Legion Partners Addresses Genesco’s Desperate Attempt to Divert Attention Away From the Urgent Need for Boardroom Change
June 29 2021 - 9:00AM
Business Wire
Legion Partners Asset Management, LLC (together with its
affiliates, “Legion Partners” or “we”), which collectively with the
other participants in its solicitation beneficially owns
approximately 5.9% of the outstanding common shares of Genesco,
Inc. (NYSE: GCO) (“Genesco” or the “Company”), today issued the
below statement in response to the Company’s decision to publicize
a disingenuous private letter issued by its Board of Directors (the
“Board”) roughly six weeks ago on May 19, 2021. As a reminder,
shareholders can learn about our world-class nominees and how to
vote on the WHITE proxy
card by visiting www.GCOForward.com.
Chris Kiper and Ted White, Legion Partners’ Managing Directors,
commented:
“We believe Genesco’s Board has once again validated our case
for urgent change by disseminating blatant distortions and
misrepresentations to its shareholders. Rather than try to
comprehensively respond to the substantive presentations we issued
last week and yesterday, Genesco released a six-week-old private
letter that mischaracterizes settlement discussions in an attempt
to imply a lack of engagement on our part. We view this as nothing
more than a disingenuous ploy to try to mislead independent proxy
advisory firms and shareholders ahead of what is likely the most
critical annual meeting in the Company’s long history.
The reality is that we did engage in a private dialogue with
Genesco prior to going public with our nomination of directors.
We asked the Company if it would be willing to initiate a
meaningful Board refresh in light of its excessive average director
tenure, numerous interlocks, poor governance practices, lack of
relevant experience and sustained underperformance. We also
informed the Company we would be willing to make our nominees
available for interviews if a settlement framework were
established. Despite the fact that Genesco seemingly pushed both of
our designees off of its Board after one year of service in June
2019, we still tried to engage in good faith.
It is equally important to stress that we were previously
willing to participate in Genesco’s self-directed refresh and
settle for one designee, provided that Company appointees were of
the highest caliber and 20-year Board member Matthew C. Diamond
would finally step down in 2022. The Company rejected that
compromise on May 20, 2021 – one day following the letter that
Genesco just released – and unilaterally pursued a refresh that
only increased interlocks among directors and executives. To add
insult to injury for long-suffering shareholders, Genesco disclosed
after rejecting our desired framework that it is spending $8.5
million on this fight. As a further sign of entrenchment, it has
come to our attention that the Company is using at least a
half-dozen external advisors (each of which is receiving
shareholders’ capital to defend underperforming directors).
After taking into account all of Genesco’s seemingly
underhanded actions and entrenchment maneuvers, including its
unwillingness to adopt a universal proxy card, we believe it is
abundantly clear that Mr. Diamond is not the only director that
must be removed and replaced on the Board. With this context in
mind, we are willing to resume settlement discussions and pursue a
resolution that leads to additional refreshment that is meaningful.
We just cannot sit by as these four long-serving directors
seemingly continue to hold the Company back:
- Matthew C. Diamond - Throughout
his 20 years on the Board, Mr. Diamond has presided over excessive
executive compensation, sustained underperformance and very
questionable corporate governance decisions such as the
renomination of directors with clear interlocks to insiders. By the
standards set by leading independent proxy advisory firms, Mr.
Diamond is an extremely stale and over-tenured Board member. We
contend his two-decade tenure compromises his independence and see
no compelling case for keeping him as a director.
- Thurgood Marshall, Jr. - In
addition to presiding over significant share price underperformance
during his nine-year tenure on Genesco’s Board, Mr. Marshall has no
prior relevant retail or footwear experience and a documented
history of flouting corporate governance best practices. Notably, a
leading independent proxy advisory firm recommended shareholders of
CoreCivic, Inc. withhold votes for Mr. Marshall for four straight
years – from 2017 to 2020 – citing material governance failures. We
question how the current Board could appoint Mr. Marshall as Chair
of Genesco’s ESG Subcommittee and tout his purported governance
expertise when he is a member of the Nominating and Governance
Committee at CoreCivic, Inc., which places material restrictions on
shareholders’ ability to amend bylaws.
- Joanna Barsh - We believe Ms.
Barsh, who has presided over persistent share price
underperformance during her lengthy tenure, bears responsibility
for the Company’s misaligned executive compensation structure and
its commitment to a broken conglomerate model. Notably, Ms. Barsh
(a long-time McKinsey consultant) is a long-serving member and now
the Chair of the Compensation Committee, which has rubberstamped
millions of dollars of payments to Mimi Vaughn, Parag Desai and
Robert Dennis (all McKinsey alumni) during a period of extended
underperformance at Genesco.
- Kevin P. McDermott - We believe
Mr. McDermott, who has presided over sizable share price
underperformance during his five-year tenure on Genesco’s Board,
has no relevant retail or footwear experience and is perpetuating
the culture of concerning interlocks at the Company. Notably, Mr.
McDermott was recently the Chief Audit Executive at Pinnacle
Financial Partners (NASDAQ: PNFP), where Marty Dickens (a current
Genesco director) is a Board member.
As shareholders can see in our most recent presentation, Legion
Partners’ four nominees – Marjorie L. Bowen, Margenett
Moore-Roberts, Dawn H. Robertson and Hobart P. Sichel – are
energized, engaged and expert operators with the vision to pursue
efficiencies, growth and value-enhancing stakeholder engagement. We
believe shareholders should focus on how the incumbents stack up to
our four-member slate when it comes to retail and footwear
experience, independence and value-enhancing ideas. The only thing
that could cloud the clear choice here is Genesco’s smoke screen,
which we implore shareholders to see through.”
***
Please visit www.GCOForward.com to view
important materials.
If you have any questions or require
assistance as you consider how to vote, please contact Legion
Partners’ proxy solicitor Kingsdale Advisors at
GCO@kingsdaleadvisors.com.
***
About Legion Partners
Legion Partners is a value-oriented investment manager based in
Los Angeles, with a satellite office in Sacramento, California.
Legion Partners seeks to invest in high-quality businesses that are
temporarily trading at a discount, utilizing deep fundamental
research and long-term shareholder engagement. Legion Partners
manages a concentrated portfolio of North American small-cap
equities on behalf of some of the world’s largest institutional and
high-net-worth investors. Learn more at www.LegionPartners.com.
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