Genesco Inc. has secured the support of a major independent proxy advisory firm as it battles activist investors seeking to reshape the retailer’s board ahead of its July 21 annual meeting, escalating a proxy contest centered on corporate governance, board composition, and shareholder returns.
On July 7, Nashville-based Genesco announced that Institutional Shareholder Services (ISS) recommended shareholders vote for all nine of the company’s director nominees, rejecting efforts by activist investors Bradley Radoff, Jumana Capital Investments LLC, and Christopher Martin — collectively the Radoff-Jumana Group — to replace two incumbent directors.
In its July 6 report, ISS concluded that “the dissidents have not made a compelling case for change. As such, support for all management nominees on the management (WHITE) card is warranted. Shareholders are also recommended to withhold votes from the dissidents’ nominees.”
ISS also cited the financial performance and governance in backing management at Genesco, a publicly owned specialty retailer and wholesaler of branded and licensed footwear and accessories.
“A closer look at the company shows an enterprise that has posted peer-beating TSR [Total Shareholder Return] and a steady but still below-peak improvement in operating performance, and that possesses a generally shareholder-friendly corporate governance regime,” the advisory firm wrote.
ISS further noted that, “In the one-, three-, and five-year periods ending on the unaffected date, and since the announcement of the CEO’s appointment (Nov. 4, 2019) through the same date, the company’s TSR exceeded its peer median. When the above four measured periods are extended through June 30, 2026, the above observation also holds true.”
The recommendation is a victory for Genesco as it seeks to fend off a challenge from the Radoff-Jumana Group, which collectively owns about 9.1 percent of the company’s outstanding shares.
The activist investors launched their campaign after arguing Genesco’s board declined to “meaningfully consider” proposals they said would improve shareholder value. They are seeking to replace directors Joanna Barsh and Thurgood Marshall Jr. with their nominees, former public company CEO Westervelt T. Ballard Jr. and experienced public company director Paula Poskon.
Responding to the ISS recommendation, Genesco said the report reinforces its position that the proxy contest is unnecessary.
“We are pleased that ISS recognizes that there is no need for the proxy contest,” the company said. “Under the oversight of the company’s highly qualified directors, our management team is successfully transforming the business and is executing a strategy that is working and delivering strong results.”
Genesco also said that it continues to think Radoff’s “unnecessary campaign” and director nominees present significant risk to the momentum that’s currently under way.
“We appreciate ISS highlighting our progress and outperformance compared to Genesco’s peers and we are confident we are on the right path to continue driving value for all shareholders,” said the company in its statement.
Nevertheless, the activists have continued to criticize the company’s leadership and governance.
In a July 6 statement, the Radoff-Jumana Group accused Genesco of making “false and misleading claims” in a July 1 presentation and renewed calls for changes in executive leadership.
“Given the board’s latest manipulation of the facts, we once again call for Ms. Vaughn to be stripped of the chair role,” the group said. “It is clear to us that there is zero accountability in the boardroom so long as Ms. Vaughn is calling the shots.”
The investors also argued that Andrew Gray should be promoted to CEO if Mimi Vaughn remains board chair, saying he “is effectively already running the business as CEO of the profitable Journeys segment.”
The group additionally urged Genesco to conduct a Dutch tender offer for 1 million shares, contending the company has excess cash following a $58.7 million tax refund and an anticipated $23 million to $25 million tariff refund.
“With excess real estate, inventory, and overhead costs, we demand all excess cash be returned to shareholders at the soonest possible opportunity,” their statement said.
The activists have also focused much of their campaign on Barsh’s qualifications. In a July 1 statement, they argued Genesco inaccurately described her experience in its proxy materials, pointing out that she has never served as a public company chief executive or on another public company board.
The group went further, saying, “during Ms. Barsh’s 13-year tenure, Genesco’s share price declined by 50.2 percent,” adding that the board failed to seriously consider settlement proposals that included replacing Barsh and Marshall, appointing one of the activists’ nominees, and separating the roles of board chair and CEO.
Genesco enters the shareholder vote after reporting a first-quarter net loss of $14.81 million on a 3 percent increase in net sales to $487.03 million, results that exceeded analyst expectations.
The company also recently named Jonathan Collins as senior vice president of finance and chief financial officer, effective Aug. 3. Vaughn has served as interim CFO since March following the departure of Cassandra “Sandra” Harris.
The current contest marks the second activist challenge Vaughn has faced since becoming CEO. In 2021, Genesco defeated a proxy fight launched by Legion Partners after ISS also backed the company’s nominees, although competing proxy advisory firm Glass Lewis supported the activist investor. A recommendation from Glass Lewis in the current contest has not yet been announced.
Shareholders are scheduled to vote at Genesco’s annual meeting on July 21.
As of 3:45 p.m. (EST) July 14, Genesco is currently trading around $34.35 per share, down approximately 0.35 percent for the day. The stock is fluctuating within a daily range of $33.98 to $35.01 and sits in the middle of its 52-week range of $21.55 to $43.60.