Hedge fund Marcato Capital Management LP said Dec. 4 that it was scaling back its quest for seats on footwear company Deckers Outdoor Corp.'s board of directors, seeking three seats instead of nine.
The San Francisco-based fund announced the change in a letter that it sent to Deckers shareholders and urged shareholders to vote for Kirsten Feldman, Steve Fuller and Anne Waterman, the fund-endorsed candidates. Marcato said its nominees "are independent from both management and Marcato and will further enhance diversity in the boardroom," according to a copy of the letter.
Marcato also argues that its board nominees would help improve the company's performance. The company's brands own about 8.5% of outstanding Deckers stock, according to data compiled by S&P Global Market Intelligence.
Also on Dec. 4, Deckers said its board plans to appoint at least two new independent directors by the time of its 2018 annual meeting slated for September 2018. The new directors will replace an equal number of directors retiring from the board. Deckers is set to hold its 2017 annual meeting Dec. 14 and is urging shareholders to vote for its slate of nine directors.
The developments in the proxy fight come after the hedge fund sued Deckers in October, in an effort to force the company to hold its annual meeting and classify the hedge fund's board nominees, according to a Reuters report Oct. 23. At the time, Marcato proposed replacing the entire Deckers board of directors, according to the report.
Marcato said in a statement Nov. 6 that it filed a definitive proxy statement with the SEC for the election of its nine nominees. The hedge fund has charged that Deckers' stock is underperforming and its profit margins falling due to an alleged lack of board oversight, among other allegations.
The Deckers board along with the search firm will take into consideration all director candidates suggested by shareholders, including those identified by Marcato. According to Deckers, Marcato has not allowed any of the candidates identified by it to participate in the company's governance and selection process so far.
"Rather than participate in our search process and help our efforts to continue to deliver sustainable value for our stockholders, Marcato has chosen to continue this expensive and distracting proxy fight during our most important selling season," said John Gibbons, chairman of Deckers.
Leading proxy advisory firms Glass Lewis & Co. and Institutional Shareholder Services have advised the company's shareholders to vote on the white proxy card of Deckers directors at the footwear company's annual meeting Dec. 14, according to Deckers.
Deckers said in a statement Nov. 10 that it had taken steps to resolve the Marcato lawsuit and planned to pursue dismissal of the suit.
