Corvex’s Meister Leaves Yum! Brands Board Of Directors

Yum! Brands (YUM) completed the spin off of its Chinese business, Yum China Holdings (YUMC), last fall. Although it’s only been a few months, ny now most people don’t remember that it took a very, very long time to get that point, including a lengthy will they or won’t they actually spin something off. Nudging the company along the way were a number of sell side analysts and activist investors, including Mr. Meister’s Corvex Capital Management. As part of his campaign, Mr. Meister actually secured a seat on the company’s board and worked on the inside in order to accomplish his goals.

Less than half a year after the spinoff, Mr. Meister has already declared mission accomplished and gave up his board seat. Here is what he had to say:

Serving on the YUM Board has been a tremendous experience. With the China spin‐off successfully executed, and YUM’s capital structure, management team and transformation plans in place, the company is set up for great success. I hold this management team in the highest regard, and believe that under Greg Creed’s impressive leadership the company is well on its way to achieving its long-term goals. Yum! Brands has been and will continue to remain one of my firm’s largest holdings, as we see iconic brands, an improving business model and significant free cash flow growth with a high degree of visibility. I want to thank David Novak, Bob Walter, Greg Creed, and the entire YUM Board for giving me the opportunity to serve.

Yum’s CEO, Greg Creed, was equally as effusive about Mr. Meister, calling him an ‘invaluable member of the Board’. His exit could be interpreted positively as a strong vote of confidence in the current management team or more cynically, in that he can now more freely trade in the company’s shares. There could be a larger conversation here about activists, but Mr. Meister’s accomplished what he set out to do with Yum and now the future is in the hands of management to keep growing the business.

While Mr. Meister claims that Yum Brands will remain one of firm’s ‘largest holdings’, apparently he does not feel the same way about the spinoff, Yum China. Corvex’s most recent 13F (reflecting December positions) shows that the firm’s Yum! Brands stake remained unchanged vs. September with 21,040,195 shares owned. The firm only owned 14,633,097 Yum China shares though. Given the 1:1 spinoff ratio, that means Corvex sold about one third of its YUMC stake in less than two months. Unfortunately for him, while both spins have underperformed the broader market, Yum China has actually done a little better than its parent post-spin. Lets see what happens in the long term.

Disclosure: Author holds no position in any stock mentioned.