After much acrimony, shareholders at San Francisco-based gifts marketer RedEnvelope elected all six company-backed nominees to the board of directors during its 2004 Annual Meeting on Aug. 27.
They are: board chairman Michael Moritz, a partner with the venture firm Sequoia Capital; Michael Dunn, president of Prophet Brand Strategies; Karen Edwards, formerly with Yahoo!; Charles Heilbronn, an executive with Chanel Limited; Daniel R. Lyle, a former partner at PricewaterhouseCoopers; and Alison May, Red Envelope’s current president/CEO.
The vote ended an ugly public fight over which faction should take control of the now-public company. The shareholders won out over a dissident group led by Red Envelope’s founder Scott Galloway, who earlier in August publicly challenged the company’s board chairman Michael Moritz. Galloway charged that under Moritz’s leadership, Red Envelope had lost its way. Galloway, one of the company’s largest shareholders, proposed a series of initiatives that would spur growth at Red Envelope, which has had a series of marketing and fulfillment missteps, most notably during last Christmas.
Moritz responded by rejecting Galloway’s plan and then reduced the number of board seats, including Galloway’s, who then formed a dissident shareholder group called, “The Concerned Shareholders of Red Envelope.” In an open letter to shareholders, “The Concerned Shareholders” cited that Red Envelope had lost 47% of the value of its stock price since it went public Sept. 25, 2003. And of the 81 IPOs filed in 2003, Red Envelope ranks 71st in performance.
If Galloway’s group had been successful, former Red Envelope chief executive Martin McLanan, currently the CEO at gifts/art supplies cataloger Flax Art & Design, would have been named interim CEO.
At the meeting, shareholders rejected the proposal to add two seats to the board of directors. The bylaws of RedEnvelope permit the company to add seats when appropriate candidates are identified. Shareholders also ratified the appointment of Deloitte & Touche as its independent registered public accounting firm for 2005.