CalSTRS and Legion Partners Holdings withdrew their slate of nominees to the Perry Ellis International Inc. board of directors and ended their proxy solicitation contest “in response to recent positive steps” taken by the company, the shareholders group said in a filing Tuesday with the Securities and Exchange Commission.
As part of that move, the two activist investors withdrew their non-binding proposal calling for the appointment of an independent chairman of the company.
Officials at the $191.2 billion California State Teachers' Retirement System, West Sacramento, reaffirmed in the filing they will present for a shareholder vote a non-binding shareholder proposal calling for Perry Ellis to declassify its board.
CalSTRS and Legion Partners, whose affiliates include Legion Partners Asset Management, own a combined 6.3% of the company's outstanding shares. (CalSTRS hired Legion Partners Asset Management to manage $200 million and took a 30% stake in the firm last year.)
With the company implementing a number of the changes recommended by CalSTRS and Legion, Perry Ellis' stock price has increased 52% since July 17, the date of CalSTRS and Legion Partners' original Schedule 13D filing to disclose an ownership of more than 5% in the company, the investors said in the filing.
Among the recent changes, Perry Ellis announced in a May 20 SEC filing that two independent directors decided not to stand for re-election and are being replaced with two new nominees as independent directors.
In addition, the company announced a leadership succession plan with Oscar Feldenkreis, vice chairman, president and chief operating officer, taking over as chairman and CEO, effective next Jan. 30He replaces his father, George Feldenkreis, who will become executive chairman.
“While we believe more must be done to build value for shareholders, we are encouraged by the steps taken to date and stand ready to help this reconstituted board move the company in the right direction,” Anne Sheehan, CalSTRS director of corporate governance, said in the filing.
CalSTRS and Legion continue to call for changes at Perry Ellis, including asking it to “undertake a robust search process to find the right CEO for the company, rather than continue the Feldenkreis family domination,” the filing said.
George Feldenkreis said in a statement, “I am very pleased that, as we move beyond the distraction of a proxy contest, we will now be able to focus all the efforts of our board and management team on continuing to further our strategic initiatives to create more value for our stakeholders," noting the company's stock price is up 55% over the past 12 months, through May 22.
The board's independent members issued a statement, saying, they “appreciate the constructive dialogue we have had with our shareholders on a variety of issues in recent months.”
The company's annual meeting is July 17.