Let the Schoonover Reign Death Watch Begin!

Circuit City's (CC) Board responded to activist Mark Wattles' demands.

In said letter they state:

April 4, 2008

Mark J. Wattles
Wattles Capital Management, LLC
7945 W. Sahara Avenue, Suite 205
Las Vegas, NV 89117

Dear Mark:

We have received your letter of April 2, 2008, in which you indicate that you would like to meet with the Circuit City Board of Directors or with its lead director to discuss your views regarding Circuit City. I will contact you to set a mutually agreeable time.

It appears to me from your letter and certain other statements that you may not have a full understanding of the Company's current strategy and challenges, and I think a conversation will help provide a better picture of those efforts and possibly facilitate a more productive dialogue between the Company and your firm. I also want to note that the company had previously reached out to you to set up a meeting following the year-end management quiet period or to listen to your concerns prior to our reporting date.

It was a surprise to read that you would not permit the individuals you have proposed as nominees to the Company's Board of Directors to meet with the Nominating and Governance Committee of the Board without imposing an unusual and unreasonable condition for such a meeting. Our practice is for the Committee to evaluate director nominees proposed by shareholders in the same manner it evaluates other prospective nominees. We believe this is a very standard and appropriate process. The Board strives to select for its membership highly qualified individuals who are dedicated to advancing the interests of the Company's shareholders and actively seeks nominees who will bring diverse talents, experiences and perspectives to the Board's deliberations. Certainly you would agree the Board has an obligation to its shareholders to thoroughly research and personally interview potential members. This is even more true given that your proposal to remove the entire Circuit City Board would, if adopted, give your nominees absolute control of the entire Board.

I trust that we can resolve this point in a personal conversation, so that the Nominating and Governance Committee can meet the individuals you have nominated to the board, and separately look forward to the opportunity to meet with you.
Sincerely,

/s/ Mikael Salovaara
[JT]

Here is the "between the lines" on this one. Wattles is attacking both the Board and CEO Schoonover. What the board is going to do is offer up Schoonover as a sacrificial lamb to get Wattles to back off his demand to remake the Board.

Defending Schoonover is an exercise in futility as the "conditions" the company now facing are of his creation and even those who are his closest allies must realize this. If they do not, CC's problems are deeper than anyone thinks.

They are going to go through the public pronouncements necessary to save face but when all is said and done, Schoonover is out.
That being said, we can now officially beginning the "Schoonover Reign Death Watch"

My guess is that before the month is out CC has a new CEO.

Disclosure: No position.

Comments

[hazeleye]

I believe that the bulk of shareholders would agree with you. I think the only chance Schoonover has is if his THE CITY concept stores are showing considerable progress versus the traditional Circuit City style store. But, even if they are, it very well may be too late to save Schoonover.

[circuitvol]

Yes the writing is on the wall for Schoonover but the damage has been done. He has set the company back years and although I agree he is on his way out, he will walk away with multi millions in a settlement. He's no dummy in how to leverage himself for $$...........there's a term for people who do that for a living.......

[BayMan]

Ditto to comments of Circuitvol. Fancy Schoonover starting another retail chain with his settlement money to take on Best Buy. Or, would he go back to Best buy and make it Worst Buy?

[billddrummer]

I don't think BBY wants him back.