ELDER BEERMAN TO EXPAND BOARD
Byline: Arnold J. Karr
NEW YORK — Averting what would have been a contentious battle at its annual meeting next month, Elder-Beerman Stores Corp. Thursday revised its proxy statement to make room for three directors proposed by its two largest shareholders.
The Dayton, Ohio-based department store group’s amended proxy will propose Mark Berner, Eugene Davis and Charles Turner for election to the board, taking slots originally held by Stewart Kasen, John Wiesner and John Muskovich. Muskovich, formerly president and chief operating officer, left EB this month, as reported in these columns.
Berner and Davis were originally proposed as directors by PPM America, which, with 13.2 percent of EB’s stock, is the company’s second largest shareholder.
Moira Cary was included in PPM’s shareholder proposal but wasn’t included in the new proxy.
Turner, senior vice president and chief financial officer of Pier I Imports, is a former executive of both J.C. Penney and KPMG Peat Marwick. He was placed on the slate at the suggestion of Snyder Capital Management, EB’s largest shareholder with a 20.9 percent stake.
The one name to survive the transition from the original board slate to the current one is Dennis Bookshester, the former retailer who now serves as chief executive of Fruit of the Loom and, since the expansion of its board last December, an EB director. Bookshester, who originally found his way to the board on the recommendation of Snyder, received praise from several of the involved parties for helping to put the compromise in place.
“Dennis was very much an important broker in making this happen,” Davis told WWD, “but I give everyone at Elder-Beerman a tremendous amount of credit. If the manner in which [EB chief executive] Fred Mershad handled himself through this is any indication, I have high hopes we can all work together and achieve our goals.”
The ultimate objective is to “Move the stock from $4 to between $16 and $20 as soon as possible,” Davis replied. “There are many ways in which we could achieve that.”
In addition to the revised board alignment, EB has proposed elimination of its classified board — placing all directors up for election each year — and elimination of the “supermajority” and imposition of a simple majority requirement for shareholder approval of certain corporate actions.
It also proposed amendments allowing EB to opt out of two Ohio statutes that impose restrictions on the company and its larger shareholders.
The supermajority requirement affects substantial matters of corporate governance, such as the size of the board, who can call special shareholder meetings and when they can be held.
Davis pointed out that the move to simple majority voting would require, under existing rules, a supermajority vote of 72 percent.
Commenting on the new slate of directors and other changes, EB’s Mershad said in a statement, “Our shareholders’ interests are of paramount importance to the board and management of Elder-Beerman, and we are pleased to have reached an agreement that we believe will benefit and strengthen our relationship with our entire shareholder base.”
In EB’s statement on the revision, Stuart Lissner, PPM’s managing director, said the proposed changes would give shareholders “a stronger voice in the company.” Snyder Capital’s Alan Snyder added, “I am pleased that Elder-Beerman and PPM have constructively resolved their differences, and the resulting changes will benefit Elder-Beerman and its shareholders.”
While PPM had sought new directors and more democratic shareholder participation in EB’s affairs, another large shareholder, David Nierenberg of D3 Family Fund, which controls 6 percent of EB’s stock, had pushed for the ouster of Mershad and others in senior management.
With Snyder and PPM supporting EB’s recent actions, the immediate threat to senior management has been reduced, but the pressure to improve performance and shareholder value remains and will be the focus when the annual meeting takes place in Dayton on Aug. 24.
“Elder-Beerman has put together a good plan for next year and hopefully can succeed at achieving its plans,” Bookshester told WWD, citing his involvement as an outside director as he declined further comment.
Scott Davido, chief financial officer of EB, noted: “We’re all very pleased that we were able to come to an agreement with our shareholders. We have a lot of business ideas to talk about at the annual meeting.”
When asked about the current tenor of business at the store, Davido replied, “Next question.”