Activist investor Marcato Capital Management is urging the shareholders of Deckers Outdoor Corp. (DECK) , which makes Ugg and Teva footwear, to replace the entire board, arguing that the current board cannot be trusted to deliver on its goals.

"For several years, Deckers' board of directors and management have presided over a failed business strategy that has led to a precipitous decline in profit margins, runaway corporate overhead expenses, wasteful capital spending, and unsuccessful acquisitions triggering large write-downs," Mick McGuire, a managing partner at Marcato, wrote in a letter to shareholders.

"Simply put, Deckers' board has failed its stockholders repeatedly, over a multi-year period, and should not be trusted to deliver on its goals," McGuire wrote. The San Francisco-based Marcato owns about 8.4% of Deckers, its second-biggest single holding, according to financial research solutions company FactSet. Marcato manages about $1 billion of assets, according to an article in Business Insider in June, which cited a person familiar with the numbers.

Deckers shares fell 92 cents, or 1.39%, to $65.19 in Nasdaq trading today.

When asked for comment, Goleta, Calif.-based Deckers pointed to a letter sent to shareholders on Nov. 2, which stated that Marcato is "not willing to consider a negotiated resolution to its proxy contest unless we replace a majority of the directors," adding that this is "simply the wrong outcome for Deckers."

Marcato said it is taking the "necessary step" of seeking to replace the current slate of directors with people "who will bring the experience, focus and commitment to help the company succeed."

Marcato is putting forth nine candidates to replace the board. The firm nominated Deborah Derby, a director at Vitamin Shoppe Inc. (VSI) ; Kirsten Feldman, a faculty member of the University of Waterloo and the former head of global retail group at Morgan Stanley's (MS) investment banking division; Steve Fuller, the former chief marketing officer at LL Bean Inc.; Matthew Hepler, a partner at Marcato; Robert Huth, the former chief executive officer at David's Bridal; Jan Rogers Kniffen, CEO of retail consulting firm J Rodger Kniffen World Wide Enterprises; Mitchell Kosh, the former executive vice president and chief administrative officer at Ralph Lauren Corp. (RL) ; Nathaniel Lipman, a director at Exela Technologies Inc. (XELA) and former Chairman and CEO of customer engagement firm Affinion Group Holdings Inc.; and, Anne Waterman, who spent 15 years at Michael Kors (KORS) .

The Ugg shoe.
The Ugg shoe.

The current nine-member board has an average tenure of 7.3 years, which is less than the 9.14-year average for S&P MidCap 400 companies, according to BoardEx, a relationship mapping service of TheStreet Inc. There are also three women on the board, representing 33%, which is more than the average female representation, about 18%, on S&P MidCap boards.

Still, Marcato's plan to replace the entire board doesn't constitute a change in control, according to Charles Elson, a professor at the University of Delaware. Elson recently told The Deal that replacing directors isn't a change in control, it is merely a change in oversight.

It is also very difficult to take control of an entire board but not impossible, Elson said in an interview on Monday. For instance, activist hedge fund Starboard Value replaced the entire board at Darden Restaurants Inc. (DRI) in 2014.

Elson said that when an activist is seeking control, the focus will be on who are dissident directors coming in and what their plan is. Shareholders will ultimately determine "how good are the proposals that [the dissident candidates are] making," Elson said.

Marcato said in the letter that if elected, its slate of dissident directors will focus on selling or spinning off non-core brands and closing more physical retail stores in addition to reducing costs and recapitalizing the balance sheet.

Deckers said in April that it would review strategic alternatives, including a sale. In late October, the company said that it had contacted 90 potential buyers but was unable to find an acquirer.

Deckers  is scheduled to hold its annual shareholder meeting on Dec. 14.

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