Bath & Body Work’s board of directors has slammed activist investor Third Point’s proxy challenge as “misguided,” suggesting that it is because the retailer rejected Third Point’s “ultimatum” that it appoint a former employee of the hedge fund to its board.
Daniel Loeb’s Third Point fund, which owns a 6 percent stake in Bath & Body Works, last week called for shareholder representation on the board to ease concerns about the company’s corporate governance and decision-making processes. But in a letter to shareholders Monday, the board stressed that it had engaged “constructively in good faith” with Third Point over several months and demonstrated openness to all of its views and recommendations, following them when they made sense, such as the appointment of Lucy Brady as a director.
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It stated, however, that it would not accede to Loeb’s ultimatum that his former employee as one time co-chief investment officer and personal protégé, Munib Islam, be appointed to the board.
“After considering Mr. Islam’s qualifications and skills at length, the board concluded, correctly, that a CFO of a major public company would bring more relevant capital allocation and financial experience to the board than Mr. Islam,” the letter said.
“Bath & Body Works has taken all reasonable steps to avoid a costly and distracting proxy fight,” the letter continued. “It is disappointing and unfortunate that despite repeated efforts to engage productively with Third Point, the company will have to spend time, effort and resources on a costly proxy fight resulting from Mr. Loeb’s unreasonable insistence that his personal protégé be appointed to the board.”
On Thursday, the retailer released lower forecasts despite beating Wall Street expectations in its most recent quarter, leading one analyst to warn that it could give ammunition to Third Point.
The company was formed a year before that in August 2021, when the former L Brands split into two entities: Victoria’s Secret and Bath & Body Works. Each company trades individually on the New York Stock Exchange. Bath & Body Works was number 14 on WWD Beauty Inc’s most recent Top 100 Beauty Manufacturers list, with $4.6 billion in sales for calendar 2021.