No Fight Left in Avon

Avon would rather capitulate than switch. The company agreed to give activist investor Barington Capital Group LP the right to approve the appointment of an independent director to the company's board, avoiding a proxy fight. The group owns a stake of more than 3% in Avon. The nominee would have to be jointly selected by Avon and its top investor, Cerberus Capital Management, to whom Avon sold a majority of its North America business earlier this month.

“We are pleased to have reached this settlement agreement with Barington, which allows us to avoid a potential proxy contest,” said Chan Galbato, Avon's non-executive chairman.

 

Barington has also agreed to withdraw its nominations for election to the Avon board at the annual shareholder meeting scheduled for May 26.
 

Avon named former FedEx Corp executive Cathy Ross to its board on Monday. The Barington Capital-led group, which includes NuOrion Partners AG, had proposed a restructuring of Avon in December, asking to add new independent directors and recruit a new senior management team.



Avon has been struggling to reverse a steady decline in sales as the 130-year old pioneer of direct-selling has lost favor to bigger players such as Estee Lauder Cos Inc that offer more exclusive brands. The company Avon said earlier this month it would cut 2,500 jobs and shift its headquarters to the UK, responding to which Barington said there was “still much more that needed to be done to improve the business.”


Avon replaced half of its board when it agreed to sell a 19% stake to Cerberus Capital in December, adding three Cerberus executives to its board, including Galbato as non-executive chairman. Reuters reported on Sunday that Avon was close to a deal with activist investors under which it would add a new independent director in exchange for the activists backing away from a proxy fight.


In other Avon board news, the company Cathy D. Ross to its board, effective March 24, 2016. She will serve on the audit committee and will stand for election at the company's 2016 annual meeting.


Until her retirement in 2014, Ross served as executive vice president and chief financial officer of FedEx Express, FedEx Corporation's largest global operating unit, which accounted for over half of the company's $47 billion in annual revenues. During her career at FedEx Express, Ross gained extensive financial and operational experience. As CFO of FedEx Express, she was responsible for a finance team of approximately 5,000 employees worldwide and worked closely with the FedEx Express senior operations leaders.