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...”
For its next men’s wear collection, @roberto_cavalli will show as a special guest at #PittiUomo, running from June 12-15. The brand, which has Florence in its roots, will relaunch its men’s wear collection, which will be presented separately from women’s wear for the first time since Paul Surridge was appointed creative director in May. #wwdnews #wwdfashion (📷: @aitorrosasphoto)
“I was making the guacamole when my scout saw me,” says model @stuckinteenage on being discovered just six months ago while working at @chipotlemexicangrill. Since then Williams has signed with @dnamodels, walked in her first show at @calvinklein and landed on the cover of @vogueitalia – a high point of any model’s career. To read @lisajlockwood’s full interview with the model on her experiences thus far, head to WWD.com – link in bio. (📷: George Chinsee)
“I love the idea of dialogue, period. It’s where I’ve always gotten my inspiration from: hearing other women speak, their journeys and their paths,” said @hereisgina, who delivered the keynote speech during @sxsw for @createcultivate in partnership with @fossil. For her two panels, Rodriguez chose female empowering, female-led and female entrepreneurs to focus on. Head to WWD.com to read more about her thoughts on Time’s Up, growing up in a family of women and why we “need a girls’ club.” #wwdeye #sxsw (📷: @jgreenery)
Leading luxury brand are shaking things up to keep up with streetwear. Case in point: the arrival of @mrkimjones as artistic director of @diorhomme. Jones, who succeeds @Kris_Van_Assche, is seen as one of the handful of designers who can actually straddle the luxury and streetwear worlds — which could lead to even more changes at established brands. What could this mean for the rest of the menswear landscape? Head to WWD.com to find out what experts predict #wwdfashion (📷: @franckmura)
“It’s like buying groceries. You’re going to buy the best mango, the best mozzarella, the best things. You have to, or others are going to take it all,” said @gabrielahearst on why she uses only the finest fabrics. Last week, Hearst received her first @cfda nomination for Womenswear Designer of the Year, and earlier this month she opened a permanent showroom in Paris. To read @jessiredale’s interview with the designer and find out why this is shaping up to be a big year for her, head to WWD.com. #wwdfashion (📷: @francoisgoize)
“It’s an interesting thing, playing a younger version of your mother. It’s an interesting concept. I adore my mom and love her in every capacity, but it was just something that had never crossed my mind,” says @anniemstarke on playing a young Joan Castleman in “The Wife.” The same role will be played by her mother Glenn Close. Read more about her growing up in the film industry as the daughter of producer John H. Starke and Close and what she has planned for the future #wwdeye (📷: @nataliamantini)
@asics is launching a new streetwear sneaker inspired by its latest ambassador, @steveaoki. The Hyper-Kenzen x Aoki, which will launch at @footlocker stores exclusively tomorrow, is a slip-on style that incorporates the brand’s proprietary Gel technology through beads integrated into the midsole for comfort and endurance. Read the full story on WWD.com.