Tempur Sealy International Inc. Chief Executive Officer Mark Sarvary will step down on Tuesday as part of a settlement with activist investor H Partners Management, which has said the mattress maker is poorly managed.
Tim Yaggi, who is currently Tempur Sealy’s operating chief, will take the CEO post on an interim basis, the Lexington, Kentucky-based company said in a statement on Monday. As part of the changes, H Partners’ Usman Nabi will join Tempur Sealy’s board, and the company will pursue the addition of another director recommended by the investment firm.
The agreement followed H Partners’ successful campaign to get shareholders to oppose the re-election of three board members, including Sarvary. After the investor vote was held last week, Sarvary, Chairman Andrews McLane and Christopher Masto, who heads up the nominating and corporate governance committee, all agreed to quit the board. Frank Doyle, who has been a director since 2003, will be the new chairman.
Tempur Sealy shares fell less than 1 percent to $61.96 as 10:039 a.m. in New York. The stock was up 13 percent this year through the end of last week.
H Partners, Tempur Sealy’s largest shareholder, had called for Sarvary’s ouster as CEO, urging the company to recruit a “capable” leader, overhaul its management structure, and better communicate with workers, shareholders and retailers. The hedge fund, previously known for helping turn around theme-park operator Six Flags Entertainment Corp., owns about 10 percent of the mattress company.
The activist criticized Tempur Sealy for underperformance, poor corporate governance and execution failures since the company acquired spring-mattress producer Sealy Corp. in 2013. H Partners argued that Sarvary couldn’t manage Sealy because it’s more operationally challenging than Tempur, which is known for its memory-foam beds. H Partners ratcheted up its campaign last month when it released a 95-slide presentation online critiquing management.
Activist investors generally acquire equity stakes in publicly traded companies and agitate executives and directors to make changes they believe will boost shareholder returns.