DEFA14A: Deckers Outdoor Corporation Amends Stock Split Proposal, Removes Preferred Share Increase

Deckers Outdoor Corporation is amending its proposal for a six-for-one stock split to remove the proportionate increase in authorized preferred shares following feedback from institutional stockholders and proxy advisory firms.

Summary

• Deckers Outdoor Corporation has filed a supplement to its definitive proxy statement regarding the 2024 annual meeting of stockholders.
• The supplement amends Proposal No. 6, which concerns an amendment to the company's certificate of incorporation to effect a six-for-one stock split.
• The original proposal included a proportionate increase in authorized shares of both common and preferred stock.
• The amended proposal removes the increase in authorized preferred stock, keeping it at 5,000,000 shares.
• The number of authorized common shares will still increase from 125,000,000 to 750,000,000.
• As of March 31, 2024, Deckers had 25,592,318 shares of common stock issued and outstanding.
• The board believes the stock split will make the shares more affordable and attractive to a broader group of investors and increase liquidity.
• The board may elect not to proceed with the stock split even if stockholders approve it.
• The forward stock split is expected to become effective on or about September 13, 2024.
• Approval of the New Amendment requires the affirmative vote of a majority of the outstanding shares entitled to vote at the Annual Meeting.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The stock split is generally viewed favorably as it can increase liquidity and attract more investors. The company's responsiveness to shareholder feedback is also a positive sign. However, the board's discretion to abandon the split introduces some uncertainty.

Positives

• The stock split aims to make shares more affordable and attractive to a broader investor base.
• Increased liquidity in the trading of common stock could positively impact the aggregate value of shares.
• The company is responsive to stockholder feedback and implementing strong corporate governance practices.
• The company will have sufficient authorized but unissued shares available for issuance by our Board in connection with, among other things, grants under our equity incentive plans, financings, mergers or acquisitions, strategic transactions and other general corporate purposes.

Negatives

• The board reserves the right to elect not to proceed with the stock split even after stockholder approval, which introduces uncertainty.

Risks

• The board may determine not to proceed with the stock split if it is no longer in the best interests of the company and its stockholders.
• The stock split requires stockholder approval, and there is a risk that it may not be obtained.

Future Outlook

The company anticipates the forward stock split becoming effective around September 13, 2024, pending board approval after the stockholder vote.

Management Comments

• Our Board regularly evaluates the effect of such growth on the liquidity and marketability of our common stock and believes the considerable appreciation in the trading price of our common stock makes our common stock less affordable and attractive to fewer investors.
• Our Board believes effecting a six-for-one stock split of our outstanding shares would make our shares more affordable and attractive to a broader group of potential investors and increase liquidity in the trading of our common stock, which could have a positive impact on the aggregate value of our shares.
• Based on conversations with and feedback from certain institutional stockholders and proxy advisory firms, our Board has determined it is in the best interest of the Company and its stockholders to amend Proposal No. 6 to no longer provide for a proportionate increase in the authorized shares of our preferred stock.
• We believe our response to feedback received from certain stockholders and proxy advisory firms reflects our ongoing commitment to stockholder outreach efforts and the implementation of strong corporate governance practices.

Industry Context

Stock splits are often used by companies whose share prices have risen significantly to make the stock more accessible to a wider range of investors, potentially increasing trading volume and liquidity. This move aligns with common practices in the market to enhance investor participation.

Comparison to Industry Standards

• Companies like Apple and Tesla have previously executed stock splits to lower their share prices and attract more retail investors.
• The six-for-one split is a relatively large split compared to some other companies, which may indicate a strong belief in future growth.
• The decision to remove the preferred share increase demonstrates responsiveness to investor concerns, a practice valued in corporate governance.

Stakeholder Impact

• Shareholders may benefit from increased liquidity and potential appreciation in share value.
• Potential investors may find the stock more affordable and attractive.
• Employees with stock options or equity grants will see an increase in the number of shares they hold, but the overall value should remain the same immediately after the split.

Next Steps

• Stockholder vote on the amended proposal at the Annual Meeting on September 9, 2024.
• Board decision on whether to proceed with the stock split after stockholder approval.
• Filing of the New Amendment with the Secretary of State of Delaware, expected on or about September 13, 2024, if the board decides to proceed.

Key Dates

Keywords

stock split, common stock, preferred stock, authorized shares, proxy statement, Deckers Outdoor Corporation, annual meeting, corporate governance, liquidity, investors