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!

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