Genesco Inc. said that Institutional Shareholder Services (ISS), an independent provider of proxy research and vote recommendations to the institutional investment community, has recommended that Genesco shareholders vote for all nine of the company’s director nominees at Genesco’s annual meeting on July 20. Legion Partners, the activist shareholder group, described ISS’s recommendation as “contradictory” and continued to push for changes to the board.
“We are gratified that after a comprehensive review and analysis, ISS recommended that shareholders vote “For All” of Genesco’s highly qualified directors for reelection at our upcoming annual meeting,” said Mimi Vaughn, board chair, president and CEO of Genesco, in a statement. “In its recommendation, ISS clearly recognizes that the skills and experience of our directors are essential to the continued execution of our footwear-focused strategy, which is producing clear and positive results and that Legion’s nominees would not bring anything new or additive to our Board. This endorsement from a leading proxy advisory firm underscores our strong belief that we have the right Board and strategy in place and that we are well-positioned to succeed and enhance long-term shareholder value in a rapidly evolving retail landscape.”
In making its recommendation that shareholders vote on the Company’s Blue proxy card “For All” nine of Genesco’s directors, ISS commented:
- “In light of GCO’s recent board and management changes, and given that Legion’s nominees do not appear demonstrably superior to the directors whom they would replace, shareholders are advised to support the board’s nominees at this annual meeting.”
- “…all four recently appointed members of the board appear to be appropriate additions, and the dissident’s critique of interconnections among GCO board members is creative but unconvincing.”
- “…the immediate removal of the four longest-tenured directors standing for re-election does not appear necessary…”
- “The dissident’s ‘cover the waterfront’ strategy lacks focus, and may present difficulties of digestion for shareholders…”
ISS also highlighted that Legion’s nominees lack the relevant skills to serve on Genesco’s Board, noting:
- “[Marjorie Bowen] provided very limited details about what she would like to accomplish in her second term on the board.”
- “The company’s concerns regarding [Dawn Robertson’s] short-lived tenure at many companies seem valid and based on fact rather than opinion.”
- “[Hobart Sichel] lacks public Board experience (which, in this particular situation, would seem essential, especially for a single dissident director), and the board has already considered him on their own volition and decided against advancing his candidacy.”
- “[Margenett Moore-Roberts] lacks public Board experience” and her skills of building an inclusive customer base and workforce “do not appear to be among the company’s most urgent needs.”
- “The potential contribution of Legion’s nominees to the board would therefore appear to be limited.”
Genesco said it continues to urge shareholders to protect the value of their investment by voting the Blue proxy card today “For” all nine of the company’s directors at the company’s annual meeting on July 20, 2021. Genesco’s proxy statement and other information related to its 2021 Annual Meeting of Shareholders can be found here.
In response, Legion, the activist investor looking to place its nominees on Genesco’s board, issued its call to urge Genesco shareholders to focus on the need for further change in the company’s boardroom following ISS’ “puzzling” recommendation.
Chris Kiper and Ted White, Legion Partners’ managing directors, commented in part, “Legion Partners urges Genesco shareholders to continue to focus on the need for further boardroom change following the contradictory report issued by ISS. We question how ISS can repeatedly acknowledge Genesco’s many years of financial and operational underperformance, but then recommend shareholders vote to elect all of the long-tenured directors on management’s card. We contend this conflicting recommendation sends a terrible message: an insular and underperforming board of directors can avoid accountability when a sizable shareholder nominates by simply enacting incremental, unilateral refreshments. We believe boards should regularly refresh and improve their skill sets and experience – not just wait to do the least necessary only under pressure from shareholders. The fact that the Genesco Board has been so stale despite years of deteriorating performance offers strong evidence of an insular culture and lack of alignment with shareholders. This is the essence of the risk the ISS recommendation does not address. If shareholders allow this type of entrenchment maneuver to become accepted precedent, we fear there will be long-term negative consequences for the Company’s investors, employees, consumers and other corporate stakeholders.”
More information on Legion’s proposals can be read here.
Photo courtesy ISS