BOSTON (Reuters) – An investor group plans to nominate two directors to GameStop Corp’s (GME.N) 11-member board, less than one year after reaching a cooperation agreement with the videogame retailer, two sources familiar with the matter said.
Hestia Captial Partners LP and Permit Capital Enterprise Fund LP, which jointly own 7.5% of GameStop’s shares, are criticizing the board for poor strategic planning and capital allocation.
The two, working together, plan to nominate Hestia partner Kurtis Wolf, and Paul Evans, an executive who has experience as a chief financial officer and board member, as directors, the sources said.
The two sides squared off in 2019 when the investors pressed management to buy back shares and refresh the board. As part of a cooperation agreement, GameStop agreed to add a director to the board who was proposed by the investors.
The peace has not endured, however, and the shareholders, who stress they are “long-suffering investors” rather than activists, said missteps have sent the share price tumbling 63% over the last year and that one new director was not enough to change board room dynamics. Hestia has owned shares for eight years.
The company’s stock price closed trading at $3.76 on Friday leaving it with a market capitalization of $250 million.
“We believe adding a large stockholder, as well as another stockholder supported voice with financial expertise, will give stockholders a greater say in the future of the Company; something that is greatly needed,” Wolf and Permit partner John Broderick, wrote in a letter to shareholders, that was seen by Reuters.
Earlier this month GameStop announced changes to the board and appointed three independent directors. Hestia and Permit called it a “move in the right direction” but said it was too little and came too late. Two directors will stay on until the 2021 annual meeting and will essentially become “lame duck” directors.
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