US: Proxy advisers back Wet Seal in board battle
The battle for control of troubled US teen clothing retailer The Wet Seal continues, with two proxy advisers recommending shareholders reject Clinton Group's efforts to replace six of its board members.
The Wet Seal said yesterday (26 September) that Institutional Shareholder Services (ISS) and Egan-Jones Proxy Services reject dissident shareholder Clinton Group's efforts to replace all bar one member of the current board.
Clinton Group, which owns more than 5% of the retailer's outstanding stock, has also been calling for the sale of the troubled retailer. The move came after the retailer booked a second quarter loss of US$12.4m, with sales declining 9.1%.
The ISS cited a lack of detail to Clinton Group's plans, while Egan-Jones said the group is making strides in addressing its financial difficulties "primarily by stabilising the business by returning to its core expertise of fast fashion merchandising".
However, the ISS recommended that shareholders elect two directors from the Clinton Group's slate.
The Wet Seal said it "respectfully disagrees with this part of their report, and urges the retention of all five continuing directors and our two new members".
On 20 September, the company appointed Kathy Bronstein and John Goodman to its board. Bronstein has spent 18 years with the company, with 1 as CEO. Goodman was CEO of Charlotte Russe from 2008-2009 and has held senior leadership roles at companies including Sears, Kmart, Levi Strauss and Gap.
"The Wet Seal Board and management strongly believe that the best course for shareholders is for the full seven-person board, including its two new strong directors with teen retailing experience, to work constructively and prudently over the next few months to complete the plan to transition back to our fast fashion strategy," said chairman Hal Kahn.
"The critical holiday season is two months away, and we remain committed to restoring stability and building real and lasting value while we explore alternatives with our financial advisers for enhanced opportunities."
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