When all is said and done, Regis Corp. President Randy Pearce's day turned out pretty well Thursday.
Dissident investor Starboard Value LP won three seats on the Edina-based company's seven-member board of directors, partly because of its blistering criticism of senior executives like Pearce. Nevertheless, the longtime Regis veteran will still succeed Paul Finkelstein as CEO next year.
But Pearce -- who later Thursday afternoon was given a new, eighth seat after the board voted to expand -- knows he can't take anything for granted.
"I realize every person has to perform," Pearce told the Star Tribune. "I'm not pleased with our financial performance. I agree with our shareholders that we need to turn around our financial performance."
Starboard executives said Pearce's path to the CEO's office, which the company had announced earlier this year, was never really in doubt. But you wouldn't have known that, given Starboard's bare-knuckled campaign to replace three Regis directors with its own candidates: Starboard CEO Jeffrey Smith; former Charming Shoppes CEO James Fogarty, and David Williams, who previously served as executive vice president of Chemed.
Starboard said the company, under Finkelstein and Pearce, was bloated with costs and lacked operational focus. The firm also accused Regis of bad corporate governance. For example, Starboard argued Regis should have conducted a broader search for a new CEO. While Starboard said Pearce was a qualified candidate, the firm suggested Pearce was too much of an insider to bring real change to the company.
But that's water under the bridge, said Peter Feld, Starboard's portfolio manager and head of research. What Starboard really wanted, besides its three board seats, was to infuse Regis with a sense of urgency, he said.
"People's eyes are now open," Feld said. "That's the most important thing to come out" of the proxy battle.
