BOSTON (Reuters) - One of Destination Maternity Corp’slargest investors on Monday accused the retailer of “governance shenanigans” and asked it to clarify exactly how many directors will be elected at the annual meeting, a regulatory filing shows.
In the last two weeks the company has increased and then decreased the size of its board, creating what investor Nathan G. Miller calls confusion and worse for investors, he wrote to the Moorestown, New Jersey-based company on Monday, according to the filing.
Investors like Miller who are pushing for changes at corporations around the country have a short time to nominate dissident investors and company lawyers force them to follow strict nomination rules for their slates to be valid. Industry analysts say Destination Maternity’s shifts in board size are unusual and raise questions for investors.
Miller, whose NGM Asset Management owns 7.8 percent of the company’s stock and is pushing it to add female directors, said the back-and-forth is leaving investors in the dark about how many people will eventually oversee how the company operates.
On April 3, the company increased the board to six directors from four. Then it cut the board back to five directors on April 12 when one of the recently appointed directors quit after only nine days on the job, the filing says.
Another board member then said he would not run again, but the company did not reduce the size of the board, saying it would do so only after the 2018 annual meeting began, the filing says.
We “are concerned that these governance shenanigans are an attempt to gain an improper advantage in the election of directors at the 2018 annual meeting of stockholders,” Miller wrote, demanding an “unequivocal statement regarding the maximum number of Board seats that are up for election.”
The annual meeting is scheduled for May 23, according to a Feb. 28 statement by the company.
Miller asked the company to use a universal proxy card so investors can choose directors from both the management and dissident slates. The company refused to use it.
Both Miller and a representative for Destination Maternity declined to comment.
Destination Maternity’s stock lost 3.6 percent to $2.59 in Nasdaq trading on Monday.
Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler