EX-GOODY’S CEO FILES SUIT TO DUMP BOARD
NEW YORK — Robert M. Goodfriend, who was ousted as chairman and chief executive officer of Goody’s Family Clothing Inc. in September, has filed a lawsuit seeking to unseat the chain’s entire board of directors.
Goodfriend, a member of the founding family of 171-unit, moderate-priced apparel chain, owns 63 percent of Goody’s shares.
In a statement, Goody’s, based in Knoxville, Tenn., said Goodfriend’s action was an outgrowth of the board’s decision to remove him as chairman and ceo.
According to Goody’s, Goodfriend has demanded a special shareholders’ meeting on Jan. 10 to remove the board.
Goodfriend’s lawsuit wants the court to determine that the board can be removed by a vote of the majority of outstanding shares, which he owns, rather than 80 percent.
Goody’s said Goodfriend had obtained a restraining order that prevents the company from altering its bylaws or charter, from amending or implementing a shareholders’ rights plan and from issuing any capital stock or selling any “material portion of the company’s assets.”
The restraining order prohibits Goody’s from making any severance payments to its directors, officers or senior management.
The retailer noted that following the dismissal of Goodfriend, the board formed a special committee of all nonmanagement members of the board. It charged the committee with evaluating strategic alternatives, among other concerns.
“The special committee has been in discussions with Mr. Goodfriend regarding…the possibility of a sale of the common stock of the company not owned by Mr. Goodfriend to him, or if he declines to make an offer for such shares, a possible sale of the company to third parties,” Goody’s said in the statement.
G. William Speer, a spokesman for the special committee, said the group was “disappointed” that Goodfriend has chosen to litigate rather than continue the talks.
Speer said Goody’s was working on an agreement with Goodfriend through last Tuesday — the day before the retailer announced its former executive had filed suit.
“We’re still willing to have a dialog with Goodfriend,” said Speer. “He’s not given a clear indication as to what his preferences are” about making a bid for Goody’s minority shares or selling the company to third parties.
In response to the suit, Goody’s defended its actions and said its lawyers were reviewing the documents.
As reported, Goodfriend, whose father founded Goody’s 41 years ago, was removed as chairman and ceo immediately after telling the board he was dissatisfied with the retailer’s status as a public company.
The board interpreted Goodfriend’s statement as a precursor to a bid to take the chain private.
Goody’s lost $2.1 million in the third quarter ended Oct. 29, hurt by lower profit margins and weak September comparable-store sales. The loss was after a $2.8 million charge for professional fees related to a class action suit against the company. — Fairchild News Service