Proxy Battle Heats Up: Why Glass Lewis Backs Simpson Oil’s Push for Parkland Board Control

The proxy battle at Parkland Corporation has reached a critical juncture, with shareholder advisory firm Glass Lewis issuing a pivotal recommendation that could reshape the company’s leadership. At stake is the board’s composition—and the future direction of a firm struggling to regain its footing amid underperformance and strategic uncertainty.

The Split Recommendation: A Middle Ground in a High-Stakes Battle

Glass Lewis has advised shareholders to back seven of Simpson Oil’s nine director nominees and six of Parkland’s 13 management-backed candidates, creating a 7-6 split in favor of Simpson’s slate. This recommendation reflects a calculated compromise: injecting fresh governance while retaining institutional knowledge. The firm argues that Parkland’s shareholders deserve accountability after years of underperformance.

Key metrics underscore the urgency:
- Parkland’s gross profit margin has slipped to 12.63%, well below industry averages.
- Revenue declined by 12.79% in the past year, with Q4 2024 earnings of $0.57 per share missing analyst estimates by 15%.
- Shares trade at 40% below their calculated fair value, according to Glass Lewis.

The advisory firm also criticized Parkland’s incumbent board for “reactive and defensive decision-making,” citing actions like accelerating the AGM timeline, adding dissident nominees unilaterally, and resisting universal proxy rules—all moves perceived as entrenchment tactics.

Simpson Oil’s Play for Control: Reform or Overreach?

Simpson Oil, the activist investor with a 19.8% stake, insists that electing all nine of its nominees is essential to address governance failures. The firm accuses Parkland’s current leadership of “value destruction,” pointing to the shutdown of its Burnaby Refinery and the underperformance of Florida operations. Simpson’s slate advocates a dual-track strategy: exploring a potential sale of the company while repositioning it for long-term growth.

However, Parkland’s management has pushed back, warning that Simpson’s agenda risks destabilizing the company. They argue that their 13-nominee slate—three of which overlap with Simpson’s picks—offers the best balance. The company highlights its progress: a strategic review underway, a CEO succession plan in place, and a 13-year streak of dividend increases.

The Numbers Tell a Story of Struggle

Parkland’s operational challenges are stark. In addition to its revenue decline, the company has faced:
- A negative outlook downgrade from S&P Global Ratings following the Q4 miss.
- A $1.3 billion write-down related to its Florida assets, which were recently divested.
- Safety improvements, albeit modest: a 6% increase in safety metrics over two years.

Simpson Oil argues that these results prove the need for a board overhaul. Parkland counters that its strategic adjustments—including cost-cutting and asset sales—are already bearing fruit. Yet the market remains unconvinced: PKI.TO has underperformed the S&P/TSX Composite Index by 28% over three years.

The Voting Mechanics: A Tight Deadline for a Big Decision

Shareholders have until May 1 (GOLD proxy) and May 2 (BLUE proxy) to cast votes, with the AGM scheduled for May 6. Employees holding shares via Parkland’s ESPP must navigate potential voting hurdles, as both sides have enlisted proxy firms (Carson Proxy for Simpson, Kingsdale Advisors for management) to distribute materials.

Why the Split Recommendation Matters

Glass Lewis’s middle path aims to address two core issues:
1. Governance Reform: Simpson’s push for accountability is justified given Parkland’s poor execution. The firm’s refusal to adopt universal proxy rules—a basic standard for fairness—has drawn criticism from institutional investors.
2. Operational Continuity: Parkland’s management retains critical expertise, particularly in executing complex transactions. For instance, three of Simpson’s nominees (Stuckey, Gibson, Christiansen) are already on the management slate, signaling overlap in strategic vision.

Conclusion: A Delicate Balance Between Change and Stability

The Glass Lewis recommendation reflects a pragmatic approach: a 7-6 board split would inject oversight without triggering chaos. Simpson’s demand for full control risks overcorrection, while Parkland’s resistance to meaningful change could prolong underperformance.

The data is clear: Parkland’s stock has underdelivered for years, and its governance flaws have alienated investors. A balanced board stands the best chance of navigating the dual challenges of a potential sale and operational turnaround. Shareholders should heed Glass Lewis’s advice—not because it’s a perfect solution, but because it’s the most credible path forward in this high-stakes proxy battle.

As the May 6 AGM approaches, the question remains: Will shareholders prioritize accountability or stability? The answer could determine whether Parkland refuels its value—or continues to sputter.