Glass Lewis recommends that Deckers stockholders vote “FOR” ALL of Deckers’ director nominees on the WHITE proxy card. In its report, Glass Lewis stated1:
“…[w]e ultimately come away with the sense that the current Deckers board has a firm handle and deeply engaged understanding of the opportunities and challenges facing the business and how to address them in a timely and sustainable manner.”
“…[w]e believe Marcato has failed to establish a sufficient case for the extensive, majority board change it has sought throughout this proxy contest. In our view, the Company appears to have the right board and plan in place for Deckers at this pivotal juncture for both the Company and the retail and branded products industry.”
“The Company’s strategic and cost savings initiatives implemented both before and since Marcato arrived on the scene have begun to show positive results in terms of margin improvement and growth. Thus, now does not appear to be an appropriate time for shareholders to support an overhaul of the board proposed by a shorter-term shareholder advocating an alternative plan that is centered on dismantling the strategies put in place in recent years by the current board and on more aggressively pursuing cost savings, store closures or other financially short-sighted initiatives, all of which would likely derail the progress made by the Company and potentially be value destructive.”
“We find the board’s strategy to be prudent and well-reasoned and we are encouraged by the recent positive results as the management team has begun to execute on the Company’s plan. We also consider the current board to have the requisite and relevant assortment of skills and experience among its members to continue to oversee a proper direction for the Company, recognizing that the board intends to appoint at least two new directors with additive skills within the next year.”
“Further, while we see no case for shareholders to support a board overhaul, we also see limited — if truly any — cause for shareholders to seriously consider using this opportunity afforded by Marcato’s nomination to support incremental board changes.”
In making its recommendation, ISS stated2:
“…The dissident has failed to justify its control of the board by failing to provide either a detailed business plan for the company going forward or a contingency plan that identifies a qualified and credible new management team should management continuity become an issue.”
“…The dissident has also come to the table without clearly demonstrating that major downside risks had been thoroughly considered and, to a reasonable extent, could be managed by the dissident following the election of a majority slate. Said another way, the dissident may have overreached by nominating a majority slate.”
Commenting on the Glass Lewis and ISS reports, which both recommend Deckers stockholders vote on the WHITE proxy card, Deckers issued the following statement:
The recommendation from Glass Lewis to support ALL of Deckers’ highly qualified director nominees shows that Glass Lewis recognizes Deckers’ significant progress and stockholder value creation under the current Board and management team and reaffirms that Deckers has the right Board and the right strategy to deliver value for all stockholders.
We are pleased that ISS has recommended that Deckers stockholders vote on the WHITE proxy card. The Board recommends that stockholders elect ALL of Deckers’ highly-qualified and experienced director nominees—John M. Gibbons, Karyn O. Barsa, Nelson C. Chan, Michael F. Devine III, John G. Perenchio, David Powers, James E. Quinn, Lauri M. Shanahan and Bonita C. Stewart.
ISS states that it cannot support Marcato’s dissident slate due to two main factors: (1) the fact that robust contingency planning is missing from Marcato’s case and (2) the risk of whole board replacement would very likely be disruptive to stockholder value.
ISS later states, “The potential downside risk of losing all board continuity—especially the potential of losing management continuity at the beginning of the company’s highest-volume, make-or-break sales season without the reassurance of a competent team-in-waiting—outweighs the risk of allowing the incumbents to attempt implementation of the company’s current plan for another year, and therefore is simply too great to justify direct support of the dissident.”
Deckers said its Board and management team “have a proven track record of taking decisive action to position Deckers for enhanced stockholder value. Under the guidance and oversight of the current Board, Deckers continues to successfully execute its transformation strategy by streamlining its cost structure, optimizing its retail strategy, focusing on profitable growth and executing the most significant stock repurchase program in our history. This transformation is already driving results, and Deckers is positioned as a stronger and more focused company.”
In contrast, Marcato is pushing a short-term agenda that will not only disrupt our momentum, but will also risk Deckers’ health and sustainability. Replacing members of the Deckers’ Board now with any of Marcato’s nominees—all of whom are unvetted and lack the relevant experience critical to our business—would be damaging and destructive.”
This is a crucial moment for Deckers in the midst of one of the most dynamic retail environments in history. The markets recognize that our transformation is working and is the right path for Deckers. Our Board continues to be a significant agent of change in this transformation. We firmly believe Deckers has the right Board, the right strategy and the right management team to continue executing on our transformation plan, drive stockholder value and position Deckers for continued success.”
On November 27, 2017, Deckers announced that it intends to appoint at least two new independent directors prior to its 2018 Annual Meeting of Stockholders (expected to be held in September 2018) in keeping with its commitment to meet the needs of its consumers, win in the marketplace and deliver value to stockholders. The appointment of new directors will coincide with an equal number of retirements from the existing Board.”
“Deckers reminds stockholders that their vote is extremely important, no matter how many shares they own. The Deckers Board unanimously urges stockholders to protect the value of their investment by using the WHITE proxy card to vote “FOR” ALL of Deckers’ director nominees. The Deckers Board advises all stockholders to simply discard any Gold proxy card or other proxy materials received from Marcato. Instead, to follow the Board’s recommendation, stockholders should use the WHITE proxy card to vote “FOR” all of Deckers’ director nominees.”
1 Permission to use quotations neither sought nor obtained.
2 Permission to use quotations neither sought nor obtained.