Last week, however, Institutional Shareholder Services, a major proxy advisory company to stock investors, endorsed Burkle's plan to seat three of his own nominees (including himself) on the company's nine-member Board of Directors, as well as rewrite Barnes & Noble's shareholder rights (or "poison pill") plan, a measure designed to prevent hostile takeovers. Apparently, Burkle believes that BKS is "significantly undervalued" and a change of management is necessary to restore the company to fiscal health. Among his chief complaints is that Barnes & Noble waited too long to introduce the Nook, thereby handicapping the bookseller in the digital media/e-book market.
Not everyone agrees with ISS, however: three major advisory services (Glass Lewis & Co., Egan-Jones Proxy Services, and Proxy Governance Inc.) are on Riggio's side, a position somewhat strengthened by the fact that a Delaware judge ruled against Burkle's legal assault on BKS' poison pill defense. Shareholders are scheduled to vote on the proposals at the end of the month.
What does this mean for the industry and for you as authors, readers, and consumers?
Again, I doubt this battle will much affect Barnes & Noble's bottom line in the short term. An ultimate victory by Team Riggio will probably result in little substantive change for the company; a victory by Team Burkle could be game-changing, as his vocal desire to move BKS further into digital media and Yucaipa's successful history of leveraged buyouts could indicate a plan to convert Barnes & Noble into a more direct competitor with Amazon (more emphasis on e-books and related content, reduction of physical title stock, more money allocated to .com business, and so on). The times, they are a-changin', mes auteurs.
To be clear: this is all speculation on my part, and I don't know what Burkle is planning to do any more than any other moderately interested third party; I only know what's being reported in the news. I also have no real preference regarding control of the company; it's all the same to me whether it's run by a rich guy from New York or a rich guy from Los Angeles. I am, however, intrigued by the repercussions of either's victory, and I'm curious to see where this will take Barnes & Noble over the next five years.
What about you, gentle readers?