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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.