Destination Maternity has a new CEO — a woman — and a new board in which three of the four directors are women.
Marla Ryan, 51, will take over as interim chief executive at the Moorestown-based maternity clothing retailer, according to the initial returns from Wednesday’s proxy vote.
Company management lost a proxy vote to remain at the helm of the troubled company, and the incumbent board members are now out. That includes Pierre-André Mestre, chairman of the largest stockholder, French retailer Orchestra; Peter Longo, Barry Erdos, and Melissa Payner-Gregor, the prior interim CEO.
The vote was held Wednesday at the company’s Moorestown headquarters at 9:15 a.m. The final proxy inspection isn’t expected until Friday or next Tuesday, after Memorial Day.
“We are excited about the opportunity to work with employees and management. There’s tremendous opportunity to build the business back to what it deserves to be,” said Ryan, a 25-year retail executive most recently with Land’s End. She also said the new board will work “very amicably” with the current interim CEO.
Outside proxy consultants voted mostly for the new board. Institutional Shareholder Services (ISS), a proxy advisory service, recommended that shareholders vote in a split board at Destination Maternity, including two management board member candidates and two outside board candidates, while Glass-Lewis, another proxy advisory service, recommended voting with management’s slate. Egan Jones, which ranks corporate debt, recommended a vote for the dissident shareholders and the new board.
Besides Ryan, the new board includes the entire dissident slate: Holly N. Alden, cofounder of Skullcandy with her husband, Rick Alden; Christopher Morgan, formerly an equity analyst at Kingdon Capital; and Anne-Charlotte Windal, a former Wall Street retail analyst with Bernstein Research.
The activist shareholder campaign was waged by Kenosis Capital, an investment fund headed by Peter O’Malley, and Nathan Miller of NGM Capital, two investors who wanted to vote in a clean slate at the mother-and-baby retailer.
Together, the dissident investors held roughly 9 percent of Destination Maternity, or about 14.6 million shares. Last fall, Destination Maternity did battle with French shareholder and competitor Orchestra, and after a bitter proxy battle, gave it a seat on the board.
After Wednesday’s vote, Destination Maternity’s stock gained more than 6 percent to close at $2.90 a share. Destination Maternity shares have dropped from more than $30 a share in 2013 to less than $2 a share last fall.
The nominee board members and dissident shareholders put forth a turnaround plan laid out at a website called DestFacts.com. In the executive summary, the dissidents proposed targeting $7.5 million in corporate overhead, reducing unnecessary recurring costs, reducing reliance on third parties and vendors, and renegotiating lease costs for a savings of $2 million.
Destination Maternity also plans to expand into new products, including baby carriers, strollers, and other pre/post-partum items, according to the website.