The Barington Capital Group, which includes NuOrion Partners and a number of other investors, own more than 3% in the business, which gives the group certain voting rights.
The candidacy will be jointly approved by the Avon Products board of directors and Cerberus Capital Management, a privately-owned investment company that took a majority share in Avon North America back at the beginning of March, creating New Avon LLC.
At the same time, the deal that Avon has struck means that the investment group has agreed to withdraw its nominations for elections to Avon’s board of directors at the company’s AGM, and to ensure all its share representation is in favor of the nominees proposed by the Avon board.
Avoiding a proxy contest
Adding to Avon’s significant challenges, the contest over the election of board members with the investors could have led to a proxy contest, which might have added to existing pressures – a situation that has now been avoided.
"We are pleased to have reached this settlement agreement with Barington, which allows us to avoid a potential proxy contest. We have a process underway to identify the additional independent Board member and we look forward to working with Barington to complete that process,” said Chan W. Galbato, Avon's non-executive Chairman of the Board.
“The Avon Board and management team continue to be fully engaged in executing the Company's transformation plan for the benefit of all shareholders."
Indeed, the news was well received by Wall Street yesterday with stocks rising by more than 5% and trading at $4.52 a share in mid-morning trading, today.
New board member
Alongside news of the deal struck with the activist investors, Avon also announced the addition to the board of Cathy Ross, a former FedEx executive.
Ross previously held the position of CFO at FedEx until her retirement in 2014 and was nominated to the position by Avon and Cerberus Capital Management.
Her appointment is effective from March 24th and she will serve on the Audit Committee, while standing for the election at the company’s 2016 AGM.