Wet Seal opposes Clinton Group's board plans
FOOTHILL RANCH, Calif. (AP) — Wet Seal is advising its shareholders against supporting activist investor The Clinton Group's plans to replace some of the teen retailer's board members.
The Clinton Group has been very vocal about its displeasure with Wet Seal's performance and previously urged Wet Seal's board to sell the company.
This past Friday, Clinton Group disclosed in a filing with the Securities and Exchange Commission that it would like to nominate Raphael Benaroya, Dorrit Bern, Lynda Davey, Mindy Meads and John Mills for seats on Wet Seal Inc.'s board.
Benaroya is the founder and former chairman and CEO of United Retail Group and former chairman of FAO Schwarz. Bern is the former chairman, president and CEO of Charming Shoppes and is group vice president of women's apparel and home fashions at Sears. Davey is chairman and CEO of Avalon Group Ltd. Meads is the former president and co-CEO of Aeropostale Inc. and former CEO of Lands' End. Mills is the former president and chief operating officer of Aeropostale.
Late Monday, Wet Seal said in a letter sent to its shareholders that the Clinton Group has rejected proposals that it put forth last week. Those proposals included letting two additional directors that were nominated by Clinton Group join Wet Seal's board and letting someone from Clinton Group help with the retailer's search for a CEO.
Wet Seal fired CEO Susan McGalla in July without naming a replacement. The Foothill Ranch, Calif., company says its board is working with recruiter Korn/Ferry International to find a replacement CEO and expects to fill the post soon.
Wet Seal said in its letter to shareholders that Clinton Group's rejection of its proposals shows that the company "is focused solely on short-term activism and its own interests," but added that it is still open to finding a compromise with them.
Wet Seal says that Clinton Group's board nominees all have retail experience but don't have expertise in the teen girls' retailing or fast-fashion merchandising. The retailer said that it believes its current board is better suited to lead it.
Last week Wet Seal announced that it named two new board members and that it was getting rid of its temporary shareholder rights plan. The company adopted a shareholder rights plan in August, aimed at protecting itself from any takeover attempt. Wet Seal said Thursday that it was getting rid of the rights plan based on feedback from shareholders and the board's confidence that its stock price is stabilizing.
Wet Seal had 551 stores in 47 states and Puerto Rico as of Aug. 25.
Its shares finished at $3.23 on Monday. They are up from a 52-week low of $2.42 on July 23. The traded as high as $5.01 last September.