Wet Seal Proxy Fight Brewing
The Wet Seal Inc. may be headed toward a proxy fight.
On Sept. 6, ClintonGroup, based in New York, filed papers with the Securities and Exchange Commission to solicit stockholder consent toreplace the Wet Seal board. Wet Seal is a vertical manufacturer headquarteredin Foothill Ranch, Calif., which runs 551 stores. Clinton Group owns 6.57percent of Wet Seal’s Class A common stock.
The Wet Seal board promised to evaluate the challenge but alsodefined a board change as a bad idea.
“At this important juncture, bringing in a large number of newdirectors who are not familiar with the business will deleteriously affect thecompany's ability to improve its performance in the coming months. That wouldnot be in the best interests of all of our shareholders,” a board statementsaid. There are five members of the Wet Seal board: Henry D. Winterstein,Kenneth M. Reiss, Sidney M. Horn, Jonathan Duskin and Harold D. Kahn.
In its SEC filing, Clinton Group said it was time for a change. Itcomplained that the retailer’s Class A common stock declined more than 40percent this year. It argued that while Wet Seal has been a solid-performingcompany in the past, it has failed to reverse a decline, while the board hasshifted various strategies for the company and ousted Susan McGalla, Wet Seal’sformer chief executive officer, after only 18 months on the job.
Clinton group nominated a new board, whichit claimed had no prior ties with the investment group. Clinton’s candidatesare Wet Seal incumbent director Kenneth M. Reiss, as well as Raphael Benaroya,Dorrit M. Bern, Lynda J. Davey, Mindy C. Meads and John S. Mills.
On Sept. 7, Wet Seal filed papers with the SEC noting that Winterstein had acquired more 25,000 shares of Class A common stock in the company at a weighted average price of $3.06.—Andrew Asch
