CALGARY — A U.S. activist investor that has been pushing Parkland Fuel Corp. to consider selling or spinning off its Burnaby, B.C. refinery said Thursday it will withhold support from all of Parkland Fuel Corp.'s incumbent directors at the company's upcoming annual meeting.
New York-based Engine Capital LP, which owns about a two per cent stake in Parkland, said the Calgary-based fuel supplier and marketer has failed to address the concerns it raised in March. In a letter to the board at that time, Engine criticized the company for underperformance and urged it to consider getting rid of non-core assets to become a pure-play fuel marketer and retailer.
In a followup letter on Thursday, Engine said it met with Parkland's CFO, but was frustrated that it has not been offered a meeting with the company's board as it requested.
"Engine has engaged with more than 50 boards of directors over the last decade, and we have never encountered a situation where one has been so unresponsive," Engine managing partner Arnaud Ajdler and partner Brad Favreau wrote in the letter.
"The response from an engaged and competent board of directors should be to engage with a major shareholder, not to hide behind its CFO."
Engine said it is also frustrated that Parkland has once again nominated 24-year tenured chair Jim Pantelidis to the board, despite adopting a 10-year term limit for directors.
"This policy should apply to all directors, including the company’s chairman, especially considering that he has been on the board for almost a quarter of a century," Ajdler and Favreau said.
"We therefore urge the board not to renominate Mr. Pantelidis at the 2024 annual meeting."
In an emailed statement Thursday, Parkland said it has engaged frequently with Engine over the last several months but continues to have confidence in its board of directors and strategy.
"We appreciate the many expressions of support we have received from our shareholders, including our largest shareholder, both for all our directors and for our overall strategy to build long-term shareholder value," Parkland said Thursday.
In March, Parkland said it had entered into an agreement with its largest shareholder, Simpson Oil Ltd., which will provide it the right to designate up to two nominees for election to Parkland's board.
Simpson Oil owns more than 19 per cent of Parkland stock. Engine said Thursday it will vote for the two board nominees appointed by Simpson.
Engine has also been critical of Parkland's approach to executive compensation. The activist investor noted that CEO Bob Espey's total direct compensation increased 23 per cent in 2022 to $5.3 million.
"Mr. Espey’s compensation has consistently increased over the last few years as the business has grown through M&A and has become more complex – the very issues that are hurting shareholders," Engine said.
Parkland is set to hold its annual general meeting on May 4.
Parkland purchased its Burnaby refinery — which refines 55,000 barrels per day of crude and synthetic oil into gasoline, diesel, jet fuels and more — from Chevron Canada for $1.5 billion in 2017.
On the retail side, Parkland is one of the fastest-growing independent fuel suppliers and marketers in North America, with a network of retail service stations across Canada, the northern U.S. and the Caribbean.
Its On the Run convenience store brand is expected to have more than 1,000 locations by 2024.
This report by The Canadian Press was first published April 20, 2023.
Companies in this story: (TSX:PKI)
Amanda Stephenson, The Canadian Press
