Parlux Fragrances Inc.'s (NDAQ:PARL) recent share repurchase is drawing criticism from several large investors, including Glenn Nussdorf. The company authorized stock repurchases of up to 10 million shares of the Company's common stock - an extraordinarily large stock repurchase, covering almost 55% of the company's 18,430,000 outstanding shares. But why complain about a stock repurchase of any kind, especially a large one? Well, according to Nussdorf's Schedule 13D/A filing today:

"In light of the fact that my consent solicitation will be commencing very shortly, that the record date is one week from today, and that the Board has just authorized massive stock repurchases, I am understandably concerned that the stock repurchases may be made for the purpose of, and in a manner designed to, entrench the Company's current management and Board of Directors. I believe that any use of corporate funds for such purpose would constitute an unconscionable breach of fiduciary duty and misuse of corporate assets and, in such event, I intend to hold you responsible. I demand that the Company make immediate, full and clear public disclosure of the purposes of the massive stock repurchase authorization and how it is intended that any shares repurchased by the Company, whether prior to, on, or after the record date, will be treated for purposes of my consent solicitation."

The conflict between Nussdorf and the board began in December when Nussdorf disclosed his concerns about the company and threatened a proxy battle in a Schedule 13D/A filing on December 22nd with the SEC:

"As the beneficial owner of a substantial percentage of the outstanding shares of Parlux, I believe that much can be done to increase shareholder value and that it is time for immediate change at both the Board and management levels. The decline in the Company's share price from a high closing price of $18.96 earlier this year (after adjusting for a 2-for-1 split in June 2006) to the current $6.26 level (a decrease in shareholder value of 67%), the Company's recent disclosure of decreased sales and earnings for the quarter ended September 30, 2006, and the allegations in the recently amended class action lawsuit that the Company improperly recognized revenues on sales to related parties, have led me to conclude that the Board of Directors is failing to act in the best interests of the Company's shareholders and is not exercising appropriate oversight of management. I am convinced that a continuation of the status quo risks a further destruction of shareholder value and, accordingly, I intend to protect the value of my significant investment in the Company through a consent solicitation to replace members of the Board of Directors.

As I have publicly disclosed in my Schedule 13D filing, I am exploring the possibility of making an acquisition proposal to acquire the Company in a business combination transaction. While I have not made a decision at this time whether to pursue such a proposal, I strongly urge the Board not to take any action (such as the previously announced and subsequently abandoned sale of the Perry Ellis brand) which would materially modify or impact the Company's business, products or assets and could adversely effect the Company's value. In addition, the consent solicitation will present Parlux shareholders with a unique opportunity to express their views on the future direction of the Company."

Clearly, Nussdorf has a good reason for concern. Parlux's past failures to act in the best interest of shareholders, or even grant board seats to Nussdorf, illustrate their lack of conern for shareholders. If Nussdorf is successful in garnering significant shareholder approval in his proxy contest, there is a good possibility that he could take further actions to benefit shareholders. This makes PARL a stock worth watching over the next few months.

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