Urethane Blog

Drama at Huntsman

January 13, 2022

Huntsman Highlights Recent Strategic Actions to Enhance Shareholder Value

Download as PDF January 12, 2022 5:47pm EST

Sets the Record Straight Regarding Starboard’s Misstatements

THE WOODLANDS, Texas, Jan. 12, 2022 /PRNewswire/ — Huntsman Corporation (NYSE: HUN) issued the following statement in response to the letter and nomination notice the Company received from Starboard Value LP today:

At Huntsman’s Investor Day in November, we announced financial targets building on the strongest profit and margin performance the Company has ever achieved with its current portfolio of businesses. The Huntsman Board of Directors actively oversaw that performance and it continues to oversee the Company’s announced comprehensive initiatives, all of which enhance accountability and alignment with our shareholders, including:

  • Initiating a strategic review process for the Textile Effects Division to continue advancing our focus on portfolio enhancement;
  • Authorizing new share repurchases of $1 billion over the next three years, building on the $682 million of share repurchases Huntsman has completed since 2018;
  • Implementing a multi-year incentive compensation program for all Huntsman officers and vice presidents that ties the vast majority of their incentive compensation to the achievement of the Investor Day targets, thereby promoting transparency, ensuring objective accountability and fostering execution; and
  • Substantially completing the Board refreshment process that began in 2018 by adding David B. Sewell, José Muñoz and Curtis E. Espeland, highly-qualified and independent Directors who were identified by a leading international search firm, to a group of diverse and experienced independent Directors including four recent additions: U.S. Navy (retired) Vice Admiral Jan Tighe, who joined the Board in 2019 and chairs the Board’s Sustainability Committee; Sonia Dulá, who joined the Board in 2020 and is Chair Apparent of the Compensation Committee; Jeanne McGovern, who joined the Board in 2021 and chairs the Audit Committee; and Cynthia Egan, who joined the Board in 2020, chairs the Nominating and Corporate Governance Committee and serves as Non-Executive Vice Chair and Lead Independent Director.

Importantly, these recent initiatives are the latest steps in the strategy we began executing in 2017. Since that time, the Board has overseen a significant repositioning of the Huntsman portfolio that has generated meaningful shareholder value. The Company has divested ~40% of its businesses, including the sale of its commodity portfolio to Indorama in 2020 for ~$2 billion. The Indorama announcement intensified Huntsman’s focus on differentiated, high-margin and downstream product lines, which led to 105.8% of total shareholder return (TSR) through January 11, 2022, 42.4 percentage points better than the performance of the S&P 500 over the same period.

Huntsman values the views of all of our shareholders, including Starboard, and maintains an open dialogue with them. Although our normal policy is not to comment on individual conversations, members of our Board and the executive management team have held numerous discussions with Starboard over the past several months.

Huntsman’s engagement with Starboard has been frequent and extensive since the outset. Soon after Starboard disclosed their stake, we invited Starboard to our headquarters to understand their perspectives. We previewed our Investor Day presentation with Starboard and incorporated input from them. There was, and continued to be, no misalignment with Starboard on the Company’s objectives and strategic initiatives.

Huntsman has continued to keep lines of communication with Starboard open and promptly responded to every outreach they made. In particular, Huntsman repeatedly told Starboard that its ongoing Board refreshment was moving forward:

  • When Starboard told us that they had specific director candidates ready more than a month ago, on December 9, 2021, Huntsman immediately asked for those candidates’ names so that our Nominating and Corporate Governance Committee could consider them alongside the candidates previously identified by the independent search firm;
  • Between December 9, 2021 and January 5, 2022 Huntsman repeatedly sought those names and none were given;
  • Instead, Starboard insisted that Huntsman’s Nominating and Corporate Governance Committee surrender its duties, appoint Starboard’s three unidentified candidates and remove two Huntsman Directors;
  • On December 23, 2021, instead of providing the requested names, Starboard asked for the Huntsman D&O questionnaires, a required step towards making nominations and a clear indication of Starboard’s readiness to engage in a proxy contest;
  • Given these unconstructive responses from Starboard, Huntsman’s Board determined that the continuation of our active board refreshment and the expeditious holding of the upcoming annual meeting was in the best interests of our shareholders and appointed three highly-qualified, independent directors (Messrs. Sewell, Muñoz and Espeland) and announced the date of our annual meeting;
  • Only after these announcements, on the evening of January 5, 2022, did Starboard finally share the names of three candidates (Jeff Smith, James L. Gallogly and Sandra Beach Lin). Within 48 hours, the Nominating and Corporate Governance Committee had interviewed Starboard’s two outside candidates, James and Sandra; and
  • Following these interviews, the Company attempted to work constructively with Starboard to reach an agreement and avoid a proxy contest. Despite Huntsman’s multiple good faith attempts to reach an amicable outcome in the best interests of all Huntsman shareholders, an agreement could not be reached.

We are deeply disappointed that Starboard is forcing Huntsman and its shareholders through the cost and distraction of an unnecessary proxy contest. Starboard is more concerned with installing their handpicked candidates on Huntsman’s Board than allowing the Board and management team to create shareholder value, through our multiple initiatives that Starboard supports. The Board expects shareholders will appreciate the independence, experience and expertise of Huntsman’s refreshed Board of Directors, and they will benefit from a relentless and undistracted focus on clear financial targets designed to generate transparency and accountability for three successive years of record improved performance. Huntsman’s Board has determined that it is in the best interests of shareholders to let them resolve this situation expeditiously.

Huntsman continues to welcome constructive insights from our shareholders and remains committed to taking decisive actions to drive sustainable value creation.

Shareholders are not required to take any action at this time. The Board will review the nomination notice pursuant to established policies and present its recommendations with respect to the election of directors in the Company’s definitive proxy statement, which will be filed with the Securities and Exchange Commission and mailed to all shareholders eligible to vote at the Annual Meeting. As previously disclosed, the Annual Meeting will take place on March 25, 2022.