According to a filing with the Securities & Exchange Commission, Heelys believes the two resigned “because they disagreed with certain of the board's activities and determinations within the last 12 months, most notably, the Board's determination that it was in the best interest of the company and its stockholders to terminate discussions relating to a potential sale of the company and to instead focus on the company's continued growth and operation as an independent company.”
Adams resigned on May 26 while Middlekauff, a first-cousin of
In its statement, Heelys said its Board “disagrees with the allegations made in the resignation letters. The Board believes that the allegations or disagreements with the Board expressed in the resignation letters are motivated primarily by the strong personal interest of Mr. Adams and Mr. Middlekauff to liquidate all or a significant portion of their respective shares of the company, rather than their purported focus on the long-term best interests of the company and its stockholders.”
The statement added, “Contrary to the resignation letters, the Board strongly believes that it has fulfilled its fiduciary obligations to all Heelys' stockholders, including Messrs. Adams and Middlekauff, who are also two of the company's principal stockholders.”
Heelys said the board has discussed and considered various strategic alternatives for the company, including a share repurchase program and potential sale of the company, within the last 12 months. The Board received and considered unsolicited indications of interest from Skechers USA Inc. and a small number of indications of interest, solicited through an investment banking firm engaged by the Board, during that time. Contrary to the statements or suggestions in the resignation letters, however, Heelsy said the Board did not receive any “offers” to acquire the company.
“All of the indications of interest were at best preliminary, subject to due diligence and other significant conditions or contingencies,” the statement said. “With the sole exception of Messrs. Adams and Middlekauff, all of the Board members, including those who have no other relationship with Capital Southwest Venture Corporation or Capital Southwest Corporation, ultimately determined that the best interests of the company and its stockholders would be for the company not to pursue any of those indications of interest, but instead to maintain the company's independence, enhance the company's management team with consumer product expertise and focus on the company's core products and operations.”
“The Board believes that, in the exercise of due care and undivided loyalty to the company and all of its stockholders, it is now appropriate to pursue the previously announced actions to execute its current business plan, with the intent to increase long-term value for the company and all of its stockholders.”
Heelys said that in light of the decisions of. Adams and Middlekauff not to stand for reelection at the Annual Meeting, and the conditions in the company's By-Laws regarding nominations of directors, the Annual Meeting will now include the election of only six directors. Proxies already submitted for the Annual Meeting will remain effective subject to their terms, but any votes, by proxy or otherwise, in favor of the election of Adams or. Middlekauff at the Annual Meeting will be ineffective and disregarded. The two vacancies on the Board will be addressed by the Board after the Annual Meeting. The vacancies on the Audit Committee and the Compensation Committee resulting from Middlekauff's decision will also be subsequently addressed by the Board.