ATCHISON, KAS. — MGP Ingredients has terminated Tim Newkirk as chief executive officer without cause as part of a settlement agreement with the Cray group, which includes members of the company’s founding Cray family, the Atchison-based company said Dec. 3. The agreement covers all issues related to the 2013 annual meeting, which was postponed back in May, and all related lawsuits.
The company’s board of directors, as part of the settlement agreement, will appoint Don Tracy and Randy Schrick to serve as interim co-c.e.o.s following the annual meeting, now scheduled for Dec. 17. Mr. Tracy has been vice-president of finance and chief financial officer since November 2009. Mr. Schrick has been vice-president of engineering since June 2009.
Mr. Newkirk was named president of MGP Ingredients in October 2006 and c.e.o. in March 2008. He also resigned from the board of directors.
Efforts to remove Mr. Newkirk as c.e.o. began in May of this year. Karen Seaberg, granddaughter of company founder Cloud Clay Sr., and Cloud Clay Jr. refused to attend the May 23 annual meeting, citing “a growing concern with the lack of profitable growth, deterioration in the corporate culture, efforts to sell certain parts of the company’s business, efforts to amend the bylaws that would limit accountability to shareholders and increase the power of the chief executive officer, and the level of compensation paid to the chairman of the board of directors and the c.e.o. of the company.”
Ms. Seaberg and Mr. Cray in May said they wanted to remove Mr. Newkirk as c.e.o. and requested his resignation as a director.
On Nov. 8, a special committee of MGPI’s board of directors determined the best approach to enhance long-term shareholder value was to continue execution of the company’s plan to reposition the business for profitable growth. Ms. Seaberg said the decision settled the main point of contention.
According to the settlement agreement announced Dec. 3, all pending litigation between the parties will be dismissed. The company will reimburse the Cray group for all reasonable legal fees and out-of-pocket costs and expenses incurred in connection with the matters related to the annual meeting, including proxy solicitation charges.
Pursuant to the settlement agreement, the Cray group will continue to hold proxies for the election of directors, governance proposals and the say-on-pay advisory vote reflected in the proxy statement and proxy card. The board has agreed to vote in favor of de-staggering the board. The Cray group has agreed to elect the new c.e.o. to the board at the company’s 2014 annual meeting of stockholders.
The company and the board have agreed the company will not sell any assets, will not make any acquisitions of other companies or assets and will not enter into any joint venture relationships of a material nature or outside of the ordinary course of business in the next 12 months without the approval of at least six board members.
John Byom said he no longer will serve as a nominee of the company as a group B director, which is elected by holders of preferred stock. Mr. Byom had been a director since 2004.
MGP Ingredients produces food grade industrial alcohol and formulates grain-based starches and proteins into ingredients for the branded consumer packaged goods industry. The company supplies spirits and offers flavor innovations and distillery blends to the beverage alcohol industry.MGP Ingredients in 2012 had net income of $1.6 million, or 9c per share, and net sales of $334 million. Shares of MGP Ingredients on the NASDAQ closed at $5.08 per share on Dec. 3.