The Pantry, Inc. (NASDAQ: PTRY), a leading independently operated convenience store chain in the southeastern U.S., today sent the following letter to stockholders in response to the ill-informed arguments made by the dissident stockholder group led by JCP Investment Management, LLC in connection with the Company's 2014 Annual Meeting of Stockholders: Dear Fellow Stockholder, At The Pantry’s Annual Meeting of Stockholders on March 13, 2014, you have the opportunity to protect the value of your investment by supporting your Board of Directors on the WHITE proxy card. A dissident stockholder group, led by JCP Investment Management, LLC, has undertaken an aggressive campaign of misinformation, and put forward an empty plan that illustrates a fundamental lack of understanding of our business, in an effort to put its director nominees on The Pantry’s Board. We believe the election of the dissident nominees would disrupt the ongoing progress your Board and management team are making on the Company’s strategic plan. It is important for us to set the record straight with respect to the inaccurate statements made by the dissident group, in order to ensure that stockholders have all the facts when making this important decision about the future of their investment. THE DISSIDENT GROUP’S “PLAN” TO ENHANCE STOCKHOLDER VALUE PRESENTS NO NEW IDEAS TO CREATE STOCKHOLDER VALUE AND REFLECTS A LIMITED UNDERSTANDING OF THE COMPANY’S BUSINESS Following an in-depth strategic and operational review that culminated in October 2013, the Company’s leadership, with the support of a globally recognized consulting firm, identified key areas of focus for creating meaningful value for the Company and all stockholders, including sales growth initiatives, strategic store enhancements, acquisitions and thoughtful expense management. The Pantry’s Board and management team have acted on these key focus areas and implemented changes that have positioned the Company for sustained, profitable growth.
FACT: The Company’s Board and management team have clearly communicated and are actively implementing a QSR plan to drive stockholder value. Contrary to the uninformed insistence of the dissident group, The Pantry’s QSR roll-out plan is not constrained by capital. Your Board and management have studied QSR market dynamics carefully, and know that the optimal strategy for success is not an “urgent build plan” but a measured expansion with top-tier QSR partners, taking into account market and brand availability, construction costs and store size. The Company has 223 QSRs in place today and is targeting 20 new QSRs in 2014, with 40-50 new QSRs per year thereafter. In total, The Pantry has identified over 500 additional sites for potential QSR expansion.The performance of the Company’s existing QSRs indicate that this strategy is working. QSR comps have steadily improved over the last four quarters. Moving forward, the Board and management team will continue to pursue this QSR opportunity in a thoughtful way that will best enhance stockholder value. The Board’s expertise and significant experience in retail and convenience store operations, is far more relevant to this undertaking than the purported knowledge base of the dissident group’s nominees, which includes:
- Todd Diener’s experience in the casual dining restaurant industry, an area of foodservice that differs significantly from the QSR business;
- James Pappas’ one year of experience as chairman of Morgan’s Foods, Inc., an over-the-counter (OTC) listed stock with a $12 million total market capitalization, or his director experience at Samex Mining Corp., a publicly traded Canadian mining company that ceased operations within a year of his joining the board; and
- Joshua Schechter’s OTC board experience in hair solutions, engineered products and telecommunications infrastructure.
FACT: The Pantry has had only two permanent CEOs in four years, and a total of four CEOs in the last 18 years. Upon the retirement of Peter Sodini in 2009, who served as CEO for more than 13 years, the Board appointed Terry Marks, who was CEO for two years. Following Mr. Marks’ departure in 2011, the Board chose current CEO Dennis Hatchell to lead the Company. During the period between Mr. Marks’ departure and Mr. Hatchell’s start date in 2012, our Chairman, Ed Holman, served temporarily as interim CEO, a common practice at public companies undertaking a search for a permanent CEO. Mr. Hatchell has served as the current CEO for two years and Ed Holman remains active as Chairman of the Board today.FACT: Starting in 2012, the Board has strengthened the senior management team with the addition of several key hires, including a new CEO, CFO, Chief Merchandising Officer, CIO and VP of Real Estate & Business development. The management changes undertaken since 2012 have ensured that The Pantry has a best-in-class management team to execute on our plan to grow the Company and create stockholder value. THE COMPANY’S BOARD OF HIGHLY QUALIFIED, EXPERIENCED DIRECTOR NOMINEES IS DEDICATED TO MAINTAINING BEST PRACTICES IN CORPORATE GOVERNANCE Your Board has nominated nine highly qualified directors who together possess significant retail, convenience store, consumer packaged goods, foodservice and financial experience that is highly relevant and critical to the business. Of the nine nominees, eight have direct experience working in the retail and/or convenience store industries, seven have executive management experience at Fortune 500 companies. All are committed to the highest standards of corporate governance and oversight. FACT: The Pantry is always open to evaluating new Board members with relevant knowledge and expertise, and has taken proactive steps to expand and add new talent to the Board. Recent additions include:
- Dennis G. Hatchell, appointed in March 2012. Mr. Hatchell has led the transformation of the Company’s strategy since his appointment as CEO in March 2012. His creativity and insight, combined with more than 40 years of industry experience in the food distribution and retail grocery business, have made him an invaluable member of the Board.
- Kathleen R. Guion, appointed in May 2013. Ms. Guion brings significant fuel experience through her service as President and COO of E-Z Serve Convenience Stores, a chain of over 600 stores with fuel operations in the Houston area, and as Vice President and General Manager of 7-Eleven convenience stores. Ms. Guion’s prior retail experience includes serving as an executive with Dollar General, which under her leadership significantly expanded its food merchandise offering.
- Thomas W. Dickson, nominated in January 2014. Mr. Dickson most recently served as Chairman and CEO of Harris Teeter Supermarkets, a leading food retailer in the southeastern United States with 216 stores and $4.1 billion of revenue, and brings nearly two decades of operational and management experience in the supermarket industry.
With the recent addition of Kathleen Guion and Thomas Dickson, and the decision of Paul Brunswick and Bryan Monkhouse to not stand for election at the 2014 annual meeting, the Company has clearly demonstrated a willingness to bring “fresh perspectives” into the boardroom. However, your Board does not think it is in the best interests of stockholders to replace three highly experienced, highly qualified and independent directors—Robert Bernstock, Edwin Holman and Thomas Murnane—with dissident nominees solely interested in pursuing their self-serving agenda. The new management team, under the oversight of the Board, has shown success on several key merchandise initiatives and growth investments.PROTECT THE VALUE OF YOUR INVESTMENT IN THE PANTRY: VOTE THE WHITE PROXY CARD TODAY Under the guidance of your Board and management team, The Pantry has successfully executed plans to improve performance and unlock the potential of our powerful convenience store platform. The Board’s director nominees are actively engaged and together possess significant retail, convenience store, consumer packaged goods, foodservice, fuel and financial experience—all areas that are highly relevant and critical to The Pantry’s business, and that have made substantial contributions to the Company’s progress. In contrast, the Company believes that the dissident group brings neither expertise nor insight to the table. The dissident group has not outlined any constructive steps to enhance the Company’s strategy, and has been unable to demonstrate how its director nominees would do anything to improve the value of stockholders’ investment in The Pantry beyond what the Board and management team have clearly articulated and are successfully executing. We are confident that we have the right Board, the right management team and the right strategy to continue to drive value for all stockholders. We strongly urge you to protect the value of your investment in The Pantry by voting “ FOR” your Board’s experienced and highly qualified director nominees—Robert F. Bernstock, Thomas W. Dickson, Wilfred A. Finnegan, Kathleen Guion, Dennis G. Hatchell, Edwin J. Holman, Terry L. McElroy, Mark D. Miles and Thomas M. Murnane—on the WHITE proxy card today. Your vote is extremely important, no matter how many or how few shares you own. We urge you to vote today by telephone, online, or by signing and dating the enclosed WHITE proxy card and returning it in the postage-paid envelope provided. Please do not return or otherwise vote any GOLD proxy card sent to you by the dissident group. On behalf of your Board of Directors, we thank you for your continued support of The Pantry.
|Edwin J. Holman||Dennis G. Hatchell|
|Chairman of the Board||President and Chief Executive Officer|
Important Additional InformationThe Pantry has filed a definitive proxy statement and form of white proxy card with the SEC on February 13, 2014 and commenced mailing the definitive proxy statement and white proxy card to The Pantry’s stockholders in connection with its 2014 Annual Meeting of Stockholders. THE PANTRY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING WHITE PROXY CARD, AND ANY OTHER PROXY MATERIALS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE AS THEY CONTAIN IMPORTANT INFORMATION. The Pantry, its directors and certain of its executive officers are deemed to be participants in the solicitation of proxies from The Pantry’s stockholders in connection with the matters to be considered at The Pantry’s 2014 Annual Meeting of Stockholders. Information regarding the identity of participants, and their direct or indirect interests, by security holdings or otherwise, is set forth in the definitive proxy statement and other materials filed with the SEC in connection with The Pantry’s 2014 Annual Meeting of Stockholders. Stockholders may obtain any proxy statement, any amendments or supplements to the proxy statement and other documents filed by The Pantry with the SEC for no charge at the SEC’s website at www.sec.gov. Copies are also available at no charge at The Pantry’s website at www.thepantry.com, by writing to The Pantry at 305 Gregson Drive, Cary, North Carolina 27511, Attention: Secretary or by calling The Pantry’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834.