A Texas investor group that’s been buying up stock in Casella Waste Systems is calling for a shake up of the company’s board of directors. Shareholders have been voting by proxy and the results will be announced Nov. 6; The outcome could threaten Chairman and CEO John Casella’s seat on the board.
J.C.P. Investment Management, a small Houston based investment firm, began buying shares of Casella in 2010. Today it owns about 5.7 percent of Casella’s stock.
In a letter to Casella’s Board of Directors, J.C.P. said it was nominating two candidates for the three seats that are up for election on the board to improve corporate governance and maximize shareholder value.
James Pappas, the majority owner of J.C.P., did not want to talk on the record. But in a letter to Casella’s board of directors, he describes the Vermont based company as deeply undervalued. He blames poor investment and operational decisions. He says the company’s financial structure has eroded shareholder rights and value.
J.C.P. points out that since Casella’s initial public offering in October 1997, the company’s stock price has dropped 70 percent from its high of $18 a share. Wednesday’s share price was just under $6.
J.C.P. faults the current leadership with that drop in value and says it has nominated Brett Frazier and James Pappas to bring new direction to Casella’s Board of Directors.
Casella has urged shareholders to vote for its slate of three candidates which includes: CEO and founder John Casella, William Hulligan and James E. O’Connor.
Joe Fusco, vice president of Casella Waste Systems, says J.C.P.'s allegations that the current board is stale are off base. “We have a great board and we have great leadership," says Fusco. "One way to look at is we have a lot of experience both from a waste industry perspective and a public company perspective."
Fusco says the opposition candidates Frazier and Pappas don't have nearly the amount of practical experience.
As to the drop in Casella’s stock value since 1997, Fusco says several steep stock market declines beginning in 2001 and more dramatically in 2008 hit many companies hard and shouldn’t diminish gains Casella is making now.
“I think it’s tempting to talk about things that happened two decades ago, but if you look at the last two and a half years where we’ve put in place a strategy and new board members, we’re doing quite well," says Fusco. "In fact, since the beginning of this year, our stock price is up over 45 percent."
Stockholders will have the final say. Results from their votes will be announced at Casella’s annual meeting Nov. 6, 2015.
