(By Balachander) Wet Seal Inc.(NASDAQ:WTSLA) agreed with its third-largest investor Clinton Group to terminate consent solicitation. The Foothill Ranch, California-based specialty retailer also said four of its directors agreed to resign and will replaced by four of Clinton's nominees.
Clinton owns around 6.9 percent of the company.
As part of the settlement, Wet Seal has added Clinton's nominees: Dorrit Bern, Lynda Davey, Mindy Meads and John Mills as new Directors. Jonathan Duskin, Sidney Horn, Hal Kahn and Henry Winterstern have resigned from the Board, the company said.
On Wednesday, Wet Seal said it urged its shareholders to reject efforts by Clinton to replace the company's current experienced Directors with Clinton's hand-picked nominees who lack relevant experience.
"It is not in the best interests of the company and our shareholders to have an almost complete turnover of the Board on the eve of the fourth quarter," said Wet Seal Chairman Hal Kahn. "It would be extremely disruptive to our employees, customers and suppliers at a time when we are in the midst of implementing a return to our fast fashion strategy and beginning to gain traction in improving our performance."
"Therefore, we strongly urge our shareholders to revoke or withhold their consent to allow Clinton Group to replace six of the seven current members of our Board, including our two recently added members, with five of their own candidates who have no experience with Wet Seal or fast fashion," Kahn said on Wednesday.
On Friday, the company said Hal Kahn has agreed to continue to serve Wet Seal as a consultant pursuant to his existing contract.
As of August 25, 2012, Wet Seal operated a total of 551 stores in 47 states and Puerto Rico, including 469 Wet Seal stores and 82 Arden B stores.
The stock, which has been trading in the 52-week range of $2.42 to $4.78, ended at $3.14 on Thursday.