(Reuters) - Campbell Soup Co’s (CPB.N) board is drawing up a list of CEO candidates, with Chief Operating Officer Luca Mignini emerging as the top internal contender, as the company seeks to fend off a proxy challenge from Daniel Loeb’s hedge fund, Third Point LLC, people familiar with the matter said.
Third Point unveiled a slate of nominees on Friday to replace Campbell’s 12-member board, pushing it to more actively explore a sale and criticizing its lack of a succession plan after Chief Executive Denise Morrison left in May. Morrison’s departure came after several years of weak corporate earnings.
Campbell board member Keith McLoughlin, who has served as interim CEO since Morrison’s departure, has said he is not interested in the job on a permanent basis.
That has added to pressure on Campbell to find a leader who will help it execute an ambitious turnaround plan it unveiled last month. Despite Morrison’s exit almost four months ago, the board has only recently taken formal steps to look externally for a new CEO, according to the sources.
Mignini, 55, joined Campbell five years ago and was promoted in April to be its COO, putting the Italian-educated executive in charge of the U.S. company’s snack and meal businesses, in addition to U.S. sales and global development. Morrison also held the COO position before she took the top job in 2011.
Investors who met with McLoughlin and Campbell Chief Financial Officer Anthony DiSilvestro in recent days told Reuters that Mignini joined the meetings, in a sign the company was seeking to raise his profile. Mignini did not usually attend such meetings in the past, the investors said.
CNBC reported in May, at the time of Morrison’s departure, that Mignini was a likely candidate for the CEO seat.
The board is also preparing to interview candidates from outside the company, although nobody external has been contacted yet, according to one of the people familiar with the arrangements.
Campbell’s board, which includes three heirs of John Dorrance, the chemist who invented condensed soup and ran the company nearly a century ago, will review a list of external candidates at its next meeting at the end of September, the source added.
The sources asked not to be identified because the deliberations are confidential. A Campbell spokesman declined to comment on whether Mignini was the top internal candidate and said the board had been working with executive-search firms to assess both internal and external candidates. Third Point declined to comment.
Campbell Soup shares were up 0.5 percent at $40.40 in early morning trading on Monday, giving the company a market capitalization of about $12 billion.
Third Point’s board challenge could complicate the CEO selection process, given that shareholders could choose to replace board members who will be making that decision, in a vote that could be scheduled as early as November. The turmoil could discourage some of the consumer industry’s top executives from applying, the sources said.
Third Point faces an uphill struggle in any battle for control of Campbell Soup, given that descendants of Dorrance own a combined stake of about 42 percent in the company. A board challenge could ratchet up pressure on Campbell, however, to explore a sale with more urgency.
Third Point, which manages $18 billion in assets, has played a role in bringing new CEOs to several companies, including Jose Almeida to Baxter International Inc (BAX.N), Tad Smith to Sotheby’s (BID.N), and Marissa Mayer to Yahoo.
One external CEO candidate Campbell Soup’s board is expected to consider is Mark Clouse, chief executive of Pinnacle Foods Inc PF.N, who will soon be without a full-time job after his company agreed in June to sell itself to ConAgra Brands Inc (CAG.N) for $8.1 billion.
Clouse, 49, is an industry veteran, having also held senior positions at Oreo-maker Mondelez International Inc (MDLZ.O) and Kraft Foods Inc. It is not clear if Clouse would be interested. He could not be reached for comment.
Campbell said on Aug. 30 it planned to sell its international and fresh refrigerated-foods units, and only left open the possibility of putting the whole company up for sale in the future, snubbing a call from Third Point to do so urgently.
The 149-year-old company, which revolutionized the home-cooking industry with easy-to-prepare soups and low-cost production techniques, has been struggling to attract young consumers to its namesake soups and Pepperidge Farm cookies.
Campbell’s latest foray into fresh food has faltered, while Wall Street has questioned an acquisition strategy that increased debt at the same time as costs increased.
Reporting by Richa Naidu in Chicago and Svea Herbst-Bayliss in Boston; Editing by Peter Cooney and Steve Orlofsky