A group that includes the recently suspended chief executive of the Stater Bros. grocery chain said Tuesday that it has begun a proxy fight in an effort to defeat management's slate of directors at the March 20 annual meeting.
The Colton-based firm itself announced separately Tuesday that it has withdrawn its unaudited first fiscal quarter figures, which it reported Feb. 6. Tuesday's announcement said an initial review by outside auditors indicated that the income figure had been understated.
On Feb. 10, only four days after the financial results were announced, Stater Bros. suspended Jack H. Brown as its president and chief executive. Simultaneously, the company filed a suit alleging that Brown understated its profit figures last year to allow him to buy its stock at depressed prices and that he later corrected the figures. Brown has said the allegations are false.
Brown and others in a group that owns more than 30% of Stater Bros. have notified the company that they intend to nominate candidates to oppose management's slate for the three positions on the board of directors that are up for reelection.
Since Brown and an ally already hold positions on the nine-member board, his group could win a 5-to-4 majority of the board if it elects its three candidates.
The Brown group's stock holding is almost as great as the 38.7% held in a voting trust for the children of Stater Chairman Bernard R. Garrett.
Brown's group, partners in La Cadena Investments, and Garrett joined in 1983 to acquire Stater Bros. in a leveraged buy-out from Petrolane Inc. At the time, Brown was a member of the firm's management, while Garrett owned other kinds of businesses.
Results This Week
A union representative at Stater said Tuesday that about 200 fellow employees turned out at a rally last Friday night to voice support for Brown.
Garrett, who took on Brown's duties after his suspension, said Tuesday that the company expects to be able to announce restated first-quarter income later this week. On Feb. 6, net income was reported at $1.78 million, up sharply from the same quarter a year earlier.
After that report, the firm's stock jumped $2 a share to $14.50 in the over-the-counter market. The price declined early last week immediately after Brown's suspension but recovered during succeeding days. It closed Tuesday at $14.75, down 12.5 cents.
Brown said his group hopes to be able to distribute its proxy material to Stater Bros. holders next week.
His slate was listed as including John C. Wallace of Long Beach, a private investor and consultant to Petrolane; Lawrence Carr of Anchorage, Alaska, president and 43% owner of privately held Carr Gottstein Co., which operates Alaskan food, drug, advertising and real estate businesses, and Martin A. Matich of Colton, president of Matich Corp., a privately held general engineering contractor.
Stater Bros. management's slate for the board vacancies has been identified as including incumbents Daniel Nash, John W. Partridge and Bertram Zweig.