Glass Lewis Recommends Genesco Shareholders Vote For Boardroom Change on Legion Partners’ WHITE Proxy Card
July 08 2021 - 7:30AM
Business Wire
Leading Independent Proxy Advisory Firm
Concludes Change is Warranted and Supports the Addition of
Highly-Qualified, Independent Director Candidates to Genesco’s
Board
Glass Lewis Endorses Nominees Dawn H.
Robertson and Hobart P. Sichel, Who Have Significant Retail Sector
Operations and Turnaround Experience
Glass Lewis Scrutinizes Long-Tenured
Directors – Including Matthew C. Diamond – While Highlighting That,
“Genesco's Performance and Returns Have Been Profoundly Substandard
by Almost Any Benchmark Over Almost Any Period”
Legion Partners Urges Fellow Shareholders to
Vote on the WHITE Proxy Card to Elect
its Full Slate, Which Possesses the Expertise, Impartiality and
Vision Lacking in Genesco’s Boardroom
Legion Partners Asset Management, LLC (together with its
affiliates, “Legion Partners” or “we”), which collectively with the
other participants in its solicitation beneficially owns
approximately 5.9% of the outstanding common shares of Genesco,
Inc. (NYSE: GCO) (“Genesco” or the “Company”), today announced that
leading independent proxy advisory firm, Glass, Lewis & Co.,
LLC (“Glass Lewis”), has recommended the Company’s shareholders
vote for boardroom change on the WHITE proxy card. In particular, Glass Lewis
has endorsed nominees Dawn H. Robertson and Hobart P. Sichel for
election to Genesco’s Board of Directors (the “Board”) at the
upcoming Annual Meeting of Shareholders (the “Annual Meeting”) on
July 20, 2021. Learn about how to vote on Legion Partners’
WHITE proxy card by visiting
www.GCOForward.com.
Chris Kiper and Ted White, Legion Partners’ Managing Directors,
commented:
“Legion Partners is pleased that Glass Lewis is acknowledging
Genesco’s many years of underperformance and recommending the
Company’s shareholders vote for sorely-needed boardroom change on
the WHITE proxy card. We agree
with Glass Lewis’ critique of Genesco’s long-tenured directors,
including 20-year director Matthew C. Diamond. We also agree with
the manner in which Glass Lewis has critiqued Genesco’s poor
corporate governance, underwhelming financial results and weak
valuation. By recommending that shareholders vote to elect Ms.
Robertson and Mr. Sichel, Glass Lewis is endorsing two proven
retail experts with significant experience turning around
struggling retailers. We believe shareholders should go a step
further to protect their investment by electing all four members of
the Legion Partners’ slate.”
In making its recommendation that shareholders vote on the
WHITE proxy card, Glass
Lewis noted Genesco’s concerning governance, while affirming Legion
Partners’ case for change: 1
- “Genesco's defense of its longest serving directors quickly
falters under the weight of the Company's dour metrics. With this
view in mind, we believe
there is ample cause for Genesco to
support an incremental degree of board change at this
time.”
- “We consider the timing of [the recent new director]
appointments and the contemporaneous departures of Mr. Dickens and
Ms. Mason seems to suggest the sitting board may have felt
pressured to pursue an accelerated and reactive refresh to blunt Legion's case [...]
we do not consider the process giving rise to the noted
appointments reflects favorably on Genesco.”
- “We note there exists considerable friction in relation to the
continued service of Matthew Diamond, whose 20-year tenure more
than doubles the next longest serving member of the remaining
Genesco board. Despite this objectively
lengthy term and related optics surrounding his effective
independence, we note the remaining Genesco directors nevertheless
tabbed Mr. Diamond to both serve as the board's lead independent
director and chair the nominating and governance committee
[...] it is both noteworthy and
disconcerting that the board saw no glaring issue with vesting
critical and notionally independent oversight responsibilities in a
two-decade director.”
- “[…] Genesco's relative returns during
Mr. Diamond's tenure have been profoundly poor, suggesting
that the fundamental preservation and expansion of shareholder
value is not a critical input into the deliberative processes
giving rise to renominations or key committee appointments. We
believe investors should take a very dim view of this
framework.”
- “We further note several of the
Dissident's more incremental alternatives appear to speak directly
to established weaknesses at the Company, including what
seems to be subpar expense management and pervasively sluggish and
substandard digital/e-commerce execution.”
- “We believe [Ms. Robertson’s] experience speaks directly to a
number of fundamental operational concerns at Genesco… we note
Ms. Robertson has, in certain
cases (e.g. Myer Department Stores, Stein Mart), been retained to implement challenging turnaround
strategies […]”
- “Mr. Sichel would add further retail
marketing and incremental e-commerce experience well tailored to
Genesco's current deficiencies, and consider his eight-year C-suite
tenure at a Fortune 500 company adequately offsets his lack of
prior board service. We would further highlight that
between its IPO in October 2013 and the start of August 2019,
Burlington generated TSR of 608.2%; over the same period, Genesco
generated a dividend adjusted loss of -45.4%.”
In its report, Glass Lewis also highlighted Genesco’s serial
financial underperformance and weak operational execution by
noting:
- “Genesco's performance and returns
have been profoundly substandard by almost any benchmark over
almost any period.”
- “Genesco is a serial
underperformer with a fairly weak
track record of execution and innovation.”
- “In essence, we are concerned Genesco is not simply moving the goalpost, but replacing it
entirely.”
- “[...] Genesco has routinely failed to
reliably offer investors attractive value over the short-, medium-
or long-term, has not realized superior performance in the wake of
advertised shifts in strategy or executive composition
and has weathered a decidedly dour exogenous event substantially
worse than other branded and retail footwear firms […]”
- “Of note on the revenue side is the fact that Genesco's focus
on footwear has failed to drive
competitive top-line growth both before and after giving effect to
COVID-impacted periods, leaving the Company firmly in
the lower third of all peer benchmarks.”
- “Journey's [e-commerce penetration] remained well off the pace of similarly situated teen
retailers. In simple terms,
[…] a rising e-commerce tide [during COVID] lifted all boats, but
nevertheless left Genesco's primary
footwear retailing segment substantially below comparable
trends.”
- “Genesco's margins have, in
fact, deteriorated over the long
term, owing, in no small part, to bloated costs and ineffective
management.”
***
Please visit www.GCOForward.com to view
important materials.
If you have any needs or require assistance
as you consider how to vote, please contact Legion Partners’ proxy
solicitor Kingsdale Advisors at GCO@kingsdaleadvisors.com.
***
About Legion Partners
Legion Partners is a value-oriented investment manager based in
Los Angeles, with a satellite office in Sacramento, California.
Legion Partners seeks to invest in high-quality businesses that are
temporarily trading at a discount, utilizing deep fundamental
research and long-term shareholder engagement. Legion Partners
manages a concentrated portfolio of North American small-cap
equities on behalf of some of the world’s largest institutional and
high-net-worth investors. Learn more at www.LegionPartners.com.
1 Permission to quote Glass Lewis neither sought nor obtained;
emphasis added.
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version on businesswire.com: https://www.businesswire.com/news/home/20210708005458/en/
For Investors: Kingsdale Advisors Michael Fein / Lydia Mulyk,
646-651-1640 mfein@kingsdaleadvisors.com /
lmulyk@kingsdaleadvisors.com For Media: MKA Greg Marose / Charlotte
Kiaie, 646-386-0091 gmarose@mkacomms.com / ckiaie@mkacomms.com
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