Genesco is once again appealing to shareholders to deny the board of directors member seats nominated by activist investor Legion Partners Asset Management LLC.
In a letter to shareholders released June 18, Genesco’s board of directors wrote that the four people nominated by Legion to replace the existing independent directors on the footwear company’s board “lack the skills, experience, and track records needed to deliver sustainable, long-term value to shareholders.”
Legion, which owns 5.9% of Genesco’s shares, has nominated Marjorie L. Bowen, Margenett Moore-Roberts, Dawn H. Robertson and Hobart P. Sichel to the Genesco board.
In the letter, Genesco’s board disputed the experience of Legion’s nominees, writing that its new independent directors, John Lambros, Angel Martinez, Mary Meixelsperger, and Greg Sandford, have deep knowledge of the retail sector and the experience to help lead Genesco.
In addition, “Our board has a strong track record of accountability and being a good steward of capital, making necessary and decisive changes to strengthen and grow Genesco’s business and drive long-term shareholder value. Genesco’s Board has and will continue to act as its own change agent – and take necessary action when warranted,” Genesco wrote.
The Genesco board added, “Legion has made no effort to engage constructively with Genesco regarding Legion’s proposed nominees and has failed to bring forward any value-creating ideas. Do not let Legion’s baseless campaign and slate of unqualified directors disrupt our momentum.”
For its part, Legion managing directors, Chris Kiper and Ted White, asked shareholders in a June 14 letter to approve its nominees at the upcoming July 20 shareholders meeting.
“Shareholders cannot expect a new day at Genesco without first electing the right directors for this pivotal moment in time. Fortunately, the candidates we have nominated have the independence, objectivity and public company experience to help improve the Company’s compensation practices, long-term alignment, and overall operational rigor and performance,” the letter from Legion said.
Legion noted that two of Genesco’s board members that it’s seeking to replace, Matthew Diamond and Joanna Barsh, are longstanding members of the Genesco board’s compensation committee. This committee, Legion wrote, does not believe that equity awards should be tied to performance-based vesting requirements. Legion said Genesco’s board granted equity awards over $70 million to top executives but did not have stated performance requirements.
Legion said that as Genesco’s operating profits declined year over year, executive compensation increased. For example, from fiscal years 2014 to 2020, operating profit declined by half, while executive compensation increased 43%, Legion wrote in the letter.
In late May, Genesco posted adjusted profits of $11.6 million, or 79 cents per share, compared with the prior year’s loss of $51.4 million, or $3.65 per share. Revenues increased 93% to $539 million.
Genesco shares were rising 3.8 percent to $57.27 in Monday morning trading.