Farmer Bros. Names Two New Directors

Farmer Bros. Co. named two new independent directors to its board Wednesday and accepted the resignation of a longtime company insider in a move that may deflect some criticism by dissident shareholders.

The restructuring of the Torrance-based coffee roaster’s board leaves Farmer Bros. with what it said was a majority of four independent directors, although at least one of them was not judged to be an outsider in a recent analysis by a shareholder advisory firm.

Farmer Bros. has been at odds with a group of institutional investors and other shareholders over the makeup of its board, which they have said is too cozy with the company’s management.

The move comes a day after it was disclosed that Farmer Bros. approached its biggest institutional investor, Franklin Mutual Advisors, to discuss what price the company might pay to purchase the holdings of its public shareholders.

Franklin, which owns nearly 10% of Farmer Bros., said in a regulatory filing Tuesday that it expected at least $400 a share.

News of the talks sent Farmer Bros. stock up $16, or 5%, to $325.25 on Nasdaq on Wednesday. The thinly traded company saw 13,600 shares change hands, a volume more than 60 times as great as Tuesday’s and the most in at least two years.

But in its own regulatory filing made after the market closed Wednesday, Farmer Bros. characterized the discussion with Franklin as a courtesy and legal obligation.

“The company never made nor accepted any offer to acquire such shares,” John Simmons, chief financial officer of Farmer Bros., said in the 8K statement filed with the Securities and Exchange Commission. “The company will continue to evaluate its strategic options.”

During a board meeting Wednesday, Farmer Bros. named Thomas Maloof, chief financial officer of Irvine-based travel management firm Hospitality Marketing Concepts, and John Samore Jr., an independent business consultant and former Arthur Andersen accountant, to its board.

It also announced the board resignation of John Anglin, 55, who serves as the company’s corporate counsel.

With those changes, Farmer Bros. said a majority of its seven directors are “independent” as defined by the federal Sarbanes-Oxley Act of 2002, which mandates stricter corporate governance procedures.

Other members of the board include: Roy. F. Farmer, 86, chairman of the company; his son, Roy E. Farmer, 50, company president; and Guenter W. Berger, 65, vice president of production.

The other two directors are Lewis A. Coffman, 83, who is the company’s retired vice president of sales, and John H. Merrell, 58, a Glendale accountant.

In December, Institutional Shareholder Services of Rockville, Md., urged stockholders to withhold votes from the two Farmers and Berger because Farmer Bros. failed to establish an independent nominating committee for the board.

The action was a protest vote because the Farmers and management controlled enough shares of the company to ensure their reelection at the company’s annual meeting Dec. 26.

Also in December, another shareholder advisory service, Investor Responsibility Research Center, judged that only one Farmer Bros. director -- Merrell -- met its standards of independence.

Coffman’s ties to the company were too close for him to be considered an outside director, according to the center.