Deckers pushes back against proxy contest ahead of annual meeting

By

Jennifer Braun

Published
Nov 20, 2017

Deckers Brands filed a letter to stockholders on Friday highlighting the Board and management team’s success, following a lawsuit from Marcato Capital Management and ahead of its upcoming 2017 Annual Meeting of Stockholders.
 

Marcato, which owns approximately 8.4 percent of the outstanding common shares of Deckers Outdoor Corporation, filed a lawsuit that proposes replacing the company’s entire 10-member board.
 
Additionally, in a letter to Deckers' stockholders, Marcatto attacked the company for Deckers' “failed business strategy that has led to a precipitous decline in profit margins, runaway corporate overhead expenses, wasteful capital spending, and unsuccessful acquisitions triggering large write-downs.” 

Now, Decker’s is fighting back with a letter to stockholders, as well as an investor presentation highlighting its transformation strategy and trust in its board.
 
In the letter, Deckers reiterated that its transformation strategy is working and that “progress and our momentum is at serious risk” due to Marcato’s proxy contest.
 
The firm attacked five points from Marcato’s proposal including its plan to close profitable stores and implement draconian cost cuts and unsustainable margin targets.
 
“We urge you to support your current Board, which continues to implement a transformation plan designed to enhance value at Deckers for all stockholders. Do not support the short-term and value destructive agenda of a single stockholder who does not understand our business, and who we believe will completely derail our momentum,” said Chairman of the Board John M. Gibbons, in a letter to stockholders.
 
Meanwhile, an Investor Presentation was also filed last week where Deckers again highlighted strong company results, as well as a marketplace transformation plan focused on elevating the UGG brand and the Hoka One One brand.
 
The footwear, apparel and accessories company expressed confidence in its transformation strategy noting how Deckers’ stock performance has outperformed its proxy peers, with gains of approximately 143 percent over the past two years, compared to approximately 85 percent for its proxy peers.
 
Deckers also noted how it is transforming its brands to leverage better sales. The Ugg brand, which has been impacted by unseasonably warm winters and fashion trends, will see a new multi-season product strategy. The company also plans to further exploit its Hoka One One brand, which has seen revenue grow to over $100 million in the last four years.
 
Deckers Annual Meeting will take place on December 14th at which time the vote to elect nine members for the Board of Directors will take place.