June 9, 2014 Okapi Featured in New York Post article on ValueVision Media Proxy Contest
An activist investor’s efforts to oust the board of ValueVision Media — the parent company of ShopHQ, an also-ran among home-shopping networks — has won overwhelming support from the two leading proxy-advisory firms.
Glass Lewis, in a report released over the weekend, followed ISS in calling for a major overhaul of the board of ValueVision.
In fact, Glass Lewis went further than ISS and recommended shareholders vote for the entire six-member slate put up by the activist investor, Clinton Group.
ISS earlier recommended its clients vote for just four members of the dissident slate — a group that includes former Sony Music head Tommy Mottola and former QVC marketing chief Fred Siegel.
However, in the context of proxy battles, ISS’s supporting four of the dissident six still signaled a lack of confidence in ValueVision leadership. “It’s unusual for proxy advisors to recommend that investors replace even half a board, as ISS did — much less a majority of the board, as Glass Lewis did,” said Bruce Goldfarb, the president of Okapi Partners, the proxy-solicitation firm representing Clinton Group.
Almost as damning, as shareholders weigh voting options going into ValueVision’s annual meeting on June 18, was the lack of support for the eight-member board currently in place. Neither ISS nor Glass Lewis recommended its clients vote for the return of any of these incumbent directors. ShopHQ, based in Eden Prarie, Minn., saw operating profit fall 37 percent in the three months ended May 3, on a 5.5 percent rise in revenue. Its shares are down 30 percent this year.
If a majority of shareholders takes Glass Lewis’ advice, Clinton Group will achieve a rarity; it will have effected a corporate coup in a company believed to have had entrenched leadership as recently as October. That’s when Clinton Group, a New York hedge fund, went public with criticism of ValueVision’s performance and called for the removal of company CEO Keith Stewart. The hedge fund’s president, Greg Taxin, has been exchanging barbs with ValueVision ever since and, in a June 2 letter to shareholders, attacked its management not only for underperformance but for “a great lifestyle.” “At least 10 senior members of management live 900 miles or more from the office, often jetting in on Monday and out on Thursday (mostly at company expense),” he wrote.
Taxin also dismissed ValueVision’s merchandising strategy for its ShopHQ network as hopelessly outdated — “focused as it is on selling widely available, ‘distinctive national brands’ with a programming format that is reminiscent of the 1990s and a monotonous and repetitive schedule.”
ValueVision, which operated as ShopNBC until Jan. 31 when its licensing deal with Comcast’s NBCUniversal expired, was quick to challenge ISS’s recommendations, claiming they demonstrate a “lack of knowledge and understanding of the company.”
On Monday, the company reported that a third proxy-advisory firm, Egan-Jones, backs its entire board slate. Clinton Group’s Taxin, when reached by phone, seemed more amused by ValueVision’s rebuttal than impressed. “It was hysterical,” he told The Post, “in both senses of the word.”
ValueVision shares were up 1.5 percent to $4.07 in mid-day trading Monday.
Activist wins key support to oust board of ShopHQ parent [New York Post]