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Third Point’s Bath & Body Works proxy fight eyes executive pay

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Feb 23, 2023
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Illustration: Tiffany Herring/Axios

Activist investor Dan Loeb’s Third Point is waging a proxy fight against Bath & Body Works over what it describes as excessive executive pay and sagging financial performance.

Why it matters: Executive pay may be a recurring theme in activists’ playbooks this year, buoyed by the SEC's new rules on “pay for performance” disclosures.

Context: The rule, which went into effect last year, requires companies to disclose the relationship between executive compensation and the company’s financial performance.

Driving the news: Third Point intends to introduce its own slate of board candidates, with at least one shareholder representative.

  • Third Point has a more than 6% stake in Bath & Body Works.

What they’re saying: Third Point cited Sarah Nash, who served as the executive chair and interim CEO from February 2022 to January 2023 and took home $18 million.

  • The activist took aim at her credentials, saying she lacked experience in the beauty and consumer industries as the current CEO of Novagard Solutions, a maker of silicone sealants and coatings.
  • Third Point also said the company was poorly allocating capital, bringing up an ill-timed stock buyback program last year.

The other side: Bath & Body Works said in a statement that while it is open to input and recommendations of its shareholders, it disagrees with Third Point’s letter.

  • “The Board is committed to best-in-class corporate governance practices, including as it relates to compensation and Board refreshment,” it said.
  • The company noted that it got a 95% approval vote on its most recent "say on pay" proposal last year.
  • Around 75% of the board is comprised of members who have joined since 2019, it added.

Of note: Bath & Body, which reported 4Q earnings today, said sales fell 5% year over year to $2.89 billion.

  • Its stock has tumbled about 16% over the past year, floating around $42.

Flashback: Last year, around 114 companies globally faced remuneration demands, up from 92 in 2021 and 86 in 2020, according to Insightia.

The bottom line: “Expect to see more director revolts in 2023, with both investors and proxy advisers strengthening their ESG policies ahead of the coming season,” Insightia says.

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