The Charlotte Russe (CHIC) Board of Directors needs to stop being entrenched and act in the best interests of the shareholders. The recent "poison pill" adoption is not in the shareholders' best interest, nor is a Board of Directors where very few have any economic interest in the Company other than free stock grants and Board of Directors fees for sitting on their Board.
I think it is time to clean house at the next annual shareholder meeting, if they keep going about their ways. Below is copied a letter sent two weeks ago, which received no response:
August 27, 2008
Ms. Jennifer Salopek
Charlotte Russe Holding, Inc.
4645 Morena Boulevard
San Diego, CA 92117
Dear Ms. Salopek and Charlotte Russe Holding, Inc. Board Members:
As you may or may not be aware I hold a beneficial interest of 74,600 shares of stock in Charlotte Russe Holding, Inc. ("CHIC" or the "Company"). As you are aware CHIC's stock prices continues to languish, even after the Company repurchased 16.3% of the outstanding stock on April 2nd, 2008.
I'd like to take the time to express my concern about the recently enacted shareholder rights plan or "poison pill" which went into effect earlier this week. This is a blatant disregard to the interests of the shareholders who ultimately own the company. The Board of Directors should let the shareholders decide for themselves if an offer is acceptable or not. I'd encourage the Board to immediately rescind the poison pill defense or to allow the shareholders to decide on the issue through a vote. Members of the Board of Directors may have become insensitive to the concerns experienced by the Company's owners due to the Board's near failure to qualify as owners themselves. I have to question if they aren't acting in their own self-interests of collecting fees and stock grants for serving in their capacity, rather than in the best interests of the owners of the Company. If members of the Board of Directors believe in the future of the Company and that the stock is undervalued they would be purchasing shares themselves in the open market.
The Board of Directors agreed to return value to the shareholders through repurchasing shares in April and given the significant erosion in share price since then, I'd encourage them to make an immediate authorization and commencement of another large share repurchase utilizing the Company's cash balance and/or combination of cash and credit facilities. This should benefit all shareholders through their respective ownership stakes and should provide for larger earnings per share through reduced outstanding shares in the future. If credit facilities are utilized, the Company can always retire debt incurred by future cash flows or a secondary offering at a later date and at a higher stock price, resulting in a net decrease of shares.
In regards to the recent departure of Company executives, I'd encourage the Board to consider bringing back Dan Carter as CFO. He performed well during his tenure. I don't know why Mark Hoffman "retired" so suddenly, but if it was due to a conflict with the Board, I'd encourage the Board to look at his history of performance for the shareholders and to encourage him to come back from "retirement" and be reinstated as CEO.