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Institutional Shareholder Services (ISS) Recommends That Pantry Shareholders Vote The GOLD Proxy Card To Elect CPS Nominees

Stocks in this article: PTRY

HOUSTON, March 3, 2014 /PRNewswire/ -- Concerned Pantry Shareholders ("CPS"), a group led by JCP Investment Management, LLC and Lone Star Value Management, LLC, together a significant shareholder of The Pantry, Inc. ("The Pantry" or the "Company") (NASDAQ: PTRY), announced today that Institutional Shareholder Services ("ISS"), a leading independent proxy voting advisory firm, has recommended that stockholders of The Pantry vote on CPS's GOLD proxy card to support the election of its director nominees -- Todd Diener and James Pappas – to the Board of Directors of The Pantry (the "Board").  ISS recommended that The Pantry stockholders "DO NOT VOTE" on the Company's white proxy card.

ISS' show of support marks the second such strong recommendation for a vote on CPS's GOLD proxy card from an independent proxy voting advisory firm in the past week.  Last week, Glass Lewis & Co., LLC ("Glass Lewis") recommended that The Pantry shareholders vote on CPS's GOLD proxy card to elect all three of CPS's highly qualified nominees after concluding that CPS has made "a far more compelling case in favor of board-level change than Pantry has submitted in favor of maintaining the status quo."

James Pappas of JCP Investment Management, LLC and Jeff Eberwein of Lone Star Value Management, LLC remarked, "We are deeply gratified by the strong endorsement of both leading proxy advisory firms and appreciate the overwhelming support we have received from our fellow shareholders to date.  We urge you to remain focused on the core issues in this contest and the facts – The Pantry has been plagued by persistent underperformance and deep undervaluation for which the current Board continues to have no viable solution.  In contrast, CPS has a well-thought out plan to improve the Company and the best qualified directors to help implement and oversee it.  We are more confident than ever that with your support we can help create a better future for The Pantry."

In reaching its conclusion, ISS performed a detailed analysis of both sides' positions in the election contest.  In its report, ISS focused on the Company's sustained operating and TSR underperformance, strategic track record, and governance profile.  ISS concluded that shareholders should vote on the GOLD proxy card saying:

"Given the long tenure of the three targeted incumbent directors, however, and the company's poor performance over a sustained period, it appears that the dissidents have met their burden of proving that change on the board is warranted."

Excerpts from ISS' Analysis & Recommendation

On The Pantry's Persistent Destruction of Shareholder Value and Justified Lack of Shareholder Confidence in the Current Board:

"Over the last 10 years the board has not simply failed to increase, but has failed even to sustain, shareholder value. Given the company's financial constraints and increased competition, moreover, the window to create shareholder value may be closing. Shareholders' lack of confidence in the board's and management's ability to unlock shareholder value, as manifested in the share price performance, appears justified."

On The Pantry's Deep and Sustained Total Shareholder Return (TSR) Underperformance:

"Over the last 10 years, PTRY's TSR has greatly underperformed its peers and the NASDAQ index, by 369 percentage points and 143 percentage points, respectively. The underperformance began in May 2007, significantly before the financial crisis, and has persisted.  Over the last 5 years the company has continued to materially underperform the peer group by 362 percentage points and the NASDAQ Index by 213 percentage points."

"…the sustained TSR underperformance over the last 10 years has transcended good and bad economic cycles. Moreover, the company's peers seemed to have managed their way these cycles."

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