Tempur's Meeting Today: H Partners betting on black at this point

The Tempur Sealy shareholder meeting is today...

And as we’ve noted before that H Partners (owning 10% of Tempur Sealy)  has a lot of support, which includes other Tempur shareholder Chieftain Capital (owns <6%) and ISS. But at the same time, they’ve failed to lay out any real plans for change, only to point to the fact that Tempur has been a gross underperformer of peers since the Tempur-Pedic and Sealy merger in 2012. Recall that H Partners has owned Tempur for several years now, just finally breaking bad after a bad earnings report.

Granted there are some corporate governance changes needed - namely the fact that there are two private equity guys on the board, but neither of their firms has a stake in Tempur any longer. H Partners wants to overthrow the CEO and throw out three board members.

Now - things aren’t as easy as simply withholding votes, even if a majority don’t vote for the three directors H Partners wants out, they’d still have to give their resignations. And H Partners has put up no nominees - having missed the deadline. Tempur has been firing back at H Partners, pointing to the fact that the fund has sat idly by all this time - why now? Note that H Partners wrote a handwritten letter in January - the month before going active - commending the company on all its great work.

The activist might get the CEO off the board, but getting him ousted seems unlikely. They run a highly concentrated portfolio though, they can’t afford to get this one wrong.