FOOTHILL RANCH, Calif. (AP) — The chairman of Wet Seal (NASDAQOTH:WTSLQ) 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, 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.
Wet Seal shares rose 11 cents, or 3.5 percent, to $3.25 in premarket trading. 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, which has about a 7 percent stake in Wet Seal, 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 had 554 stores in 47 states and Puerto Rico as of Sept. 29.
The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.