NEW YORK, Feb 22 (Reuters) – Billionaire investor Daniel Loeb advised retailer Bathtub & Physique Works on Wednesday that his hedge fund Third Level plans to launch a board problem and mentioned the corporate’s addition of recent administrators doesn’t deal with his considerations about governance, capital allocation and govt pay.
“As fiduciaries, we now have no selection however to place forth certified director candidates and provides our fellow shareholders the chance to elect administrators who can maintain the stewards of their capital liable for the choices they make,” Third Level founder Daniel Loeb wrote in a letter to the corporate’s board.
Bathtub & Physique Works mentioned in an announcement late on Wednesday, “The Board strongly disagrees with the views expressed in Third Level’s letter.” Nevertheless, it mentioned it could evaluation and take into account Third Level’s proposed board nominations.
The corporate additionally mentioned the additions of Lucy Brady and Steve Voskui to its board earlier this month had been a product of the board’s engagement with Third Level.
The board thought of the hedge fund’s suggestions that the corporate would profit from extra monetary and capital allocation experience, Bathtub & Physique Works mentioned, including that it was unlucky that Third Level has introduced its intent to pursue a expensive public proxy struggle.
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Tensions had been simmering between the 2 sides for months ever since Third Level introduced in December it owned a roughly 6% stake within the specialty retailer, criticized the corporate’s excessive prices and its lagging share value.
Third Level adopted by way of and introduced its board problem hours after Bathtub & Physique Works on Tuesday mentioned that it was including a second new board member, presumably to assuage the hedge fund’s criticisms.
The transfer didn’t appease Loeb and he accused the group of “working in triage mode” as an alternative of following finest company governance practices. He mentioned that the board left him no selection however to mount a proxy struggle as a result of his requests so as to add a shareholder consultant to the board had been ignored.
“Our discussions have stalled and our considerations about the way in which this board operates have intensified,” the letter mentioned.
He declined to say what number of director candidates he would nominate or to determine them however mentioned that one among his potential candidates had been rebuffed by the corporate.
The board at present has 12 members and the window to appoint administrators stretches into subsequent month.
Loeb additionally took intention at Sarah Nash, the corporate’s present board chair who had briefly assumed the function of interim chief govt final 12 months.
She was paid $18 million on high of the $700,000 she was receiving to be board chair, Loeb wrote, calling the pay package deal “outsized,” saying it alerts a large governance failure. Loeb mentioned the corporate bungled its succession planning and that Nash was “ill-suited” for interim CEO function.
The corporate appointed Gina Boswell as CEO late final 12 months.
Bathtub & Physique Works is valued at roughly $10 billion.
This marks Third Level’s first proxy struggle since 2018 when it challenged Campbell Soup Co.
Reporting by Svea Herbst-Bayliss and Akanksha Khushi; Modifying by Anna Driver and Uttaresh.V
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