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Children’s Place listened to shareholders, makes changes


Following a contentious exchange with a large shareholder in 2015, Children’s Place is changing a key provision of its bylaws that allows investors to nominate directors and allowing a vote on several other measures shareholders identified as concerns.

Children’s Place, which operates nearly 1,100 stores, said that after seeking input from shareholders it changed a bylaw regarding proxy access rights. That means the company will include board nominees in its proxy materials for up to 20% of the board proposed by a shareholder, or a group of up to 20 shareholders, who have continuously owned 3% or more of the company’s common stock for a minimum of three years.

Other matters regarding shareholders rights will be put to a vote in May when Children’s Place holds its annual meeting. Meanwhile, the board took steps to strengthen the company’s governance practices in the areas of director engagement and executive compensation, and to enhance disclosure practices. The company said the governance enhancements and proposals underscore the board’s commitment to corporate governance best practices and are based on input received from a comprehensive outreach initiative to major shareholders led by Dr. Joseph Alutto, chair of the Nominating and Governance Committee. Those discussions included multiple discussions with shareholders holding approximately two-thirds of the company’s shares of common stock.

“Our current governance framework provides important support for our business and promotes the achievement of our strategic initiatives, all in order to serve the best interests of our shareholders,” Alutto said. “We are proud of our governance practices, and we understand the importance of reassessing them regularly. Over the last several months, we sought input from our major shareholders concerning governance matters which are important to them, and we greatly appreciate their engagement with us in highly productive conversations. Following this outreach, our board of directors added to our strong governance framework by taking steps in the areas of shareholder rights, director engagement, executive compensation and disclosure practices that reflect its commitment to strong corporate governance, transparency and the creation of shareholder value.”

In addition to the proxy access change, other proposed changes to the charter include reducing to 25% from 75% the amount of shares an investor would need to own before calling a special meeting. Another provision extends to 30 days from 15 the amount of time allowed for submitting board nominations and shareholder proposals in the proxy statement.

Other changes which don’t require a shareholder vote were also made to corporate governance guidelines. For example, the board agreed to limit to four the number of boards on which independent directors may serve. In addition, the amended guidelines further emphasize the importance of the board’s policies concerning diversity, board refreshment and succession planning.

Regarding executive compensation, the company has added adjusted operating margin and adjusted return on invested capital to the existing performance metric of adjusted earnings per share, and has eliminated the use of a total shareholder return, or TSR, modifier, for purposes of its long-term incentive compensation plan. These changes will be effective for awards to be made in 2016 and are in response to shareholder requests for performance metrics that more directly measure progress on the company’s strategic initiatives and over which management has more direct influence.

“We are continually looking at ways to improve our board and its processes to best position the company to continue to generate shareholder value and meet its strategic goals. The board was unanimous in its decision to take the actions announced today, and we look forward to maintaining a consistent and productive dialogue with our shareholders,” Alutto said.

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