April 27, 2020
An investor group is looking to change the board of directors of fiscally challenged video game retailer GameStop — despite recent changes to the chain’s board.
Hestia Capital Partners LP, Permit Capital Enterprise Fund, L.P. and their affiliates, which own about 7.2% of the outstanding common stock of GameStop, April 27 announced they have mailed a definitive proxy statement to shareholders for the retailer’s annual virtual meeting in mid-June.
The investor group says recent board “refreshment” is insufficient and contends the board should be primarily composed of directors with traditional retail backgrounds.
In March, GameStop announced the appointment of three new members to its board, who it claimed had strong retail backgrounds. They included Reginald Fils-Aimé, William Simon and James Symancyk.
The activist group believes GameStop should add stockholder-aligned directors who have the financial acumen, turnaround experience and stockholder perspective to drive “real change” at GameStop.
The group is urging shareholders to vote in its nominees, who include Paul Evans and Kurtis Wolf. If elected, it says the nominees would push GameStop to reduce its “bloated” cost structure, fix misaligned executive compensation, address liquidity concerns, focus on optimizing the chain’s gaming assets, and create a “positive” narrative about the company’s future.
In a statement, the group acknowledged the “unfortunate” timing of the proxy contest due to the COVID-19 crisis, but said the lack of diversity of perspectives on the board and its resistance to engage with them to avoid a contested election, had “compelled” it to move forward with its nominations.
The proposed board changes come as GameStop faces increased challenges in a retail market undermined by digital streaming and lack of new-generation hardware. The company reported a 27.5% decline in winter holiday sales. Comparable store sales decreased 24.7%.