Bed Bath & Beyond, bowing to pressure from activist investors including Ancora Advisors, has made significant changes to its board of directors as it works to address operational concerns outlined in an open letter written by those investors this past month.
In response, the company is transforming its board, which will now comprise 10 directors, nine of whom are independent and six of whom are women.
“The transformed board will reflect significant diversity across race, gender and ethnicity, and have an average tenure of less than four years,” the company said in a statement, adding that five current independent directors will step down.
The company also announced a series of additional governance enhancements., including a Business Transformation and Strategy Review Committee, which will review all aspects of the company's business transformation, strategy and structure. It will also reconstitute its Audit Committee and the Compensation Committee with a mix of new and existing independent directors, including the appointment of committee chairs, to further enhance the company’s independence, organization and leadership responsibilities.
Two of the activist investors — Cleveland-based Ancora and New York-based Legion Partners — issued a statement indicating they were not satisfied with the moves and were not dropping their efforts to replace the board and CEO.
“The board changes announced today by Bed Bath 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," the statement said. "Further, the company’s announcement lacks any detailed strategic vision for driving value creation at Bed Bath. We will therefore continue to move forward with our campaign to install fresh, experienced and independent oversight and management at the company."
Bed Bath & Beyond said that it had multiple discussions with members of the activist group, which also includes Macellum Capital Management, and said it has invited them to participate in the board transformation process to get their ideas for business and operational improvement.
“To date, the activist group has declined this invitation, but the company remains open to engaging in constructive dialogue with them,” Bed Bath & Beyond said.