[CADWALADER, WICKERSHAM & TAFT LLP LETTERHEAD]
June 5, 2009
Via Email and EDGAR
Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Attention: Melissa Duru
Re: The Children's Place Retail Stores, Inc.
Preliminary Proxy Statement on Schedule 14A filed May 15, 2009 by
Ezra Dabah, Renee Dabah, Raphael Benaroya, Jeremy J. Fingerman,
Ross B. Glickman and Emanuel R. Pearlman
File No. 0-23071
Ladies and Gentlemen:
We are submitting this letter in response to the written comments of
the staff (the "Staff") of the Securities and Exchange Commission (the
"Commission"), dated May 29, 2009 (the "Comment Letter"), with respect to the
Preliminary Proxy Statement on Schedule 14A filed by Mr. Dabah, Renee Dabah,
Raphael Benaroya, Jeremy J. Fingerman, Ross B. Glickman and Emanuel R. Pearlman
(collectively, the "Participants") with the Commission on May 15, 2009 (SEC File
No. 0-23071) (the "Preliminary Proxy Statement") in connection with the
solicitation of proxies by the Participants at the 2009 Annual Meeting of
Shareholders (the "2009 Annual Meeting") of The Children's Place Retail Stores,
Inc. ("The Children's Place" or the "Company").
Set forth below are the headings and text of the comments raised in
the Comment Letter, followed by the Participants' responses thereto. Capitalized
terms used but not otherwise defined herein have the respective meanings
ascribed to them in the Preliminary Proxy Statement. We have also included the
requested statement of each of the Participants below.
In addition, we are simultaneously filing a revised Preliminary
Proxy Statement in response to the Comment Letter.
Securities and Exchange Commission 2
Preliminary Proxy Statement
Background and Reasons for the Solicitation, page 4
1. Please clarify the circumstances surrounding Mr. Dabah's departure as
Chief Executive Officer of the company in September 2007. Specify, for
example, whether Mr. Dabah voluntarily resigned or whether he was removed
by the Board. If the latter, please disclose the circumstances surrounding
his removal.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 1.
2. Your disclosure states that there is a "misalignment" of the current
Board's interests with those of the Company's shareholders and you suggest
that this is evidenced by the less than 1% ownership interest of the
current directors. Given the fiduciary duties imposed on directors,
however, it is not apparent that directors must own shares in order to
have interests that are in alignment with those of a company's
shareholders. Please revise your disclosure accordingly or advise.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 2.
3. See our previous comment. When comparing the share ownership percentages
of the current directors with those of the Dabah participants, please
provide complete disclosure so that you reference not only Mr. Dabah's
share ownership levels but also the fact that none of the Dabah nominees
owns any shares.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 3.
4. You indicate that Mr. Dabah does not have any current plan or intention to
acquire the company. Please revise to clarify whether Mr. Dabah, any of
his affiliates or any of the other participants have any plans to acquire
the company.
Response
Securities and Exchange Commission 3
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 4.
Appoint a permanent CEO, page 7
5. You disclose that no candidate has been recommended by the committee for
Mr. Dabah to interview. Given his status as a member of the search
committee for a CEO, please also disclose whether Mr. Dabah has attempted
to locate or introduce any CEO candidates during the period referenced.
Also, please disclose whether any other nominee (i.e. other than Mr.
Benaroya) had been approached by Mr. Dabah regarding the CEO position.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 5.
6. Update the disclosure regarding Mr. Benaroya's position regarding his
willingness to be considered for the position of CEO.
Response
Please be advised that there has been no change in the status of Mr.
Benaroya's position regarding his willingness to be considered for the position
of CEO.
7. Avoid statements that directly or indirectly impugn character, integrity
or personal reputation or make charges of illegal or immoral conduct
without factual foundation. In this regard, your disclosure that the Dabah
nominees will bring "accountability" to the Board should be further
explained and supported or removed as it indirectly suggests that the
Board currently lacks accountability. Refer to Rule 14a-9.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 7.
8. You assert that Mr. Crovitz has a large compensation package and imply
that as a result, he has been less inclined to pursue the process of
finding a CEO. Please provide support for your assertions. Specifically,
please address how Mr. Crovitz's package compares to the compensation
packages provided to similarly situated CEOs at comparable companies.
Alternatively, remove the statement.
Response
Despite his Interim CEO status and his lack of any prior experience as a
CEO, the Company is paying Mr. Crovitz compensation in excess of many permanent
CEOs. Mr. Crovitz's total compensation in the 2008 fiscal year was $4,884,285.
This is more than
Securities and Exchange Commission 4
the total compensation of permanent CEOs at several peer retail companies during
the same period, including Phillips-Van Heusen Corp., American Eagle Outfitters
Inc., Destination Maternity Corporation, Bon-Ton Stores Inc., Dress Barn Inc.
and Men's Wearhouse Inc. The compensation received by Mr. Crovitz in fiscal 2008
is also greater than the compensation received by interim CEOs at comparable
companies, including Bruce Johnson, interim CEO of Sears Holdings Corporation
for the past 16 months, who received $1,166,293 in total compensation during
2008. Charts comparing the compensation Mr. Crovitz receives in his capacity as
Interim CEO to the compensation received (1) by permanent CEOs of peer companies
and (2) by interim CEOs of peer companies are attached.
In Mr. Dabah's view, the level of compensation Mr. Crovitz received from
the Company, which, as described above, is more than similarly situated interim
CEOs and many permanent CEOs at comparable companies, gives Mr. Crovitz an
economic incentive to remain in his position, as once a permanent CEO is
selected, Mr. Crovitz will no longer earn this level of compensation from the
Company.
9. To facilitate shareholders' understanding of the ability of the Dabah
nominees to effectuate any of the actions listed in the proxy and to
clarify for shareholders the degree of control that could be asserted by
Mr. Dabah following an election of his nominees, please disclose the
number of Dabah designees on the Board currently and, assuming the Dabah
nominees were elected, the total possible percentage of seats occupied by
Mr. Dabah and his designees.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 9. Please be advised that Mr. Dabah does not have the
right to designate any person to serve on the Board. Mr. Silverstein, a current
member of the Board, is Mr. Dabah's father-in-law.
10. We refer you to Rule 14a-9. Your disclosure regarding Ms. Kasaks and
Pacific Sunwear of California, Inc. appears to omit information that
shareholders may deem relevant to properly assess Ms. Kasak's
qualifications. For example, you cite to comments made by shareholders in
a recent proxy contest involving Pacific Sunwear yet omit reference to the
fact that the contest was settled. Further, in discussing the decline in
stock performance since her appointment as CEO of Pacific Sunwear, you do
not acknowledge that other factors could have impacted the stock price
decline (i.e. such as the recent extreme volatility in financial and
capital markets). Please revise your disclosure accordingly.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 10.
Securities and Exchange Commission 5
11. Support for each statement or assertion of opinion or belief must be
self-evident, disclosed in the proxy materials, or provided to the staff
on a supplemental basis. Provide us with support for the following
non-exhaustive list of statements:
o "Mr. Dabah remains concerned about...the lack of certain core
competencies and experience on the Board... and senior management's
inability to develop, put in place and focus on short and long-term
growth...,";
Regarding the statement that the members of the Board "lack of
certain core competencies and experience," Mr. Dabah believes that commercial
real estate and marketing expertise are key competencies for any specialty
retailer. In Mr. Dabah's opinion, the current Board does not have any members
who have significant experience in retail real estate and brand marketing. Real
estate expertise will help the Company navigate the current economic environment
and real estate market dynamics. This knowledge is especially important given
the fact that approximately 41% of the Company's leases will come up for renewal
over the next two to three years. The Company's solid balance sheet should
afford the Company the opportunity to aggressively pursue rent reductions as
leases come due. Mr. Dabah also believes that the ability of the Company's
Senior Management team to effectively market the brand, drive sales and maximize
profitability will prove essential in these challenging economic times.
Please see the revised Preliminary Proxy Statement in which we
revised the statement that Mr. Dabah remains concerned about "senior
management's inability to develop, put in place and focus on short and long-term
growth." This statement is based on the fact that, with the exception of the
relocation of the e-commerce business, the Company has not made any public
statements or announcements regarding plans or initiatives for short and
long-term growth.
o "Mr. Benaroya is well positioned to gain the respect and loyalty of
the Company's employees...,";
We have deleted this statement. Please see the revised Preliminary
Proxy Statement.
o "Mr. Dabah believes these departures have been in larger part due to
the deterioration of the Company's energetic and collaborative
culture established during Mr. Dabah's tenure as Chairman and
CEO...,";
Please be advised supplementally that Mr. Dabah has received
communications, including letters and emails, from several departed employees
which support this statement.
o "since Mr. Dabah's departure, the Company has not introduced new
initiatives for the future growth of the Company...";
Securities and Exchange Commission 6
Please see the revised Preliminary Proxy Statement in which we
revised this statement. This statement is based on the fact that, with the
exception of the relocation of the e-commerce business, the Company has not made
any public statements or announcements regarding plan or initiatives for short
and long-term growth.
o "Mr. Matthews served on the boards of several entities that filed
for bankruptcy...,";
Mr. Matthews' experience as a retailer has included serving on the
boards of several entities that have filed for bankruptcy.
- --------------------------------------------------------------------------------
Year Position Company Event
- ---- -------- ------- ----------------------------------------------
2005 Director Levitz Levitz filed for Chapter 11 in October
2005 and was ultimately liquidated; Mr.
Matthews was subsequently sued by
bondholders for allegedly omitting
material information about the company's
health
- --------------------------------------------------------------------------------
2004 Chairman Galyan's Reported seven straight quarters of
Trading declining same-store sales and 18%
Company decline in share price over 3 years
since IPO before being acquired(1)
- --------------------------------------------------------------------------------
2001 Director Lechters Inc. Resigned less than four months before
Chapter 11 filing; Lechters was liquidated
in October 2001
- --------------------------------------------------------------------------------
1999 Director Loehmann's, Resigned from Board of Directors after
Inc. Chapter 11 filing
- --------------------------------------------------------------------------------
1995 Director Hills Stores Sued for damages the chain incurred as a
Co. result of its management takeover
- --------------------------------------------------------------------------------
(1) Share price declined 47% from IPO to one-day prior to announcement
o "Mr. Fingerman revitalized Campbell's U.S. Soup franchise,
generating three consecutive years of consumption growth..."; and,
This statement is based on Campbell's Consumer Insights fiscal year
calculations, which were based on AC Nielsen Fluid Oz Volume for Food-Drug-Mass
All Outlet Data. This represents consumer purchases from stores, as opposed to
Campbell shipments to retailers, which can be influenced by pricing, deal
timing, quarter or year end loading, etc. This statement is also based on
information contained in Campbell Soup Co.'s Form 10-K for the fiscal year ended
July 31, 2005. Please be advised that the revised Preliminary Proxy Statement
was revised to include the following statement: "During his tenure with Campell,
Mr. Fingerman served as General Manager of Campbell's Soups Australasia, where
he led his team to achieve soup market share leadership for the first time in
the company's over 30 year history there..." This statement is based on
information contained in Campbell's Annual Report for 1999.
o reference on page 8 to the potential gain in market share by the
company if the board agreed to roll out the shoe concept and pursue
The Children's Place brand potential.
The Company states in its Form 10-K for the fiscal year ended
January 31, 2009: "Based on information from NPD Group, a consumer and retail
market research firm, we believe our market share of children's apparel for The
Children's Place brand increased to 3.9% in Fiscal 2008 from 3.6% in Fiscal
2007." Mr. Dabah believes that the
Securities and Exchange Commission 7
Company can reasonably achieve better market penetration in children's footwear
given the brand's recognition in what Mr. Dabah believes to be a fragmented
market.
Biographical Information, page 10
12. Please revise the biographical information of the nominees so that it
complies with Item 401 of Regulation S-K. Refer to Item 7(b) of Schedule
14A. For example, revise the biographies to ensure that you completely
describe each individual's business experience for the past five years and
disclose the dates of experience by month and year. Also, ensure that
there are no gaps or ambiguities regarding time in the five-year business
sketches you provide. For example, we note gaps in the biographical
information provided for Messrs. Benaroya and Pearlman.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 12. Please be advised supplementally that Mr. Fingerman
was unemployed from April 2004 to May 2005.
Information about Ezra Dabah and Participants, page 14
13. Disclosure required by Item 4(b) and 5(b) of Schedule 14A is incomplete.
Further, we note conflicting disclosure in Annex A versus the disclosure
under this heading regarding persons who are "participants" as the term is
defined in Instruction 3 to Item 4(b). For example, Annex A identifies
Liberation Investment Group's transactions over the past two years, yet,
you have not included this entity in the defined term "Participant" on
page 14. Similarly, the term "Participant" on page 14 does not include
reference to Mr. Silverstein, Mr. Dabah's father-in-law and co-director
yet, disclosure on page 14 implies that he is considered a participant.
Please revise to disclose and define clearly all participants and provide
all required disclosure pursuant to Item 5(b) of Schedule 14A.
Response
Please see the revised Preliminary Proxy Statement, which has been revised
in response to Comment 13.
Costs and Methods of Solicitation, page 21
14. It appears that you intend to solicit proxies by mail, courier services,
e-mail, internet, advertising, telephone, facsimile or in person. Please
be advised that all written soliciting materials, including any e-mails or
scripts to be used in soliciting proxies must be filed under the cover of
Schedule 14A on the date of first use. Refer to Rule 14a-6(b), (c) and
(m). Please confirm your understanding.
Securities and Exchange Commission 8
Response
We understand that all written soliciting materials must be filed under
the cover of Schedule 14A on the date of first use.
15. If you do solicit proxies via the Internet, please tell us whether you
plan to solicit via internet chat rooms, and if so, tell us which websites
you plan to utilize.
Response
We do not plan to solicit via internet chat rooms.
Other Information, page 22
16. We note you refer security holders to information that you are required to
provide and will be contained in the company's proxy statement for the
annual meeting. Please confirm that you are relying on Rule 14a-5(c) to
refer to this information.
Response
We confirm that we are relying on Rule 14a-5(c) to refer to this
information.
Closing Comments - Participant Statement
At your request, the Participants further acknowledge that:
o the Participants are responsible for the adequacy and accuracy of the
disclosure in the Preliminary Proxy Statement;
o Staff comments or changes to disclosure in response to Staff comments do
not foreclose the Commission from taking any action with respect to the
Preliminary Proxy Statement; and
o the Participants may not assert Staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Enclosed please find a copy of the revised Preliminary Proxy Statement, as
well as a marked copy showing the changes to expedite your review. Please do not
hesitate to contact me at 212-504-5555 with any questions or comments you may
have.
Very truly yours,
/s/ Dennis J. Block
--------------------------
Dennis J. Block
Attachments
Enclosures
Securities and Exchange Commission 9
Failure to Pursue Appropriately and Install a Qualified, Permanent CEO
....which seems as if it was inevitable given the compensation the Interim
CEO received...
COMPENSATION(1)
Company Name CEO Name Revenues ($mm) Year Total Comp
- ----------------------------------- -------------------- --------------- ----- -----------
Polo Ralph Lauren Corp. Ralph Lauren $ 4,880 2008 $34,200,351
Abercrombie & Fitch Co. Michael S Jeffries 3,540 2008 15,912,111
Aeropostale Inc. Julian R. Geiger 1,886 2008 14,184,583
Gymboree Corp. Matthew K. McCauley 1,001 2008 8,679,762
Chico's FAS Inc. Scott A. Edmonds(2) 1,582 2008 8,662,873
AnnTaylor Stores Corp. Kay Krill 2,195 2008 7,844,424
The Talbots Inc. Trudy F. Sullivan 1,495 2008 5,673,854
Charming Shoppes Inc. Dorrit J. Bern 2,475 2008 5,297,451
The Children's Place Retail Charles Crovitz(3) 1,630 2008 4,884,285
Stores, Inc.
Phillips-Van Heusen Corp. Emanuel Chirico 2,492 2008 4,870,079
Pacific Sunwear of California Inc. Sally Frame Kasaks 1,255 2008 4,224,467
American Eagle Outfitters Inc. James V. O'Donnell 2,989 2008 3,796,055
Destination Maternity Corporation Dan W. Matthias(4) 565 2008 3,293,325
Bon-Ton Stores Inc. Byron L. Bergren 3,225 2008 1,931,985
Dress Barn Inc. David R. Jaffe 1,444 2008 1,688,595
Men's Wearhouse Inc. George Zimmer 1,972 2007 1,667,224
Median ` $ 1,929 ` $ 5,090,868
Observations
o Despite Mr. Crovitz's Interim CEO status, his total compensation is
comparable to that of permanent CEOs.
o On February 5, 2009, Mr. Crovitz received an additional restricted stock
award of 55,401 shares valued at approximately $1 million on the closing
price of the grant date.
Mr. Crovitz's compensation is excessive given his role as Interim CEO
(1) Represents companies used by the Company to review its compensation
practices per Proxy.
(2) Ceased serving as CEO effective January 7, 2009; served as CEO for 8 years.
(3) Includes equity grant received on February 5, 2009.
(4) Ceased serving as CEO effective September 30, 2008; served as CEO for 15
years.
Failure to Pursue Appropriately and Install a Qualified, Permanent CEO
....which is significantly higher than the compensation other Interim CEOs
have received in retail...
COMPENSATION OF SELECT OTHER INTERIM CEOS
Interim Total
Company Name Name Period Served CEO Tenure Revenues ($mm) Year Comp(1)
- --------------------------------- --------------------- ------------------- ------------ --------------- ---- -----------
Sears Holdings Corporation Bruce Johnson 02/08 - Present 16 Months $ 46,770 2008 $1,166,293
Charming Shoppes Inc. Alan Rosskamm 07/08 - 04/09 9 Months 2,475 2009 1,474,215
Charlotte Russe Holding, Inc. Leonard Mogil 07/08 - 11/08 4 Months 823 2008 1,895,036
Eddie Bauer Holdings, Inc. Howard Gross 02/07 - 06/07 4 Months 1,023 2007 1,169,806
Gap, Inc. Robert Fisher (2) 01/07 - 07/07 6 Months 14,526 2007 -
Median 6 Months $ 2,475 1,169,806
The Children's Place
Retail Stores Charles Crovitz (3) 09/07 - Present 20 Months $ 1,630 2008 $4,884,285
Observations
o Mr. Crovitz has been Interim CEO significantly longer than those listed
above (~2x as long).
o Mr. Crovitz's compensation is significantly higher than those listed above
(~4x higher than the median).
Mr. Crovitz's compensation is excessive given his role as Interim CEO
(1) Total compensation annualized in instances where the term of service was
less than one year for the reported proxy amount.
(2) Gap Interim CEO Robert Fisher did not receive any additional compensation
for services provided as Interim President and CEO.
(3) Includes equity grant received on February 5, 2009.