Corporate Governance

Barnes & Noble Proxy Fight After Delaware Ruling

By Todd Penner

The Delaware Court of Chancery, in Yucaipa Am. Alliance Fund II, L.P. v. Leonard Riggio, et. al., No. 5465-VCS, 2010 WL 3170806 (Del. Ch. Aug. 11, 2010), previously upheld a poison pill adopted by Barnes & Noble's Board of Directors to prevent Yucaipa American Alliance Fund ('Yucaipa') from purchasing more than a 20% stake in the company, which is discussed here, here, and here.  The fight, however, was not over. 

Ron Burkle, on behalf of Yucaipa, filed a Proxy Statement with the Securities and Exchange Commission challenging the current Barnes & Noble Board in a proxy contest.  The Statement nominated Burkle, Stephen F. Bollenbach, and Michael S. McQuary for the Board of Directors. Additionally, the Statement asked shareholders to amend the poison pill by raising the threshold trigger to 30%, approximately Leonard Riggo's ownership stake.  

Thereafter, Barnes & Noble sent a letter to shareholders urging them to vote for the Board's nominations, which included Barnes & Noble founder Leonard Riggio, as well as David Golden, and Dr. David Wilson.  The letter suggested shareholders vote against Yucaipa's nominations and presented reasons in support. 

The fight is finally over.  Barnes & Noble shareholders voted at the Annual Shareholder's Meeting on September 28, 2010 in favor of the Board's nominations electing Mr. Riggio, Mr. Golden, and Dr. Wilson to the Board.  The voting results were close, as was expected, with each of the Board's nominees receiving approximately 2 to 3 million more votes (out of the nearly 50 million shares that voted) than Yucaipa's nominees.  Additionally, the proposed amendment to the poison pill was rejected by a similar margin.  The preliminary voting results can be found here in the Form 8-K filing.

The primary materials for this case may be found on the DU Corporate Governance website.  

Full post as published by The Race to the Bottom on October 07, 2010 (boomark / email).