UNFI Executives In the Hot Seat Over Wasteful Spending
TACOMA WA- As UNFI (NYSE: UNFI) stock value plummets, company executives are taking heat for what some view as wasteful spending practices. Critics say executives are throwing money away on personal power struggles even as company stock value has dropped over 90% since 2015.
The latest criticism stems from an employee contract dispute related to the company’s relocation of their Tacoma WA Distribution Center. Last month, in a landmark decision, an arbitrator sided with the Tacoma Employees in their dispute. The arbitrator ordered the company to allow Tacoma employees to move to the new facility with their existing pay and benefits. The good news for investors is that the damages awarded are still relatively cheap, since not all of the layoffs have been completed. The bad news, however, is that UNFI executives are defying the legally binding decision, increasing the company’s liability by roughly $1.2 Million per month (not including potentially millions in legal costs).
The decision not to abide by the award is baffling many industry insiders who said the company is extremely unlikely to prevail. “Arbitration decisions rarely get overturned. It’s like they are throwing a Hail Mary pass from their own 1-Yard line… far more likely to backfire than to help in any real way. Except in this case, its not a game, its potentially tens of millions of dollars they are gambling with,” said one expert with close knowledge of the issue.
The company’s liability compounds exponentially when you factor in the impact of this decision on an already tenuous labor situation for UNFI nationally. Workers from across the country have jumped on the hashtag #FUnfi and are calling for a nationwide UNFI work stoppage. UNFI executives shirking employment contracts will certainly not help them avoid that outcome.
UNFI’s Chief Legal Officer Jill Sutton appears to be calling the shots in this situation. She has been quoted in news outlets calling the arbitrators decision “unlawful”. Sutton’s actions raise questions: Is she spending company resources to save face after the embarrassing arbitration defeat? Are departures in her department due to dissension within her own ranks? Is CEO Steve Spinner personally involved in these decisions, or has he been kept in the dark?
This isn’t the first time UNFI leadership has come under fire for how it spends money. Last year, Yahoo Finance reported that Spinner’s compensation was nearly three times higher than the median CEO salary for companies with similar market capitalization.
Keep an eye on UNFI: my sources tell me their upcoming shareholder meeting could get interesting.
David Gilbert-Pederson, Reporting