Activist Investor Takes Issue With Dillard's; Signs Indicate Upcoming Proxy Battle

by Mark Friedman  on Monday, Mar. 3, 2008 12:00 am  

"I utilize my skills and various contacts in a particular industry to improve the value of businesses I invest in," Mitarotonda was quoted in Orol's book. "Certainly, the more you know about one industry, the better you should do in it."

Barington turned its attention to the small, cash-rich dot-com companies, including MusicMaker.com and Fairmarket Inc., according to a 2004 report by the New York law firm Wachtell Lipton Rosen & Katz.

"Barington had enjoyed a string of successes," the report said. "Its disruptive proxy campaigns had ended either in outright victory or with settlements that gave it board representation and forced corporate action to distribute cash such as liquidation or substantial buybacks."

Then Barington took on Payless ShoeSource Inc.

In 2004, Barington tried to get Mitarotonda and two others on the Payless board.

Mitarotonda urged Payless shareholders in a May 19, 2004, letter to vote for him and the others to improve the company.

He said the management had "a poorly executed merchandising strategy" and "diminishing returns on equity and net assts, and a declining stock price!" Payless responded by suing Barington in U.S. District Court in Topeka, Kan., to prevent Mitarotonda and his people from getting on the board. Payless dismissed the case after Mitarotonda and his two associates failed to be elected in May 2004.

But Barington continued its activist ways. One of Barington's recent successes has been with the auto parts firm The Pep Boys - Manny, Moe & Jack of Philadelphia.

In 2006, Barington led a group of investors who owned 9.9 percent of publicly traded Pep Boys to reconstitute the board and put Mitarotonda aboard. 

"I look forward to working with my fellow directors toward improving the operations and performance of the Company for the benefit of all the Company's shareholders," Mitarotonda said in an Aug. 3, 2006, news release.

The company was in need of a turnaround. Its stock had hit $19.38 in July 2004 and then fallen to $10.48 in July 2006.

After Mitarotonda took a seat on the board, the company's stock rose. It reached nearly $21 in May 2007.

 

 

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