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Bed Bath & Beyond Yields to GameStop Chairman’s Board Nominees

Only two weeks after activist investor Ryan Cohen and his RC Ventures raised concerns about Bed Bath & Beyond’s leadership in a letter to the company’s board, the home goods retailer announced it has entered a cooperation agreement with Cohen, one of the agitators behind the GameStop craze.

According to the agreement, Bed Bath & Beyond will expand its board of directors to include three new independent appointees suggested by Cohen—Marjorie L. Bowen, Shelly C. Lombard, and Ben Rosenzweig. Last year, Legion Partners tried and failed to get Bowen, who’s done board stints with bankrupt Sequential Brands and post-bankruptcy Centric Brands, onto Genesco’s board.

Bowen and Rosenzweig also will join a four-person strategy committee to explore ways to capitalize on the company’s Buy Buy Baby division. Bed Bath & Beyond independent director Sue Gove will serve as chair of the strategy committee, and independent director Andrea Weiss rounds out the group. The strategy committee has the ability to retain independent advisors to support the development of recommendations that it will ultimately make to the full board.

“The resolution announced today represents a positive outcome for all of Bed Bath’s shareholders,” Cohen said in a statement. “By refreshing the Board with shareholder-designated individuals who possess capital markets acumen and transaction experience, the Company is well-positioned to review alternatives for Buy Buy Baby. I appreciate that management and the board were willing to promptly embrace our ideas and look forward to supporting them in the year ahead.”

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Cohen, who serves as chairman of GameStop and co-founder of Chewy, expressed concern in his letter about leadership compensation in relation to Bed Bath & Beyond’s earnings over the past year.

“While we like Bed Bath’s brand and capital allocation policy, we have concerns about leadership’s compensation relative to performance and its strategy for reigniting meaningful growth,” the letter said.

The letter cited Bed Bath & Beyond’s executive leadership compensation—nearly $36 million last fiscal year—as too costly for the retailer, particularly considering its recent earnings declines. During the first two-thirds of the most recent fiscal year, total sales dropped 28 percent, and comps declined 7 percent. The company also reported a net loss of $25 million.

Bed Bath & Beyond’s current leadership came on after another activist-led upheaval in 2019 led to the ouster of former CEO Steve Temares, as well as board resignations by Warren Eisenberg and Leonard Feinstein, and the addition of new board members.

In his letter, Cohen suggested several remedies for the company’s troubles, including a spinoff or full sale of the Buy Buy Baby brand, as well as raising the prospect of selling the entire company to a well-capitalized buyer with experience in retail operations.

“Our company and board have always been committed to evaluating all options to maximize long-term shareholder value, and we look forward to integrating our new directors’ ideas to drive our continued transformation,” said Bed Bath & Beyond CEO Mark Tritton. “Our Buy Buy Baby business is a tremendous asset, and we are committed to unlocking its full value. As we move forward, our goals will continue to focus on delivering value for our shareholders, enhancing experiences for our customers, executing on the transformation throughout our business, and creating new and exciting opportunities for our dedicated employees across all our banners.”

The three new board members will stand for election at Bed Bath & Beyond’s 2022 shareholders meeting, and the board will temporarily expand to 14 members before reverting to 11 members following the annual meeting.

“Over the past two years, our board has transformed the company’s governance, management team, compensation policies, and oversight of strategy and operations,” said Harriet Edelman, Bed Bath & Beyond board chair. “Under this board’s leadership, the company has implemented consequential changes to our business, including the divestiture of multiple non-core assets and a significant increase in investments in structurally critical enablers of our business. The board is highly committed to fundamentally reshaping Bed Bath & Beyond for our customers while driving growth and profitability across its banners. We look forward to benefitting from the contributions and perspectives of our new directors.”