An investment group is urging Urban Outfitters (URBN) shareholders to vote against the re-election of two of its longest-serving directors, noting that the board's "extreme insularity" has contributed to the retailer's underwhelming performance.
CtW Investment Group, which works with union-sponsored pension funds to enhance shareholder returns, issued a letter on Monday encouraging Urban investors to vote against the re-election of Robert Strouse, 69, and Harry Cherken Jr., 68. Strouse has served as a director since 2002. He is currently the lead independent director and chair of the Nominating and Governance Committee, according to BoardEx, a business unit of TheStreet. Cherken, meanwhile, has been a director since November 1993.
"The board is so insular that it has led to a broken nomination process," Dieter Waizenegger, executive director at CtW, said in a statement. "Improving the diversity of the board is needed to disrupt the echo chamber and redirect the company's strategies to improve Urban's performance."
Urban's nine-member board is comprised of five over-tenured male directors and two women, one of whom is chief executive Richard Hayne's wife, Margaret Hayne. The Urban CEO, a co-founder of the company, has been chairman of the board since the company's incorporation in 1976. Co-founder Scott Belair, 70, and director Joel Lawson III, 70, have served on the board for 41 years and 32 years, respectively. Strouse and Cherken are the other over-tenured directors.
"The average tenure of directors at Urban is 19 years, as compared to the average tenure for the S&P MidCap of 9.4 years," CtW said, citing a March 2017 study by Institutional Shareholder Service (ISS).
Urban, in response, said it has a "longstanding record of engaging with shareholders and responding to their suggestions." The company noted that it had has been taking "targeted, strategic steps to alter the make-up of the board over time," adding that "changing the composition of a board is not something that can or should take place overnight."