Bed Bath & Beyond Overhauls Board Amid Activist Pressure -- Update
By Kimberly Chin
Bed Bath & Beyond Inc. has announced a series of changes to its board, including the appointment of five new independent directors, amid a proxy battle with a group of activist investors seeking to overhaul the board and turn around its operations.
The home-goods retailer said Monday the board will now comprise 10 directors, instead of 12, that will vary in race, gender, ethnicity, and experience level, with an average tenure of less than four years. Nine of those directors will be independent and six will be women, the company said.
The changes also call for five of its current independent directors to step down. Co-founders Warren Eisenberg and Leonard Feinstein, who collectively control roughly 2.3% of the company, according to FactSet, will retire from the board and will move into the role of co-chairmen emeriti. The changes are effective May 1.
Bed Bath & Beyond has faced criticism from activist investors Legion Partners Asset Management LLC, Macellum Advisors GP LLC and Ancora Advisors LLC, which control a combined stake in the company of about 5%, according to a securities filings. The investors have said the company failed to adapt over time and allowed costs to increase, eroding value for shareholders. They also called for Chief Executive Steven Temares to be replaced, and they nominated a slate of directors for the board.
Bed Bath & Beyond has long countered the group's public push for these changes. The retailer said Monday it had invited the investor group to participate in its plans to bring new members to its board. To date, the investors have declined the invitation. The company will remain in open dialogue with them, Bed Bath & Beyond said.
Shares of the retailer, known for its bedding, towels and kitchen items, rose 1.7% in premarket trading. Its shares have risen 26% since The Wall Street Journal first reported the activist group's intentions.
The new directors will include Harriet Edelman, vice chairman of Emigrant Savings Bank, Harsha Ramalingam, senior adviser at Boston Consulting Group Inc., Andrea Weiss, founding partner of the O Alliance Consulting Services LLC and CEO and founder of Retail Consulting Inc., Mary Winston, president and founder of WinsCo Enterprises Inc., and Ann Yerger, a corporate governance specialist at Spencer Stuart North American Board Practice.
Patrick Gaston, current lead independent director, will be named independent chairman, effective immediately, Bed Bath & Beyond said.
The company also said it would form a committee and undergo a strategic review of the whole business. The company will appoint committee chairs to its board audit and compensation committees, which will be reconstituted. Bed Bath & Beyond will also reconstitute its nominating and corporate governance committee.
The Union, N.J., based company will create a new executive compensation plan that it says better aligns compensation with the company's performance and long-term shareholder value creation.
Earlier this month, the company reported its first annual loss and sales decline in its nearly three decades of being a public company.
Bed Bath & Beyond was founded in 1971 by Mr. Feinstein and Mr. Eisenberg. When it went public in 1992, it had 34 stores. It now has more than 1,500.
Write to Kimberly Chin at firstname.lastname@example.org
(END) Dow Jones Newswires
April 22, 2019 08:40 ET (12:40 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.