Research Desk Line-up: Crocs Post Earnings Coverage

LONDON, UK / ACCESSWIRE / November 14, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Deckers Outdoor Corp. (NYSE: DECK), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=DECK. The Company announced on November 10, 2017, that its Board of Directors have taken certain steps to address and resolve the lawsuit filed by an affiliate of Marcato Capital Management L.P. ("Marcato") in October 2017. Marcato had filed the lawsuit against the Company to get a new slate of Board members approved and ensure that its Annual Shareholder Meeting would take place on the scheduled date of December 14, 2017. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Steps initiated to resolve the Lawsuit

Some of the steps initiated by Deckers' Board include the following:

  • the Shareholders Annual Meeting will be held on the scheduled date, i.e. December 14, 2017. The change in date is subject to "the Board's ability, in the exercise of its fiduciary duties to stockholders, to adjust the date of the meeting should circumstances require that action".

  • The Board has approved an amendment in Deckers' credit facility to prevent default if a majority of Marcato's director nominees are elected to the Company's Board. Deckers has approximately $103 million credit facility as on September 30, 2017, and will be due immediately if there is any change in the composition of the Board. Deckers is working with JPMorgan Chase Bank to get the requisite consents from the lenders to implement the amendments to prevent defaults. The Board had agreed to approve Marcato's director nominees as director candidates under the credit facility mainly for this purpose.

  • The Board has also disabled acceleration of equity awards and compensation that would have occurred if a majority of Marcato's nominees were elected at the Annual Meeting. To ensure that this change happens, the Board has decided to treat the elected Marcato's director nominees as "continuing directors". This step will ensure that if the Marcato's nominees are elected they would come under the relevant equity and deferred compensation plans. Marcato had pointed out in its lawsuit that Deckers has provisions wherein any move to trigger a change-in-control would result in millions of dollars in accelerated equity awards and deferred compensation payments to executives.

The Company and its Board feels that the changes announced would invalidate Marcato's lawsuit and lead to the dismissal of the lawsuit.

Commenting on the matter, John M. Gibbons, Chairman of the Board of Directors of Deckers, said:

"We've taken decisive action to resolve these legal issues so that stockholders can focus on what really matters - choosing the right stewards to lead Deckers forward and continue to execute on its transformation. The Deckers' Board is singularly focused on continuing to evolve Deckers to meet the needs of our consumers and deliver value to our stockholders. We strongly believe that our Board of experienced and well-qualified directors is the right Board to move Deckers forward. We urge all stockholders to vote on the WHITE proxy card at the upcoming Annual Meeting."

Details of the Lawsuit filed by Marcato

Marcato had filed a lawsuit against Deckers Brands on October 23, 2017, in the Court of Chancery of the State of Delaware. The lawsuit was aimed at getting Marcato's nominees approved and ensure that the Shareholders Annual Meeting takes place on the scheduled date of December 14, 2017. Marcato had appealed to the Court that the Company not only lock the date of its Shareholders Annual Meeting but also take steps to disable a provision in its credit and employment agreements. Marcato's contention was that since Deckers had refused to approve Marcato's nominees, and if they are elected, it would lead to expensive change-of-control penalties. Due to these changes the executive compensation is estimated to reach $36 million and allow lenders to make an early call on their credit facility valued approximately $103 million.

Marcato had first acquired around 6% stake in the Company in February 2017 and now owns approximately 8.4% stake. In April 2017, Deckers had announced that it had initiatedprocess to review strategic alternatives to enhance stockholder's value, including the sale of the Company. In September 2017, it had nominated 10 new members to the Company's Board of Directors. Marcato's nominations came in after it had written an open letter to the Company threatening to replace the entire Board if the Company did not explore options to sell the Company or look at divesting smaller brands if the sale of the Company did not occur. Marcato had issues due to the underperformance of the Company's stock and earnings. Marcato believes that the share price of Deckers could double by 2020 if the Company takes steps like selling or divesting part of its business, increase share buybacks and overhaul executive compensation. The lawsuit was filed a few days before Deckers announced the completion its strategic review process and decided that it would not pursue the sale of the Company.

About Deckers Brands

Goleta, California based Deckers is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories. The Company's brands include UGG®, Koolaburra®, HOKA ONE ONE®, Teva®, and Sanuk®. Deckers Brands products are sold in more than 50 countries and territories via select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites.

Last Close Stock Review

At the closing bell, on Monday, November 13, 2017, Deckers Outdoor's stock climbed 1.17%, ending the trading session at $69.25. A total volume of 651.02 thousand shareshave exchanged hands, which was higher than the 3-month average volume of 521.59 thousand shares. The Company's stock price surged 7.60% in the last three months, 17.65% in the past six months, and 15.09% in the previous twelve months. Moreover, the stock rallied 25.02% since the start of the year. The stock is trading at a PE ratio of 69.46 and currently has a market cap of $2.22 billion.

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