Parkland Corporation appointed two new independent directors to its board Tuesday as the company moves to reinforce corporate governance amid a strategic review.

The appointments come as Parkland faces heavy criticism from disgruntled shareholders over its board’s composition. On Monday, hedge fund Engine Capital launched a campaign calling for a new board to oversee the review process,

“At this point, it is clear that the board has failed in its core responsibility to act in the best interests of shareholders and, therefore, cannot be trusted to oversee the strategic review,” said in a news release.

Engine called for a new board that includes shareholder representatives and qualified independent directors.

Parkland reiterated its call for majority shareholder Simpson Oil to rejoin the board while touting the new directors.

“Felipe and Sue are accomplished executives with expertise in industries and sectors that align with Parkland’s business,” said Board Chair Michael Jennings. “Felipe’s deep energy industry experience in Parkland’s broader international region combined with Sue’s extensive retail experience and governance expertise, will be invaluable as the company explores all options to maximize value for all shareholders.”

Bayon, the former president and CEO of Ecopetrol S.A., brings more than 30 years of leadership experience in the global energy sector. Gove has held CEO, CFO, and chief operating officer positions in the retail industry, with extensive board experience, including a 12-year tenure at AutoZone.

As part of the board strengthening effort, Parkland has added six independent directors in the past two years. The company has invited its largest shareholder, Simpson Oil, to rejoin the board and participate in the special committee leading the strategic review.

Engine, which owns a 2.5% stake in Parkland, is pushing for a reconstitution of the board to ensure “a thorough evaluation of all paths to delivering enhanced shareholder value.”

According to the Globe and Mail, the fund manager has criticized Parkland’s leadership for “poor execution” of its non-core asset divestment program and its handling of a rejected previous $8-billion takeover offer from U.S.-based Sunoco.

Calgary-based Parkland initiated its strategic review in early March. The company has stated that the review could result in the sale of the entire business but “there are no guarantees the strategic review process will result in a transaction.”

The review, led by a special committee of independent directors, is exploring various options to maximize shareholder value, including asset divestments, acquisitions, business combinations, and a potential sale.

Parkland launched the review after Simpson Oil secured a key legal victory that removes restrictions on its ability to push for change at the company’s highest level.

Simpson Oil, which holds nearly 20% of Parkland, won a ruling from the Ontario Superior Court, freeing it from a 2019 governance agreement that had prevented it from engaging in activism or soliciting bids for the company.

In April 2024, Simpson publicly called for Parkland to explore a sale.

Parkland operates about 4,000 gas stations and electric-vehicle charging sites across Canada, the United States, and the Caribbean. The company also owns the On the Run convenience-store chain and M&M Food Market. Much of the company’s Caribbean network was acquired from Simpson when Parkland purchased the SOL refuelling-station chain in 2018 and 2022 for a combined $2.4 billion.

The relationship between Parkland and Simpson Oil has been fraught with tensions, according to the Globe. In late 2023, two Simpson-appointed directors resigned from Parkland’s board after just seven months, following the company’s refusal to name one of them as board chair, the Globe reported.

Simpson subsequently declared the governance agreement invalid, a position Parkland contested until the court ruled in Simpson’s favour.

Engine Capital has urged Parkland to cut costs and sell non-core assets, aligning with Simpson’s push for a sale. On Monday, Engine said Parkland has “wasted millions of shareholders’ money on litigation” while trying to prevent Simpson from exercising its most basic right as a shareholder: Voting its shares as it wishes.”

In addition, Engine accused Parkland of showing “zero interest in engaging with its shareholders” and “appearing unable to monetize non-core assets.”

Photo: Parkland Corporation