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Bed Bath & Bed co-founders retiring; activist investors say shakeup not enough

Bed Bath & Beyond is overhauling its board. But the changes aren’t enough to satisfy activist investors who are pushing for bigger changes.

The home good chain on Monday announced that co-founders and co-chairmen Warren Eisenberg and Leonard Feinstein will retire and that five independent directors will step down, effective May 1. In other changes, the board will now be made up of 10 directors (as opposed to its current 12) that will “reflect significant diversity” in race, gender and ethnicity, and have an average tenure of less than four years. The board overhaul comes as a group of activist investors have been seeking to overhaul the board of the struggling retailer.

Bed Bath & Beyond named current lead independent director Patrick Gaston as independent chairman, effective immediately. Also, it said the board will form a “business transformation” and “strategy review committee” to review all aspects of its business, strategy and structure, and to reconstitute the audit and compensation committee. The board will also formulate a new executive compensation plan that increases the “at-risk” component that further aligns compensation with the company’s performance and shareholder value creation.

Last month, activist investors Legion Partners Asset Management, Macellum Advisors GP, and Ancora Advisors urged Bed Bath & Beyond to replace its entire board and oust CEO Steven Temares, who had led the chain since 2003. The group said the chain has not kept up with the new retail environment and changing consumer and has allowed its costs to increase. On Monday, the three companies issued a statement in which they said the changes announced by Bed Bath & Beyond are not nearly enough “when measured against what is needed to address the issues with the current board and management, including that CEO Steven Temares must be held accountable for the company’s prolonged poor performance and destruction of shareholder value.

“Further, the company’s announcement lacks any detailed strategic vision for driving value creation at Bed Bath,” the group stated. “We will therefore continue to move forward with our campaign to install fresh, experienced and independent oversight and management at the company.

The group also expressed skepticism that the five new incoming directors, who it said were “hand-picked by the current incumbent directors, would translate to the level of independent oversight that the company requires.

In April, Bed Bath & Beyond reported mixed fourth-quarter results amid ongoing efforts to transform its business for a digital age.

As of March 2, 2019, the company had a total of 1,533 stores, including 994 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 277 stores under the names of World Market, Cost Plus World Market or Cost Plus, 124 buy buy Baby stores, 81 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, 55 stores under the names Harmon, Harmon Face Values or Face Values, and two retail stores under the name One Kings Lane.
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