Farmer Brothers Company · NASDAQ:FARM
Farmer Brothers — Proxy Contest (September 2016)
98 slides from Farmer Brothers's proxy contest presentation, Sep 29, 2016
Slide 1: In Pursuit of Maximizing Shareholder Value
In Pursuit of Maximizing Shareholder Value September 2016 www.SaveFarmerBros.com
Slide 2: Table of Contents
Table of Contents Executive Summary Poor Track Record of Value Creation and Operating Performance Poor Capital Allocation Decisions The Board’s Questionable Corporate Governance We Do Not Believe the Board Is Capable of Maximizing the Value of Your Investment Our Highly Qualified Directo
Slide 3: Executive Summary
Executive Summary 2
Slide 4: About Save Farmer Bros.
About Save Farmer Bros. Save Farmer Bros. is a shareholder group led by Carol Farmer Waite and certain other members of the founding family, which is the largest shareholder of Farmer Bros. Co. (“Farmer Bros.” or the “Company”) Farmer Bros. is a business that we care deeply about, but it is a bu
Slide 5: The Farmer Bros. Story
The Farmer Bros. Story Farmer Bros. was established by Roy E. Farmer in 1912 to brew and distribute coffee to homes and businesses in the Los Angeles area In 1920, Frank Farmer, Roy’s brother, became a partner in the Company During the 1920’s, Roy and Frank grew the Company to expand to San Di
Slide 6: Farmer Bros.' Sudden Decline
Farmer Bros.’ Sudden Decline In 2005, with the passing of Roy E., the Company was led for the first time by someone outside of the Farmer family During this period the Company struggled to be profitable These struggles were compounded by the 2008 financial crisis which eventually led the Compa
Slide 7: Situation Overview
Situation Overview In August 2015, Ms. Waite wrote a letter to the Board describing her concerns regarding the direction of the Company, as well as its current reputation • Ms. Waite was not provided with any answers or resolutions to her concerns by the Board Therefore, in October 2015, Ms. Wai
Slide 8: The Board Has Failed to Create Sustainable Shareholder Value
The Board Has Failed to Create Sustainable Shareholder Value 15.7x EV/EBITDA 16.0x 15.0x 14.0x 13.0x 12.7x 12.0x 12.1x 12.0x 11.0x 10.0x 9.0x 8.7x 8.2x 8.0x 7.0x LTM EBITDA NTM EBITDA FY 2017E EBITDA Management's Selected Peer Group Median Farmer Bros Farmer Bros. is materially undervalued relative
Slide 9: The Board's Poor Operating Performance
The Board’s Poor Operating Performance 50% LTM Operating Margin 45.5% 45% 40% 35% 30% 25% 21.0% 20% 15.1% 15% 10% 6.2% 5.2% 5% 3.0% 1.9% 0.7% 0% Dunkin' B&G Foods National Treehouse Coffee Farmer Bros SpartanNash Inventure Brands Beverage Foods Holding Foods Farmer Bros. lags most of management’s se
Slide 10: Questionable Capital Allocation Decisions
Questionable Capital Allocation Decisions Recently, the Board has made several capital allocation decisions which we believe were subsequently contradicted by the Company’s hastily executed relocation of its corporate headquarters to another state, including: Long haul fleet investments Long h
Slide 11: The Company's Return on Invested Capital is Significantly Lower Than Its Cost of Capital
The Company’s Return on Invested Capital is Significantly Lower Than Its Cost of Capital 12% 10% 8% 6% 4% 2% 0% -2% Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 WACC ROIC We believe the fact that the Company’s return on capital is significantly lower than its cost of capital demonstrates the Board’s po
Slide 12: Questionable Corporate Governance
Questionable Corporate Governance We question the Board’s corporate governance practices, including: Limited shareholder board representation Poor executive compensation practices, which is reflected in the Company’s extremely poor “say-on-pay” results Dramatically increasing director compen
Slide 13: Which Directors Did Mr. Keown Personally Recruit?
Which Directors Did Mr. Keown Personally Recruit? Director since Director since Director since Hired March Director since Director since Director since 1980 2009 2011 2012 2012 2013 2013 Guenter Berger Jeanne Farmer Hamideh Assadi Mike Keown Randy Clark Charles Marcy Christopher Grossman Motte
Slide 14: We call on the Board to immediately form a special committee
We call on the Board to immediately form a special committee comprised of outside, non-employee directors to review strategic alternatives and to retain the services of an independent financial advisor to assist the special committee in this review We believe it is necessary for the Board to report
Slide 15: Our Highly Qualified Director Nominees
Our Highly Qualified Director Nominees We have nominated three highly qualified candidates to stand for election to the Board at the 2016 Annual Meeting who will be committed to instituting governance best practices, restoring board independence, making pragmatic capital allocation decisions, grow
Slide 16: Poor Track Record of Value Creation and Operating Performance
Poor Track Record of Value Creation and Operating Performance 15
Slide 17: Sustainable Shareholder Value Has Not Been Created
Sustainable Shareholder Value Has Not Been Created 15.7x EV/EBITDA 16.0x 15.0x 14.0x 13.0x 12.7x 12.0x 12.1x 12.0x 11.0x 10.0x 9.0x 8.7x 8.2x 8.0x 7.0x LTM EBITDA NTM EBITDA FY 2017E EBITDA Management's Selected Peer Group Median Farmer Bros Farmer Bros. is materially undervalued relative to managem
Slide 18: The Company's SG&A Spend is Not In Line With Management's Selected Peer Group
The Company’s SG&A Spend is Not In Line With Management’s Selected Peer Group LTM SG&A Margin 34.5% 35% 29.6% 30% 25% 20% 15.1% 15% 12.2% 12.6% 10.9% 10.2% 10% 8.1% 5% Coffee B&G Foods Treehouse Inventure SpartanNash National Dunkin' Farmer Bros Holding Foods Foods Beverage Brands Note these numbers
Slide 19: Corporate Overhead Has Ballooned Under Current Management
Corporate Overhead Has Ballooned Under Current Management $43,000 8.0% $41,000 $39,000 G&A Expense ($ in thousands) 7.0% $37,000 G&A Margin $35,000 6.0% $33,000 $31,000 5.0% $29,000 $27,000 $25,000 4.0% 2012 2013 2014 2015 2016 G&A Expense G&A Margin G&A expense and G&A margin have grown substantial
Slide 20: Farmer Bros.' Operating Margin Lags Most of Management's Selected Peers
Farmer Bros.' Operating Margin Lags Most of Management’s Selected Peers 50% LTM Operating Margin 45.5% 45% 40% 35% 30% 25% 21.0% 20% 15.1% 15% 10% 6.2% 5.2% 5% 3.0% 1.9% 0.7% 0% Dunkin' B&G Foods National Treehouse Coffee Farmer Bros SpartanNash Inventure Brands Beverage Foods Holding Foods Even tho
Slide 21: Operating Margin Has Been Largely Flat
Operating Margin Has Been Largely Flat By adjusting for only restructuring costs and asset sales, the Board and management present a narrative of growing operating income and operating margin The Company has been decreasing inventory and depreciation has been steadily falling, however, which mak
Slide 22: Mr. Keown enjoys boasting about the Company's total shareholder return
Mr. Keown enjoys boasting about the Company’s total shareholder return during his tenure as CEO(1) We do not believe he is to credit for the Company’s improved stock price performance during this time Rather, we believe that most of the improvement has been due to the fact that Mr. Keown’s tenure st
Slide 23: Total Shareholder Return Under Mr. Keown is Not What It Seems
Total Shareholder Return Under Mr. Keown is Not What It Seems 40% Total Shareholder Return(1) Current Management Former Farmer Bros. Chairman & CEO Roy F. Farmer Bros. announces 20% Farmer passes away During the first half of CY it will restate earnings 13.8% 2010 Franklin Mutual because of an error
Slide 24: Poor Capital Allocation Decisions
Poor Capital Allocation Decisions 23
Slide 25: Questionable Capital Allocation Decisions
Questionable Capital Allocation Decisions Recently, the Board has made several capital allocation decisions which we believe were subsequently contradicted by the Company’s hastily executed relocation of its corporate headquarters to another state, including: Long haul fleet investments Long h
Slide 26: Mike Keown Couldn't Sleep: Tell Day quote
“It was 3 a.m. on Feb. 5 and Mike Keown couldn’t sleep. It was ‘Tell Day,’ the day that the president and CEO of Farmer Brothers would inform 350 employees that the 103-year-old coffee company – and most of their jobs – would leave Torrance, Calif., for another city in Texas or Oklahoma. “So he went
Slide 27: Corporate Relocation
Corporate Relocation In February 2015, the Company announced that it was moving its corporate headquarters from its longtime home in California to Texas(1) We believe there are several issues with the relocation • The decision appears to have been hastily made, and we question whether the Board
Slide 28: "You don't know who heard what in the hallway."
“You don’t know who heard what in the hallway. You’re looking over your shoulder a little bit. You hope nobody spills the beans.” Mike Keown, Director & CEO Bill Hethcock, “Take a coffee break and go inside Farmer Brothers' move to North Texas”, Dallas Business Journal, July 24, 2015 27
Slide 29: Was the Corporate Relocation Thoroughly Assessed?
Was the Corporate Relocation Thoroughly Assessed? When compared with other companies that have moved offices to the Dallas-Fort Worth region, was Farmer Bros. relocation of its corporate headquarters too quick?(1) Company Announcement Expected Move In Months Farmer Bros. (Corporate HQ, February 2015
Slide 30: The Relocation Will Cost Investors Much More Than They Were Originally Led to Believe
The Relocation Will Cost Investors Much More Than They Were Originally Led to Believe Original Plan(1) Updated Plan Torrance Closure Costs $25 million $31 million(2) New Facility Costs $35-$40 million $55-$60 million(3) New Capital Expenditures $20-$25 million $35-$39 million(3) “The final budget re
Slide 31: Certain Long-Term Strategic Investments Appear Shortsighted in the Wake of the Relocation
Certain Long-Term Strategic Investments Appear Shortsighted in the Wake of the Relocation Machinery Investment in Torrance Plant Modernizing Long Haul Fleet Rebranding Long Haul Fleet Investments in Torrance Electrical System 30
Slide 32: Machinery Investment in Torrance Plant
Machinery Investment in Torrance Plant Why did funds get utilized to invest in “state of the art” equipment in Torrance only to have the Company move to Texas shortly thereafter? Is the equipment going to be utilized in Texas? 2012(1) 2013(2) The fact that these slides are a year apart and repre
Slide 33: Modernizing Long Haul Fleet
Modernizing Long Haul Fleet Why invest money in the Company’s truck fleet for the long-term, if only to sell a few years later for short-term gains as it switched to third party logistics (“3PL”)? “CapEx in fiscal 2014 included additional investments in our fleet….” Mark Nelson, CFO Q4 2014 Earnings
Slide 34: Management Re-Branded the Company's Long Haul Fleet and Then Sold It Two Years Later
Management Re-Branded the Company’s Long Haul Fleet and Then Sold It Two Years Later Not only did management invest in upgrading the mechanics of the fleet, but they also re- branded it and then sold the long haul fleet two years later “In December 2015, the Company announced its plans to replace
Slide 35: Was the Cost of the Installation of Light Bulbs and an Equalizer Recouped Prior to the Relocation?
Was the Cost of the Installation of Light Bulbs and an Equalizer Recouped Prior to the Relocation? Did the $70,000 in annual savings ever materialize or was the entire project a misuse of shareholder equity if a relocation was on the table? Source: Farmer Bros. Form 8-K filed December 11, 2013 34
Slide 36: These Cost Saving Initiatives Do Not Require Relocating an Entire Company to Another State
These Cost Saving Initiatives Do Not Require Relocating an Entire Company to Another State Replacement of Fleet with Third Party Logistics Vendor Managed Inventory Initiatives Disposal of Former Spice Business These costs savings initiatives have been consistently coupled with the cost savings
Slide 37: Capability or Not? Spice Sold in 2015
Capability or Not? Spice Sold in 2015 “About 70% of our portfolio is in coffee, but we've got nice capabilities in spice….” Mike Keown, Director & CEO 2012 Annual Meeting, December 6, 2012 (emphasis added)(1) “Our major emphasis is on coffee, but we also believe we have opportunity in spice, in tea,
Slide 38: E-Commerce – To Exist or Not to Exist?
E-Commerce – To Exist or Not to Exist? For several quarters management has been touting the Company’s dive into e-commerce as a strategic objective • We believe, investor questions are consistently darted on investor calls and no indication of any added value or profit has occurred in this sector
Slide 39: The Board's poor capital allocation decisions become readily apparent
The Board’s poor capital allocation decisions become readily apparent when comparing the Company’s return on invested capital to its cost of capital 38
Slide 40: The Company's Return on Invested Capital is Significantly Lower Than Its Cost of Capital
The Company’s Return on Invested Capital is Significantly Lower Than Its Cost of Capital 12% 10% 8% 6% 4% 2% 0% -2% Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 WACC ROIC Source: Bloomberg 39
Slide 41: A New Acquisition In the Middle of the Corporate Relocation
A New Acquisition In the Middle of the Corporate Relocation On September 12, 2016, the Company announced that it had entered into a purchase agreement to acquire substantially all of the assets of China Mist Brands, Inc. (“China Mist”) for $10.8 million, plus a performance-based payment of $0.5 mi
Slide 42: The Board's Questionable Corporate Governance
The Board’s Questionable Corporate Governance 41
Slide 43: "[W]e welcome your comments and your criticisms"
“[W]e welcome your comments and your criticisms, preferably more comments….” Mike Keown, Director & CEO 2012 Annual Meeting 42 Source: Farmer Bros. Form 8-K filed December 12, 2012
Slide 44: Director Qualifications as Defined by the Company
Director Qualifications as Defined by the Company “Directors should possess the highest personal and professional ethics, integrity, and values and should be committed to representing the long- term interests of the Company’s stockholders.” Farmer Bros. Corporate Governance Guidelines(1) As the foll
Slide 45: Questionable Corporate Governance
Questionable Corporate Governance We question the Board’s corporate governance practices, including: Limited shareholder board representation Poor executive compensation practices, which is reflected in the Company’s extremely poor “say-on-pay” results Dramatically increasing director compen
Slide 46: Mr. Keown's Personal Recruitment of Three Directors Leads Us to Question the Independence of the Board
Mr. Keown’s Personal Recruitment of Three Directors Leads Us to Question the Independence of the Board Identifying director candidates is the job of the Nominating and Corporate Governance Committee, not the CEO! (1) We have to question the independence of three current directors who were personally
Slide 47: Which Directors Did Mr. Keown Personally Recruit?
Which Directors Did Mr. Keown Personally Recruit? Director since Director since Director since Hired March Director since Director since Director since 1980 2009 2011 2012 2012 2013 2013 Guenter Berger Jeanne Farmer Hamideh Assadi Mike Keown Randy Clark Charles Marcy Christopher Grossman Motte
Slide 48: One Director Is No Longer Deemed Independent
One Director Is No Longer Deemed Independent In the Company’s 2015 proxy statement, six of the Board’s seven directors had independent status(1) Yet, during the FY 2016 earnings call Mr. Keown stated that five directors are now deemed independent “Six of our seven directors are outside, non-employee
Slide 49: We Do Not Believe the Independent Directors Have Adequate Skin In the Game
We Do Not Believe the Independent Directors Have Adequate Skin In the Game We believe there is a troubling misalignment of interests between the Board and shareholders • Outside of Jeanne Farmer Grossman, the independent directors own a mere 0.4% stake in the Company(1) • Accordingly, we believe t
Slide 50: We Do Not Believe the Board is Properly Aligning the Executive Compensation Program to Shareholder Demands
We Do Not Believe the Board is Properly Aligning the Executive Compensation Program to Shareholder Demands Shareholder response to “say-on-pay” advisory vote(1) 2011 2012 2013 2014 2015 88% 63% 67% 68% 60% Starting in 2012, “say-on-pay” results dropped to a level that should concern the Board, yet w
Slide 51: Has the poor "say-on-pay" results led the Board to alienate themselves from shareholders?
Has the poor “say-on-pay” results led the Board to alienate themselves from shareholders? 50
Slide 52: Executive Officer Base Salary
Executive Officer Base Salary Name FY 2012 FY 2013 FY 2014 FY 2015 Michael Keown, CEO $475,000 $475,000 $475,000 $507,000 Newer officers are Mark Nelson, Former CFO 280,000 310,000 320,000 compensated more than their Isaac Johnston, CFO 350,000 Thomas Mattei, Legal Counsel 250,000 predecessors despi
Slide 53: Despite the Constant Realignment of Executive Compensation, the Approval Remains Low
Despite the Constant Realignment of Executive Compensation, the Approval Remains Low Board Responses to Poor “Say-on-Pay” Results “In light of this stockholder advisory vote, during fiscal 2013 the Compensation Committee evaluated the Company’s executive compensation programs… which resulted in the
Slide 54: ISS Report Quote on Compensation Program Concerns
“[T]here are some concerns raised with respect to certain design aspects of the company's compensation program. First, discretionary bonuses were paid to NEOs under the company's corporate relocation plan…. In addition, questions remain over the rigor of the company's performance based equity, which
Slide 55: Director Qualifications as Defined by the Company
Director Qualifications as Defined by the Company “Directors should possess the highest personal and professional ethics, integrity, and values and should be committed to representing the long- term interests of the Company’s stockholders.” Farmer Bros. Corporate Governance Guidelines(1) As the foll
Slide 56: The Board Has Limited Its Transparency When It Comes to Bonus Triggers
The Board Has Limited Its Transparency When It Comes to Bonus Triggers Threshold Threshold Threshold Modified Net Income and Modified Operating Cash Flow: Threshold Modified Net Income Operating Cash Flow: Confidential $22.35 million Operating Cash Flow: and Modified Operating and threshold achievem
Slide 57: Is this the Compensation Committee's motto?
Is this the Compensation Committee’s motto? “If at first you can’t achieve a bonus in the previous fiscal year, don’t work to beat it the next year, just reduce it to make it more achievable” 56
Slide 58: The Company's Compensation Peers Each Lay Out Their Targets in Full Transparency
The Company’s Compensation Peers Each Lay Out Their Targets in Full Transparency Full Transparency Confidential Why is Farmer Bros. the outlier? Source: SEC filings Note: Boulder Brands, Inc. omitted as it has been acquired by Pinnacle Foods Inc. and National Beverage Corp. omitted as its CEO is com
Slide 59: Why Was the Largest Shareholder on the Board Replaced as Comp Chair After Only Two Years?
Why Was the Largest Shareholder on the Board Replaced as Comp Chair After Only Two Years? We believe the removal of Jeanne Farmer Grossman, the Board’s largest shareholder, as Chair of the Compensation Committee reflects an attempt to stifle any differing views on the Board, which is contrary to pro
Slide 60: Rewards Given to Management for Not Performing
Rewards Given to Management for Not Performing Management received a significant bonus which was specifically created for FY 2015 despite performance targets being unmet and performance being worse compared to FY 2014(1) The special bonus was created under the shroud of all the hard work that wa
Slide 61: Mr. Keown Given More Option Shares Than Policy Allows per Calendar Year
Mr. Keown Given More Option Shares Than Policy Allows per Calendar Year “On June 3, 2016, the Compensation Committee of the Board… determined that a portion of the non-qualified stock option granted to Michael H. Keown… on December 3, 2015… was invalid because such portion caused the total number of
Slide 62: It Seems That the Board is Compensating Directors and Management at the Expense of Shareholders
It Seems That the Board is Compensating Directors and Management at the Expense of Shareholders The Board has recently given themselves raises, extra compensation and “created” special payments for management Director Compensation(1) FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Retainer $30,000 $
Slide 63: Self-Serving Board?
Self-Serving Board? Director Compensation FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Guenter Berger $62,725 $55,766 $169,058 $76,030 $78,561 $126,625 Jeanne Farmer Grossman 34,880 71,342 118,996 95,997 102,012 130,253 Martin Lynch 65,622 66,814 122,496 91,747 23,000 Thomas Maloof 84,622 87,314
Slide 64: We Do Not Believe the Board Is Capable of Maximizing the Value of Your Investment
We Do Not Believe the Board Is Capable of Maximizing the Value of Your Investment 63
Slide 65: We Believe Mike Keown Is the Wrong Leader for Your Investment
We Believe Mike Keown Is the Wrong Leader for Your Investment In addition to the poor corporate governance practices of the Board, we have significant concerns about Mr. Keown Merely examining his LinkedIn profile reveals an individual who is prone to self-promotion and exaggeration of his past
Slide 66: Is Mr. Keown Looking for Another Job?
Is Mr. Keown Looking for Another Job? In his LinkedIn summary, Mr. Keown seems to be promoting himself more than he’s promoting Farmer Bros. In fact, Farmer Bros. is not mentioned at all in his LinkedIn summary! Does the Board have a succession plan in case Mr. Keown leaves? Source: www.linkedin.com
Slide 67: A Consistent Track Record of Delivering Results?
A Consistent Track Record of Delivering Results? WACC vs. ROIC 35% LTM SG&A Margin 34.5% 12% 29.6% 30% 10% 8% 25% Farmer Bros.' is a leader in bloated SG&A expense 6% 20% 15.1% 4% 15% 12.2% 12.6% 10.9% 2% 10.2% 10% 8.1% 0% 5% -2% Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 WACC ROIC Source: www.linked
Slide 68: A Team Builder?
A Team Builder? Do the approximately 300 Torrance-based employees who lost their livelihood agree that Mr. Keown is “good at building morale”? “You don’t know who heard what in the hallway. You’re looking over your shoulder a little bit. You hope nobody spills the beans.” Mike Keown, Director & CEO
Slide 69: A Good Morale Builder?
A Good Morale Builder? According to Glassdoor employee reviews, morale doesn’t appear to be very high at Farmer Bros. right now (see Appendix) Source: www.linkedin.com/in/mike-keown as of September 28, 2016 (emphasis added); www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm 68
Slide 70: What does Mr. Keown have to say about his tenure at Farmer Bros. in his LinkedIn profile?
What does Mr. Keown have to say about his tenure at Farmer Bros. in his LinkedIn profile? 69
Slide 71: Mr. Keown's Tenure at Farmer Bros. as Summed Up In His LinkedIn Profile
Mr. Keown’s Tenure at Farmer Bros. as Summed Up In His LinkedIn Profile Did Mr. Keown actually drive “4x stock improvement in 48 months”? Has the restructuring actually realized savings of $20 million? Did Mr. Keown actually recruit three out of seven directors on the Board? Was the last employee su
Slide 72: Did Mr. Keown Exaggerate the Company's TSR During His Tenure at Farmer Bros.?
Did Mr. Keown Exaggerate the Company’s TSR During His Tenure at Farmer Bros.? If Mr. Keown actually “drove” Farmer Bros.' share price 4x in his first 48 months, then its price per share would have been $45.92 on March 23, 2016… it wasn’t Unfortunately for shareholders, Mr. Keown is exaggerating by 2
Slide 73: Did Mr. Keown Exaggerate the Realized Cost Savings of the Corporate Relocation?
Did Mr. Keown Exaggerate the Realized Cost Savings of the Corporate Relocation? When the relocation was announced, the savings were expected to begin in the “latter half of fiscal 2016”(1) During the FY 2016 earnings call, Mr. Keown admitted that the Company had not yet reached $20 million in annual
Slide 74: Did Mr. Keown Exaggerate Employee Morale Over the Last 12 Months?
Did Mr. Keown Exaggerate Employee Morale Over the Last 12 Months? Was the last employee survey actually conducted within the last 12 months? Or is Mr. Keown waiting for the last of the 300 Torrance-based employees to be “removed” before conducting an employee survey? Source: www.linkedin.com/in/mike
Slide 75: Did Mr. Keown Exaggerate His Role in the Implementation of the Coffee Hedging Strategy?
Did Mr. Keown Exaggerate His Role in the Implementation of the Coffee Hedging Strategy? Did Mr. Keown implement the coffee hedging strategy, or was the coffee hedging strategy adopted by the Company well before he was named CEO?(1) Source: www.linkedin.com/in/mike-keown as of September 28, 2016 (emp
Slide 76: We Are Left to Wonder What Else May Have Been Exaggerated in Mr. Keown's Past
We Are Left to Wonder What Else May Have Been Exaggerated in Mr. Keown’s Past Source: www.linkedin.com/in/mike-keown as of September 28, 2016 75
Slide 77: We believe the experience of Messrs. Clark and Mottern may have also been exaggerated
We believe the experience of Messrs. Clark and Mottern may have also been exaggerated in the Company’s filings 76
Slide 78: Has the Company Misstated the Qualifications and Experience of Messrs. Clark and Mottern?
Has the Company Misstated the Qualifications and Experience of Messrs. Clark and Mottern? The Company’s most recent proxy statement discloses that Mr. Clark is a retired CPA and that Mr. Mottern, the Chairman of the Audit Committee, is currently a CPA As late as 2013, the Company’s proxy disclosed t
Slide 79: Mr. Clark "Retired" as a CPA in 1986
Mr. Clark “Retired” as a CPA in 1986 If Mr. Clark’s license expired in 1986, then why did the Company’s 2013 proxy claim that he was an active CPA? Source: CPAVerify.org as of September 7, 2016 (emphasis added) 78
Slide 80: We Have Been Unable to Find Any Verification That Mr. Mottern Has Ever Been a CPA
We Have Been Unable to Find Any Verification That Mr. Mottern Has Ever Been a CPA Did the Board ever bother to verify whether Mr. Mottern, the Chairman of the Audit Committee, is, or ever was, a CPA? Source: CPAVerify.org as of September 28, 2016 (emphasis added); California Board of Accountancy; Co
Slide 81: We Were Surprised to Learn of the Arrest of Senior Vice President of Operations, Barry Fischetto
We Were Surprised to Learn of the Arrest of Senior Vice President of Operations, Barry Fischetto Shareholders and potential investors would not have difficulty coming across this mugshot when performing online due diligence on the Company(1) Barry Fischetto was hired by the Board in December 2014
Slide 82: Our Highly Qualified Director Nominees
Our Highly Qualified Director Nominees 81
Slide 83: We call on the Board to immediately form a special committee
We call on the Board to immediately form a special committee comprised of outside, non-employee directors to review strategic alternatives and to retain the services of an independent financial advisor to assist the special committee in this review We believe it is necessary for the Board to report
Slide 84: Our Highly Qualified Director Nominees
Our Highly Qualified Director Nominees We have nominated three highly qualified candidates to stand for election to the Board at the 2016 Annual Meeting who will be committed to instituting governance best practices, restoring board independence, making pragmatic capital allocation decisions, grow
Slide 85: Tom Mortensen – Improving Operating Leverage
Tom Mortensen – Improving Operating Leverage Experience Held numerous positions during his 35 year career at Farmer Bros. Executive officer at Farmer Bros. from 2012 through 2015 Mr. Mortensen will bring to the Board his extensive knowledge of coffee, tea and culinary product sales and distribut
Slide 86: Mike Keown quote praising Tom Mortensen
“Tom is an extraordinary leader and embodies Farmer Brothers' passion for service and dedication to each of our customers. I am looking forward to his leadership of the route sales organization, which is the backbone of the Company.” Mike Keown, Director & CEO Farmer Bros. Form 8-K filed April 3, 20
Slide 87: John Samore, Jr. – Improving Capital Allocation
John Samore, Jr. – Improving Capital Allocation Experience Currently serves as an independent strategic business consultant and as an independent tax consultant Retired Tax Partner at Arthur Andersen LLP Former Director of Farmer Bros. Certified Public Accountant in California Mr. Samore wil
Slide 88: Jennifer Gonzalez Yousef – Improving Sales Growth
Jennifer Gonzalez Yousef – Improving Sales Growth Experience Current Senior Group Manager, Industry Relations at WNS (Holdings) Limited Former Human Capital Analyst at Deloitte Consulting LLP Ms. Yousef will bring to the Board her deep knowledge of strategy, process improvement, information tech
Slide 89: Appendix
Appendix 88
Slide 90: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 89
Slide 91: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 90
Slide 92: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 91
Slide 93: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 92
Slide 94: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 93
Slide 95: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 94
Slide 96: Glassdoor employee reviews
Source: www.glassdoor.com/Reviews/Farmer-Bros-Reviews-E1390.htm as of September 28, 2016 95
Slide 97: Contact Information
Contact Information Investors: Okapi Partners LLC 1212 Avenue of the Americas, 24th Floor New York, New York 10036 (877) 796-5274 info@okapipartners.com 96
Slide 98: Disclaimer
This presentation with respect to Farmer Bros. Co. (“Farmer Bros.” or, the “Company”) is for general informational purposes only, is not complete and does not constitute legal, tax, investment, financial or other advice or a recommendation to enter into or conclude any transaction or buy or sell any