The Australian billionaire’s BBRC International is taking its case to remake the board to shareholders at the company’s annual meeting June 11.The Australian billionaire’s BBRC International is taking its case to remake the board to shareholders at the company’s annual meeting June 11.
Now that Brett Blundy’s BBRC International has officially gone to shareholders with his bid to oust two of Victoria Secret & Co. directors, the intimates retailer has released details about why it’s spent years rebuffing the Australian billionaire — from allegations of what it described as his pattern of “hiring executives with a history of serious allegations of sexual harassment” to claims of a little bit of corporate espionage.
BBRC, which Blundy leads as chairman, has a 13 percent stake in Victoria’s Secret’s and last week asked shareholders to withhold their votes for chair Donna James and her fellow board member Mariam Naficy at the company’s June 11 shareholder meeting.
Blundy wrote to shareholders that “Voting against Ms. James’ and Ms. Naficy’s reelection is akin to ‘addition by subtraction’ — we believe that a board without them will bring fresh judgment to capital allocation, free management to focus on the core business rather than optimizing a failed acquisition and attract directors with the expertise this next phase demands.”
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But the retailer’s board on Monday pulled back the curtain a little more on its long engagement with Blundy, who once tried to buy the business.
A supplemental proxy statement filed with regulators included a letter from Victoria’s board that said the proxy battle “risks disrupting the company’s momentum at a critical stage in its transformation.”
“The board, working closely with VS&Co’s management team, has acted decisively to put the company on a new trajectory for accelerated growth and has the skills necessary to oversee the continued execution of its Path to Potential strategy,” the letter said. “The board’s decisive actions are repositioning the business for long-term success and creating sustained value for shareholders. Since the board announced the appointment of CEO Hillary Super, VS&Co has delivered best-in-class operational and financial performance and 152 percent total shareholder return.”
While Blundy is now looking to unseat directors, he previously was looking to become a director or even chair himself, a prospect the board nixed in December for a laundry list of reasons that were laid out in a letter to the activist that was sent Nov. 13 and was included in Monday’s regulatory filing.
“After careful and extensive consideration, the board has determined in accordance with its fiduciary duties that appointing you to the board would not be in the best interests of Victoria’s Secret or its shareholders,” the board wrote to Blundy.
Among the factors that the board said “weighed against” Blundy’s candidacy were the reputational risks arising from “your pattern of hiring executives with a history of serious allegations of sexual harassment.”
“The board is especially vigilant regarding these types of issues,” the letter said. “This derives not only from the board’s fiduciary duties, but also the history of the company’s former parent L Brands with these types of allegations.”
Victoria’s Secret’s board also argued that Blundy’s own intimates company Léays was a direct competitor.
And the retailer said that, leading up to the launch of Léays, “a senior BBRC employee who is one of your most trusted advisers visited numerous Victoria’s Secret stores and, according to store personnel with whom he interacted, falsely presented himself as being affiliated with Victoria’s Secret to gain access to and misappropriate confidential sales information from the stores.
“While we addressed the issue from a legal perspective through an exchange of letters between counsel in which you agreed to destroy all misappropriated information, the board remains extremely disappointed that you have refused to provide any explanation for this series of events,” the letter said. “Indeed, your offhand suggestion during the October 13 meeting that we could ensure we did not face any more such issues by simply adding you to the board demonstrated an attitude toward compliance with law and conflict issues that is wholly inconsistent with the board’s expectations.”
Other shareholders will have their say next month.
