Two Leading Proxy Advisors Recommend Wet Seal Shareholders Reject Clinton Group’s Efforts to Replace Six Board Members
September 26 2012 - 9:29AM
Business Wire
The Wet Seal, Inc. (Nasdaq: WTSLA), a leading specialty retailer
to young women, announced today that two leading independent proxy
advisors, Institutional Shareholder Services (“ISS”) and Egan-Jones
Proxy Services (”Egan-Jones”), have recommended that shareholders
reject efforts by Clinton Group to replace six members of the
Company’s Board of directors.
In their rejection of Clinton Group’s attempt as dissident
activists to replace all but one member of the current seven-person
Board, ISS cited Clinton Group’s lack of detail or a coherent plan
and commended the current Board’s recent positive decisions and the
addition of new Directors:
- “…the dissident's plan is wanting in
many areas, given the lack of specific detail.”
- “…the board's decision to add two
new directors, remove the poison pill, reduce director compensation
and attempt a settlement with the dissident, all appear to be in
shareholders’ best interest.”
- “…given the strength of their track
records and relevant direct executive experience both implementing
and leading companies in fast fashion value oriented apparel
retailing to Wet Seal's target customer, both Bronstein and Goodman
are strong additions to the board and capable of helping drive the
company back to profitability.”
In rejecting all of Clinton Group’s proposals and endorsing the
current Board, Egan-Jones noted:
- “…the Clinton Group failed to
provide substantive new ideas or valid reasons to change the
Company’s strategic direction which would lead to enhancement of
stockholder value.”
- “The Board is demonstrating ‘active
oversight’ by responding to…shareholder concerns (including those
of the Clinton Group)…”
- “The Company is making strides in
addressing financial difficulties, primarily by stabilizing the
business by returning to its core expertise of fast fashion
merchandising.”
- “It appears that Clinton Group is
not agreeing to compromise despite the Company’s efforts to
establish a solution…”
- “We are not convinced that election
of the dissident’s slate to the board of directors would work to
the benefit of shareholders.”
The rejection of Clinton Group’s plans to replace a majority of
the current Board by both Egan-Jones and ISS are important
independent analyses by two leading proxy advisors who have many
institutional investors as clients that rely upon their advice for
proxy voting matters. Even though ISS recommended that shareholders
elect two new Directors from the Clinton Group slate to replace two
of the company’s independent Directors, ISS has recommended that a
majority of Wet Seal’s current Board members continue to lead the
company’s return to a fast fashion merchandising strategy. The
Board respectfully disagrees with this part of their report and
urges the retention of all five continuing Directors and our two
new members. Our continuing Directors have been instrumental in
guiding The Wet Seal through its last successful turnaround between
2004 and 2006 and in the period of recovery and significant
positive cash flows maintained in part through cost and expense
controls for three successive years after the recession in 2008
that adversely affected the company and many other teen
retailers.
Hal Kahn, Chairman of the Board of The Wet Seal, said: “We are
pleased that both Egan-Jones and ISS have recommended that our
shareholders reject Clinton Group’s consent solicitation to make
wholesale changes to the current experienced Board. With the recent
addition of Kathy Bronstein and John Goodman, the Board has added
two new strong Directors with relevant teen retailing experience
who complement the continuing Board’s strong mix of skills and
experience across all aspects of the business and who will assist
us as we implement our fast fashion strategy. We are also pleased
by the specific recognition of the recent steps the Board has taken
to address shareholder concerns and continue to be confident of the
current Board’s ability to successfully implement a return to a
proven fast fashion strategy at Wet Seal in the best interests of
all shareholders.”
Mr. Kahn added, ”The Wet Seal Board and management strongly
believe that the best course for shareholders is for the full
seven-person Board, including its two new strong Directors with
teen retailing experience, to work constructively and prudently
over the next few months to complete the plan to transition back to
our fast fashion strategy. The critical holiday season is two
months away, and we remain committed to restoring stability and
building real and lasting value while we explore alternatives with
our financial advisors for enhanced opportunities.”
Mr. Kahn concluded: “We are also pleased that ISS and Egan-Jones
agree with the Board’s assertion that Clinton Group has no coherent
strategy for The Wet Seal. We will continue to listen to the views
of all our shareholders and remain convinced that adding those
Clinton nominees who lack female teen apparel or fast fashion
merchandising experience or other relevant credentials is not in
the best interests of shareholders.”
Accordingly, The Wet Seal continues to urge shareholders to
reject Clinton Group’s proposal to replace experienced members of
the Board with Clinton’s slate of hand-picked nominees by
NOT signing or returning any WHITE proxy or consent card from
Clinton Group. To revoke any WHITE consent, you should vote
the BLUE revocation card and ensure that it is received by The Wet
Seal as soon as possible.
If shareholders have any questions or need assistance in voting
their shares, they should contact The Wet Seal’s proxy solicitor,
MacKenzie Partners, Inc., at 212-929-5500 or at 800-322-2885
Toll-Free.
About The Wet Seal, Inc.
Headquartered in Foothill Ranch, California, The Wet Seal, Inc.
is a leading specialty retailer of fashionable and contemporary
apparel and accessory items. As of August 25, 2012, the Company
operated a total of 551 stores in 47 states and Puerto Rico,
including 469 Wet Seal stores and 82 Arden B stores. The Company's
products can also be purchased online at www.wetseal.com or
www.ardenb.com.
For more company information, visit www.wetsealinc.com.
Safe Harbor
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: This news release contains forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include, but are not limited to, statements that relate to the
intent, belief, plans or expectations of the The Wet Seal, Inc.
(the “Company”) or its management. All forward-looking statements
made by the Company involve material risks and uncertainties and
are subject to change based on factors beyond the Company's
control. Accordingly, the Company's future performance and
financial results may differ materially from those expressed or
implied in any such forward-looking statements. Such factors
include, but are not limited to, those described in the Company's
filings with the Securities and Exchange Commission (the “SEC”).
The Company will not undertake to publicly update or revise its
forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied
therein will not be realized.
Other Disclosures
The Company and certain of its directors and executive officers
may be deemed to be participants in a solicitation of consent
revocations from stockholders in connection with the consent
solicitation by Clinton Group, Inc. The Company has filed a
definitive consent revocation statement with the Securities and
Exchange Commission (the “SEC”) in connection with such consent
solicitation (the “Consent Revocation Statement”). Information
regarding the names of the Company’s Directors and executive
officers and their respective interests in the Company by security
holdings or otherwise is set forth in the Consent Revocation
Statement filed with the SEC. This document is available free of
charge at the SEC’s website at www.sec.gov.
The Company has mailed the definitive Consent Revocation
Statement and a form of consent revocation to each stockholder
entitled to deliver a written consent in connection with the
consent solicitation. WE URGE INVESTORS TO READ THE CONSENT
REVOCATION STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY
OTHER RELEVANT DOCUMENTS THAT THE COMPANY FILES WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
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