April 09, 2010

Kiosk Founder Seeks Blockbuster Board Seat

Infighting at Blockbuster spills over into board of directors. Meyer wants in. Problem is he originally got in at $6.50/share (2007) and now those shares are worth 30 cents (ouch...).

Kiosk Founder Seeks Blockbuster Board Seat | homemediamagazine.com

A Blockbuster investor and founder of DVDXpress movie rental kiosks April 8 sent a proxy notice to shareholders soliciting their support to join Blockbuster’s seven-member board of directors.

Gregory Meyer, who owns 620,000 shares of Blockbuster stock, is seeking to replace board member James Crystal.

The Dallas-based DVD rental company’s entire board, including CEO Jim Keyes, is up for re-election at the annual shareholder meeting May 26.

Meyer in 2001 founded DVDXpress, a kiosk vendor with 1,000 units he later sold to Coinstar in 2007. He then served as managing director of DVDXpress until 2009, when it was merged with Redbox.

In the proxy filing, Meyer said Crystal was named to the board in 2007 when Blockbuster shares traded at $6.50 per share. They now trade for around 30 cents per share.

He said Crystal sits on seven different company boards, which does not allow the adequate time needed to help turn around Blockbuster’s operations.

“It is difficult to see what good Mr. Crystal’s ‘risk management’ has done for Blockbuster shareholders over the past three years given that significant market share has been lost to competitors and the value of the stock has been decimated,” Meyer wrote in the filing.

In addition Meyer cited the board’s relatively low ownership of Blockbuster shares — underscored by Crystal’s 140,000-share stake largely acquired through time served and not on the open market — as a catalyst for a change in directors.

Blockbuster CEO Jim Keyes reiterated his support for Crystal, saying Meyer's ownership stake in the company was not grounds to become a member of the board.

“Jim Crystal is very important for his experience with the company during the last three years and invaluable assistance in Blockbuster’s plans for recapitalization of the company and the transformation of our business model," Keyes said. "His continuity in board service, along with the others on the company’s slate, will play a key role in our success at Blockbuster."

Posted by staff at April 9, 2010 10:40 AM