Starboard Value: Time For real Change At Wausau

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 Starboard Value open letter

February 18, 2014

Wausau Paper Corp.

100 Paper Place

Mosinee, WI 54455

Attn: Members of the Board of Directors


Dear Board Members,


The time has come for real change at Wausau Paper Corp. (“Wausau” or the “Company”). While management continues to miss its targets and attempts to lower expectations, shareholders have been voicing their disappointment with the status quo and their support for change. Clearly, we are not the only Wausau shareholders who have lost patience with the unwillingness of the current board of directors (the “Board”) to hold management accountable for failed execution and the Company’s prolonged underperformance. Over the past few weeks alone, two other major shareholders, Altai Capital Management and LionEye Capital Management, have publicly expressed their independent perspectives on Wausau. Altai Capital Management believes a “convincing prima facie case supporting the need for continued enhancement” of the Board has been made, while LionEye Capital Management “has lost confidence that the Board will hold senior management accountable” and “believes that change in the composition of the Board, including the addition of shareholder representation, is in the best long-term interests of the Company.”


Moreover, we believe that numerous other large and long-time shareholders have been privately expressing similar frustrations to the Company for some time. We hope that management has provided the Board with an accurate picture of the views of the Company’s shareholders. If so, you should have a clear understanding of the high level of shareholder support for Board change and of why such change is required now.


As we described in our detailed letter to Henry “Hank” Newell, Chief Executive Officer of Wausau, dated October 22, 2013 (available at, as well as our letter to the Board that accompanied our nomination of director candidates for election at the 2014 Annual Meeting of Shareholders (the “2014 Annual Meeting”) (available at, we believe significant opportunities exist for valuecreation based on actions within the control of management and the Board. Unfortunately, the current management team and Board have repeatedly shown an inability to execute on those opportunities or to achieve their stated goals. This has resulted in a highly concerning track record of missed expectations.


These points were further reinforced when management announced yet another earnings miss and negative guidance revision in Wausau’s Q4 2013 earnings report on February 10, 2014. In each of our two previous letters, we pointed out that the Company has a long history of missing expectations, as evidenced by what is now a string of seven consecutive quarterly earnings misses, and ten out of the last twelve.


Starboard Sc 13 Da Feb 182014

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