Deckers Brands announced that it has taken steps to resolve a lawsuit filed earlier this year by activist investor and hedge fund Marcato Capital Management.
The company, parent to brands like Ugg, Teva and Hoka One One, announced board action to address and resolve the lawsuit filed by Marcato, which as of February of this year, owns a 6 percent stake in Deckers Brands.
Marcato sued Deckers Brands in Deleware Chancery Court earlier this year in an effort to allow Deckers’ stockholders to elect new nominees of their choosing at the yearly meeting, without “value-destroying” repercussions, according to a Business Insider report.
In turn, Deckers Brands recently released a statement urging stockholders to vote for all nine of Deckers’ director nominees at the company’s annual meeting taking place Dec. 14, and none of Marcatos’ nine suggested nominees. Deckers and the board now believe that Marcato’s lawsuit is no longer effective, and is acting to dismiss the lawsuit.
“We’ve taken decisive action to resolve these legal issues so that stockholders can focus on what really matters—choosing the right stewards to lead Deckers forward and continue to execute on its transformation,” said John M. Gibbons, chairman of the board of directors. “The Deckers Board is singularly focused on continuing to evolve Deckers to meet the needs of our consumers and deliver value to our stockholders. This transformation—which has been in process for almost two years and was already far along when Marcato made its initial investment—is showing real, tangible results.”
The board reportedly approved of an amendment to Deckers’ credit facility in order to prevent an “event of default” from happening under the credit facility if a majority of Marcato’s director nominees make their way onto Deckers’ board of directors. Deckers is working with JPMorgan Chase Bank agents to obtain the necessary lender consents to the new amendment into motion as soon as possible.
The company believes its stock repurchase plan puts Deckers in a positive position, serving as a reason as to why stockholders should vote for all nine of Deckers’ board of directors nominees.
Gibbons went on to say that the company’s transformation is allowing Deckers to be a faster, leaner and more focused company that is better positioned to build stockholder value and excel in the marketplace.
“We strongly believe that our Board of experienced and well-qualified directors is the right Board to move Deckers forward,” said Gibbons. “We urge all stockholders to vote on the white proxy card at the upcoming annual meeting.”
Deckers Brands has felt the pressure in the last year, upping its sales game and fiscal year 2018 guidance, as well as debuting a $400 million stock repurchase plan.