Comments on continued governance issues that appear designed to
interfere with a fair election
Believes Bed Bath’s newly reconstituted Board represents insufficient
change and will ensure the status quo continues
Expresses shock and concern to hear CEO Temares claim that elements
of Bed Bath’s turnaround plan are “substantially complete”
Calls on Temares to cease and desist making what appears to be
reactive and untested operational and strategic changes until after the
2019 Annual Meeting
NEW YORK–(BUSINESS WIRE)–Legion Partners Holdings, LLC (“Legion Partners Holdings” together with
its affiliates, “Legion Partners”), Macellum Advisors GP, LLC (together
with its affiliates, “Macellum”), and Ancora Advisors, LLC (together
with its affiliates, “Ancora” and, together with Legion Partners and
Macellum, “the Investor Group”) today issued the following statement
regarding recent misleading claims and shareholder-unfriendly actions
from Bed Bath & Beyond Inc.’s (NASDAQ: BBBY) (“Bed Bath” or the
“Company”):
“Our desire is for this proxy contest to be fully about the merits and
the facts. That is why we have focused on Bed Bath’s share price
underperformance, its lack of a viable strategic plan, its alarming
corporate governance issues, and our recently-released plan detailing
how we believe our nominees can realize the significant potential of the
Company. In short, the real issues that matter to shareholders.
Unfortunately, the Company has chosen to engage in a campaign of
misinformation and deception in an attempt to distract shareholders. Bed
Bath has issued what are in our view misleading statements, put up
shareholder-unfriendly obstacles to a fair proxy contest, and has made
changes to the Board of Directors (the “Board”) that are simply too
little, too late. Consider the following:
Misleading statements and obstacles
Bed Bath’s directors are seemingly attempting to mislead investors and
create obstacles to prevent shareholders from participating in a fair
process to elect the best directors for the Company. We believe this
represents an effort to protect CEO Steven Temares and protect the
status quo.
-
The Investor Group made a significant attempt to negotiate a
settlement. The Company claims that the Investor Group did not
meaningfully engage in settlement conversations.1 This is
patently false. At the urging of the Company, the Investor Group
actually signed a non-disclosure agreement the morning of Easter
Sunday (April 21st). After receiving a settlement
proposal, the Investor Group was prepared to discuss the proposal on
Monday, April 22nd and communicated this to the Company and
its advisors. Before the Investor Group could respond to the proposal,
the Company rushed to release its new director appointments within 24
hours of signing the non-disclosure agreement. The Company likely
understood its proposal was not compelling and rather than actually
engage in a good faith negotiation, it quickly cut ties with seven
long-tenured legacy directors and added five new directors – many of
whom may only recently have been identified. Further, since the
Company just entered into a non-disclosure agreement with the Investor
Group, it was fully aware the agreement stipulated the Investor Group
was not allowed to disclose the agreement’s existence for several
days. We believe shareholders will see this disingenuous tactic as an
act of bad faith and an attempt to mislead shareholders. -
The Company refuses to agree to a universal proxy card. On two
occasions, the Board declined to agree to the use a universal proxy
card – despite previously trying to create an unlevel playing field by
demanding the Investor Group’s nominees give their consent to be named
on the Company’s proxy card but not offering that its nominees be
similarly named on the Investor Group’s proxy card. While the Company
has finally agreed to level the playing field and not to name any of
the Investor Group’s nominees on its proxy card, the Investor Group
has sought to encourage the use of a universal proxy card as best
governance practices, particularly following the recent Board changes. -
The Board is not taking necessary action to avoid triggering
potential adverse financial consequences under Bed Bath’s $1.5B Notes.
The Company has refused to approve of our director nominees in a
timely manner for the sole purpose of avoiding triggering certain
change in control provisions that could accelerate the Notes if a
rating event follows the change in control. A change in a majority of
the Board without the incumbent Board’s approval of our nominees would
constitute a change in control. We believe the Board can prevent this
adverse consequence by approving in advance the Investor Group’s
nominees. Such approval is not an endorsement or recommendation, so,
in our view, the incumbent Board has no good reason to refuse to grant
it. By failing to approve of the Investor Group’s nominees and keeping
the threat of such consequences out there, we believe the Board is
seeking to taint the corporate electoral process. -
The Company has not set a date for the 2019 Annual Meeting of
Shareholders (the “2019 Annual Meeting”). The Company has
typically held its annual meeting in late June or early July. If it
intended to be consistent with prior years, the Company should have
filed preliminary proxy materials by now. We hope that the Company is
not seeking to delay the 2019 Annual Meeting to buy time to develop a
plan that is half baked and reactive when faced with a contested
election.
Newly reconstituted Board falls significantly short of needed change
We believe shareholders cannot accept that the legacy directors who have
overseen the Company’s disastrous performance can be trusted to select
new candidates with appropriate backgrounds and objectivity to evaluate
the Company’s strategy. Similarly, shareholders should not feel
comfortable giving control of the Board to a new group of directors to
implement the same strategic initiatives that have shown little
improvement to the business.
-
Change of control given to five new directors without a plan.
We believe this degree of change is implicit acknowledgement of how
disastrously the legacy Board has dispatched its fiduciary duty.
Shareholders should not allow a transfer of control to new directors
selected by the legacy directors who have overseen over $8 billion of
value destruction over the past 15 years. -
The newly reconstituted Board does not appear to have the requisite
skills necessary to turn Bed Bath around. The new Board does not
possess a former or current retail CEO. In contrast, the Investor
Group nominees include seven former or current retail CEOs. The
directors on the newly constituted Board, over their collective
careers, have served on the Board of only one other publicly traded
retailer. Our nominees have served on 20. -
The composition of the new Board will perpetuate the status quo.
- Steve Temares remains the CEO.
-
Leonard Feinstein and Warren Eisenberg will continue to be paid
for attending meetings and will remain in the boardroom voicing
their perspectives and attempting to influence the Company’s
direction. -
Newly appointed chairman, Patrick Gaston, is a 12-year veteran Bed
Bath director. He has overseen substantial destruction of value
while serving on the Audit Committee, the Nominating and
Governance Committee and the Compensation Committee. -
The newly reconstituted Nominating and Governance Committee is
comprised of three of the four remaining legacy directors. This
committee, which has no retail experience, will have
disproportionate influence over the future fate of Mr. Temares.
CEO Temares’ statements regarding operational improvements are
concerning
We are mystified that as part of the Company’s response to the Investor
Group’s Strategic Plan, Bed Bath claims that the Company’s turnaround
plan is “well underway and delivering results” as well as parts of its
transformation plan are “substantially completed.”2 Not only
is there little to no evidence that any positive change is occurring, we
are concerned that the rate of deterioration, based on Q1 guidance, is
accelerating. If these results are what the Company views as
“substantially completed,” then shareholders should be substantially
outraged. We believe wholesale change is imperative. Half measures will
not do and the newly constituted Board, which appears designed to keep
Mr. Temares in place, risks further deteriorating results and
destruction of shareholder value.
Shareholders’ voices must be heard before any further changes are made
The Investor Group calls on Mr. Temares to stop making what appears to
be reactive and untested operational and strategic changes to the
business, particularly as it relates to the Company’s promotional
stance. It is our belief that as the Company attempts to improve margins
by reducing couponing it’s actually losing customers and driving gross
margin dollars lower. We see no evidence that the company is “trading
sales for margin” as Mr. Temares claimed on the last investor conference
call. We do not believe shareholders are in
favor of this initiative and Temares should stop making operational and
strategic changes that appear to be further destroying value until
shareholders have voted at the 2019 Annual Meeting.
We look forward to continuing to make our case for change to Bed Bath’s
shareholders in the coming weeks. For more information visit https://restorebedbath.com/.”
About Legion Partners
Legion Partners is a long-term-oriented activist fund focused on
producing superior risk-adjusted returns for clients. Legion Partners’
investment strategy is concentrated on North American small cap
equities, utilizing deep fundamental research and long-term shareholder
engagement to drive superior performance over time.
About Macellum
Macellum has substantial experience investing in consumer and retail
companies and assisting such companies in improving their long-term
financial and stock price performance. Macellum’s historical investments
include: Collective Brands, GIII Apparel Group, Hot Topic, Charming
Shoppes and Warnaco, among other companies. Macellum prefers to
constructively engage with management to improve its governance and
performance for the benefit of all stockholders, as it did with Perry
Ellis. However, when management is entrenched, Macellum has run
successful proxy contests to effectuate meaningful change, including at
The Children’s Place, Christopher & Banks and most recently at Citi
Trends.
About Ancora Advisors
Ancora Holdings, Inc. is an employee owned, Cleveland, Ohio based
holding company which wholly owns three separate and distinct SEC
Registered Investment Advisers, Ancora Advisors, Inc., Ancora Family
Wealth Advisors, LLC and Ancora Retirement Plan Advisors, Inc. and
Inverness Securities LLC, a broker dealer. Ancora Advisors, LLC
specializes in customized portfolio management for individual investors,
high net worth investors, investment companies (mutual funds), pooled
investments (hedge funds/investment limited partnerships), and
institutions such as pension/profit sharing plans, corporations,
charitable & “Not-for Profit” organizations, and unions. Ancora Family
Wealth Advisors, LLC is a leading, regional investment and wealth
advisor managing assets on behalf families and high net-worth
individuals. Ancora Retirement Plan Advisors, Inc. specializes in
providing non-discretionary investment guidance for small and midsize
employer sponsored retirement plans.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Legion Partners Holdings, LLC, a Delaware limited liability company
(“Legion Partners Holdings”), Macellum Advisors GP, LLC, a Delaware
limited liability company (“Macellum GP”), and Ancora Advisors, LLC, a
Delaware limited liability company (“Ancora Advisors”) together with the
participants named herein, intend to file a preliminary proxy statement
and accompanying WHITE proxy card with the Securities and Exchange
Commission (“SEC”) to be used to solicit votes for the election of their
slate of sixteen highly qualified director nominees at the 2019 annual
meeting of shareholders of Bed Bath & Beyond Inc., a New York
corporation (the “Company”).
LEGION PARTNERS HOLDINGS, MACELLUM GP, AND ANCORA ADVISORS STRONGLY
ADVISE ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND
OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC’S WEB SITE AT http://www.sec.gov.
IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE
COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST.
The participants in the proxy solicitation are Legion Partners Holdings,
Legion Partners, L.P. I, a Delaware limited partnership (“Legion
Partners I”), Legion Partners, L.P. II, a Delaware limited partnership
(“Legion Partners II”), Legion Partners Special Opportunities, L.P. XII,
a Delaware limited partnership (“Legion Partners Special XII”), Legion
Partners, LLC, a Delaware limited liability company (“Legion LLC”),
Legion Partners Asset Management, LLC, a Delaware limited liability
company (“Legion Partners Asset Management”), Christopher S. Kiper,
Raymond T. White, Macellum GP, Macellum Home Fund, LP, a Delaware
limited partnership (“Macellum Home”), Macellum Management, LP, a
Delaware limited partnership (“Macellum Management”), Jonathan Duskin,
Ancora Catalyst Institutional, LP, a Delaware limited partnership
(“Ancora Catalyst Institutional”), Ancora Catalyst, LP, a Delaware
limited partnership (“Ancora Catalyst”), Merlin Partners Institutional,
LP, a Delaware limited partnership (“Merlin Institutional”), Ancora
Merlin, LP, a Delaware limited partnership (“Ancora Merlin”), Ancora
Special Opportunity Fund, a series of the Ancora Trust, an Ohio business
trust (“Ancora Special Opportunity”), Ancora/Thelen Small-Mid Cap Fund,
a series of the Ancora Trust, an Ohio business trust (“Ancora/Thelen”),
Ancora Advisors, LLC, a Nevada limited liability company (“Ancora
Advisors”), Frederick DiSanto, Victor Herrero Amigo, Theresa R. Backes,
Joseph Boehm, David A. Duplantis, John E. Fleming, Sue Ellen Gove, Janet
E. Grove, Jeffrey A. Kirwan, Jeremy I. Liebowitz, Jon Lukomnik, Cynthia
S. Murray, Martine M. Reardon, Hugh R. Rovit, Joshua E. Schechter and
Alexander W. Smith.
As of the date of this press release, Legion Partners I directly
beneficially owns 3,452,124 shares of Common Stock, including 898,000
shares underlying long call options, Legion Partners II directly
beneficially owns 199,952 shares of Common Stock, including 52,000
shares underlying long call options, Legion Partners Special XII
directly beneficially owns 982,000 shares of Common Stock, including
200,000 shares underlying long call options, and Legion Partners
Holdings directly beneficially owns 200 shares of common stock of the
Company (“Common Stock”) in record name and as the sole member of Legion
Partners Asset Management and sole member of Legion LLC, Legion Partners
Holdings may also be deemed to beneficially own the 3,452,124 shares of
Common Stock beneficially owned directly by Legion Partners I, including
898,000 shares underlying long call options, 199,952 shares of Common
Stock beneficially owned directly by Legion Partners II, including
52,000 shares underlying long call options, and 982,000 shares of Common
Stock beneficially owned directly by Legion Partners Special XII,
including 200,000 shares underlying long call options. As the general
partner of each of Legion Partners I, Legion Partners II and Legion
Partners Special XII, Legion LLC may be deemed to beneficially own the
3,452,124 shares of Common Stock beneficially owned directly by Legion
Partners I, including 898,000 shares underlying long call options,
199,952 shares of Common Stock beneficially owned directly by Legion
Partners II, including 52,000 shares underlying long call options, and
982,000 shares of Common Stock beneficially owned directly by Legion
Partners Special XII, including 200,000 shares underlying long call
options. As the investment advisor of each of Legion Partners I, Legion
Partners II and Legion Partners Special XII, Legion Partners Asset
Management may be deemed to beneficially own the 3,452,124 shares of
Common Stock beneficially owned directly by Legion Partners I, including
898,000 shares underlying long call options, 199,952 shares of Common
Stock beneficially owned directly by Legion Partners II, including
52,000 shares underlying long call options, and 982,000 shares of Common
Stock beneficially owned directly by Legion Partners Special XII,
including 200,000 shares underlying long call options. As a managing
director of Legion Partners Asset Management and managing member of
Legion Partners Holdings, Mr. Kiper may be deemed to beneficially own
the 3,452,124 shares of Common Stock beneficially owned directly by
Legion Partners I, including 898,000 shares underlying long call
options, 199,952 shares of Common Stock beneficially owned directly by
Legion Partners II, including 52,000 shares underlying long call
options, 982,000 shares of Common Stock beneficially owned directly by
Legion Partners Special XII, including 200,000 shares underlying long
call options and 200 shares of Common Stock beneficially owned directly
by Legion Partners Holdings. As a managing director of Legion Partners
Asset Management and managing member of Legion Partners Holdings, Mr.
White may be deemed to beneficially own the 3,452,124 shares of Common
Stock beneficially owned directly by Legion Partners I, including
898,000 shares underlying long call options, 199,952 shares of Common
Stock beneficially owned directly by Legion Partners II, including
52,000 shares underlying long call options, 982,000 shares of Common
Stock beneficially owned directly by Legion Partners Special XII,
including 200,000 shares underlying long call options and 200 shares of
Common Stock beneficially owned directly by Legion Partners Holdings.
Macellum Home directly beneficially owns 446,415 shares of Common Stock,
including 89,500 shares underlying long call options. As the investment
manager of Macellum Home, Macellum Management may be deemed to
beneficially own the 446,415 shares of Common Stock beneficially owned
directly by Macellum Home, including 89,500 shares underlying long call
options. As the general partner of Macellum Home, Macellum GP may be
deemed to beneficially own the 446,415 shares of Common Stock
beneficially owned directly by Macellum Home, including 89,500 shares
underlying long call options. As the sole member of Macellum GP, Mr.
Duskin may be deemed to beneficially own the 446,415 shares of Common
Stock beneficially owned directly by Macellum Home, including 89,500
shares underlying long call options. Ancora Catalyst Institutional
directly beneficially owns 244,195 shares of Common Stock, including
83,700 shares underlying long call options, Ancora Catalyst directly
beneficially owns 18,380 shares of Common Stock, including 6,300 shares
underlying long call options, Merlin Institutional directly beneficially
owns 235,455 shares of Common Stock, including 81,000 shares underlying
long call options, Ancora Merlin directly beneficially owns 27,121
shares of Common Stock, including 9,000 shares underlying long call
options, Ancora Special Opportunity directly beneficially owns 20,000
shares of Common Stock and Ancora/Thelen directly beneficially owns
96,780 shares of Common Stock. As the investment advisor to each of
Ancora Catalyst Institutional, Ancora Catalyst, Merlin Institutional,
Ancora Merlin, Ancora Special Opportunity, Ancora/Thelen and certain
separately managed accounts, including accounts held by owners and
employees of Ancora Advisors of which Ancora Advisors has sole voting
and dispositive power over (collectively, the “SMAs”), Ancora Advisors
may be deemed to beneficially own the 244,195 shares of Common Stock
beneficially owned directly by Ancora Catalyst Institutional, including
83,700 shares underlying long call options, 18,380 shares of Common
Stock beneficially owned directly by Ancora Catalyst, including 6,300
shares underlying long call options, 235,455 shares of Common Stock
beneficially owned directly by Merlin Institutional, including 81,000
shares underlying long call options, 27,121 shares of Common Stock
beneficially owned directly by Ancora Merlin, including 9,000 shares
underlying long call options, 20,000 shares of Common Stock beneficially
owned directly by Ancora Special Opportunity, 96,780 shares of Common
Stock beneficially owned directly by Ancora/Thelen and 1,185,017 shares
of Common Stock held in the SMAs. As the Chairman and Chief Executive
Officer of Ancora Advisors, Mr. DiSanto may be deemed to beneficially
own the 244,195 shares of Common Stock beneficially owned directly by
Ancora Catalyst Institutional, including 83,700 shares underlying long
call options, 18,380 shares of Common Stock beneficially owned directly
by Ancora Catalyst, including 6,300 shares underlying long call options,
235,455 shares of Common Stock beneficially owned directly by Merlin
Institutional, including 81,000 shares underlying long call options,
27,121 shares of Common Stock beneficially owned directly by Ancora
Merlin, including 9,000 shares underlying long call options, 20,000
shares of Common Stock beneficially owned directly by Ancora Special
Opportunity, 96,780 shares of Common Stock beneficially owned directly
by Ancora/Thelen and 1,185,017 shares of Common Stock held in the SMAs.
As of the date hereof, John E. Fleming directly beneficially owns 5,000
shares of Common Stock. As of the date hereof, none of Frederick
DiSanto, Victor Herrero Amigo, Theresa R. Backes, Joseph Boehm, David A.
Duplantis, Sue Ellen Gove, Janet E. Grove, Jeffrey A. Kirwan, Jeremy I.
Liebowitz, Jon Lukomnik, Cynthia S. Murray, Martine M. Reardon, Hugh R.
Rovit, Joshua E. Schechter or Alexander W. Smith own beneficially or of
record any securities of the Company.
1 PR Newswire: Bed
Bath & Beyond Inc. Announces Transformation of Board of Directors and
Additional Governance Enhancements (April 22, 2019)
2 PR Newswire: Bed
Bath & Beyond Inc. Comments on Activist Presentation (April 26,
2019)
Contacts
Media contact:
Sloane & Company
Dan Zacchei / Joe
Germani
212.486.9500
[email protected]
/ [email protected]
Investor contact:
John Ferguson / Joe Mills
Saratoga
Proxy Consulting LLC
(212) 257-1311
[email protected]
