Dissident Blockbuster Shareholder Gets Proxy Firm Support15 Jun, 2010 By: Erik Gruenwedel
Blockbuster shareholder Gregory Meyer’s unsolicited bid to win a seat on the DVD rental giant’s board of directors got a boost when a proxy advisory firm endorsed him.
Meyer, who owns more than 600,000 common shares of Blockbuster, is attempting to wrest the seat held by incumbent director Gary Fernandes, who has been on the board since 2004. Specifically, Meyer has criticized the board for not recognizing the threat of rental kiosks, which he outlined in a letter to the board five years ago.
Meyer formerly owned a kiosk business that he sold to Coinstar, parent of Redbox.
New York-based RiskMetrics Group, in a June 14 report, said Meyer had the requisite industry skill and industry knowledge to add value to board deliberations.
“Based on our discussions with [Meyer], including presentations and filings dating back to 2004, it appears [he] has a deep understanding of the home entertainment retail market and its distribution channels including retail stores, mail, automated retail (kiosk) and on-line,” the report said.
Blockbuster, which has submitted a slate of five incumbent and two nominees, has been critical of Meyer’s efforts and qualifications heading into the annual shareholder meeting June 24 in Dallas.
Earlier this month, proxy advisory firm Glass, Lewis & Co. urged Blockbuster shareholders to reaffirm or vote in nominees Edward Bleier, Kathleen Dore, Gary Fernandes, Joseph Fitzsimmons, Jules Haimovitz, James Keyes and Strauss Zelnick. In its analysis, Glass, Lewis & Co. singled out voting against Meyer, citing his lack of “a cogent, practicable plan,” and failing to establish that his plans are superior to those disclosed and undertaken by the board.
RiskMetrics, in its report, countered that Fernandes, and others on the board, share responsibility for the deterioration of Blockbuster shareholder value of the past five years, which nosedived more than 95%.
“Based on [Blockbuster’s] sustained underperformance, we believe the dissident has made a reasonable case for change on the board,” the report said, citing Meyer's letters and correspondence with Blockbuster dating back to 2004 regarding the potential opportunities of automated DVD rental kiosks.
“It is apparent that the dissident is not ‘Monday morning quarterbacking’ the situation, the report said. “Therefore, for the aforementioned reasons, we recommend shareholders vote on the gold card for dissident nominee Gregory Meyer.”