Victoria's Secret & Co. has explained the rationale behind its decision to block Australian billionaire Brett Blundy from joining its board, and confirmed that one director will not seek re-election amid an escalating proxy contest, according to a regulatory filing made public on Monday.
The company said in a November letter to Blundy that it reviewed his request for a board seat but ultimately concluded that the "potential for significant reputational and legal risk" together with "conflict of interest and competition concerns" argued against inviting him onto the board.
The filing states that Blundy and his investment vehicle, BBRC International, have been campaigning to reshape the board and are urging shareholders to withhold votes from two directors - Donna James and Mariam Naficy - at the annual meeting scheduled for next month.
In the same filing Victoria's Secret said Naficy will not stand for re-election in June. The company attributed her decision to professional commitments and to the time and attention required to engage with BBRC's proxy contest.
The regulatory submission includes the November letter sent to Blundy that lists specific concerns the board considered in denying his request. The letter cites what it describes as Blundy's "pattern of hiring executives with a history of serious allegations of sexual harassment," and references reported and alleged "instances of harassment and highly inappropriate employee policies" at businesses Blundy controlled.
Victoria's Secret also noted that a company controlled by Blundy, Leays, characterizes itself as a global lingerie, sleepwear and beauty brand, which the board views as creating a competitive conflict.
Another matter highlighted in the letter involved a BBRC employee who visited Victoria's Secret stores and, "according to store personnel with whom he interacted, falsely presented himself as being affiliated with Victoria's Secret to gain access to and misappropriate confidential sales information from the stores," the filing says.
BBRC currently holds a 13% stake in Victoria's Secret and has been pressing the company for changes behind the scenes since 2024, the filing notes. BBRC has also advocated for Blundy to obtain a board seat.
The company disclosure says an anti-takeover defense known as a shareholder-rights plan - adopted after BBRC accumulated its stake - is due to expire later this month.
Victoria's Secret's filing indicates Blundy could not be immediately reached for comment. The regulatory filing and attached letter form the basis of the company's public explanation for declining to add Blundy to the board and outline the circumstances leading to a director's decision not to seek re-election.
Summary
Victoria's Secret denied Brett Blundy a board seat citing reputational, legal and competitive risks outlined in a November letter. BBRC, which owns 13% of the company, is pursuing a proxy campaign to unseat two directors. Mariam Naficy will not stand for re-election in June because of commitments and the demands of responding to the proxy contest. The filing also details allegations related to hiring practices, employee conduct at companies Blundy controlled, and an incident involving a BBRC employee at Victoria's Secret stores.
Key points
- Victoria's Secret cited "potential for significant reputational and legal risk" and "conflict of interest and competition concerns" in rejecting Blundy's bid for a board seat - impacting corporate governance and retail sectors.
- BBRC owns 13% of Victoria's Secret and has been advocating for board changes since 2024, including urging shareholders to withhold votes from two directors ahead of next month's annual meeting - relevant to investor activism and equity markets.
- Mariam Naficy will not seek re-election in June due to professional commitments and the time required to engage with BBRC's proxy contest - a direct governance consequence of the activism campaign.
Risks and uncertainties
- Ongoing proxy contest - Continued shareholder activism could affect board composition and strategic direction, with implications for the retail sector and investor confidence.
- Reputational and legal concerns cited by the company - Allegations and reports referenced in the letter could carry legal or reputational ramifications for parties involved, potentially affecting stakeholders in retail and consumer brands.
- Expiration of shareholder-rights plan later this month - The lapse of this anti-takeover measure introduces uncertainty about potential shifts in control or further activist influence over the company.