Saks, the luxury department store chain, is coming under fire from the hedge fund P. Schoenfeld Asset Management, which believes the retailer has underperformed its competitors and needs to change its corporate governance practice, the New York Times DealBook reports.
Schoenfeld, which manages about $3 billion and owns 1.5 percent of Saks, urged other shareholders on Monday to vote against the way the company currently elects directors.
Under its current election process, only four of Saks’s 12 directors come up for election every year and each serves a three-year term.The company’s staggered board “serves only to protect management and sitting board members, letting them keep their jobs and compensating them very well, irrespective of the company’s performance,” Peter Schoenfeld, the hedge fund’s eponymous founder, said in a letter.
The hedge fund also asked shareholders to withhold votes for there-election of one Saks board member, C. Warren Neel, a professor ofcorporate governance at the University of Tennessee, Knoxville.
“There are real issues with this management team,” Schoenfeldtold DealBook. “The company has never met the goals it has set forthemselves under this management team.”
Saks, known for its flagship store on Fifth Avenue in New York, hassuffered months of weak sales as well-heeled consumers cut spending onluxury items. Shares of the company are down nearly 74 percent over thepast year and have dropped to as low as $1.50 a share earlier thisyear. In January, the company said it would eliminate 1,100 jobs andreduce inventory by 20 percent.