Big 5 Sporting Goods largest outside shareholder has gone public with its three-year campaign to reform the California retailer's corporate governance after its lone director on the board was essentially excommunicated from the board.
In a Jan. 21 letter, BGFV board member Dominic P. DeMarco blasted BGFV Chairman, President and CEO Steven G. Miller for forming a “Super Committee” that excluded him and is vested with all the powers of the full board. Miller, whose father co-founded BGFV, premised the decision on an alleged conflict of interest between SCM and other non-management stockholders, according to DeMarco's letter.
DeMarco joined the BGFV board in 2011 to represent the interests of Stadium Capital Management GP (SCM), which owns 2.51 million shares, or 11.3 percent, of BGFV's shares. Miller owned about 5.48 percent of the company's shares as April 22, 2014.
On Dec. 18, 2014, DeMarco submitted a shareholder proposal that would require the company's directors to stand for election every year. That would eliminate the staggered election of directors which many shareholder advocacy groups says insulates boards from accountability. In a letter accompanying the proposal, DeMarco reiterated his recommendations that BGFV also require directors be elected by a majority rather than plurality of shareholders and that the company eliminate the supermajority vote requirements in its charter and bylaws.
Miller responded Jan. 19 by arranging a conference call with board members, who then decided to form the Super Committee, according to DeMarco's Jan. 21 letter.
In that letter, DeMarco blasts the decision and warns that “stockholders must soon determine how best to respond.”
“Non-management owners, of whom SCM is the largest, have tolerated negative stockholder returns, poor governance and limited accountability for far too long,” worte DeMarco, who serves as a managing director, co-chief investment officer and chief compliance officer for Stadium Capital.
BGFV's other major outside shareholder is Blackrock Inc., which reported Jan. 12 that it owned 7.4 percent of BGFV stock, down from 9.8 a year earlier.
