BBWI - Bath & Body Works gains as Third Point plans proxy fight (update)

Update 10:50pm: Adds Bath & Body Works comment.

Bath & Body Works ( NYSE: BBWI ) rose 3% after activist fund Third Point said it planned to start a proxy fight against the soap and fragrance company targeted at alleged excessive executive pay and lagging financial performance.

Dan Loeb's Third Point plans to nominate candidates for the company's annual meeting this spring, according to a letter he sent to the board on Wednesday,

Third Point first disclosed holding a 6% stake in the company in December, saying in a filing at the time that the board  "has made errors in structuring its executive compensation."  Third Point, which said its a top 5 holder holder of Bath & Body, has had some talks with the company's CEO Gina Boswell an Board Chair Sarah Nash, though those discussions stalled.

"Regrettably, our discussions have stalled and our concerns about the way this Board operates have intensified," Loeb wrote in a letter. "We believe it is imperative that a shareholder representative is added to provide necessary oversight and have been clear with the Company that failure to do so would leave us no alternative but to pursue a proxy contest."

Bath & Body Works ( BBWI ) on Tuesday announced that it added Hershey CFO Steven E. Voskuil as independent board member and last Tuesday added current Conagra executive, Lucy Brady, as a new independent board member . With the additions of the new directors, the BBWI board now has 12 directors, 11 of whom the company classifies as independent.

"While we recognize Mr. Voskuil’s financial experience, this Board’s handpicked new director does not assuage our concerns about substantial corporate governance shortcomings," Loeb added in the letter.

Bath & Body Works ( BBWI ) said in a statement that it "strongly disagrees" with the views expressed in Third Point's letter.

"It is unfortunate that Third Point has chosen to announce its intent to pursue a costly public proxy fight despite the Board’s good faith engagement efforts over the past several month," Bath & Body said in the statement. "The Board will review and consider Third Point’s proposed nominations in due course once they are received."

News of Third Point proxy fight was earlier reported by the WSJ.

Bath & Body Works ( BBWI ) is scheduled to report Q4 results on Thursday.

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