Pure Beauty

Bath & Body Works investor plans proxy contest

By Julia Wray | 23-Feb-2023

Daniel Loeb said Bath & Body Works’ addition of new directors failed to address concerns over governance

Bath & Body Works investor Daniel Loeb has issued a board challenge.

The billionaire owner of hedge fund Third Point revealed plans on 22 February, stating that the retailer’s addition of new directors did not address his concerns over governance, capital allocation and executive pay.

His move came a day after the US personal care seller announced the appointment of Hershey Company’s Steve Voskuil to its board of directors.

Voskuil’s onboarding followed that of Lucy Brady, President of Grocery & Snacks at Conagra Brands, earlier this month.

In a letter to the company’s board, Loeb wrote: “We have identified numerous issues pertaining to the board of directors’ oversight of executive compensation, succession planning, capital allocation, investor communication and strategy for enduring value creation.”

The letter went on to outline that while Brady, a suggested appointment of Third Point’s, had been brought in as an independent director, a second proposed candidate with “impeccable credentials” had been rejected with what Loeb called “unconvincing explanations”.

Commenting on Voskuil’s appointment, Leob continued: “This board’s handpicked new director does not assuage our concerns about substantial corporate governance shortcomings.”

He added: “As fiduciaries, we have no choice but to put forth qualified director candidates and give our fellow shareholders the opportunity to elect directors who can hold the stewards of their capital responsible for the decisions they make.”

In response, Bath & Body Works issued a statement that “strongly disagrees with the views expressed in Third Point’s letter”.

“The board is committed to best-in-class corporate governance practices, including as it relates to compensation and board refreshment,” it said.

 “The company has engaged constructively and in good faith with Third Point over the past several months in an effort to understand its views and avoid a proxy contest.

“Ms Brady’s and Mr Voskuil’s appointments were the product of the board’s and management’s extensive engagement with Third Point.”

Bath & Body Works stressed that while it values the perspectives of all of its shareholders, “it is unfortunate that Third Point has chosen to announce its intent to pursue a costly public proxy fight despite the board’s good faith engagement efforts over the past several months”.

“The board will review and consider Third Point’s proposed nominations in due course once they are received,” it continued.

The Bath & Body Works board currently has 12 members and the window to nominate directors stretches into next month.

In November, the retailer appointed former Unilever exec Gina Boswell as CEO, who took over from Sarah Nash.

Nash had served as interim CEO from May 2022 following the departure of the company’s boss of 20 years, Andrew Meslow.

Q3 2022 financials, released 16 November, reported net sales of US$1.6bn, a decrease of 5% compared with the prior year period.

The company is expected to release its Q4 and full year 2022 results today at 8.30am EST.

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