Select Comfort Corp. notified federal regulators Friday that it has rejected a shareholder group's request to seat the group's two nominees on the Plymouth company's board of directors.
The move could force a proxy fight at the company's annual meeting this spring. In a letter to the U.S. Securities and Exchange Commission, officials of the manufacturer and retailer of adjustable mattresses said the move by Blue Clay Capital Partners of Minneapolis is "in opposition to the nominees recommended by our board."
"We carefully considered the credentials and experience of the Blue Clay nominees, as well as the company's criteria for the nomination of directors," the letter said. "Ultimately, our board unanimously determined" that Blue Clay's nominees would not get the company's approval. As such, the issue could now be put to a vote at the annual meeting."
The possible proxy fight comes on the heels of a rough couple of years for Select Comfort. The company has generated positive sales growth but suffered from costly product introductions, advertising snafus and additional costs related to opening new stores and launching a national TV campaign.
Recent improvements to quarterly earnings have helped boost the stock, which is trading at levels not seen since 2012. The stock, which was $13.64 a share in January 2014, closed Friday at $31.92, down 39 cents a share.
Adam Wright, a managing partner of Blue Clay and one of the people the hedge fund wants to nominate for the Select Comfort board, won a seat on Famous Dave's of America's board after Blue Clay acquired 6 percent of the stock.