Mick McGuire’s Marcato Capital Loses Deckers Proxy Battle

Mick McGuire’s Marcato Capital Management has lost its battle for board seats at Deckers Outdoor Corp., the UGGs boot maker, in a contentious battle that did not move the hedge fund’s way even after it bowed to the wishes of influential proxy advisor Institutional Shareholders Service and changed its slate of nominees.

The Deckers battle is the third high-profile proxy battle in recent months where the ISS recommendation played a starring role. Nelson Peltz’s Trian Management narrowly won its hard-fought battle for a single board seat at P&G after winning the ISS endorsement, while Bill Ackman’s Pershing Square Capital Management lost the proxy vote at ADP after ISS endorsed management’s slate. In that case, ISS made the unusual recommendation that shareholders vote for ADP’s slate, but withhold one vote so Ackman might have a shot at one board seat.

ISS最初也采取了类似的tack with McGuire as it had with Ackman. It endorsed Deckers’ slate of board nominees, but it left open the notion that the hedge fund might deserve three board seats — instead of the nine it had proposed.

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In its initial recommendation for Deckers’ nine-member slate, ISS had acknowledged that the company’s “prolonged underperformance” meant that “some degree of board change is necessary.” But it said Marcato’s slate “could not meet the requirements of ISS’ framework...involving a possible change of boardroom control.”

ISS said only four of the San Francisco-based hedge fund firm’s nominees had significant boardroom experience and that the firm had not outlined a business plan. Almost immediately, Marcato withdrew most of its nominees,只留下三个.

Just two days later ISS — in a surprise switch — changed its recommendation to endorse the Marcato slate instead of that of Deckers.

ISS在12月7日表示：“董事会在解决公司长期明显表现不佳的问题上明显缺乏紧迫性，以及持不同政见者提出的有效治理担忧，是导致目前有必要对持不同政见者提供直接支持的评估的重要因素。”。

但初步结果显示，突然改变主意似乎来得太少，来得太晚，无法让投票结果对马卡托有利。

“We are very pleased with the outcome of today’s vote,” the Galateo, California-based Deckers said in a statement announcing that its nine director nominees appeared to have won. “Today’s outcome reaffirms that we are on the right track.”

The stock immediately fell 4 percent on the news, to about $75, in midday trading on Thursday.

McGuire, in a statement following the vote, said, “We continue to believe that the status quo at Deckers is unacceptable and the Board must take meaningful steps to avoid repeating its many historical failures. We are pleased to have served as a positive change agent and believe our involvement has created significant value for all stockholders. However, a lot of work is still required in order for Deckers to reach its full potential.”

对冲基金公司Deckers在一份声明中称，早些时候，Deckers拒绝与Marcato和解securities filing. The same day of the filing, Deckers made a renewed plea to shareholders, saying among other criticisms of Marcato that the activist “insists on recklessly and rapidly closing our stores, even profitable ones.”

马卡托今年2月首次入股德克斯。此后，该公司获得了8.5%的股份，平均每股支付约57美元。由于该公司股价今年继续下滑，10月，马卡托起诉该公司将股东选举推迟到12月，among other reasons. At that time, Marcato put up a slate of ten board nominees, hoping to take over the entire board.

Even though that move didn’t pan out, the stock is still up some 38 percent, closing at $78.35 on Wednesday, though it had fallen more than five percent in late trading on Thursday. It’s been a better play for Marcato than another high-profile activist stake of his, Buffalo Wild Wings, which only became a profitable bet after the fast food chain entered a merger agreement with Roark Capital and Arby’s. That stock is up 9 percent for Marcato.

Meanwhile, Marcato is having a bang-up year. Its main fund was up 16.09 percent through November 15, Marcato Encore, had gained 20.02 percent during the same time period, according to an HSBC document that tracks hedge fund performance. The flagship fund is up around 24 percent through November, according to an individual familiar with the numbers.