More recently, The Jones Group Inc. in June saw activist investor James Mitarotonda, chairman and chief executive officer of Barington Capital Group join its board. Mitarotonda has a history of pushing Warnaco Group Inc., Dillard’s Inc., Nautica, Harry Winston and others to tighten up operations. Barington has a 2.3 percent stake in Jones and has been pushing for the apparel group to sell off some smaller brands and tighten up operations. Jones has hired Citi to explore its options and is currently reviewing bids for the entire company, just the apparel division and just the footwear division.
Michael Appel, president of consulting firm Appel Associates, which specializes in turnarounds and management-performance improvement, said, “Activist investors can play an important purpose when they identify companies that are undermanaged and underperforming, and press for change that will improve performance and shareholder return. Some activist investors may have a short-term horizon and that can be detrimental to building long-term shareholder value, but many push for positive change.”
Appel said that on most boards he’s been on, directors have tried to do the right thing. There are not that many lawsuits against board members because most exercise two key duties: duty of good faith and duty of due care. In Appel’s view, the key area of dispute often centers on “an honest difference of opinion on what is the right thing or right course of action.”
But what is the role of an activist shareholder who is also on the board?
According to Robert L. Chapman Jr., managing member of Chapman Capital: “In exchange for being given the privilege of having a board seat and the attendant influence on the company from the inside, the activist sacrifices the ability to publicly reprimand its executives and fellow board members, in addition to being restricted from buying and selling shares at will. J.C. Penney and Bill Ackman is a textbook case of the latter trying to have his cake and eat it too, and until banished from the boardroom he thought he could pull it off.
“The nearly universal and rightfully harsh backlash against Ackman’s behavior derives not just from his transgressing that insider-or-outsider rule, but this guy rightfully lost the privilege to criticize J.C. Penney’s executives and directors the minute the apple of Ackman’s eye, hand-picked fellow superhero Ron Johnson, was exposed as something of a charlatan. Thus, under normal circumstances Ackman’s waging of internecine war was unacceptable, but this was an abnormal case wherein Ackman had activist blood on his hands well before he drove the corporate dagger into [Myron] Ullman’s back,” Chapman said.
Chapman and Ackman have locked horns in the past, most recently earlier this year over Herbalife.
Ratings agency Standard & Poor’s last month issued a report about the impact of activism on corporate management and governance. Laurence Hazell, a governance specialist in the S&P Corporate Ratings group, said that how management and the board responds to the activist proposals can provide good insight “about their qualities as leaders of the corporation,” such as their willingness to listen to and consider alternative perspectives and their “ability to adopt a new direction or convincingly articulate why their own current plans are the right ones...”
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion