If shareholders remember what was most recently presented to them, then Chico’s FAS Inc. made sure it got the last word in.
Chico’s and activist investor Barington Capital are in the middle of a proxy battle for board seats. The activist hedge fund on Monday said it mailed a letter to shareholders explaining its position and urging investors to vote for its “blue” proxy card. Chico’s on Thursday followed suit, saying it has mailed out a letter delineating its position and asking shareholders to vote the “white” proxy card.
The shareholders’ annual meeting is set for July 21. Two directors will be vacating their seats. The board has nine directors, or eight independent board members and the company’s chief executive officer, Shelley Broader. Chico’s is nominating four to the board, including Broader and an incumbent director. The other two who are standing for election would be new to Chico’s board, if elected. Barington’s slate consists of two nominees and both would be new to Chico’s board, if elected.
Related Galleries
The battle for board seats began in late May, although Barington has said it was in discussions with Chico’s since March about some ideas on how to improve the company’s operations. The activist investor said the retailer could “more than double its earnings per share in three years” if it had been a better-managed company. At present, it doesn’t appear that Barington is pushing for a management change or for a sale of the company. So far, the hedge fund is saying it just wants to be heard and it can ensure that if it has seats on the board.
In the Chico’s letter to shareholders, from chairman David F. Walker, the company emphasized it has taken “significant actions and is making substantive progress on implementing its new plan,” all within just 180 days of Broader’s appointment. She joined the company in December. Following her review of operations, Chico’s said Broader has cut costs, made new key hires and introduced four focus areas to help drive consistent growth across the firm’s brand portfolio.
The retailer also took the time to explain where and why it disagreed with many of Barington’s points, such as how to grow its intimates concept Soma. Barington is suggesting opening more stores, but Chico’s said just increasing its Soma store base isn’t meshing with the consumer dynamic that has them increasing their interaction with the brand digitally.
Chico’s also emphasized that the company is recommending a vote “for” the company-sponsored proposal to declassify the board over a three-year period. That means the entire board would stand for election at the 2019 annual meeting. Corporate governance experts have said that companies in general have declassified their boards, giving shareholders the opportunity to throw out the entire board at the annual shareholders’ meeting if they’re not satisfied with oversight. Chico’s also noted that the company has improved its corporate governance by adopting a formal policy limiting directors to service on four public company boards, in addition to Chico’s.
Walker asked shareholders to throw out Barington’s Blue proxy card and instead vote the White card from Chico’s.