Nash Finch Co. said Tuesday that shareholders resoundingly approved the sale of their firm to Spartan Stores but decidedly opposed payouts to outgoing executives that included $25.8 million to CEO Alec Covington.
The vote against the pay packages is advisory only, however, and Nash Finch and Spartan announced the completion of a $1.3 billion deal that creates a new company called SpartanNash.
The buyout of Edina-based Nash Finch by rival Michigan-based grocery wholesaler Spartan Stores was unveiled in July. Shareholders of both companies approved the deal Monday, with more than 98 percent of Nash Finch’s stockholders voting for it.
But 74 percent of Nash Finch shareholders rejected a nonbinding proposal on payouts to Nash Finch’s top executives, according to a filing Tuesday with federal securities regulators.
Institutional Shareholder Services (ISS), a proxy advisory firm, had recommended that shareholders vote “no” on the pay advisory measure. The payments “represent an extraordinary financial burden to shareholders,” ISS declared.
Covington’s deal, which was negotiated when he started as Nash Finch CEO in 2006, calls for more than $6 million in cash — including $5.1 million in severance — along with $15.1 million in stock and retirement plans and $4.6 million to compensate for certain taxes.
Covington will serve as an adviser to SpartanNash on an as-needed basis. Spartan CEO Dennis Eidson is the new company’s CEO. SpartanNash will at least initially be based in Grand Rapids, Mich.
Robert Dimond, Nash Finch’s outgoing chief financial officer, told the Star Tribune last week that the long-term site of the headquarters is still being assessed. Nash Finch employed about 500 people at its Edina headquarters, and the majority of them will remain after the buyout, Dimond said.
The combined companies will still use the Nash Finch and Spartan Stores names in their respective markets. Beginning Tuesday, the common stock of their corporate parent SpartanNash will trade on the Nasdaq Stock Exchange under the symbol SPTN.
Former Spartan Stores shareholders own 57.7 percent of the new company, while former Nash Finch stockholders own 42.3 percent.