CINCINNATI — Shareholders of U.S. Shoe Corp. voted overwhelmingly Thursday against breaking the company’s women’s apparel, footwear and optical operations into three separate businesses.
A shareholder proposal to that effect was defeated by approximately 25.7 million votes to 7.7 million, but the vote of confidence in management was tempered by an equally decisive vote for a second shareholder proposal.
That one calls for annual elections of the entire board instead of the current system of three groups, each of which is elected for a three-year term. The proposal, submitted by the California Public Employees Retirement System, was approved, 28.3 million to 5.1 million.
Both proposals, which grew from shareholder discontent over the company’s performance in the last few years, were resolved at the annual meeting at U.S. Shoe headquarters here.
Noting the similarity in the reversed numbers, Alfred D. Kingsley, senior managing director of Greenway Partners, which owns more than 2 million shares and had supported the spinoff, said after the meeting that “a lot of people chickened out” on the breakup proposal, “apparently feeling the vote on election of directors would give the board a message.”
Shares of U.S. Shoe closed Thursday at 19, up 1/8, on the New York Stock Exchange.
Management had actively campaigned against the breakup proposal. Bannus B. Hudson, president and chief executive officer, said the company is in a turnaround and the best way to improve its performance is to keep it whole.
Michael Searles, president of the company’s women’s specialty retailing group, told shareholders an example of the turnaround is a “Wear to Work” strategy that has made Casual Corner “the largest retailer of women’s suits in the U.S.”
Conceding that Casual Corner missed some opportunities last year, like linen and washed silk, Searles said Casual Corner now has a “key-item mentality.” For example, the chain expects to sell 700,000 units of fine gauge knit tops for spring against 100,000 last year, and 350,000 linen suits at $49, a category that produced no business last year because it wasn’t carried.