Over at the SEC is an excellent letter from Richard E Middlekauff – who just resigned from the board of Heelys, Inc – a shoe company.
1: The shareholders are not maximising their return after the company was in play.
The Board, in my opinion, should seriously engage potential buyers of the Company, unlike it did with Skechers USA, Inc. last year, in order to maximize the Company’s value for its stockholders. I do not see the Company achieving this as a stand alone company. Unfortunately, it appears that the majority of the Board charted a different course, giving scant attention to the offers from Skechers and other third party prospective buyers, and instead pursued an untimely and expensive restructuring of the Company by installing management having no actual experience in the shoe industry.
..My feeling is that CSW is not considering offers for the acquisition of the Company in a manner consistent with Delaware law. I understand that CSW has its own internal issues with its stockholders; however, that should not cloud its fiduciary duties to the Company. Any intentions regarding the Company in connection with any stock buy-back or plans to take the Company private should be disclosed to the Company’s stockholders as required by federal securities laws.
2: The board was not being consulted for important decisions
As a Board member, I have often not been consulted in advance of significant management decisions.
3: The board was given insufficient information and time to make decisions
I often did not receive sufficient information to properly prepare for meaningful participation in Board meetings to properly evaluate the information in connection with addressing critical matters affecting the Company.
Similarly, the recent Board meeting held on May 12th upset me greatly, but provides a good example of the short shrift treatment of the Board members when each director was given only two (2) minutes to speak on the significant issue of the strategic direction of the Company. This was most unfair to me personally, as well as any other director who shared a very different point of view from the majority of the Board.
I’ve written about this before – and I’ll reiterate that if you find yourself in any of these situations then get out.