NEW YORK, June 12, 2014 /PRNewswire/ -- Clinton Group,
Inc. ("Clinton Group") announced today that it has sent a letter to
the stockholders of ValueVision Media, Inc. (Nasdaq: VVTV) in
advance of the June 18, 2014 annual
meeting in which it expresses its view that a change in the Board
of Directors is required if the Company is going to fulfill its
potential. The Clinton Group has nominated six independent
professionals for the Board of Directors and is asking for the
support of its fellow ValueVision shareholders.
"The most disappointing thing about this contest over the future
of the Company," said Gregory P.
Taxin, President of Clinton Group, "is that the incumbent
team has decided to spend millions upon millions defending their
track record and jobs instead of reviewing their strategy,
accepting assistance from our capable and willing nominees and
developing a way forward that could help turn ValueVision into a
great commercial enterprise."
In its letter to shareholders, Clinton Group notes that
ValueVision's Chief Executive Officer Keith
Stewart instructed employees on June
5 that, "[i]t is business as usual at ShopHQ."
"If our nominees become the Company's directors, business will
not be as usual," continued Mr. Taxin. "We know buried inside of
ValueVision are the assets, skills, and creativity required to
spawn the next leader in omni-channel retailing. Our nominees
relish the opportunity to mold those assets into a Company of which
we can all be proud. We cannot expect gains, however, without
change."
Clinton Group encourages its fellow shareholders to review the
materials it has prepared for shareholders, which are available at
www.AddValueAndVision.com.
Shareholders with questions should contact Bruce Goldfarb or Lydia
Mulyk at Okapi Partners LLC at (212) 297-0720, Toll-Free (855) 305-0857, or
VVTV@okapipartners.com.
A copy of the letter sent to ValueVision shareholders is
included below:
To Our Fellow Shareholders of ValueVision:
Clinton Group, Inc. and the funds we manage (the "Clinton
Group") are investors in ValueVision Media Inc. ("ValueVision" or
the "Company"). We believe the Company can be great. We also
believe that a change in the Board of Directors is required if the
Company is going to fulfill its potential. So, we have nominated
six independent professionals to serve on the Board. With the
Company's annual meeting coming up next week, we are asking you to
please vote for our nominees on the Gold proxy card. Information on
our nominees and our views can be found at
www.AddValueAndVision.com.
The Company's existing Board and executive team have done a lot
of things in response to our call for change. They hired six
professional services firms, first to "defend" themselves against
our efforts to convene a special meeting of shareholders and then
to "defend" their track records. They have produced a lengthy proxy
statement, at least three slide presentations, a video, a
full-color brochure and more letters than I can count. They have
sent executives around the country to meet with investors and
increased their own severance payouts in the event they lose this
proxy fight. They have presented historical performance data in a
favorable way to show progress and cleverly started and stopped
charts and comparisons to indicate out-performance. (This morning
they have decided to compare the Company's current performance to
that during the nadir of the financial crisis in 2008, when the
Company hired and fired a CEO within six months, its cable
distribution was threatened with imminent cancelations and an
investment banker failed to sell the Company, all while the economy
melted; we are unimpressed with such a comparison.) They have
attacked us and one of the independent proxy advisory firms that
dared to judge them inadequate. They have even suggested, this
morning, that they are not receiving shareholder support because
shareholders are not "informed." In all, they have spent more than
$3 million of shareholder money in
these efforts.
But there is one thing they have not done: They have not
articulated a plan that even aims for excellence.
Indeed, nowhere in the hundreds of pages they have produced is
even the suggestion that ValueVision can someday be as good
a commercial enterprise as its rivals, HSN and QVC. There is, in
short, a palpable lack of imagination, confidence, inspiration,
ambition and vision, in our view.
We believe ValueVision has the ability to rival its competitors,
to challenge their market share, to grow significantly and to
create meaningful upside for shareholders. We do not, however,
believe these things will happen with a team in charge that has
lost ground to HSN and QVC during the last five or six
years, giving up substantial market share and under-performing
competitors' stock market gains.
Not only does the current team seemingly slink from the
suggestion that ValueVision can be great, it does not even offer a
single significant dimension – customer counts, penetration rates,
revenue per home, customer engagement, thought leadership,
management quality, diversity of vendor relationships, social media
interaction, online or mobile platform functionality, product
assortment, programming diversity, or proprietary product
development – on which the team believes it beats or can beat its
rivals. Without the drive to lead the competition in even
one of these areas, there is little hope the Company can
match or overtake its rivals. No, the current team appears resigned
to remain in a distant third place.
We had hoped that even if we failed to win this proxy contest,
at least our challenge of the current business plan would serve as
a wake-up call for management. Alas, it does not appear so. As
Keith Stewart wrote to the employees
on June 5, "It is business as
usual at ShopHQ."
"As usual", for ShopHQ, is a rather unique method of operating a
business. On May 1, Mr. Stewart had
an 11 AM appointment with a sell-side
research analyst who was considering picking up coverage of the
Company. We are told that Mr. Stewart showed up some thirty minutes
late and apologized by saying he was "fishing" and did not want to
leave the lake because the "fish were biting." And, of course,
because May 1 was a Thursday, if it
was like most Thursdays, many on the management team left in the
early afternoon to catch their flights back home – to Pennsylvania, Florida, Texas and the other places where as many as 10
senior managers spend their Fridays (and many Mondays). Usual for
ValueVision is quite unusual.
Sadly, this proxy contest does not seem to have been a wake-up
call for the incumbent team. But even if had, even if the
high-priced advisors management has engaged – the investment bank,
the two law firms, the public relations firm, the investor
relations firm, the executive recruiter and the proxy solicitor –
or, dare we suggest, the executive team itself, had been inspired
to develop and articulate an ambitious business plan for the
Company during this proxy fight, would such a plan have credibility
with investors? After all, the current team has missed nearly
every public projection they have made. Revenue of $1 billion? Not close. EBITDA margins of 10%.
Nope. Product mix closer to that of the competitors? No. Sales per
home back to 2006 levels? No way. Penetration rates growing to half
of the competitors' rate? Not achieved.
Without so much as recognition of the underperformance and the
need for a concrete plan, we believe the team is unlikely to break
its disappointing pattern of anemic performance.
We believe such underperformance likely affects the shareholders
more than the Board. Since 2004, the independent directors,
combined, have bought less than $1
million of stock. (Our nominees have put more money to work
in the last year in buying the Company's stock, through a special
purpose vehicle, than all the incumbent independent directors
combined over the last 10 years.) With more than 69% of the
directors' pay coming in the form of cash last year (and with total
compensation being twice the average of comparably sized
companies), the performance of the business and stock affects the
public shareholders much more than it affects the directors.
Perhaps this is why the directors are content to leave in place
a Chief Executive Officer under whose leadership the stock has
underperformed its rivals, the major market index and various
sector indexes since January 2010.
How long will they wait to make a change?
We believe the Company can be great. So do our nominees. They
have developed a strategy and plan, subject of course to learning
more if they are elected, to exploit the Company's uncommon access
to the television screens of 87 million American homes. They
believe that with proprietary brands (i.e. brands that are
unavailable elsewhere) and products that are truly exclusive to
ValueVision, engaging programming and a diverse schedule, the
Company can attract new audiences, sell more goods, generate
substantial profits and perform well for shareholders.
Both management and our nominees put their respective plans, and
their track records and backgrounds, in front of the two leading
proxy advisory firms. Both firms took days to analyze the
information and wrote lengthy, detailed reports. Both of them
reached the same conclusion: Shareholders should not vote for the
incumbents. Instead, both concluded, new directors from our slate
of nominees should be elected to help the Company grow and create
value for shareholders. Both recommended that shareholders vote on
the Gold proxy card. Glass Lewis, one of these firms, said we had
made a "compelling case for significant change at the board level."
ISS, the other firm, wrote that "change at the board level is
warranted".
Glass Lewis concluded, succinctly:
[Clinton Group] has offered a detailed and comprehensive plan
for the Company, one that appears sound and compelling. ...
[S]upport for [the Clinton Group] nominees is likely to result in a
superior outcome for ValueVision shareholders than what might
reasonably be expected from shareholders' continued endorsement of
the incumbents, in light of the Company's track record for the last
five years.
Seemingly left without anything to say on the merits, and having
failed to win the support of these respected independent proxy
advisory firms, ValueVision has taken the rogue's way out: attack
the messenger. The Company has attacked ISS and, of course, it has
attacked us. Don't be distracted. This proxy fight is about
ValueVision's performance. Not ISS and not us.
We own a significant amount of ValueVision stock, though
admittedly less than we once owned. We reduced our position because
the Company rejected (on what we regard as specious grounds) our
two attempts to call a special meeting of shareholders and we were
not comfortable owning so much stock under the present leadership.
We care today more than ever about making sure the Company is in
good hands. Our judgment on investments and board nominees (another
subject of ValueVision's attacks) has proven profitable for our
investors and the stocks in which we have invested have
outperformed the relevant indexes. Have a look, if you care, at the
stock price results after the proxy fight at Stillwater Mining or
the board appointments with which we were involved at Dillard's,
Red Robin Gourmet Burgers, Radian Group, Abraxas, Digital
Generation or NutriSystem. (The Company likes to focus on Wet Seal,
one of a dozen companies at which we have helped to place
directors; Wet Seal, like all teen apparel retailers, has been hard
hit by macro headwinds, unlike the strong tailwinds in home
shopping that ValueVision would have you ignore.)
But this contest is not about us. The Clinton Group (and our
employees) will not be on the Board of ValueVision no matter
what the outcome of the annual meeting. But shareholders do have a
choice. You can choose the "business as usual" incumbent directors
– some technology and health care CFOs, an insurance company
executive, a web advertising sales executive and such – or our
proposed nominees, veterans of the home shopping business (from HSN
and QVC), retail (Bloomingdale's
and Saks), television production (Freemantle North America) and
entertainment (Sony Music). We believe that for the years to come,
our nominees are a better choice to lead the strategy and oversee
management of the Company.
Of one thing we are confident: with the team we have proposed as
directors, business will not be "usual".
Instead, our nominees will insist on an executive team that
works every day (from the headquarters) to develop the business and
increase shareholder value. No fishing trips while potential
business partners wait. There will be a focus on innovation and
catching up – and then leap-frogging – the competition. The
business will evolve quickly, with the addition of new vendors,
proprietary brands and programming approaches that will not cost a
lot, but which will have, we believe, a major impact on the bottom
line. The look-and-feel of the channel and Company will finally
emerge from the 1990s and have a modern, interactive, clean and
inviting look. The culture inside the company will change too: Gone
will be the million-dollar per year, three-day-a-week executives
that have understandably bred resentment and loathing. Gone too
will be the coarse language and oppressive, imperial leadership
culture that we have heard so much about from present and former
employees.
We know buried inside of ValueVision are the assets, skills, and
creativity required to spawn the next leader in omni-channel
retailing; our nominees relish the opportunity to mold those assets
into a Company of which we can all be proud. We cannot expect
gains, however, without change.
So, vote for change. If you too think ValueVision can be better
than it is, please vote the Gold card and vote for our
nominees.
If you have any questions or require any assistance in
delivering your proxy, please contact Okapi Partners LLC at
VVTV@OkapiPartners.com or (212) 297-0720 or Toll-Free (855) 305-0857. You can also contact
the Clinton Group at VVTV@Clinton.com.
Thank you for your consideration,
//s//
Gregory P. Taxin
About Clinton Group, Inc.
Clinton Group, Inc. is a Registered Investment Advisor based
in New York City. The firm has been investing in global
markets since its inception in 1991 with expertise that spans a
wide range of investment styles and asset classes.
Important Additional Information
CLINTON RELATIONAL OPPORTUNITY MASTER FUND, L.P., CLINTON
RELATIONAL OPPORTUNITY, LLC, GEH CAPITAL, INC., CLINTON SPECIAL
OPPORTUNITIES MASTER FUND, LTD., CHANNEL COMMERCE PARTNERS, L.P.,
CLINTON GROUP, INC., GEORGE E. HALL
(COLLECTIVELY, "CLINTON") THOMAS D.
BEERS, MARK BOZEK,
RONALD L. FRASCH, THOMAS D. MOTTOLA, ROBERT ROSENBLATT AND FRED
SIEGEL (TOGETHER WITH CLINTON, THE "PARTICIPANTS") AND/OR CERTAIN
AFFILIATED PARTIES HAVE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC") A DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING FORM OF PROXY CARD TO BE USED IN CONNECTION WITH THE
PARTICIPANTS' SOLICITATION OF PROXIES FROM THE STOCKHOLDERS OF
VALUEVISION MEDIA, INC. (THE "COMPANY") FOR USE AT THE COMPANY'S
2014 ANNUAL MEETING OF STOCKHOLDERS (THE "PROXY
SOLICITATION"). ALL STOCKHOLDERS OF THE COMPANY ARE ADVISED
TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED
TO THE PROXY SOLICITATION BY THE PARTICIPANTS BECAUSE THEY CONTAIN
IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO
THE PARTICIPANTS. THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING
PROXY CARD HAVE BEEN FURNISHED TO SOME OR ALL OF THE COMPANY'S
STOCKHOLDERS AND ARE, ALONG WITH OTHER RELEVANT DOCUMENTS,
AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
HTTP://WWW.SEC.GOV/. IN ADDITION, OKAPI PARTNERS LLC,
CLINTON'S PROXY SOLICITOR, WILL PROVIDE COPIES OF THE DEFINITIVE
PROXY STATEMENT AND ACCOMPANYING PROXY CARD WITHOUT CHARGE UPON
REQUEST BY CALLING (212) 297-0720 OR TOLL
FREE AT (855) 305-0857.
ADDITIONAL INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION
OF THEIR DIRECT OR INDIRECT INTERESTS BY SECURITY HOLDINGS IS
CONTAINED IN THE DEFINITIVE PROXY STATEMENT ON SCHEDULE 14A FILED
BY CLINTON ON MAY 13, 2014 AND IN THE DEFINITIVE ADDITIONAL
MATERIALS ON SCHEDULE 14A FILED BY CLINTON
ON MAY 22, 2014 AND
JUNE 6, 2014. THESE DOCUMENTS CAN BE
OBTAINED FREE OF CHARGE FROM THE SOURCES INDICATED ABOVE.
SOURCE Clinton Group, Inc.