Kenvue Reaches Agreement with Activist Investor Starboard Value, Appoints New Board Members

Kenvue, the consumer health spinoff from Johnson & Johnson, has reached a cooperation agreement with activist investor Starboard Value, resulting in significant changes to the company's board of directors. The move comes as Kenvue faces challenges in meeting sales growth expectations and aims to unlock what Starboard refers to as "trapped potential" within the organization.

Board Restructuring and New Appointments

Effective immediately, Kenvue has appointed three new members to its board of directors:

1. Jeffrey Smith, CEO of Starboard Value
2. Sarah Hofstetter, president of e-commerce analytics company Profitero
3. Erica Mann, former consumer head at Bayer

These appointments will temporarily increase Kenvue's board from 11 to 14 directors, with plans to reduce it to 13 at the upcoming annual shareholder meeting. As part of the agreement, Starboard Value has withdrawn its previously proposed board member candidates and committed to voting its approximately 22,000 shares in favor of Kenvue's nominees.

Larry Merlo, Kenvue's chairman, expressed optimism about the new additions, stating that their insights will be "very beneficial as the board and management team continue to focus on accelerating sustainable, profitable growth and creating shareholder value."

Financial Performance and Future Outlook

Kenvue, known for household brands such as Band-Aid, Listerine, and Tylenol, has faced recent challenges in meeting its financial targets. The company reported a mere 0.1% sales growth in 2024, falling short of its projected 1% to 3% growth. Looking ahead to 2025, Kenvue forecasts a net sales change ranging from -1% to +1% compared to the previous year.

These disappointing results have contributed to Starboard Value's push for change within the company. In its proxy statement, the activist investor cited "persistent disappointing and deteriorating financial results, missed commitments, and ineffective board oversight" as reasons for its involvement.

Despite these challenges, Kenvue's market position remains significant. The company's initial public offering in 2023, valued at $41 billion, was the largest in U.S. markets in over a year. Currently, Kenvue's shares are trading at just over $24.00, compared to their initial pricing of $22 per share.