FOOTHILL RANCH, Calif. -- In a win for The Clinton Group, the chairman of Wet Seal and three other directors have stepped down from its board, replaced by four nominees of the activist investor group unhappy with the struggling teen retailer's performance.
Wet Seal Inc., based in Foothill Ranch, Calif., and The Clinton Group have been in a proxy fight. The Clinton Group holds about a 7 percent stake in Wet Seal. As a result of the board changes, Clinton Group has agreed to terminate its effort to get support from shareholders for its nominees, Wet Seal said Friday.
In addition to a shake-up to the board, changes are afoot in the company's merchandising division. The chief merchandising officer for the company's namesake division is leaving for a job at jeans company True Religion Apparel Inc., Wet Seal said late Friday. Harriet Sustarsic will remain at Wet Seal until Oct. 19. Kim Bajrech and Debbie Shinn are taking over for her. They had been the interim merchandising heads of the division from November 2009 to November 2011, when Sustarsic came on board.
Wet Seal shares ended unchanged Friday at $3.14. Its shares are down 32 percent since hitting a 52-week high of $4.63 last October.
Earlier this week, Clinton Group said that Wet Seal reneged on an offer to give up majority control of its board.
The investor group said in a filing Tuesday with the Securities and Exchange Commission that it had been told by Wet Seal's banker that four of the retailer's board members were willing to step down if Clinton Group agreed to settle consent solicitations.
But Clinton Group said it got another call from the banker late Tuesday saying that the board had changed its mind and the directors would not resign.
By Friday, an agreement had been reached. Board members Jonathan Duskin, Sidney Horn and Henry Winterstern have resigned, along with Chairman Hal Kahn. They have been replaced with four individuals nominated by Clinton Group: Dorrit Bern, Lynda Davey, Mindy Meads and John Mills.
The board will also still include Kathy Bronstein, John Goodman and Ken Reiss.
Wet Seal has 554 stores in 47 states and Puerto Rico.