Ron Burkle may have drawn first blood in the proxy fight that now looks all but inevitable at Barnes & Noble's (BKS) annual shareholders meeting next month, but founder and Chairman Leonard Riggio isn't about to back down. In fact, Riggio is increasing his stock holdings and staying on the board of directors ballot while two others vacate their seats.
Earlier this week, Riggio, who's B&N's top stakeholder with 29.9% of total shares, exercised options to acquire just south of 100,000 shares at a price of $16.96, or $16.8 million. Those options, originally granted back in 2001 and comprising 1.7% of his total stake, were set to expire in 2011. Instead of letting them go, Riggio is making use of them now so that he can then vote his entire equity stake in the proxy fight.
Riggio can't acquire any more shares on the open market lest he trigger the same "poison pill" measure that curtailed Burkle's stock grab and kept the Los Angeles billionaire's total company stake at its current 19.2%.
Board of Directors Seats Soon to be Filled
With Riggio set up for a full-bodied challenge, the next issue revolves around who will run alongside him for reelection to B&N's board of directors. Originally both Michael Del Giudice and Laurence Zilavy were slated to run again to retain their longtime positions. But the company announced Thursday afternoon that the two men would cede their seats for a couple of newcomers: David Golden, a partner in Revolution LLC (which funds ZipCar), and David Wilson, CEO of the nonprofit Graduate Management Admission Council education group.
Neither Wilson or Golden appear to have any ties to Riggio or other board members, which distinguishes them from the two candidates Burkle nominated to run alongside himself, Stephen Bollenbach and Michael McQuary. As DailyFinance reported last week, Burkle has known Bollenbach, the former CEO of Hilton Hotels and current chairman of KB Home (KBH), a company whose board Burkle has sat on for 15 years. McQuary, chairman and CEO of Wheego Electric Cars, was a former board member of Liquid Audio when Burkle briefly pondered the prospect of taking over that company.
A spokesperson for B&N declined to comment further on the switch in candidates, but Del Giudice in particular may have been viewed as a compromised pick. His alleged independence as the board's lead director was called into question by Judge Leo Strine in last week's ruling that Burkle's lawsuit to throw out the "poison pill" measure was invalid. Strine also pointed to Del Giudice's deep personal and political ties to Riggio.
The committee set up by B&N to explore various strategic alternatives -- including, as widely expected, a sale that would lead to the company going private -- did not include either Del Giudice nor Zilavy. The two men will remain on the board through the annual meeting.