Gottwalds look to exert leverage, push for changes atop Tredegar Corp.

Tredegar Corp.’s headquarters is on the second floor of 1100 Boulders Pkwy. (Photo courtesy of Commonwealth Commercial Partners)

Members of a powerful Richmond family are once again using their leverage as the largest shareholders of locally based Tredegar Corp. to try to push for changes at the top of the publicly traded firm.

Brothers John, William and James Gottwald have in recent weeks quietly, yet publicly expressed their disappointment with the management and financial performance of the industrial manufacturer that was created by their father.

Tucked into a few sentences at the end of an SEC filing earlier this month, the Gottwalds declared their intention to vote against the re-election of the members of the Tredegar board of directors and against the compensation packages for the company’s top executives at its upcoming shareholders meeting.

The brothers collectively control 7.32 million shares of Tredegar stock, making them by far the company’s largest shareholders. Their stake amounts to 21 percent of the company’s outstanding shares.

In addition to their plan to vote against the company’s leadership at the May 9 shareholders meeting, the brothers’ SEC filing briefly details some of their concerns about the state of the Southside-based firm.

“These concerns, which had been expressed privately by John Gottwald in an email to the board last fall (as to which he received no response), include the performance of the issuer’s common stock (particularly in contrast to the stock market in general over the past five years), the elimination of the corporate dividend and excessive corporate expenses,” the filing states.

The Gottwalds’ Tredegar shares are worth approximately $47 million based on the stock’s Tuesday closing price of $6.47. However, the stock is down nearly 29 percent over the last year and down 64 percent since 2019, when their stake would have been worth $130 million.

The company also suspended its stock dividend last year due to a provision in one of its credit agreements with a lender.

Tredegar reported a loss of $35 million in the fourth quarter of 2023, and lost $105 million for the full year, according to its most recent earnings reports. Its sales for the year were $705 million.

The brothers seem to place the blame for that performance on the Tredegar C-suite, as well as the board for its oversight of the executive ranks.

“The (Gottwalds) expect the board of directors to oversee management strategy and performance. When it becomes clear that performance is not providing value for shareholders over a reasonable time frame, then the board needs to consider changes in senior management,” the filing states.

The filing added that the Gottwalds have no plans to propose their own alternate slate of directors for election at next month’s meeting.

While they own nearly a quarter of Tredegar’s shares, the Gottwalds would need other major shareholders to fall in line and vote with them in order to achieve the changes they’re calling for. The SEC filing can be seen as their way of putting the word out.

Tredegar, in an emailed response to a BizSense inquiry last week, said: “We are in dialogue with the Gottwalds. We will be providing a business update at our annual meeting on Thursday, May 9, which starts at 9 a.m.”

This isn’t the first time the Gottwalds have tried to publicly push for changes atop Tredegar.

They made a similar play in 2013, calling for the firm to consider pursuing “strategic alternatives,” which typically means a sale of the company or a spinoff of some of its operations.

That led two years later to the resignation of the company’s CEO and CFO, with John Gottwald stepping in as chief executive and William Gottwald taking over as chairman of the board.

It was a familiar seat for John, as he had previously been Tredegar’s CEO from 1989 to 2001 and again from 2006 to 2010. His 2015 stint lasted until 2019. He then became chairman of the board until retiring last year.

John Steitz took over for Gottwald as CEO in 2019 and remains in that position.

In addition to Steitz, the board members who are in the Gottwald’s crosshairs this time around are: George Freeman III, CEO of Richmond-based Universal Corp.; Ken Newsome, executive chairman of Markel Food Group; Gregory Pratt, a former chairman of Carpenter Technology Corp. who serves as chairman of the Tredegar board; Thomas Snead, a retired Anthem executive; and Carl Tack, a finance professor at William & Mary.

The Gottwalds’ history with Tredegar traces back to its earliest days. The company was created as a spinoff of Ethyl Corp., which was run by the brothers’ late father, Floyd Gottwald.

Ethyl also spun off Albemarle Corp., which was chaired for a time by William Gottwald. Richmond-based NewMarket Corp. was also born out of that spinoff process and was run by Floyd Gottwald Jr.’s brother Bruce Gottwald. Bruce’s son Teddy Gottwald now runs NewMarket, which is also publicly traded and headquartered on South Fourth Street downtown.

Tredegar operates in three primary sectors: aluminum extrusions for a variety of industries; plastic films used to protect items like flat-screen electronics; and polyester films used in packaging.

The company is headquartered at 1100 Boulders Parkway in the Boulders office park. Its filings state that it has 1,900 employees.

The company has operations around the U.S., as well as in China and Brazil. It’s in the process of selling off its Brazilian unit, known as Terphane, for expected proceeds of around $85 million, according to its annual report.

Steitz, the CEO, said in that report that the company faced “significant business challenges in 2023” and “an unprecedented cyclical downturn.”

Those include a downturn at its Bonnell aluminum operations, which it said had been negatively affected by the pandemic. The company also cited challenges from foreign competition and increased interest rates, and it also made a costly move to settle its legacy pension plan in November.