By Svea Herbst-Bayliss and Greg Roumeliotis
(Reuters) - Campbell Soup Co (N:CPB) and Daniel Loeb's hedge fund Third Point LLC are close to an agreement over composition of the U.S. food company's board of directors that will end a proxy contest that was due to come to a head this week, people familiar with the matter said on Sunday.
Under the deal being negotiated, Third Point will have two of its nominees appointed to Campbell Soup's board, the sources said. This arrangement is a concession Campbell Soup had previously offered, but Third Point had turned down.
The two Third Point nominees to join Campbell Soup's board would be Comscore Inc (O:SCOR) president Sarah Hofstetter and former Blue Buffalo CEO Kurt Schmidt, the sources said, cautioning that it was possible that negotiations could still collapse at the last minute.
The two will expand Campbell Soup's board from 12 members to 14, and will also have input in appointment of a third director, as well as the company's search for a new chief executive, the sources said.
Campbell Soup and Third Point did not immediately respond to requests for comment. The Wall Street Journal first reported on the potential settlement.
Third Point initially sought to oust Campbell's entire board, but following feedback from investors it downsized its slate to five nominees. The company's annual meeting, where investors are due to vote on the board, is scheduled for Nov. 29.
The deal would be the latest example of a major company reaching agreement with an activist shareholder to end a proxy contest. This year activists have launched 42 proxy contests at U.S.-based companies and 13 have been settled, data from Activist Insight show.
One of Third Point's criticisms of Campbell's has been the board's lack of succession planning to replace Denise Morrison, the former CEO who left unexpectedly in May. She has been replaced on an interim basis by board member Keith McLoughlin.
McLoughlin said he was not interested in the top job and that the company was ready to appoint someone before year's end. Third Point has also been courting a potential candidate, according to a source familiar with the matter who would not name the person. Third Point has now agreed to a standstill agreement that will prevent it from challenging Campbell Soup's further, according to the sources.
McLoughlin had met with Loeb last week in an effort to reach a deal, one of the sources said.