A hedge fund is demanding that cosmetics maker Elf Beauty investigate its ex-board member Bill McGlashan, the buyout mogul embroiled in the college-admissions scandal.
New York-based Marathon Partners — which has an 8.5-percent stake in Elf, a marketer of “cruelty-free” makeup at discount stores like Walmart and Target — wrote to Elf’s board on Wednesday, demanding to inspect the company’s books and records, according to a source close to the situation.
As The Post reported last week, Marathon wants to investigate whether McGlashan had a role in the company’s failure to promptly disclose violations of US sanctions against North Korea.
McGlashan’s TPG sold 5 million Elf shares in a 2017 secondary offering without disclosing to investors that the company had used North Korean materials to make some of its eyelash kits — a violation it had meanwhile reported to regulators.
“Our concerns regarding … Elf’s overall boardroom dynamics have taken a greater sense of urgency” since McGlashan got indicted by a federal grand jury on wire fraud charges, Marathon told Elf’s board in a Wednesday letter.
McGlashan has pleaded not guilty to charges from the US Justice Department that he paid $50,000 to have his son’s ACT admissions exam results doctored and agreed to pay another $250,000 for a fake football profile to get his son into USC.
Meanwhile, Marathon is also questioning McGlashan’s performance as the head of Elf’s compensation committee. The hedge fund cited lavish pay that the board doled out to John Bailey, who resigned as chief financial officer last month.
“Bailey’s compensation was extremely lucrative, despite the company’s poor results and failure to meet projections,” Marathon said in the letter, noting that Bailey earned $15.6 million during his three-year tenure, even as he sold more than $22.2 million in Elf shares.
“McGlashan’s role in fostering an environment where such fact patterns are permissible must be objectively examined,” Marathon said. “Aggressive and conflicted conduct such as this may be consistent with an individual willing to cut corners and ignore fiduciary obligations.”
McGlashan’s former employer, the buyout fund TPG, is also investigating McGlashan as it determines if he should receive any of his remaining compensation.
Elf did not immediately respond to requests for comment.
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