Bed Bath & Beyond Overhauls Board Amid Activist Pressure -- 4th Update

04/22/19 02:36 PM EDT
By Kimberly Chin 

Bed Bath & Beyond Inc. is overhauling its board of directors and pledged to review operations amid a proxy battle with a group of activist investors who have called for changes to the company's management ranks and business.

The home-goods retailer said Monday that five independent directors will step down and be replaced. The transformed board, which will comprise 10 directors instead of the 12 currently on the panel, will reflect significant diversity across race, gender, and ethnicity, the company said.

Among those retiring from the board are Bed Bath & Beyond co-founders Warren Eisenberg and Leonard Feinstein, who collectively control roughly 2.3% of the company, according to FactSet. Messrs. Eisenberg and Feinstein will move into the roles of co-chairmen emeriti as of May 1.

Of the 10 directors, Chief Executive Steven Temares will be the only one who isn't independent.

The company also said it would form a strategic-review committee to evaluate the whole business.

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 Mr. 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 discussions regarding board members and about improving the business. The group has so far declined the invitation, the company said, adding that it would remain open to talks.

In a written statement Monday, the group of investors said Bed Bath & Beyond's latest moves don't go far enough to address issues and the company didn't provide details on how it plans to enhance shareholder value.

"We will therefore continue to move forward with our campaign to install fresh, experienced and independent oversight and management at the Company," the group said, adding that the new directors proposed by Bed Bath & Beyond don't have the skills and experience needed to execute meaningful change.

The group has offered a slate of 16 director candidates, including former Gap Inc. executive Jeffrey A. Kirwan, former Pier 1 Imports Inc. CEO Alexander W. Smith and Macellum founder Jonathan Duskin, according to filings.

Shares in Bed Bath & Beyond, known for its bedding, towels and kitchen items, were off 4.3% on Monday afternoon. Its shares have risen 20% 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 Practices.

Patrick Gaston, current lead independent director, will be named independent chairman, effective immediately, Bed Bath & Beyond said.

The company will also 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., company said it would create a new executive-compensation plan that it said 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 as a public company.

Bed Bath & Beyond was founded in 1971 and has more than 1,500 stores. When it went public in 1992, it had 34 stores.

Write to Kimberly Chin at kimberly.chin@wsj.com

 

(END) Dow Jones Newswires

April 22, 2019 14:36 ET (18:36 GMT)

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