Three activist hedge funds are looking to shake up Bed Bath & Beyond’s entire board of directors in a proxy challenge.
Ancora Advisors, Legion Partners Asset Management, and Macellum Advisors, with a combined 5% stake in the housewares retailer, seek to enlist other disgruntled shareholders to remove all 12 of Bed Bath & Beyond’s directors and its chief executive officer, Steven Temares.
The company’s stock rose more than 20% the day they announced their challenge. Prior to the news, shares were down 35% over the past year.
Ancora, Legion, and Macellum, calling themselves “the Investor Group,” issued a joint statement Tuesday where they said Temares has “overseen the destruction of more than $8 billion in market value over his 15-year tenure.” The three firms also charged there was poor management and a botched business model change.
Additionally, the three said Temares, and co-executive chairmen and company founders Warren Eisenberg and Leonard Feinstein, received more than $300 million in total compensation since 2005 as shares underperformed Bed Bath & Beyond’s peer group. At the company’s 2018 annual meeting, 56% of the shareowners voted to urge the resignation of the former chair of the board’s compensation committee, Victoria Morrison. But the retailer’s board said it would keep her.
Bed Bath & Beyond stock has lost over 80% of its value since early 2015.
“In the Investor Group’s view, the lack of retail expertise on the board has been an impediment to advancement and in the current operating environment will only result in the continuation of deteriorating results,” the hedge trio said. “Shareholders must demand change now before the Company’s failures become irreversible.”
The team also shared its nominations of 16 retail industry professionals it would like to see on the board. These include current and former Macy’s, Guess, and Pier 1 Imports executives, as well as Macellum CEO Jonathan Duskin.
“The Investor Group believes the gravity of corporate governance issues and rapid deterioration in operational performance during the last 12 months necessitates complete and immediate change on the board,” the unit said.
Bed Bath & Beyond said it regularly engages with its shareholders and “welcomes constructive input focused on enhancing value” in a statement issued Tuesday. The business said it has met with and had discussions with Legion and Macellum, but has not engaged with Ancora.
The home goods retailer also said the two funds did not provide any suggestions or ideas on how it could improve its standing with shareowners when questioned. “Instead they chose to publicly attack the Company and provide their intent to nominate directors to take over the full Board,” it said. “Unfortunately, while our directors and management were seeking to engage in good faith, it appears that the Legion and Macellum representatives were merely seeking information to support their attack.”
Bed Bath & Beyond said it is “undertaking a comprehensive transformation” while considering the terms of the hedge group’s proposal. It also “looks forward” to any input the Investor Group may have.
None of the Investor Group’s members, nor Bed Bath & Beyond were able to be reached for direct comment.
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Tags: Ancora Advisors, Bed Bath & Beyond, Hedge Funds, Legion Partners Asset Management, Macellum Advisors