Tuesday Morning Corp. is facing a proxy fight with one of its stockholders, which is pushing for a change in CEO and directors of the company.
The company confirmed receipt of director nominations from Jeereddi II, LP. Jeereddi, together with its proposed nominees, are beneficial owners of 2.3% of Tuesday Morning common stock.
Jeereddi and the nominees previously submitted a notice of nomination to the Tuesday Morning board, and proposed immediately replacing current CEO Steven Becker with one of their proposed nominees. Tuesday Morning’s chairman met with Jeereddi representatives on two occasions to discuss the investment firm’s concerns, proposed nominees and intent to have one of its nominees be named as the company CEO. After ongoing dialogue and an evaluation of each of Jeereddi’s nominees, taking into account the attributes and backgrounds of candidates deemed necessary and appropriate, the Tuesday Morning board nominating and governance committee, as well as the full board, determined that the nominees would not advance the progress that the company is beginning to realize.
Jeereddi II and an investment partner, Purple Mountain Capital Partners, released a statement criticizing that the retailer currently trades at a massive discount to its off-price peers on an enterprise value to sales basis and insisted that their nominee for CEO, Mike Barnes, who has had executive experience with Fossil, Signet Jewelers and Francesca’s, offers the skills needed to turn Tuesday Morning around. The investment partners added that they had nominated James Corcoran of Purple Mountain for a board post.
Tuesday Morning stated that it would file a preliminary proxy statement with the U.S. Securities and Exchange Commission in connection with the solicitation of proxies for the company’s 2017 annual meeting of stockholders, which will occur on November 15.
Terry Burman, Tuesday Morning chairman, said, “The Tuesday Morning board of directors, which includes six independent directors among eight total directors, fully supports the current management team. This team has made meaningful progress executing against operational priorities intended to drive improved top and bottom line performance, a particularly notable development given the depths of challenges inherited from the prior management team. While the board is committed to acting opportunistically and flexibly to significantly enhance value for all stakeholders, Jeereddi’s proposed board nominees would inject instability and disruption in the boardroom and the company at this time. It is regrettable that Jeereddi has chosen to disregard the company’s progress and, instead, propose what we believe is an ill-advised director slate while pursuing a disruptive and protracted proxy fight at the expense of all Tuesday Morning stockholders.”