Bed Bath & Beyond's Revamped Board Fails to Win Over Activists

(Bloomberg) -- Bed Bath & Beyond Inc. yielded to some demands of a trio of activist investors, naming an independent chairman and replacing five independent directors as the home goods company struggles to turn around sales.

The dissident investors -- Legion Partners Asset Management LLC, Macellum Advisors and Ancora Advisors LLC -- said the moves fall short of what’s needed and lacked details on how the new board would create value for shareholders.

“The board changes announced today by Bed Bath are not nearly enough when measured against what is needed to address the issues with the current board and management, including that CEO Steven Temares must be held accountable for the company’s prolonged poor performance,” the group said in a statement Monday.

Under the changes announced earlier Monday, the company named lead independent director Patrick Gaston as chairman, while Harriet Edelman, Harsha Ramalingam, Andrea Weiss, Mary Winston and Ann Yerger join as new independent directors. Co-Founders and Co-Chairmen Warren Eisenberg and Leonard Feinstein will retire from the board as of May 1.

The board will also form a committee to review the company’s transformation, strategy and structure, and will institute a new executive compensation plan, it said. “The changes announced today reflect significant shareholder input and underscore our commitment to ensuring we have best-in-class governance,” Gaston said in the statement.

Bed Bath & Beyond's Revamped Board Fails to Win Over Activists

The activist group launched a proxy fight in March to remove Temares and replace the entire 12-person board. The company said Monday it has had multiple discussions with the investor group and invited them to participate in the board transformation process, which the group has so far declined.

The investor group said Monday that while it was still reviewing the new directors, its initial assessment is that they lacked the necessary skills and retail experience to implement the needed changes. It said its own slate would be focused on hiring a new CEO, repositioning the company for growth and implementing the best-in-class corporate governance.

Bed Bath & Beyond's Revamped Board Fails to Win Over Activists

The shares fell as much as 3.9 percent to $16.74 in New York. They had surged 54 percent this year through the close on April 19.

On April 9, the investor group nominated 16 independent candidates for the board, saying Bed Bath & Beyond “has long exhibited substandard disclosures that are far below the level provided by its public peers,” and cited “rapid deterioration in operational performance.”

The new board makeup includes 10 directors, nine of whom are independent and six of whom are women, with the average director tenure being less than four years, the company said.

Shares of Bed Bath & Beyond plunged earlier this month after the company reported same-store sales fell again last quarter. The retailer hasn’t seen a gain in the key metric in more than two years. The results overshadowed the company’s rosier profit forecast. At the time, analyst Anthony Chukumba at Loop Capital, called the retailer a “show me story.”

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