Lamb Weston, a major French fry maker, has recently added new board members after facing pressure from activist investors. Jana Partners, in collaboration with Continental Grain, purchased a stake in the company last fall and has been pushing for operational changes, including exploring a potential sale.
The activist group criticized Lamb Weston’s oversight and execution missteps, particularly questioning the decision to appoint an insider as CEO in December. While the possibility of a sale may be off the table for now, Jana’s influence on the Idaho-based company is expected to be significant.
As part of the agreement, Lamb Weston will be adding board members with food industry experience, such as former Nestlé USA CEO Bradley Alford and ex-McCormick chief Lawrence Kurzius. In total, the company will add four of Jana’s proposed director candidates and two others agreed upon mutually, expanding the board from 11 members to 13.
CEO Mike Smith expressed satisfaction with the agreement, stating that it is in the best interests of the company and its shareholders. Analysts were surprised by Jana’s decision not to launch a proxy fight to replace the entire board, indicating a willingness to work with the existing board.
Looking ahead, Lamb Weston faces challenges in renegotiating a third of its U.S. contracts later this year, amidst weak demand for its products. The company experienced a loss of U.S. customers in 2024, even after offering lower pricing in new contracts. This, coupled with the closure of an older processing facility in Washington and plans to cut 4% of its workforce, reflects a challenging period for the company.
Slowing fast-food sales have also impacted Lamb Weston’s profitability, as it supplies major chains like McDonald’s. Despite these challenges, the company remains focused on creating shareholder value and navigating the changing landscape of the food industry.
