Owners slate seeks seats on Ace board

Asmall group of reform-minded Ace Hardware owner-members have vowed to form an independent “owners slate” of candidates to run for the board of directors at the Chicago-based co-op’s annual stockholders’ meeting in June.

In a letter circulated via e-mail and obtained by Home Channel News, the members pointed to two major events of the last three months as the impetus for their action: the aborted plan to convert the co-op into a member-owner corporation and the announcement of what was described at the time as a $154 million accounting error.

The letter explained: “Now, more than ever, it is critical that the owner-members of Ace be able to engage their board of directors and management in a meaningful dialogue, to ensure that our expectations regarding the handling of this loss and the future of our company are being fully addressed.”

Intended to be nominated for the 12-member board are Charlie Huff, CJ’s HomeCenter in Omaha, Neb.; Brian Odell, Arlinton Ace Hardware in Kensington, Calif.; Larry Perry, Woodstock Home & Hardware in Woodstock, Vt.; and Patrick Smith, Dunn Hardware in Lyndhurst, Ohio.

“The cornerstone of our candidacy is open dialogue with owners before, and after, major decisions are made,” the letter continued.

If the four member-owners become candidates, the move would mark a break from the tradition of nominees being selected by the committee running unopposed.

At corporate headquarters, Ace’s Paula Erickson, director of advertising and brand development was aware of the intention of the four to run and added it “absolutely has the ability to do so.” However, she also said the letter didn’t “completely articulate” the overall nomination process, which she defended as thorough and designed to bring the best group of diverse member-owners to the table.

“Our management team and board of directors feels strongly about who they nominate, and our board has served this company extremely well,” Erickson said.

The current 12-member board includes 11 member-owners, representing variety in terms of size, geography and type of business. She pointed to examples of that diversity, including Dick Stine, owner of 10-store Stine Lumber and Home & Yard in Louisiana, to Rick Karp, who operates urban hardware stores in San Francisco. There’s also international representation: Sameer Al-Hamidi, general manager of a 15-store chain in Saudi Arabia.

Ace members want to know more about the accounting issue, said Odell, one of the four members who intends to run for the board. “They need to announce to the owners how they’re going to fill the equity bucket again,” he told Home Channel News.

Erickson said the co-op is continuing to work with the consulting firm Protiviti “to get to the bottom of it.” She added: “We’re working through this situation.” The size of the accounting is also expected to shrink below $150 million, rather than the $154 million originally reported.

Erickson added that the co-op encourages feedback and engages members regularly. “We understand how important it is in times like these to keep the lines of communication open,” she said.

In a related matter, Ron Knutson, vp-finance for Ace, recently resigned from the company. Asked for a reason, Erickson said it was “to pursue other opportunities.” In a letter circulated to members, Ray Griffith said the search was on for a replacement.

In an e-mail message to Home Channel News, Odell, one of the self-nominees for the board, explained that the group’s purpose is to bring a choice to the member-owners of Ace when they vote on the board.

“While our positions on a number of owner issues are different from those stated by the current board of directors, we are strongly supportive of the Ace Hardware cooperative, in general.”