: Loeb’s Third Point wants to nominate candidates for Bath & Body Works board, citing governance failures


Activist investor Third Point LLC on Wednesday laid out a plan to nominate candidates — including a shareholder representative — to the board of Bath & Body Works Inc., saying shareholders “urgently need representation” on grounds that executive pay was too high and financials were too weak.

The Wall Street Journal reported the news earlier in the day. The investment firm announced the plans after it boosted its stake in the company during the fourth quarter. Third Point has a more than 6% stake in Bath & Body Works BBWI, +2.77%.

The company did not immediately respond to a request for comment. Shares of Bath & Body Works rose 2.7% on Wednesday.

In a letter to the board of the company — which sells soap, air fresheners, body-care items and other wellness products — Third Point Chief Executive Daniel Loeb said the call for greater shareholder representation came after discussions on how to improve the company “stalled” and signs of resistance to a shareholder representative grew.

He also said Bath & Body Works didn’t acknowledge Third Point’s role in suggesting the appointment of Lucy Brady — who is president of grocery and snacks at Conagra Brands Inc. CAG, -0.30% — as an independent director. And he said board chair Sarah Nash gave “unconvincing explanations” for rejecting a second candidate, another shareholder, who was put forward by Third Point.

Loeb also criticized the roughly $18 million that Nash received for taking on a new role as executive chair and interim chief executive last year, calling the interim CEO stint “part-time” work.

“That payment came on top of the $700,000 she was already receiving annually to serve as Board Chair,” Loeb said. “Ms. Nash’s exorbitant compensation is even more remarkable when compared to her counterpart at the Company’s closest and much larger competitor, Ulta Beauty, which paid its Chief Executive Officer approximately $8.9 million in 2022.

“Ms. Nash’s outsized pay package is a red flag for shareholders and signals a massive governance failure,” Loeb continued.

Gina Boswell is the company’s current chief executive.

Bath & Body Works’ stock has fallen as Wall Street grows more concerned about the impact of inflation on things customers want to buy — like the self-care products sold by the chain — and the things they need to buy. However, the retail chain in November boosted its full-year profit outlook.

Loeb also criticized what he said was Nash’s inexperience in retail and said her role as chief executive at another company raised questions about her dedication to Bath & Body Works. The company’s separation from Victoria’s Secret in 2021, followed by a CEO departure in 2022, led to stumbles in performance and in managing investors’ expectations, he added, leading to “sloppy execution” on a share-buyback plan.

“[Bath & Body Works] bought back $1.3 billion of stock at an average price of nearly $50 before multiple cuts in earnings guidance sent the stock as low as $25,” Loeb said.

Bath & Body Works shares are down 18.2% over the past 12 months. By comparison, the S&P 500 SPX, -0.16% is down 7.4% over that period.

This article was originally published by Marketwatch.com. Read the original article here.

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