Challenge to Circuit City Board
Richmond, Va. A shareholder group has proposed the ouster of the entire corporate board at Circuit City Stores Inc. Wattles Capital Management on Friday proposed a clean sweep at the retailer just days after the group nominated five members for Circuit City's 12-member board.
Investor Mark J. Wattles, the group's principal and founder of the Hollywood Entertainment video-rental chain, has criticized Circuit City's restructuring and turnaround attempts. Wattles, which holds a 6.5% stake in the company, also proposed the repeal of any bylaw amendments or new bylaws from the board without shareholder approval.
The company said it would review the requests, “mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company's shares.”
“The members of Circuit City’s board are experienced, committed to increasing shareholder value, and vital to the successful implementation of the company’s turnaround plan,” the company said in a statement.
Circuit City reported a $207 million loss in its fiscal third quarter, and anticipates a “modest loss” in the fourth quarter, the period that included the bulk of the crucial holiday-shopping season.
The proposals, if accepted, would be aired during Circuit City's annual meeting in June.