(Reuters) - Union pension fund adviser CtW Investment Group on Monday urged Urban Outfitters Inc’s (URBN.O) investors to vote against two long-standing directors and said the board’s “extreme insularity” contributed to the company’s weak performance.
CtW recommended voting against the company’s two longest-serving members of its nominating and governance committee, Robert Strouse and Harry Cherken Jr, who are up for re-election on May 23.
The current makeup bears the hallmarks of a highly insular and long-tenured board, one that reflects the committee’s failure to maintain a robust and credible recruitment process, CtW’s Executive Director Dieter Waizenegger wrote in a letter to investors.
“For a company that is so reliant on global sourcing and focused on women, it is surprising that the board consists of largely Caucasian males with law and finance backgrounds,” the CtW letter said.
The retailer’s board has two women, including Chief Executive Richard Hayne’s wife, Margaret Hayne.
Urban Outfitter’s shares were down 1 percent at $22.67 on Monday in afternoon trading. Up to Friday’s close, the stock had lost nearly 20 percent of its value since the start of the year.
Urban Outfitters denied CtW’s assertion that the board composition had resulted in the company’s stock price decline.
“Changing the composition of a board is not something that can or should take place overnight,” the company said in an email statement.
It added that its efforts to diversify the board included retaining an independent search firm to assist the nominating committee in identifying candidates with relevant expertise.
CtW also accused Urban Outfitters of being “run as a family business,” citing the appointment of CEO Hayne’s son, David Hayne, as the company’s first chief digital officer last year.
The company in 2015 acquired the Vetri Family Italian pizza chain, which was founded by Marc Vetri, whom Hayne had personally known for several years, CtW said.
CtW works with union pension funds with more than $200 billion in assets collectively “to enhance long-term shareholder returns through active ownership.”
Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto