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NEW YORK: US Foods Holding Corp is interviewing potential candidates for its board as the food distributor tries to fend off a challenge from activist investor Sachem Head Capital Management, two people familiar with the matter said.

The company has compiled a list of director candidates and has been reaching out to them, the sources said. US Foods could try to shake up its 10-member board to persuade investors to back its directors after Sachem Head last month nominated seven candidates.

The sources did not give the identities and number of the board candidates US Foods is considering. It was also not clear when the company may make a final decision on the matter. A representative for US Foods declined to comment. A representative for Sachem Head declined to comment. A month ago, US Foods split its chief executive officer and chairman roles, a move generally seen as trying to appeal to shareholders. CEO Pietro Satriano retained his board seat, while Robert Dutkowsky, the lead independent director, was named non-executive chair.

Sachem Head, which owns 8.7% of the company, has been invested in US Foods since 2018. Last month, its portfolio manager, Scott Ferguson, wrote in a letter to other shareholders that there was “deep-seated resistance to real change at US Foods, and, in fact, a lack of acknowledgement that there is even a problem.” He said new directors are needed to hold management accountable.

Ferguson said he believes the company is lagging behind peers and has not improved operations as promised. US Foods, in response, said it profitably grew market share and expanded core earnings margins in the four years leading up to the pandemic and has since invested roughly $60 million to hire more salespeople to grow market share.

US Foods, valued at $7.9 billion as of the close of trading on Tuesday, has said that in December, Sachem Head turned down the company’s offer to settle the fight by inviting Ferguson onto its board and allowing the hedge fund to help select another director

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