Dissident investor and Ultimate Electronics owner Mark Wattles wants to unseat all 12 of Circuit City's sitting directors and replace them with the five board candidates he nominated last month.
The proposal was submitted to Circuit City via letter, along with a second proposal to repeal any bylaw amendments or new bylaws that Circuit's board may adopt without first seeking shareholder approval.
The proposals and nominees will be considered at Circuit City's annual shareholder meeting on June 24.
In a statement, Circuit City said its board will "review carefully the shareholder's proposals and the qualifications of the nominees in accordance with its fiduciary duties, mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company's shares. The members of Circuit City's board are experienced, committed to increasing shareholder value, and vital to the successful implementation of the company's turnaround plan."
Wattles, who controls 11 million shares, or 6.5 percent, of Circuit City's common stock through his investment firm, Wattles Capital Management, said he also seeks to improve shareholder returns, albeit by replacing the company's senior management team.
He notified the company of his intentions in a pair of proxy statements filed with the Securities and Exchange Commission the week of Feb. 25. The filings included a Feb. 26 New York Times article in which Wattles took Circuit's management to task for the company's mounting losses and a 76 percent decline in the value of its shares last year.
"The current CEO has been president or CEO for three years now," he told a Times reporter in reference to chairman Phil Schoonover. "The solution is not in changing real estate; the solution is changing the way they operate in existing real estate."
Wattles said he has no interest in running Circuit City or merging it with Ultimate Electronics, and that he made the board nominations after senior executives rebuffed his requests for a meeting.
The slate includes:
- Anthony Bergamo, who served on the boards of Lone Star Steakhouse & Saloon, the restaurant chain, and the Milstein Hotel Group, a hotel operator;
- Alexander Bond, managing director of Wattles Capital Management and former finance senior VP of Hollywood Entertainment, the video rental chain founded by Wattles;
- Don Kornstein, a financial consultant who served as interim chairman of Bally Total Fitness;
- James Marcum, former chief financial officer of Hollywood Entertainment; and
- Elliott Wahle, a former Toys "R" Us executive who currently heads a private investment firm and a furniture-import business in Canada.