Investment firm JAT Capital sent a scathing letter to the board of the brand new Bed Bath & Beyond on Friday saying it has refused to reply questions from shareholders and is engaging in what the investment firm called unprecedented “poor behavior.”
The firm, which has a 9.6% stake in the corporate and claims it is just not an activist fund, excoriated the board for a series of misdeeds, including canceling planned investor conferences and twisting the facts about former CEO Jonathan Johnson’s ouster.
“We’ve got attempted to have interaction constructively with investor relations, senior management and the Board of Directors in recent months, making suggestions of best practices that may preserve and enhance value, and more recently stating actions taken by management and the board that seem like destroying shareholder value,” the letter, penned by JAT’s founder John Thaler, states.
“We’ve got taken the more energetic posture with Beyond because, quite frankly, I even have never seen such poor behavior by a Board in my profession. The things that I even have heard, the things which were spoken on to me, and the actions I even have witnessed are in a category that I even have never seen.”
Beyond was previously referred to as Overstock.com, which bought Bed Bath out of bankruptcy and rebranded. Prior to its rebrand, Beyond had been grappling with sluggish sales and a dwindling market cap. After its first quarter as the brand new Bed Bath, results were mixed with steep declines in sales and profits.
The corporate didn’t return a request for comment.
Earlier this month, JAT called on Beyond to fireplace Johnson. Days later, the corporate announced he was stepping down.
In its letter, dated Friday, JAT questioned why Johnson’s board seat was removed after his ouster and said it was an try to weaken “shareholders ability to have a say.” The firm also accused the board of being disingenuous about Johnson’s decision to depart the corporate and said bluntly that he’d been “fired.”
“Moderately than terminating Johnson and publicly saying so (an announcement that might have been well received by everyone involved), the Board decided to craft a press release together with Jonathan suggesting that he had stepped down, and even making the ludicrous statement that he and the Board had jointly concluded that ‘now was the best time’ for a leadership transition,” the missive reads.
“Now could be the best time? In the midst of an organization re‐branding effort, just as the corporate embarks on a $150 million marketing campaign? And that coincidentally coincides with shareholders calling for Johnson’s removal? Writing a press release that twists the facts and makes disingenuous characterizations of the situation … furthers the perception that the Board is engaged in self‐preservation and inside dealing.”
Meanwhile JAT has called for Marcus Lemonis, the Camping World CEO and TV personality who starred in CNBC’s “The Profit,” to take over management of the corporate. He joined the Overstock board last month and has cheered its transition to Beyond Inc.
JAT renewed those calls in Friday’s letter and accused the board of being “suspicious” of Lemonis, pushing him to the sidelines and refusing his expertise.
“In one in every of the few instances where I even have been able to have interaction with a member of the Board with reference to why Marcus Lemonis wasn’t being permitted to assist manage the business, [chair of the board] Allison Abraham acknowledged to me that she (and others) were fearful that ‘Marcus has a secret nefarious plot,'” the letter states. “She has allegedly repeated this same concern to the interim CEO Dave Nielsen. When pressed on what that ‘nefarious plot’ is perhaps, she acknowledges that she doesn’t know.”
Lemonis told CNBC he has little interest in being CEO of Beyond but did join the board with an expectation that’d he be appointed executive chairman, which is yet to occur greater than a month into his tenure with the corporate. No clear timeline was set but other shareholders beyond JAT have been wondering what’s ahead for the corporate’s board given his appointment, Lemonis said.
He added he’s “upset” relations between the board and investors have reached this low-point but agrees with JAT that change must occur.
“To be honest I’m type of curious to a number of the answers too,” he said of the query’s JAT posed.
So far as the “nefarious plot” he’s suspected of, Thaler said he’s been asked if he’s a “trojan horse” for JAT or seeking to buy Beyond, which he each denies.
“I enjoy working with businesses, it has been my brand for a very long time,” said Lemonis. “If I desired to buy the business this would not be the way in which I’d do it.”
JAT called on Beyond’s board to reply its questions, once and for all, and for everybody from vendors to sell-side analysts to demand more transparency.
“It’s my strong desire that the Board be forced to clarify what it’s doing. This is just not an unreasonable ask. The actions cited below which the Board has taken within the last 60 days seem like to the detriment of the corporate and shareholders,” the letter states. “This Board has refused to clarify why they’ve made these decisions.”
Read the total letter below: