Farmer Files to Reincorporate

Institutional coffee roaster Farmer Bros. Co. said Monday that it had filed to reincorporate in Delaware and that the company planned to implement a 10-for-1 stock split soon.

The Torrance-based company also said shareholders at its annual meeting approved takeover protections and the reelection of incumbent directors.

Farmer Bros. has been beset by lawsuits and other criticisms from major shareholders, who complain that the founding Farmer family runs the business like a private enterprise for the benefit of insiders.

Indeed, dissidents claim that the outcome of the proxy voting was a foregone conclusion because an 18.7% stake in the company held by Farmer’s employee stock ownership plan gives voting control to the company’s chairman, 87-year-old Roy F. Farmer. The ESOP holdings were acquired using company loans.

Voting power of the 300,000 ESOP shares is not controlled by management, the company said. Rather, 1,100 employees directed Farmer to cast a majority of votes in favor of the proposals. The Farmer family, which controls 39% of shares, also backed the proposals.

In a “state of the company” report, Chief Financial Officer John Simmons told shareholders that the recent decline in quarterly profit reflected competition and a weak economy after several years of record earnings.

He also said measures such as fully computerizing operations for the first time in the company’s 92-year history should help results.

Shares of Farmers Bros. rose $1.85 to $323.35 on Nasdaq. The company said the stock split would create more of a market for its thinly traded shares.