Nautilus, Inc. has mailed a letter to its shareholders that says all four NLS shareholder proxy firms – representing institutional investors, mutual
funds, pension funds and others, have concluded that Sherborne's bid for
control of Nautilus is not in the best interest of all
shareholders.
The letter, in part reads:
Dear Fellow Shareholder:
The Special Meeting of Shareholders is just days away. We need your support for your Board's nominees, who are committed to building value for all Nautilus shareholders. There is still time for you to vote AGAINST the removal of your directors. To ensure that your vote is represented at the meeting, we urge you to vote TODAY by Internet or telephone by following the simple instructions on the enclosed WHITE proxy card.
Proxy Firms Unanimously Opposed to Control
Recently, yet another proxy advisory firm, Egan-Jones Proxy Services also advised their clients to reject Sherborne's proposals. All four leading advisory firms, whose clients include institutional investors, mutual funds, pension funds and others, have concluded: Sherborne's bid for control of Nautilus — removing four of your directors and replacing them with four Sherborne nominees — is NOT in the best interest of all shareholders.
Nautilus Sets the Record Straight
We would like to set the record straight with respect to some false and misleading statements made by Sherborne in a recent letter you may have received. We believe that Sherborne's letter was simply a desperate reaction to the conclusions reached last week by three of the leading independent voting advisory services who recommended against Sherborne's bid for control of Nautilus.
In its recent letter, Sherborne falsely claimed that if the roles of chairman and CEO are separated, your CEO is automatically entitled to severance and the immediate vesting of stock options. Sherborne's statement is simply wrong. If the roles are separated and a non-executive chairman is named, your CEO would not be entitled to severance or vesting of stock options.
In addition, Sherborne inappropriately mischaracterized our offer of Board representation by stating it was subject to an “onerous” standstill that would have tied their hands for 15 months, “ensuring that the Board was free to continue to make decisions that … are not in the best interests of all shareholders.” We were shocked to learn of this statement since Sherborne never followed up to see what we would ask for in exchange for putting Sherborne's nominees on the Board. Our only request would be that Sherborne not engage in another proxy contest for one year so that Nautilus management and the Board, with Sherborne's input, can focus on our ongoing restructuring without being distracted by another costly and time-consuming proxy contest. Nautilus is in the fitness equipment business — not the business of engaging in repeated proxy contests!
We do not believe that shareholders will benefit if Sherborne's nominees seize control of your Board without paying a control premium to all shareholders. However, your Board believes that all shareholders could benefit from shareholder representation on the Board during our restructuring. Our offer to Sherborne remains open, and we have also offered representation to Sun Capital Securities, LLC, our second largest shareholder, in the event our nominees are elected.
