Avon Accedes to Chartwell in Proxy Fight on Board

Avon Products Inc., the embattled cosmetics giant that has been trying to fight off uninvited overtures, said today that it has agreed to nominate two directors proposed by unwanted suitor Chartwell Associates LP to its board.

Chartwell, an investment group that includes much smaller rival Mary Kay Cosmetics, oil heir Gordon Getty and the Fisher real estate family of New York, previously said it would make a bid for Avon if the group’s candidates were elected to Avon’s board.

Chartwell Associates owns about 7.5% of Avon’s voting shares and about 9.9% of Avon’s common.

New York-based Avon said it settled the proxy contest initiated by Chartwell by agreeing to nominate the two directors proposed by Chartwell as well as two incumbent Avon directors to Avon’s board at its annual meeting May 3.

As part of the agreement, John Rochon will resign as vice chairman of Mary Kay and become a consultant to Avon.

Avon also said it will establish a committee to consider alternatives to maximize shareholder value.

The special committee will consist of James Preston, Avon’s chairman and chief executive, three incumbent members of Avon’s board and the two Chartwell nominees.

The Chartwell candidates are M. Anthony Fisher of the Fisher real estate family and Marc Leland, representing the Getty interests.

Avon incumbents and candidates are Preston and Charles Locke, chairman of Morton International Inc. Avon directors not standing for reelection are Emil Mosbacher, an investor and independent oil and gas producer, and Merlin Nelson, former vice chairman of AMF Inc.

Avon has been trying to fend off uninvited callers since last spring, when Amway Inc. offered $2 billion for the company.