Marcato says Deckers' rejected offer to settle proxy contest
BOSTON (Reuters) - After months of turning up the heat on Deckers Outdoor Corp, hedge fund Marcato Capital Management recently proposed a settlement that the UGG boot maker rejected, a filing released on Monday shows.
“Unfortunately Deckers swiftly rejected Marcato’s settlement proposal and made clear through its counsel that Deckers was not interested in pursuing any settlement discussions with Marcato,” Marcato Managing Partner Mick McGuire wrote to Deckers Chairman John Gibbons. The letter was released in a filing made to the U.S. Securities and Exchange Commission on Monday.
Deckers was not immediately available for comment.
Marcato’s offer to settle the contest has not been previously reported. In the letter McGuire said that part of his offer to settle included putting three Marcato nominees on the board. Without a last minute resolution, shareholders will now vote whether to put three Marcato directors on the board.
This is the latest twist in a proxy battle that is scheduled to be settled at Thursday’s annual meeting when shareholders’ votes will be tallied and announced.
A week ago Marcato slimmed down its slate to three directors who are all independent of the hedge fund after having spent months proposing that it replace all nine members of the board.
Later in the week, influential proxy advisory firm Institutional Shareholder Services reversed its recommendation and urged shareholders to back the hedge fund’s slate. Rival advisory firms Glass Lewis and Egan-Jones threw their weight behind the company’s directors.
Marcato has been pushing Deckers to sell off pieces of its business, buy back shares and overhaul executive compensation. It forecast such moves could help the stock price more than double by 2020.
Monday’s letter was part of an exchange of letters that included an offer from Deckers to interview Marcato’s three director candidates as the company prepares to add two new members by September 2018.
McGuire wrote that he thinks Deckers’ offer is “nothing more than a record building exercise” after Deckers rejected the settlement offer and denounced Marcato’s nominees’ qualifications.
Marcato, which owns an 8.5 percent stake in Deckers, comes into Deckers annual meeting with strong credentials, having already won one proxy contest at Buffalo Wild Wings this year and posting some of the hedge fund industry’s strongest returns. Its flagship fund up was 24 percent through November.