The inclusion of additional directors by the company does not allay the worries billionaire investor Daniel Loeb has about governance, capital allocation, and CEO compensation, according to a statement he sent to retailer Bath & Body Works on Wednesday.
Daniel Loeb, the founder of Third Point, wrote to the company’s board of directors, saying, “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 accountable for their decisions.”
The Board strongly disagrees with the views presented in Third Point’s letter, according to a statement released by Bath & Body Works late on Wednesday. It did state, though, that it would look over and take into account the proposed board candidates from Third Point.
As a result of the board’s interaction with Third Point, the company added Lucy Brady and Steve Voskui to its board earlier this month.
Bath & Body Works stated that it was regrettable that Third Point had revealed its intention to pursue a pricey public proxy fight, adding that the board had taken into account the hedge fund’s opinion that the company would benefit from additional financial and capital allocation expertise.
Since Third Point disclosed in December that it possessed an approximately 6% interest in the speciality retailer and questioned the firm’s high costs and declining share price, tensions between the two sides have been building.
Hours after Bath & Body Works stated on Tuesday that it was adding a second new board member, Third Point followed through and announced its board challenge, perhaps in response to the hedge fund’s criticisms.
The action did not placate Loeb, who accused the group of “working in triage mode” rather than adhering to best standards in corporate governance. He claimed that the board refused his pleas to add a shareholder representative to the board, leaving him with no choice except to launch a proxy battle.
The letter stated that “our negotiations have halted and our worries over the manner in which this board conducts itself have grown more serious.”
He refused to specify the number of director candidates he would propose or to name them, although he did mention that the corporation had rejected one of his possible candidates.
The board now consists of 12 people, and there is still time to propose new directors through the end of next month.
Sarah Nash, the organization’s current board chair who served as interim chief executive for a brief period of time last year, was also targeted by Loeb.
She received $18 million in addition to the $700,000 she was paid as board chair, according to Loeb, who called the pay package “outsized” and claimed it showed a serious governance failure. According to Loeb, the business botched its succession planning, and Nash was “ill-suited” to serve as temporary CEO.
Late last year, the business named Gina Boswell its CEO.
An estimated $10 billion is the value of Bath & Body Works. The corporation announced net sales for the fourth quarter of 2022, which concluded on January 28, were $2.8 billion, down 5% from the same period the previous year. Net sales for the full 2022 fiscal year fell 4% to $7.5 billion from $7.8 billion. The company anticipates a low-to-mid single-digit reduction in net sales for the first quarter of 2023. After taking on Campbell Soup Co.