Reuters: Regulatory News: UPDATE 1-Clinton Group pushes for control of retailer Wet Seal

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UPDATE 1-Clinton Group pushes for control of retailer Wet Seal Sep 24th 2012, 15:43 Mon Sep 24, 2012 11:43am EDT By Chris Peters Sept 24 (Reuters) - Activist investor the Clinton Group is pushing for control of Wet Seal Inc, brushing aside the struggling retailer's reconciliatory offer of two board seats and the withdrawal of a shareholder rights plan. Clinton, Wet Seal's third-largest investor, earlier called for the sale of the retailer and sought four seats on the board shortly after the firing of Chief Executive Susan McGalla in July. Wet Seal responded by adopting a rights plan with a 10 percent trigger a month later. The women's apparel retailer terminated its shareholder rights plan last week stating it was confident about its stabilizing share price and proposed to expand its board to include two nominees of Clinton, which has a 7 percent stake in Wet Seal. However, Clinton Group's managing director Greg Taxin said, "This shows an inability on their (Wet Seal's) part to make proper decisions in the first instance." "The shareholder rights plan was a horrible decision ... they destroy value for stockholders and not a single stockholder asked for it to be put in place." Wet Seal, which has been struggling with declining same-store sales for over a year, urged shareholders to reject Clinton's five-member slate, according to a filing with regulators on Sept. 24. Wet Seal had also expanded its board to include former CEO Kathy Bronstein and retail industry veteran John Goodman last week. Clinton Group's Taxin said the new appointments were better than any of the existing board, but insisted they were appointed hastily in a bid to fend of Clinton Group's campaign. Bronstein was fired by the company for bad performance and Goodman has less than a year's experience as CEO of a specialty retailer, Taxin said. Clinton's five-member slate has a combined CEO experience of 30 years in specialty retailers such as Charming Shoppes, Aeropostale Inc and United Retail Group, he added. Clinton Group is asking for the removal of all but one of the directors elected on May 16, 2012, and also of Bronstein and Goodman, who were added to the board on Sept. 18, 2012, Wet Seal said. If Clinton's proposals are approved, all board members, with the exception of Kenneth Reiss, would be replaced and the two new seats will be left vacant as of now. Taxin said he expects news on their proposal before the Nov. 9 deadline -- which is 60 days from when the proposal was made. Foothill Ranch, California-based Wet Seal's stock, which has lost over a third of its value in the past year, was trading up 3 percent at $3.25 on Monday on the Nasdaq. Link this Share this Digg this Email Reprints

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