Foothill Ranch-based Wet Seal Inc.’s board chair and three other directors have resigned in what the teen and contemporary retail chain described as a resolution of differences with a major shareholder.
New York-based asset management firm Clinton Group Inc., which owns 6.9% of Wet Seal’s shares, had called for the removal and replacement of four board members and a new director to fill a vacant seat.
Wet Seal’s shares were about even at $3.16, for a market value of about $283 million, in early trading Friday.
Wet Seal Chair Hal Kahn, who had been leading an interim Office of the Chairman while the company searches for a chief executive, resigned. He will remain with the company on a consulting basis.
Wet Seal Directors Jonathan Duskin, Sidney Horn and Henry Winterstern also resigned. Each is expected to help with the transition of the new board members.
The outgoing directors will be replaced by: Mindy Meads, a former chief executive of New York-based retailer Aeropostale Inc.; John Mills, a former chief operating office of Aeropostale; Dorrit Bern, former chief executive of Charming Shoppes Inc. in Pennsylvania; and Lynda Davey, co-founder and chief executive of investment bank Avalon Group in New York.
“We are pleased that Wet Seal and Clinton Group have been able to resolve the consent solicitation,” said Ken Seipel, Wet Seal president and chief operating officer in a statement. “We believe that the agreement with Clinton Group is in the best interest of all Wet Seal shareholders. This settlement will provide for a smooth and orderly transition of the board’s responsibilities, as well as a level of continuity for our employees.”
Clinton agreed to end a consent solicitation process that sought a vote by shareholders on its board nominees.
Wet Seal will keep former Chief Executive Kathy Bronstein, John Goodman and Ken Reiss on the board.
The board changes followed a filing with the Securities and Exchange Commission earlier this week by Clinton Group. Clinton Group said it had received a call from an investment banker working on behalf of Wet Seal who said the four directors were ready to resign, but then backtracked on the offer hours later.
A statement later released by Wet Seal called for shareholders to reject a board overhaul on the basis that it would disrupt a recently implemented fast-fashion strategy as the company is about to enter the highly competitive holiday selling season.
Wet Seal has been without a chief executive since July when the board fired former Chief Executive Susan McGalla following a disappointing sales slump.
The chain has 473 Wet Seal stores geared to teens and 81 Arden B stores for young women. It had $620.1 million in revenue in 2011.