With battle lines drawn, Chico’s FAS Inc. has upped the ante in its fight with Barington Capital Group and expects to spend $5.9 million in its efforts.
The retailer has been aggressively seeking investor support to ensure the solicitation of votes for its “White” proxy card. The White card lists its slate of four nominees to the board when shareholders meet at its annual meeting on July 21. Barington has the “Blue” card with its two nominees who will stand for election.
On Tuesday Chico’s filed its investor presentation on its web site, and that was followed by another letter to shareholders on Friday, as well as the posting of a video of Shelley Broader, its chief executive officer and president. Both the nearly four-minute clip and the shareholder letter essentially repeated the key points Chico’s has been focusing since the fight began in May. Thoose include cost-cutting measures instituted by Broader since joining in December 2015, the addition of new staff and the corporate governance changes the retailer is pushing.
And as the fight escalates, so too has the costs of battle. And in Chico’s case, defense comes at a price. According to the proxy filed by Chico’s earlier this month, it said it expects to spend $5.9 million in total and has spent so far at least $3.1 million. The costs are spent on attorneys’ fees, mailings to shareholders and fees to proxy solicitation firms.
Jim Mitarotonda, Barington’s chairman and ceo and one of the board nominees on the Blue card, called the expenditures “outrageous and an irresponsible waste of shareholder resources.”
The retailer said, “Rather than support Chico’s FAS like so many investors have, Barington has launched an unwarranted and gratuitous proxy campaign. The company believes electing either of Barington’s nominees would harm shareholder value and undermine the significant progress underway. Chico’s FAS will take all appropriate steps to protect its shareholders’ interests.”
According to Activist Insight Online, the average cost to a company regarding fees associated with proxy contests in 2014 and 2015 was $4 million. Extreme cases can go much higher, such as DuPont’s fight with Trian Fund Management at $15.4 million and Target’s battle with Pershing Square at $11.1 million.
In more recent battles, the estimated cost of The Children’s Place Inc.’s fight with Barington last year was $4.5 million, while the brutal battle at ValueVision Media Inc. to forestall Clinton Group a year earlier was $5.3 million.