May 23, 2018 / 9:50 PM / a year ago

UPDATE 1-Activists win proxy contest at Destination Maternity

(Adds details on board members, comment from activist)

By Svea Herbst-Bayliss

BOSTON, May 23 (Reuters) - Activist investors took control of the board of maternity and baby clothing retailer Destination Maternity on Wednesday after investors voted to replace all four directors with dissidents, including three women, sources said.

While the results had not yet been certified, the company said at its annual meeting earlier on Wednesday that the preliminary vote count showed that all four dissidents were elected, the three sources said.

Investors voted to seat Holly Alden, co-founder of audio accessory company Skullcandy, industry analyst and consultant Anne-Charlotte Windal, former retail executive Marla Ryan and investor Christopher Morgan. They replace Barry Erdos, Peter Longo, Pierre-Andre Mestre and Melissa Payner-Gregor, who is currently interim chief executive officer.

The vote marks the first time in recent corporate history that a majority of women dissident directors have won a proxy contest.

But the bitter fight between the company and the activists also illustrated how difficult it can be to get women onto boards after Institutional Shareholders Services, a prominent proxy adviser, did not back the dissidents. ISS expressed concern that the proposed directors had no public board experience.

Activists Nathan Miller and Peter O’Malley, who own roughly 9 percent of the company, have spent months pushing for the company to improve operations and argued that the maternity clothing company needs more gender diversity. Since September, there has been significant turmoil in the executive suite after Anthony Romano stepped down as CEO. He has been succeeded by two interim CEOs.

The company’s stock price, which had tumbled some 30 percent over the last 52 weeks, climbed 6.6 percent to close at $2.90. Over the last five years, the stock has fallen from roughly $30 a share.

Large investors in Destination Maternity include Royce & Associates, Renaissance Technologies, and the Vanguard Group.

“In our view, new independent voices and greater diversity will be a tremendous asset for the Company and we are very pleased with the result of this election,” Miller said in a statement. (Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler and Tom Brown)

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