What can $2.3 million buy you these days? If you're Regis Corp., apparently not much.

The Edina-based operator of hair salons spent that very sum to fight efforts by activist investor Starboard Value LP to win three seats on Regis' board of directors. In the end, Regis announced at last week's annual meeting that Starboard ultimately prevailed, with investors electing all three Starboard candidates, Starboard CEO Jeff Smith, James Fogarty, and David Williams, to the board.

What we didn't know at the time was the margin of victory. Now that Regis has filed the final results with the Securities and Exchange Commission, I can say this with a fair amount of confidence: Regis got CREAMED.

Smith won 42.8 million votes while Fogarty and Williams garnered 39.3 million and 36.1 million votes respectively. They soundly defeated incumbents Susan Hoyt (6.1 million votes), Van Zandt Hawn (5.4 million), and Rolf Bjelland (5.1 million).

How bad was the rout? The Starboard director with the fewest votes (Williams) had nearly six times as many votes as the outgoing Regis director who attracted the most votes (Hoyt).

With such a lopsided result, one wonders why Regis didn't just cut a deal with Starboard in the first place rather than waste valuable shareholder money on a such a losing cause. With $2.3 million and the advantages of incumbency, you'd think the election might have been a little closer.

It's not that the defeated Regis directors lacked qualifications. Hoyt was a former executive with Staples, Dayton Hudson, and May Department Stores, Bjelland was a top leader at Thrivent Financial, and Hawn founded private equity firm Goldner Hawn Johnson & Morrison.

The election was less about the individual merits of the defeated Starboard directors and more about investors soundly rebuking long time chairman/CEO Paul Finkelstein. Under his watch, Regis has become a listless, bloated company unable to boost same-store sales or its share price. (Finkelstein won re-election as director but will completely step away from the company next year.)


Paul Finkelstein

Paul Finkelstein


Case in point: investors also overwhelmingly rejected Regis' compensation plan for its executives. Starboard and proxy advisory firm Institutional Shareholder Services had accused Regis' board of overpaying Finkelstein given the company's lackluster performance.

Shareholders apparently agreed: 35.1 million votes against the compensation plan; 14.2 million votes for the plan with 1.2 million abstentions.

Again, not even close.

That investors rejected the company's executive compensation plan, even in a non-binding vote, is pretty rare in the corporate governance world. These sorts of things usually sail through proxy votes.

Regis, though, seems to have gotten the message.

"Although this vote is advisory, the Board takes the results of this vote seriously," the SEC filing said. "The Board and its Compensation Committee are committed to the continuous evaluation of our compensation programs and to considering appropriate adjustments to those programs in order to reflect progress made toward the implementation of the Company's operating initiatives as well as input from shareholders."



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