From Home Furnishing Business
Pier 1 Investor Seeks Immediate Changes to Board
Hedge fund Alden Global Capital, which recently accumulated a 9.5% stake in retailer Pier 1 Imports (PIR), has sent the company a letter requesting immediate representation on the Pier 1 board of directors and criticizing the company for poor operating performance and a “laissez-faire approach to board responsibilities.”
The fund also wants to assist in the search for a CEO to replace Alex Smith, who is stepping down Dec. 31.
“Shareholder representation on the Board is imperative in order to ensure that the current CEO search and hiring process is properly overseen and that shareholders' best interests are paramount in the boardroom,” the letter said.
In addition, Alden was critical of a shareholder rights plan the board recently adopted that makes it more difficult for a hostile takeover of the retailer.
“We do not believe the current market price of Pier 1 fully reflects its intrinsic value, in large part due to the Company's deteriorating operating performance, history of poor capital allocation, and irresponsible executive compensation. The purpose of this letter is not only to make our serious concerns explicit for the Board, but also to outline our views for fellow shareholders regarding why immediate and meaningful changes are required to begin rebuilding shareholder confidence,” the letter continued.
Pier 1 responded by releasing a statement saying that Alden’s “demands for abrupt change are not constructive.”
“This ultimatum, coupled with the threat to run a consent solicitation to replace the board, is not constructive and could erode shareholder value by undermining the Company’s announced CEO search and disrupting its business in the holiday selling season,” the statement read.
“As we enter the critical holiday season, the board of directors is confident that the programs underway will drive sales and expand market share -- and recent operating results are encouraging. The board remains focused on the search for a new CEO to guide and execute the company’s strategy and create increased value for all shareholders.”