Misguided management is stifling growth at Philadelphia's food-and-facilities giant Aramark, according to two Wall Street analysts who want an activist investor to step up and push out the current leadership.

Aramark is a giant in the world of food and support services, but the company's 3 percent annual revenue growth significantly lags that of its largest rival, Compass Group PLC, for one main reason. It doesn't win enough when it competes against Compass and others for long-term contracts to run dining services for schools, universities, hospitals, and other businesses, analysts at Nomura Instinet, argued in a March 18 report. In December, when Aramark cut its target for annual revenue growth to a range of 2 percent to 4 percent from 3 percent to 5 percent, analysts were puzzled, especially because Aramark estimates overall annual growth in its end markets at 3 percent.

As a group, investors two years in a row have panned Aramark's executive pay practices in their annual non-binding "say on pay" vote. The approval rate climbed to 55.8 percent at this year's annual meeting from 50.7 percent last year, according to Aramark's SEC filings. Mary J. Mullany, a Ballard Spahr partner who focuses her practice on executive compensation, said that's still a failing grade. "If you get less than 80, you're in trouble," she said.

Read the full article here. Subscription may be required.