Proxy advisors weigh in against Wet Seal nominees
NEW YORK (AP) — A proxy advisory firm on Wednesday recommended that shareholders vote against a slate of board nominees for retailer Wet Seal Inc., a day after the company's board urged its investors to do the same thing.
The Clinton Group, which has a 7 percent stake in the company, has been vocal about its displeasure with Wet Seal's performance and previously urged the chain's board to sell the company. Last week, the investment house disclosed in a filing with the Securities and Exchange Commission that it would nominate a slate of six directors to replace all but one of Wet Seal's board.
The company advised shareholders to vote against the slate. On Wednesday, a firm that evaluates proxy filings, Egan-Jones Proxy Services, also recommended shareholders give thumbs down to the nominees.
A second proxy firm, Institutional Shareholder Services, recommended shareholders elect two of the Clinton Group's slate to replace Wet Seal's independent directors, but reject the others.
Wet Seal has struggled to find the right product lineup to lure young women. Its sales trends worsened this summer, and the retailer fired its CEO in July and started looking for a new one. Susan McGalla had led the company since January 2011.
The Foothill Ranch, Calif., company 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.
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. Shares fell 3 cents to $3.10 in afternoon trading.