The war of words between the Riggio family and activist investor Ron Burkle came to a head this week at the Barnes & Noble annual general meeting when shareholders voted on Burkle's proposals to change the company's governance structure, writes Katie Barker.
The Riggio family succeeded in defending its position when shareholders voted to reinstate Leonard Riggio as chairman of the board and failed to pass Burkle's plan to loosen a poison pill provision that allows the family to hold the largest share.
Burkle was seeking to elect three independent directors to the board, including himself, and to increase the limit outside investors can take in the company to 30%. He was defeated in all of these motions.
Currently, the poison pill provision is set at 20%, which allows the founding Riggio family to remain as the company's largest shareholders with 34% of shares. Burkle, who owns 19% of the New York-based bookseller through Yucaipa, claims increasing this to 30% would not be a threat to the company but would have created a "level playing field".
Preliminary results of the vote show it was extremely close with Riggio and his fellow candidates winning 44% of the vote compared with 39% won by Burkle.
"We are very pleased by the shareholder support we have received," said Len Riggio, chairman of the board of directors. "We are also pleased that our shareholders recognise the important protections of our rights plan."
Bur Burkle shows no signs of giving up and continued his campaign against the Riggio family when responding to the results. He pointed to the small majority the family won in the vote and its voting advantage of being the company's largest shareholder as a reason for the victory.
"It is nearly impossible for any stockholder to do something Leonard Riggio doesn't want to do because of his built-in voting advantage," said Burkle. "Nevertheless, we hope the board heard today's message loud and clear and that the strategic alternatives review will be prompt, fair, transparent and conducted on a level playing field for all bidders."
Burkle mounted his attack against the Riggio family as he is unhappy with the drop in Barnes & Noble share price over the past few years, for which he blames the management of the founding family. He went on to accuse Len Riggio and his brother Stephen Riggio, Barnes & Noble CEO, of making decisions based on what would benefit the family as opposed to the company.
Barnes & Noble responded to Burkle's campaign by accusing him of attempting to takeover the company without paying fair market price.