Bed Bath & Beyond Refreshes Its Board, Co-Founders Step Down

Big announcement

On April 22, Bed Bath & Beyond (BBBY) announced that it’s refreshing its board. The company is replacing its five independent directors with new directors. Bed Bath & Beyond announced that its co-founders Warren Eisenberg and Leonard Feinstein will retire from the board and become co-chairmen emeriti.

The new board, which will be effective on May 1, will consist of ten directors instead of the previous 12 members. Among the ten members, nine of them are independent directors and six are women directors. The board members’ average tenure will be less than four years. The company named Patrick Gaston, the current lead independent director, as its immediate independent chairman.

Bed Bath & Beyond Refreshes Its Board, Co-Founders Step Down

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Bed Bath & Beyond has been facing pressure from activist investors Legion Partners Asset Management, Macellum Advisors, and Ancora Advisors. Together, the investors own a ~5% stake in the company. The activist investors criticized the board for not holding itself and the company’s management accountable for poor performances. The investors also criticized the board for the magnitude of value destruction in the last five years. The company stated that it invited the activist investors to participate in the transformation process. However, the activist investors declined the offer.

Bed Bath & Beyond announced that it will form the Business Transformation and Strategy Review Committee. The committee will review its business transformation, strategy, and structure. The company will also reconstitute its Audit and Compensation Committees of the Board, which includes appointing committee chairs. Bed Bath & Beyond plans to adopt a new executive compensation plan, which raises the at-risk component of executive compensation.

Stock performance

Despite the announcement of these changes to the board, Bed Bath & Beyond was trading ~3.5% down in the early morning trade on April 22. The company has returned 53.8% YTD (year-to-date) as of April 18. During the same period, Williams-Sonoma (WSM) and RH (RH) have returned 13.6% and -10.3%, respectively. The broader comparative index, the SPDR S&P Homebuilders ETF (XHB), which invests in home improvement and home furnishing companies, has returned 26.3% YTD.