Bebe Inc. came under fire again from activist shareholder Prentice Capital Management — and this time it’s over board member Seth Johnson.
Prentice Capital’s founder Michael Zimmerman filed a letter with the Securities and Exchange Commission on Wednesday voicing his concern that Johnson is nominated to be on the board of directors for Minnesota-based retailer Christopher & Banks Corp. Both companies are in the women’s apparel industry.
Bebe is known for its party-girl outfits, while Christopher & Banks sells more modest looks.
Zimmerman has concerns as to whether Bebe’s board considered the possible conflicts of interest and overlapping corporate opportunities that come with sharing a board member. Both companies have seen their stock prices plunge over the past year.
Zimmerman has suggested in previous public letters that outside parties have been interested in making offers to buy Bebe to no avail. Bebe has made no mention of any outside offers towards the company and neither the retailer nor any of its board members have responded to queries about third-party offers.
The letter from Prentice Capital Wednesday regarding the matter of Johnson’s board nomination said, “At a minimum, we trust that confidentiality, recusal and other appropriate screening wall procedures — at both companies — will be established to address and prevent any such conflicts of interest or the appearance of any impropriety.”
Christopher & Banks has also been under attack from an activist investor, Macellum Capital Management. The board of directors was overhauled in March when six members left and four new members were installed. The chain’s same-store sales dropped 3.4 percent in the fiscal fourth quarter and the stock has dropped over 50 percent over the past year.
In addition to being concerned about Johnson joining the Board and Christopher & Banks and potentially sharing information about deals, Zimmerman once again asked to see Bebe’s shareholder records. He wrote, “As you know, Inspecting Stockholder has an absolute and unqualified right to inspect and copy these records, which must be made available to Inspecting Stockholder on or before the fifth business day after this demand is received.”
Zimmerman said that if Bebe fails to provide the records within 5 days, then the California Corporations Code permits an order compelling the inspection of the records.
Bebe’s last public comment towards Prentice Capital was to ask Mr. Zimmerman to sign a non-disclosure agreement. At that point, Bebe chief executive officer Manny Mashouf said he would answer all of Zimmerman’s questions and alleviate his concerns. Zimmerman has said he doesn’t want to be treated any differently and won’t sign any such agreement.
“I don’t want them to tell me anything they won’t tell the other shareholder,” Zimmerman said. “I’m representing the minority.”