Okapi Partners at (855) 208-8902 | www.refreshcampbells.com Campbell’s Brochure_Final.indd 12-13 9/27/18 6:26 PM
Slide 10: October 2018
#RefreshTheRecipe OCTOBER 2018
Slide 11: The information in this presentation is for information purposes only, and this presentation does
#RefreshTheRecipe | 2 The information in this presentation is for information purposes only, and this presentation does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional advice. The information in this presentation is based on publicl
Slide 12: Table of Contents
#RefreshTheRecipe | 3 TABLE OF CONTENTS ?Overview & Summary ?Case for Change at Campbell ?Independent Slate ?Conclusion
Slide 13: Overview & Summary
OVERVIEW & SUMMARY
Slide 14: Third Point's Proven Track Record
#RefreshTheRecipe | 5 ?Proven Track Record oSince inception in 1995, the Firm has generated average net annualized returns of 18% compared to the CS Event Driven Index, HFRI Event Driven Index, and S&P 500 returns of 8%, 9%, and 10%, respectively, over the same period oThird Point has made over
Slide 15: Summary of the Case for Change
#RefreshTheRecipe | 6 ?Campbell?s incumbent Board of Directors (?Board?) has overseen a series of strategic and operational blunders over many years that have driven extreme underperformance in Campbell shares (19% total shareholder return vs. 306% for S&P 500 over last 20 years) ?Within the pas
Slide 16: Case for Change at Campbell
CASE FOR CHANGE AT CAMPBELL
Slide 17: Campbell Overview
#RefreshTheRecipe | 8 CAMPBELL OVERVIEW Packaged food business focused on snacks, soup, simple meals, and beverages Approximately $10b in sales (including Snyder?s-Lance) Owns series of iconic brands Category Mix Note: Campbell market cap approximately $11 billion and enterprise value approximately
Slide 18: Total Shareholder Return: 20-Year
#RefreshTheRecipe | 9 TOTAL SHAREHOLDER RETURN Despite owning a portfolio of iconic brands, Campbell?s incumbent Board has failed to create enduring value for shareholders Note: Total shareholder return includes dividends; data from 9.28.98 to 9.28.18 Source: Third Point LLC; Bloomberg 19% 261% 306%
Slide 19: Total Shareholder Return: 10, 5, 3 and 1 Year
#RefreshTheRecipe | 10 TOTAL SHAREHOLDER RETURN Campbell has also significantly underperformed on a 10YR, 5YR, 3YR, and 1YR basis Note: Total shareholder return includes dividends; data from 9.26.08 (10YR), 9.27.13 (5YR), 9.28.15 (3YR), 9.28.17 (1YR) to 9.28.18 (all charts) Source: Third Point LLC;
Slide 20: Campbell Today
#RefreshTheRecipe | 11 CAMPBELL TODAY The past year has been particularly disastrous ?Losing market share across categories as core business significantly underperforms ?Earnings in rapid decline given sales weakness and substantial margin pressure ?Execution issues already plaguing highly complex i
Slide 21: How Did We Get Here?
#RefreshTheRecipe | 12 HOW DID WE GET HERE? Incumbent Board has consistently failed Campbell shareholders Note: Campbell?s ?everything is on the table? comment from fiscal 3q18 earnings call (5.18.18) Source: Third Point LLC; Company Materials; Bloomberg ?Failed to execute on corporate strategy oCom
Slide 22: How Did We Get Here? In Their Own Words
#RefreshTheRecipe | 13 HOW DID WE GET HERE? Incumbent Board, in their own words, has consistently failed Campbell shareholders Note: Campbell?s comment from fiscal 4q18 earnings call (8.30.18) Source: Emphasis from Third Point LLC; Company Materials Campbell Board member & interim CEO Keith McLo
Slide 23: Corporate Strategy: Over $8 Billion Spent on Acquisitions
#RefreshTheRecipe | 14 CORPORATE STRATEGY Campbell has spent over $8 billion on acquisitions since 2012, cobbling together a hodgepodge of assets across categories and geographies with little strategic logic Independent Slate wonders if incumbent Board merely ?rubber stamped? these acquisitions with
Slide 24: Corporate Strategy: Fresh Food
#RefreshTheRecipe | 15 CORPORATE STRATEGY ? FRESH FOOD Move into fresh food with $1.55 billion deal for Bolthouse Farms has been a disaster Bolthouse Farms deal marred by countless executional issues Fresh food segment now loss-making, despite contribution from Garden Fresh Gourmet Note: Quotation f
Slide 25: Corporate Strategy: Small Deals
#RefreshTheRecipe | 16 CORPORATE STRATEGY ? SMALL DEALS Other deals like Garden Fresh Gourmet (salsa) and Plum Organics (baby food) have not worked Garden Fresh Gourmet Plum Organics Note: Comments from FY18 10-K Source: Third Point LLC; Company Materials ? ? During 2017, sales and operating profit
Slide 26: Corporate Strategy: Juicero Investment
#RefreshTheRecipe | 17 CORPORATE STRATEGY ? SMALL DEALS Campbell also blew shareholder money on speculative investments in businesses like (now defunct) Juicero Note: Campbell invested $13.5 million in Juicero per press release (October 2016) Source: Third Point LLC; Company Materials; Google Images
Slide 27: Corporate Strategy: Soup Missed Key Trends
#RefreshTheRecipe | 18 CORPORATE STRATEGY ? SOUP While distracted with bad deals, Campbell missed key trends in its core soup business ?Campbell missed key shift in consumer preferences in soup (despite dominating category) oNatural and organic ingredients oContemporary packaging (e.g. resealable bo
Slide 28: Corporate Strategy: Soup in Decline
#RefreshTheRecipe | 19 CORPORATE STRATEGY ? SOUP Core soup business lost relevance with consumers and is now in significant decline Problems largely created by self-inflicted issues Sales declines have accelerated with most recent quarter down a shocking 14% Note: Campbell?s comment from fiscal 4q18
Slide 29: Corporate Strategy: Soup Retail Channel and Market Share Losses
#RefreshTheRecipe | 20 CORPORATE STRATEGY ? SOUP Mismanagement of retail channel has driven large market share losses Problems (again) created by self-inflicted issues Campbell losing share to branded AND private label competitors Note: Campbell?s comment from fiscal 4q18 earnings call (8.30.18); La
Slide 30: Corporate Strategy: Snacks and Snyder's-Lance
#RefreshTheRecipe | 21 CORPORATE STRATEGY ? SNACKS With fresh food and soup under pressure, Campbell doubled down on snacks in an expensive ?bet the company? transaction that brings significant financial and operational risks ?Acquired Snyder?s-Lance, a US snacks business, in March 2018 oHigh purcha
Slide 31: Corporate Strategy: Snyder's-Lance Deal Off to a Poor Start
#RefreshTheRecipe | 22 CORPORATE STRATEGY ? SNACKS Snyder?s-Lance deal already off to a poor start Campbell lowered accretion guidance twice in the first six months after deal announcement Sales in measured channels have deteriorated since the acquisition and are now declining Note: IRI scanner data
Slide 32: Corporate Strategy: Earnings
#RefreshTheRecipe | 23 CORPORATE STRATEGY ? EARNINGS Strategic and operational blunders have tanked sales, operating profit, and earnings Campbell?s most recent quarter was disastrous and inspires little hope for the future Note: Campbell guided FY19 Adj. EPS to $2.45-2.53 before divestitures vs. FY
Slide 33: Corporate Strategy: Another Negative Update
#RefreshTheRecipe | 24 CORPORATE STRATEGY ? EARNINGS Less than a month after giving terrible FY19 guidance, Campbell gave investors another negative update ?Campbell, in its FY18 10-K, disclosed that ?cost increases, shipment delays, and weather-related issues? would have a ?negative impact? on fisc
Slide 34: Return on Invested Capital
#RefreshTheRecipe | 25 RETURN ON INVESTED CAPITAL Poor capital allocation and declines in the core business have combined to weigh on returns Note: Return on Invested Capital defined as Adj. EBIT (per Company) less 25% tax rate (per Company FY19 guidance), divided by average invested capital (per Bl
Slide 35: Lack of Accountability
#RefreshTheRecipe | 26 LACK OF ACCOUNTABILITY Incumbent Board failed to hold CEO accountable ?Incumbent Board claims to maintain a ?strong alignment between corporate performance and compensation? ?However, that same Board lavished its fellow board member Denise Morrison with more than $60 million i
Slide 36: Lack of Leadership
#RefreshTheRecipe | 27 LACK OF LEADERSHIP Incumbent Board also failed to plan for succession, leaving Campbell without a permanent CEO at a crucial juncture in its history ?Denise Morrison (CEO since August 2011) abruptly left as the Company reported disastrous fiscal 3q18 earnings and lowered forwa
Slide 37: Shareholder Engagement
#RefreshTheRecipe | 28 ?Third Point had limited confidence that Campbell?s incumbent Board (after years of abysmal oversight) would conduct a proper and thoughtful strategic review ?Furthermore, Third Point was concerned the incumbent Board would look to prioritize the interests of corporate insider
Slide 38: Shareholder Engagement: Analyst Support
#RefreshTheRecipe | 29 Note: Emphasis from Third Point; quotation from J.P. Morgan report ?Downgrading to Underweight? (8.10.18) Source: Third Point LLC; J.P. Morgan SHAREHOLDER ENGAGEMENT Third Point?s view garnered support from leading sell-side analysts J.P. Morgan ? ? We are on board with [Third
Slide 39: Media Perspective
#RefreshTheRecipe | 30 MEDIA PERSPECTIVE Even the Wall Street Journal supported Third Point?s view Note: Emphasis from Third Point; quotation from WSJ column ?Heard on the Street? (7.5.18) Source: Third Point LLC; Wall Street Journal The Wall Street Journal ? ? Campbell Soup Co. has been one of the
Slide 40: Strategic Review
#RefreshTheRecipe | 31 STRATEGIC REVIEW Incumbent Board had an opportunity to take bold action during the strategic review process, but instead largely recommitted to the failing status quo ?Campbell concluded its strategic review by announcing plans to divest its fresh foods and global snacks busin
Slide 41: Analyst Perspective After Failed Strategic Review
#RefreshTheRecipe | 32 ANALYST PERSPECTIVE After failed strategic review, leading sell-side analysts see need for greater change Note: Emphasis from Third Point; quotations from Goldman Sachs report ?Fundamentals deteriorate and turnaround plans are still lacking? (8.30.18), Consumer Edge Research r
Slide 42: Analyst Perspective: Sell Ratings
ANALYST PERSPECTIVE Absent greater change, analysts see little hope for shares (under the incumbent Board) Sell-side analysts more bearish on Campbell than they are on other US packaged food peers... and leading banks still see downside to shares % of analysts with “sell” ratings 47% 28% 24% 13% 13%
Slide 43: The Independent Slate
THE INDEPENDENT SLATE
Slide 44: Independent Slate Nominees
#RefreshTheRecipe | 35 Munib Islam (Third Point) Matthew Cohen (Third Point) Michael J. Silverstein (Boston Consulting Group, Author) Franci Blassberg (Debevoise & Plimpton) Sarah Hofstetter (360i, Kayak Communications) Lawrence C. Karlson (former Campbell Board member) Bozoma Saint John (Endeav
Slide 45: Independent Slate Experience and Skills
#RefreshTheRecipe | 36 Independent Slate Independent Slate has the experience and skills to ensure a smooth transition and help create a better path forward for Campbell ?Strawbridge is a Dorrance family member and large Campbell shareholder ?Strawbridge and Karlson both previously served on Campbel
Slide 46: Independent Slate Sees Multiple Paths to Create Shareholder Value
#RefreshTheRecipe | 37 Independent Slate Independent Slate sees multiple paths to create shareholder value Source: Third Point LLC Independent Slate will manage Campbell to enhance long-term value and pursue optimal outcomes for ALL shareholders ?Independent Slate, once elected, will help execute an
Slide 47: Simple Meals & Beverages: Distinct Outlook and Opportunities
#RefreshTheRecipe | 38 SIMPLE MEALS & BEVERAGES Grocery business has its own distinct outlook and set of opportunities Leading brands across soup, broth, sauce, salsa, and shelf-stable juice Compelling investment case Source: Third Point LLC; Company Materials; Google Images ?Over $5 billion in
Slide 48: Simple Meals & Beverages: Opportunities to Stabilize Sales
#RefreshTheRecipe | 39 SIMPLE MEALS & BEVERAGES Independent Slate sees ample opportunities to stabilize sales and drive earnings growth Focus on growing soup business (i.e. Stop apologizing for soup!) oCurrent Board still treats soup as a ?harvest? business and seemingly does not understand the
Slide 49: Snacks: A More Focused Strategy
#RefreshTheRecipe | 40 SNACKS Similarly, snacks would benefit from its own more focused strategy Leading brands across crackers, cookies, bread, pretzels, and chips Compelling investment case Source: Third Point LLC; Company Materials; Google Images ?Nearly $5 billion in sales in attractive growth c
Slide 50: Snacks: Opportunities to Drive Sales and Earnings Growth
#RefreshTheRecipe | 41 SNACKS Independent Slate sees ample opportunities to drive sales and earnings growth Outperform broader snacking category through smart innovation in core brands oSnacking remains a healthy category with strong and consistent growth oAmple room for innovation (flavors, ingredi
Slide 51: M&A Opportunity
#RefreshTheRecipe | 42 M&A OPPORTUNITY Sale of all or part of the Company could accelerate value creation Packaged food comparable transactions Independent Slate perspective Note: Using Bloomberg consensus FY19 EBITDA of $1.81 billion as of 9.28.18 Source: Third Point LLC; Barclays Research; Blo
Slide 52: Lack of Leadership: New Leadership Required
#RefreshTheRecipe | 43 LACK OF LEADERSHIP New leadership required to fix Campbell ?Incumbent Board has overseen a series of strategic and operational blunders that have placed the Company in a precarious situation ?Incumbent Board has lost all credibility and it would be reckless to leave those that
Slide 53: Conclusion
CONCLUSION
Slide 54: Time to #RefreshTheRecipe and Elect the Independent Slate
#RefreshTheRecipe | 45 CONCLUSION Time to #RefreshTheRecipe and elect the Independent Slate Source: Third Point LLC www.RefreshCampbells.com
Slide 55: See What Others Have to Say About CPB
SEE WHAT OTHERS HAVE TO SAY ABOUT CPB ~ 2018Third Point LLC All Rights Received TERMS OF USE PRIVACY POLICY
Slide 56: Third Point: Case for Change
THIRD POINT ABOUT US CASE FOR CHANGE OUR NOMINEES HOW TO VOTE NEWS & RESOURCES CONTACT CASE FOR CHANGE Review Third Point’s Opinions, Research and Views Regarding the Case for Change at CPB Third Point Shares Public Presentation Our presentation lays out why the Company’s current leadership is incap
Slide 57: How to Vote
THIRD POINT ABOUT US CASE FOR CHANGE OUR NOMINEES HOW TO VOTE NEWS & RESOURCES CONTACT HOW TO VOTE When available. Proxy materials can be obtained by contacting: OKAPI PARTNERS LLC (212) 297-0720 or (855) 208-8902 cpbinfo@okapipartners.com If you would like to be notified when materials become avail
Slide 58: Important Materials and Information
THIRD POINT ABOUT US CASE FOR CHANGE OUR NOMINEES HOW TO VOTE NEWS & RESOURCES CONTACT IMPORTANT MATERIALS Download The Independents, Our Brochure for Shareholders (PDF) Download Our Presentation on Campbell Soup Company (PDF) Download Our September 28 letter to Fellow Shareholders (PDF) Download Ou