But CEO Dorrit J. Bern did not wither. Standing before a packed room of shareholders and employees here yesterday, the veteran executive announced the outcome of a heated proxy fight with a flourish of comic relief and a subtle jab.

She was about to announce that the company had averted a potentially damaging shareholder standoff by agreeing to give two board seats to the dissident investors it had fought for months.

"It's not often," said Bern, 57, wearing a cream-colored pantsuit at headquarters for the Lane Bryant and Fashion Bug women's clothing chains, "that we have all these suits." Dissident investors - all men - were filing past like priests in corporate garb to take their seats at the meeting that many thought would end in rancor.

Bern then announced that Charming Shoppes had averted ballot bloodshed by reaching a down-to-the-wire settlement that gives New York investment firms Myca Partners and Crescendo Partners two of the three board seats they had sought.

The company said it would make room for the dissident nominees - retail turnaround professional Michael Appel and Crescendo managing partner Arnaud Ajdler - by expanding its eight-member board to 11.

The expanded board, coupled with the voluntary resignation of one of its three incumbents, would also make room for two veteran retail executives that Charming Shoppes would like to add to its board: Richard W. Bennet III, former vice chairman of the May Department Stores Co., and Michael Goldstein, former chairman and chief executive officer of Toys R Us Inc.

If shareholders approve the deal next month, it is hoped that the new board can help maneuver the company out of the financial ditch that made it a target for one of the season's most aggressive investor challenges.

The settlement preserves Bern's board seat - she was one of the incumbents up for reelection yesterday. But it will strip her of the chairwoman title by imposing a new rule that says different people must fill the roles of chief executive and chairman. The deal also supports incumbent Alan Rosskam for reelection.

"I am pleased to announce that we have reached a settlement," Bern said as technicians who had been playing smooth jazz a few hours earlier struggled to generate sound from her microphone at the moment of truth.

Bern then gave the floor to a man who had been among her toughest critics during the proxy fight: Crescendo Partners president Eric Rosenfeld.

"We're very happy to have reached an amicable resolution," said Rosenfeld, whose hedge fund had led the shake-up against Charming Shoppes in partnership with Myca Partners, also of New York.

The annual shareholder meeting and vote will now occur June 26, and both sides said the jointly endorsed slate would improve investors' fortunes.

Wall Street may need some convincing. The company's shares fell 3.03 percent, to $5.12. Shares have dropped 60 percent over the last year, and the company lost $83.4 million in its latest fiscal year, prompting store closings, cutbacks in capital expenditures, and the potential sale of its unprofitable catalog units.

Crescendo and Myca, which amassed a stake of more than 8 percent in the company as shares took a nosedive, have been calling for aggressive measures and now may be in a position to realize them.

Both sides said they were eager to put aside the enmity that had characterized the fight.

The company had sued the dissidents in federal court to block their efforts and had labeled them "corporate raiders." Dissidents accused the company of blocking the democratic process and manufacturing "spun" data.

"In the heat of battle, things are said on both sides, and we have put that behind us, and this board is moving together forward," Eric M. Specter, the company's executive vice president and chief financial officer, said after the announcement.

Moments after huddling with Specter to review documents following Bern's address, Ajdler said: "They're happy. We're happy. We're all happy."

Bern's announcement was surprising because the company had accused dissidents Monday of rejecting an offer to accept just one board seat.

The dissidents responded Tuesday by saying they had made a counteroffer and had not considered that a rejection of negotiations.

Specter said the two sides negotiated past midnight Wednesday and resumed early yesterday, prompting the company's announcement at 10 a.m. that the shareholder meeting had been delayed.

Bern announced the settlement at 2 p.m. The activists later said the agreement had been reached only a half-hour before Bern took the microphone.