Wet Seal Stands By Board in Proxy FightThursday, October 4, 2012
The proxy battle at Foothill Ranch-based retailer Wet Seal Inc. continues, with the retailer reiterating its position that stockholders should vote against a major shareholder’s plan to replace four of its board members.
“We believe that maintaining a degree of stability and continuity on our board is critical as we approach the holiday season,” said Wet Seal Chair Hal Kahn. “It is not in the best interests of the company and our shareholders to have an almost complete turnover of the board on the eve of the fourth quarter. It would be extremely disruptive to our employees, customers and suppliers at a time when we are in the midst of implementing a return to our fast fashion strategy and beginning to gain traction in improving our performance.”
The statement, released Wednesday evening, followed a filing with the Securities & Exchange Commission earlier the same day by New York-based asset management firm Clinton Group Inc., which said the retailer had conceded earlier this week to a call for a board overhaul.
Clinton Group owns 6.9% of Wet Seal shares.
Clinton Group, which initiated a consent solicitation to have four Wet Seal board members removed and replaced with its own nominees, said in the SEC filing that an investment banker calling on behalf of Wet Seal said “it appears you have won.”
The banker went on to say that four board directors identified as “Duskin, Hahn, Horn and Winterstern” were ready to vacate their positions Tuesday and help during the transition period of the new board members if Clinton agreed to the banker’s terms, which were not described in the filing.
The board member identified as “Hahn” in the filing is a typographical error and actually refers to board chair Hal Kahn, according to a Clinton Group representative.
Clinton Group has nominated five board nominees, including one to fill a vacant seat left open with the firing of former Chief Executive Susan McGalla in July.
Clinton Group’s filing went on to say that it received a call later that day from the same investment banker saying that the board had changed its mind and the four directors would not resign.
Shareholders have until Nov. 9 to vote on Clinton Group’s push to remake the board.
Wet Seal has been without a chief executive since McGalla's departure. The company is currently being led by an Office of the Chairman headed up by Kahn, who believes Wet Seal’s return to a fast-fashion strategy will eventually stem the stream of same-store sales declines it has seen so far this year.
Wet Seal has 469 namesake stores throughout the U.S., and 82 under the Arden B nameplate.
It had $620.1 million in revenue last year.