Parkland vs. Simpson Oil: A Proxy Battle Over Control and Value

The boardroom battle between Parkland Corporation (PKI:TSX) and its largest shareholder, Simpson Oil Limited, has escalated into a high-stakes showdown over corporate control and governance. At the heart of the conflict is a question for investors: Is Simpson Oil’s push for board control a legitimate call for accountability, or a power grab that risks destabilizing a $12 billion energy giant?

Simpson Oil’s Case: Accountability and Underperformance

Simpson Oil, holding 19.8% of Parkland’s shares, argues that the current board has failed shareholders for years. Key claims include:
- Poor Financial Performance: Parkland’s total shareholder return (TSR) has lagged peers by 95.7% since 2019, according to Simpson Oil. The company cites repeated trading losses, including a $65 million U.S. business write-down in 2022 and recent carbon credit trading missteps.
- Leadership Failures: CEO Bob Espey’s delayed resignation (effective year-end . 2025) is criticized as a lack of accountability for underperformance. Simpson also accuses the board of ignoring governance reforms, such as succession planning and risk oversight.
- Independent Slate: Simpson’s nine nominees include seven candidates with no ties to the family office, emphasizing independence. Names like Mark Davis (ex-CEO of Chemtrade Logistics) and Karen Stuckey (Walmart’s former merchandising leader) are highlighted for their operational and strategic expertise.

Parkland’s Defense: Experience vs. Entrenchment

Parkland counters that Simpson’s nominees lack the qualifications to steer a complex energy firm and prioritize Simpson’s interests over shareholders. Key rebuttals include:
- Unqualified Nominees: Two candidates work for Simpson’s family office, while others include a banker from Parkland’s lead lender (conflict of interest) and a failed CEO. Parkland argues the slate is assembled to grant Simpson unchecked control without offering a control premium.
- Strategic Review Credibility: The current board, with a supermajority of independent directors, is overseeing a “robust” Strategic Review process supported by Goldman Sachs and BofA. This includes evaluating divestitures, acquisitions, and operational improvements.
- Fiduciary Concerns: Parkland alleges Simpson’s past nominees bypassed board processes to privately solicit bids, prioritizing personal gains over fair negotiations.

Implications for Investors

The outcome of this proxy battle will determine Parkland’s strategic direction and shareholder value:
1. Simpson Victory: A Simpson-led board might prioritize aggressive restructuring, such as asset sales or cost cuts, to unlock value. However, investors risk a short-term focus on tax benefits for Simpson over long-term growth.
2. Parkland’s Status Quo: Maintaining the current board preserves continuity for the ongoing Strategic Review but carries risks if governance failures persist.

Key Risks and Opportunities

• Governance vs. Expertise: Simpson’s nominees bring diverse experience but lack deep energy-sector credentials. Parkland’s board has industry veterans but faces criticism for complacency.
• Control Premium: Simpson’s refusal to pay a premium for control (standard in takeovers) signals a confidence in Parkland’s undervaluation—current P/E of 10.5x suggests potential upside.
• Strategic Review Outcomes: If successful, Parkland’s process could yield value via divestitures (e.g., non-core assets) or M&A. Conversely, delays or poor execution could further depress the stock.

Conclusion: A Vote for Independence or Expediency?

Investors must weigh two narratives:
- Support Parkland’s Slate: Back a board with energy-sector expertise and an independent Strategic Review, but acknowledge governance flaws and underperformance risks.
- Support Simpson’s Slate: Opt for accountability and fresh leadership, despite concerns about nominee qualifications and Simpson’s minority control.

With Parkland’s stock trading at a 15% discount to its five-year average P/E ratio, the board’s actions post-AGM could unlock significant value. However, the path forward hinges on which side delivers on promises: Parkland’s promise of disciplined execution or Simpson’s pledge of transformative governance.

The voting deadline looms, and shareholders must decide whether to bet on continuity or change—a choice that could redefine one of Canada’s largest fuel distributors.

Data as of April 2025. Parkland’s AGM is scheduled for May 6, 2025. Voting instructions: BLUE proxy for Parkland’s nominees, GOLD proxy for Simpson’s slate.