Nautilus Inc.
(NYSE:NLS) executives and board members may have to fight for their
jobs after a large investor demanded that the sporting goods company
hold a special shareholder meeting to consider a variety of proposals,
according to a
Schedule 13D/A filing with the SEC.
Sherborne
Investors, which owns 23.5 percent of Nautilus, sent the company a
letter last week indicating that it wants to hold a special
shareholders meeting to remove the existing directors other than the
Interim Chief Executive Officer, the Lead Independent Director, and the
Chairman of the Audit Committee. Unfortunately, Nautilus responded by
saying it would not be able to make a decision this week and gave no
indication of when a decision would be made.
"The time required
to complete a shareholder vote is, regrettably, quite lengthy and if
such a vote were required, it would not be in anyone’s interest to
delay it beyond year end," said fund manager Edward Bramson. "To stay
on this timetable essentially requires that a meeting of shareholders
be initiated now."
Why is the hedge fund so concerned? Well,
Nautilus shares are off over 50 percent so far this year amid falling
profits and margins. Meanwhile, the company's CEO stepped down in
mid-August leaving the company in a very vulnerable position during a
time that it is making some key changes.
"There are a number of
uncertainties and major decisions facing Nautilus at the moment,
including the debt position, the Land America transaction, and the
appointment of a permanent chief executive with the appropriate
qualifications and strategic outlook," said Bramson in a letter to the
company. "I am sure you would agree that prolonged uncertainty is not
good for the company or any of its stakeholders."
In the end,
this company clearly has some issues that it needs to address very soon
in order to preserve shareholder value. Many shareholders are hoping
that Sherborne Investors will be able to step in and make some key
changes to unlock value. Combined, these factors make NLS a stock
worth watching!
Related Companies
Cybex International (CYBI)Brunswick Corporation (BC)
Select Comfort Corporation (SCSS)