Legion Partners Issues Letter to Genesco Shareholders Regarding the Need for Further Boardroom Change at the 2021 Annual Meeting

Rhea-AI Summary

Legion Partners Asset Management, owning approximately 5.9% of Genesco (NYSE: GCO), has issued an open letter to shareholders advocating for substantial board changes. They aim to elect four independent candidates to the nine-member board at the upcoming Annual Meeting, citing Genesco's poor long-term performance compared to peers. Despite recent board refreshment efforts by Genesco, Legion Partners believes these changes are insufficient and reflects a culture of underperformance. They seek a universal proxy card for shareholders to choose board members effectively.

Positive

• Legion Partners is advocating for four independent candidates to improve board performance.
• The push for change is seen as a response to Genesco's long-term stagnation, potentially benefiting shareholders.

Negative

• Genesco's total shareholder returns have significantly underperformed compared to peer groups and market indices over various timeframes.
• Recent board changes are perceived as inadequate, reflecting entrenched interests rather than genuine progress.

Legion Partners Asset Management, LLC (together with its affiliates, “Legion Partners” or “we”), which collectively with the other participants in its solicitation beneficially owns approximately 5.9% of the outstanding common shares of Genesco, Inc. (NYSE: GCO) (“Genesco” or the “Company”), today issued the below open letter to its fellow shareholders. In addition, Legion Partners announced that it has modified its slate and will be seeking to elect four highly-qualified and independent candidates – Marjorie L. Bowen, Margenett Moore-Roberts, Dawn H. Robertson and Hobart P. Sichel – to Genesco’s nine-member Board of Directors (the “Board”) at the Company’s 2021 Annual Meeting of Shareholders (the “Annual Meeting”). Learn more about Legion Partners’ case for change and nominees by visiting www.gcoforward.com.

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Fellow Shareholders,

Legion Partners nominated seven director candidates for election to Genesco’s Board last month because we believe the Company has dramatically underperformed and persistently stagnated over the past decade. We explained in our first public letter that this lost decade is a consequence of maintaining an insular, stale and underqualified Board. The table below highlights just how awful Genesco’s returns have been for shareholders over the long-term. The Company’s shares have dramatically underperformed several pertinent peer groups and market indices, including its own hand-selected indices.

	TOTAL SHAREHOLDER RETURNS (INCLUDING DIVIDENDS)
	Pre-Pandemic to Present	1 Year	3 Year		5 Year	10 Year
Genesco Inc.	2%	151%	10%		(28%)	21%
Peer Group (1)	52%	205%	127%		243%	236%
ISS Peer Group (2)	47%	192%	61%		108%	82%
S&P 1500 Footwear Index (3)	34%	62%	100%		136%	499%
S&P 500	31%	50%	67%		122%	282%
Russell 2000 Index	37%	82%	54%		119%	206%
Genesco Relative Performance:
Peer Group1	(50%)	(54%)	(117%)		(271%)	(214%)
ISS Peer Group2	(46%)	(40%)	(51%)		(136%)	(61%)
S&P 1500 Footwear Index (3)3	(33%)	89%	(90%)		(164%)	(478%)
S&P 500	(29%)	101%	(57%)		(150%)	(260%)
Russell 2000 Index	(35%)	69%	(44%)		(147%)	(185%)

Source: Company filings, Capital IQ as of an unaffected date of 04/09/2021 (Pre-pandemic date of 12/31/2019)

Although Genesco recently initiated a partial refresh of the Board on the heels of our nomination, we contend that this incremental change is not enough to break the culture of entrenchment, self-interest and underperformance in the boardroom. This is why we are providing shareholders the opportunity to vote for further change by still running four highly-qualified, independent nominees at this year’s Annual Meeting. We are also calling on the Company to agree to the utilization of a universal proxy card.

In our view, an honest and objective assessment of the circumstances and facts surrounding Genesco’s partial refresh will reinforce that more meaningful boardroom change is sorely needed.

It is important to highlight that Legion Partners spent the past three weeks trying to avert a protracted election contest and reach a reasonable settlement with Genesco. As we have demonstrated during past negotiations with much larger companies such as Bed Bath & Beyond Inc. and Kohl's Corp., we are always willing to engage in good faith and explore compromises. We brought this same constructive mentality to discussions with Genesco before they were derailed.

Notably, we proposed multiple frameworks to Genesco that did not entail our nominees comprising a majority of a reconstituted Board. We even tried to align on a framework that entailed the Company adding just one of our nominees into the refresh process and having three stale directors depart over the next two shareholder meetings, provided that Lead Independent Director and Nominating and Governance Committee Chair Matthew C. Diamond stepped down by the 2022 Annual Meeting. Genesco ultimately rebuffed us and would not commit to parting ways with Mr. Diamond – who has been on the Board for 20 years – more than a year from now. We believe that this type of intransigence should lead shareholders to question the credibility and sincerity of the partial refresh.

We also find the refresh problematic for other reasons. It appears that newly-appointed director Angel Martinez and interim Chief Financial Officer Thomas A. George worked together as c-level executives for several years at Deckers Outdoor Corporation. Appointing a new director with long-standing ties to a current senior executive forces us to question whether the incumbents want allies or independent thinkers in the boardroom. It also raises our suspicions that newly-appointed director Greg Sandfort is a prominent member of the greater Nashville area, where the Company’s headquarters are located and where the Board’s selections have historically been biased. In addition, we do not understand why Genesco – a stagnant conglomerate with an approximately $800 million market capitalization – is expanding the size of its Board for the second time in eight months without making any concrete commitment to shrink down from nine members in the near-term.

With this context in mind, we are now compelled to put all of our efforts into our campaign for further boardroom change. We call on the Board to finally set an Annual Meeting date. We also urge the Board to agree to the utilization of a universal proxy card to give shareholders the opportunity to assess all candidates and choose the best possible mix of directors for turning around Genesco. If the Company genuinely believes Mr. Diamond and the other incumbents are world-class directors, it should not object to providing shareholders the opportunity to select the best Board members from a universal proxy card.

We look forward to publishing our slate’s thoughtful analysis of Genesco in the coming weeks. While our four independent nominees would only represent a minority of the Board, they have insightful observations and strategic suggestions that can help unlock value. Our candidates also have a deep understanding of Genesco’s opportunities and the emerging shifts in the apparel, footwear and retail sectors. They would be strong advocates for all of the Company’s shareholders and stakeholders, including operating company employees and customers.

Sincerely,

Chris Kiper Managing Director Legion Partners Asset Management

Ted White Managing Director Legion Partners Asset Management

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About Legion Partners

Legion Partners is a value-oriented investment manager based in Los Angeles, with a satellite office in Sacramento, California. Legion Partners seeks to invest in high-quality businesses that are temporarily trading at a discount, utilizing deep fundamental research and long-term shareholder engagement. Legion Partners manages a concentrated portfolio of North American small-cap equities on behalf of some of the world’s largest institutional and high-net-worth investors. Learn more at www.LegionPartners.com.

Certain Information Concerning the Participants

Legion Partners Holdings, LLC, a Delaware limited liability company (“Legion Partners Holdings”), together with the other participants named herein, filed a preliminary proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2021 annual meeting of shareholders of Genesco Inc., a Tennessee corporation (the “Company”).

LEGION PARTNERS HOLDINGS STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.

The participants in the proxy solicitation are anticipated to be Legion Partners Holdings, Legion Partners, L.P. I, a Delaware limited partnership (“Legion Partners I”), Legion Partners, L.P. II, a Delaware limited partnership (“Legion Partners II”), Legion Partners, LLC, a Delaware limited liability company (“Legion Partners GP”), Legion Partners Asset Management, LLC, a Delaware limited liability company (“Legion Partners Asset Management”), Christopher S. Kiper, Raymond T. White, Marjorie L. Bowen, Margenett Moore-Roberts, Dawn H. Robertson and Hobart P. Sichel.

As of the date hereof, Legion Partners I directly beneficially owns 841,197 shares of Common Stock, par value $1.00 per share, of the Company (the “Common Stock”). As of the date hereof, Legion Partners II directly beneficially owns 47,383 shares of Common Stock. As the general partner of each of Legion Partners I and Legion Partners II, Legion Partners GP may be deemed to beneficially own the 888,580 shares of Common Stock beneficially owned in the aggregate by Legion Partners I

FAQ

What changes is Legion Partners proposing for Genesco's Board of Directors?

Legion Partners is seeking to elect four independent candidates to Genesco's Board at the 2021 Annual Meeting.

What is Legion Partners' ownership stake in Genesco?

Legion Partners beneficially owns approximately 5.9% of Genesco's outstanding common shares.

How has Genesco's stock performed compared to its peers?

Genesco's share performance has significantly lagged behind its peer groups and several market indices over the past decade.

What is Legion Partners' stance on Genesco's recent board refreshment?

Legion Partners argues that the recent board refresh is insufficient to address longstanding issues of underperformance.

Why does Legion Partners want a universal proxy card?

Legion Partners seeks a universal proxy card to provide shareholders the opportunity to vote on all board candidates and select the best mix for Genesco.