Additional Proxy Soliciting Materials - Non-management (definitive) (dfan14a)
May 20 2020 - 4:02PM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
The Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☐
Filed by a Party other than the Registrant ☒
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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GAMESTOP CORP.
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(Name of Registrant as Specified in Its Charter)
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HESTIA CAPITAL PARTNERS LP
HESTIA CAPITAL MANAGEMENT, LLC
KURTIS J. WOLF
PERMIT CAPITAL ENTERPRISE FUND, L.P.
PERMIT CAPITAL, LLC
PERMIT CAPITAL GP, L.P.
JOHN C. BRODERICK
ADAM DUKOFF
PAUL J. EVANS
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
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Hestia Capital Partners
LP (“Hestia LP”) and Permit Capital Enterprise Fund, L.P. (“Permit Enterprise”), together with the other
participants named herein (collectively, the “Stockholder Group”), have filed a definitive proxy statement and accompanying
WHITE proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of
its slate of highly-qualified director nominees at the 2020 annual meeting of stockholders of GameStop Corp., a Delaware corporation
(the “Company”).
Item 1: On May 20,
2020, the Stockholder Group issued the following press release:
Investor Group Releases Presentation
Detailing Why Further Change Is Needed at GameStop Corp.
Urges Stockholders to Vote
the WHITE Proxy Card to Elect Its Two Highly Qualified Nominees at GameStop’s Upcoming Annual Meeting
May 20, 2020 - Pittsburgh -- Hestia
Capital Partners LP, Permit Capital Enterprise Fund, L.P. and their affiliates (the “Investor Group”), who beneficially
own approximately 7.2% of the outstanding common stock of GameStop Corp. (“GameStop” or the “Company”)
(NYSE: GME), announced today that they have issued a detailed investor presentation titled “More Change Is Needed”.
The Investor Group has nominated two highly qualified directors, Paul J. Evans and Kurtis J. Wolf, for election to GameStop’s
2020 Annual Meeting scheduled for June 12, 2020.
The full investor presentation can
be found here: https://www.restoregamestop.com/presentation
The Investor Group encourages its fellow
stockholders to read the presentation, as well as its proxy materials and stockholder letters, which are accessible at www.RestoreGameStop.com.
Highlights from the investor presentation include the following:
Reasons for why stockholders should vote for more change
at GameStop:
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Despite being a valuable business with significant competitive advantages in the game retailing
industry, GameStop’s Board has overseen $2.5 billion in stockholder value destruction, underperforming its proxy peers
on key financial and operational metrics, including total shareholder returns on a one, three, five and ten year period.
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In March 2019, the Investor Group entered into a Cooperation Agreement to add two new directors
to an expanded Board of 11 members, including Lizabeth Dunn, the Investor Group’s nominee.
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Since then, the Company’s performance has continued to deteriorate.
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The stock price declined 65% in fiscal 2019.
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Revenue declined from $3.1 billion in the fourth quarter of fiscal 2018 to $2.2 billion in fourth quarter of fiscal 2019.
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Senior Notes due March 2021, which traded at par 12 months ago, traded at 74 cents on the dollar as of May 15, 2020.
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Short interest has increased from roughly 40% when the Cooperation Agreement was signed to roughly 100% over the past 14 months,
suggesting great pessimism about GameStop’s future.
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Adjusted SG&A as a percent of revenue has increased from 23.9% in fiscal 2018 to 28.6% in fiscal 2019.
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The Tulsa market test has not produced any actionable intelligence, even before Covid-19.
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Despite this performance, the Board and management have been compensated as if the stock was a
top performer, receiving $38 million in compensation in fiscal 2019, or approximately 15% of the Company’s market cap
at the end of fiscal 2019.
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GameStop’s response to Covid-19 has been slow and its communications to employees created
confusion and fear.
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GameStop was among the last in its proxy peer group to close its stores, allegedly telling its employees that it was an “essential
business” and seemingly only closed its stores in response to public outcry.
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GameStop was near last among its proxy peers to reduce its executive compensation.
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The
Board’s recent refreshment is not enough to drive the change that is needed
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Fourteen months ago, the Investor Group highlighted the need for gaming, turnaround, and stockholder representation on the
Board.
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While the Board has done two refreshments in 2019 and 2020, they remain too retail-centric and have not addressed the need
for turnaround and stockholder representation.
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2 long-tenured directors, who plan to retire next year, have irrelevant skillsets, minimal ownership and a track record of
being ineffective.
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Kurt Wolf and Paul Evans will advocate
for stockholders in the boardroom and will move swiftly to conduct a full and fair evaluation of GameStop’s operations and
capital structure to maximize value.
If elected, the nominees have the following priorities:
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Aggressively reduce SG&A
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Address the Company’s liquidity concerns
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Articulate a long-term, viable strategy
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Better align compensation with performance
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Establish a corporate culture which values all stakeholders.
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The Investor Group urges stockholders
to support its call for change at the Company by voting the WHITE proxy to elect its slate of two experienced nominees,
Paul J. Evans and Kurtis J. Wolf, at the 2020 Annual Meeting.
If you have any questions about how
to vote, the Investor Group’s proxy solicitor Saratoga Proxy Consulting can be reached at info@saratogaproxy.com or (888)
368-0379.
About Hestia Capital
Hestia Capital is a long term focused,
deep value investment firm that typically makes long-term investments in a narrow selection of companies facing company-specific,
and/or industry, disruptions. Hestia seeks to leverage its General Partner’s expertise in competitive strategy and capital
markets to identify attractive situations within this universe of disrupted companies. These companies are often misunderstood
by the general investing community and provide the ‘price dislocations’ which allows Hestia to identify, and invest
in, highly attractive risk/reward investment opportunities.
About Permit Capital Enterprise Fund
The Permit Capital Enterprise Fund,
through its management company, follows an investing philosophy that seeks to identify securities trading at a discount to intrinsic
value. The investment approach is bottom-up and focused on the valuation of the securities of individual issuers. The management
company’s assessment of intrinsic value is based on its own fundamental research as well as numerous sources of publicly
available information.
Contacts:
Kurt Wolf at 724-687-7842
John Broderick at 610-941-5025
Item 2: On May
20, 2020, the following materials were posted by the Stockholder Group to https://www.RestoreGameStop.com:
GameStop (NYSE:GME)
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