Two brothers, heirs to the estimated $11 billion Jack Daniel's fortune, are embroiled in a contentious dispute over the management of Brown-Forman, the parent company.
WL Lyons Brown III and Stuart R Brown sent a critical letter on July 10 to other family members, expressing dissatisfaction with the company's operations and urging consideration of a $15 billion takeover offer. The brothers, described as outsider heirs to the whiskey fortune, alleged that the Brown-Forman board has been "rewarding failure, and doing so lavishly and publicly." Their letter cited falling stock prices, declining sales, and a failed merger with Pernod Ricard as evidence of mismanagement.
Specifically, they criticized the board's rejection of an unsolicited takeover bid from Sazerac, a Kentucky-based bourbon maker. The brothers also targeted CEO Lawson Whiting, whose three-year tenure they characterized by "poor operating performance, failed transactions, and significant increases in personal compensation." Whiting subsequently announced his resignation as CEO.
Lyons and Stuart Brown are sons of former Brown-Forman CEO and Chairman WL Lyons Brown Jr. While they were previously involved with the company, they are not currently active in its operations. Lyons Brown had previously been removed from the family business following a disagreement with the former CEO regarding his unconventional methods.
Brown-Forman, founded in Louisville, Kentucky, in 1870, is controlled by the Brown family through more than 70 percent of its voting Class A shares. The family established the Wolf Pen Branch investment vehicle in 2017 to consolidate share voting, which controls about 60 percent of the voting shares. Lyons and Stuart Brown are not members of Wolf Pen, limiting their voting power despite their vocal opposition.
The brothers highlighted a significant drop in Brown-Forman's stock price, from the mid-$70s to the mid-$20s per share over the past three years, which they state has erased billions in generational wealth. The company also implemented a 12 percent workforce reduction last year and sold its historic cooperage. An attempt to boost sales with a blackberry-flavored Jack Daniel's Tennessee Whiskey reportedly did not succeed.
The letter also raised concerns about executive compensation, pointing to performance bonuses paid to Whiting despite the stock decline and millions in bonuses for executives involved in the Sazerac takeover negotiations, which the brothers argued yielded no value for shareholders. Regulatory filings reportedly show Whiting received a $2.7 million payout and Chief Financial Officer Jim Peters received $3.3 million.
Sazerac's $15 billion offer was initially rejected in May and renewed in July, with the company appealing directly to Brown family members. However, on July 26, Brown-Forman's board chairman, Marshall Farrer, stated the bid was "not actionable." Farrer expressed confidence in the company's long-term growth strategy, while the Wolf Pen Branch stated Sazerac's proposal did not align with their vision for Brown-Forman's future.
The dissenting brothers questioned the board's refusal to consider Sazerac's bid, suggesting it could have strengthened the company domestically and globally. They argued the board has a fiduciary duty to evaluate all credible offers for the benefit of shareholders, noting Sazerac's Louisville-based status as a potential cultural and operational fit. The brothers pressed the board to outline a clear forward strategy, be accountable for executive pay, and improve shareholder communication, stating that the "status quo is unacceptable."