Shareholders of Tempur Sealy International, a leading mattress manufacturer, voted on Friday to rework the company’s board, in part by removing chief executive Mark A. Sarvary. Tempur Sealy chairman P. Andrews McLane and Corporate Governance Committee Chairman Christopher A. Mastro were also not recommended for re-election.
All three were targeted by the activist investor firm H Partners, which owns about 10% of Tempur Sealy’s shares and had been pushing for reform since February. The firm argued that Tempur Sealy has underperformed both rivals and the broader stock market. They had previously launched the website FixTempurSealy.com to campaign for the removal of the three board members and suggested they were already in talks with potential CEO candidates, though no names were mentioned.
Tempur Sealy responded by noting that H Partners has no experience in the mattress industry, nor did they suggest an alternative leadership plan.
The company has been struggling with earnings and profit margins ever since the 2012 acquisition of Sealy. A change in leadership, however, might just be the key: Shares of Tempur Sealy were up 4.6% after the announcement of the news from the shareholders meeting.
“We thank Tempur Sealy’s shareholders for supporting our campaign for leadership change,” said Usman Nabi of H Partners in a statement. “We look forward to working constructively with a reinvigorated board to create value for all shareholders.”
The company did not disclose how many votes were cast for or against the three executives. All other board members were re-elected.
According to Tempur Sealy guidelines, directors not re-elected by shareholders must resign from the board, which all three of these executives have now done. There is still a possibility that they will keep their jobs, but such a move would likely upset investors. The company will likely have to come to a new agreement with H Partners moving forward.