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Two GameStop (GME) - Get GameStop Corporation Report investors threatened a proxy fight if the videogame retailer doesn't take steps to improve its performance, including changing its board.

In a letter to the directors of the Grapevine, Texas-based company, executives at Permit Capital Enterprise Fund L.P. and Hestia Capital Partners LP said GameStop has "dramatically underperfomed" the company's self-identified peer group, the Russell 2000 and the S&P 500. The two firms have a combined 1.3% stake in GameStop.

Earlier this month, GameStop announced a $300 million repurchase program, replacing a previous program that had $170 million remaining. The company also said it planned to retire its $350 million 2019 notes, due in October.

"We believe this underperformance is a result of a stale Board (average tenure of 11 years) that is not functioning well," the letter said. "Surveying the last five years, we struggle to identify any significant steps the Company has taken - besides the introduction of collectibles - to adapt to disruptive dynamics in its core business."

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The investors said that it would be in the best interest of all stockholders for GameStop to commit to a tender offer of up to $700 million, in addition to ongoing repurchases.

While maintaining they "are not typically activist investors," the two executives said the board's lack of a meaningful response to a previous letter and "Hestia's considerable efforts to engage with the Board, have driven us to group together and speak publicly now."

"It is our goal to work constructively with the Board to address ongoing value destruction at the Company," the letter said. "However, if this letter fails to elicit an acceptable response, we are prepared to take our proposals directly to stockholders and nominate directors for election at the Company's 2019 annual meeting."

GameStop didn't immediately response to a request for comment. Shares were trading down 2.5% to $11.30 in premarket trading.