Image Decries Lionsgate Board Slate2 Aug, 2006 By: Erik Gruenwedel
Image Entertainment is fighting a potential board takeover by minimajor Lionsgate — its second-largest shareholder.
In a proxy statement Aug. 1 to stockholders for the annual shareholder meeting Oct. 10 in Woodland Hills, Calif., the Chatsworth-based distributor characterized Santa Monica-based Lionsgate's slate of board nominees as having “limited home video entertainment distribution expertise” and potentially conflicting financial and business interests favorable to Lionsgate.
Image is imploring shareholders to re-elect its current board, which includes chairman, president and CEO Martin Greenwald.
Lionsgate, which has unsuccessfully tried to acquire Image, submitted the nominees following a June 5 ruling by the Court of Chancery of the State of Delaware that found all seats on Image's board must be put up for re-election and that Image could not amend its bylaws or certificate of incorporation without shareholder approval.
Notable among the nominees is Eric Doctorow, former COO of distributor Ventura Entertainment — acquired this year by First Look Entertainment — and recently tapped by 20th Century Fox Home Entertainment to be GM of its MGM home entertainment unit.
In the proxy, Image said Doctorow's title with MGM puts the executive in a position that “will directly compete with us.”
Image said that less than two years after Doctorow began working for Ventura, the Thousand Oaks-based distributor "executed a General Assignment for the Benefit of Creditors, an out-of-court alternative to filing for Chapter 7 bankruptcy," with First Look's $16.5 million purchase price going directly to its bank — not its priority and unsecured creditors.
The distributor alleged Lionsgate enticed its slate to run with payments of $20,000 to each candidate in addition to any standard board compensation.
A Lionsgate spokesperson confirmed the payment, but said Doctorow had voluntarily removed himself from consideration, replaced by Jack Crosby, a former executive with CinemaStar Luxury Theaters, which Image said filed for bankruptcy in 2001.