ValueVision board scrambled

Dissident shareholders of Value­Vision Media Inc. claimed that Wednesday's stockholder vote gave them half the seats on the TV and Internet shopping firm's eight-­member board.

ValueVision, an unprofitable TV and Internet shopping firm based in Eden Prairie, had no comment on the claims by the New York-based ­Clinton Group, saying it is still tallying votes from the shareholder meeting that was called to address Clinton's demand for an election. The company, which strenuously opposed the Clinton slate of candidates, said it "expects to announce final results of the election within the next few business days."

Mark Smith, an analyst at Feltl and Co. in Minneapolis, said his firm would hold off on making any changes to its financial outlook for ValueVision until the official vote total is released.

"It appears that Clinton Group has the votes, but that's a pure assumption," Smith said. "We don't know."

But a rise in ValueVision stock suggests that Clinton Group's claim is being given credence, Smith said. ValueVision shares closed at $5.01 Wednesday, up 33 cents, or 7 percent. "That tells me that people are assuming that Clinton Group has the votes, and that people like the results," Smith said.

But even if Clinton Group did win half of ValueVision's board seats, the future of the firm remains in doubt. The board would then be split four-to-four between dissidents and board members who have previously supported management.

That makes it less likely that the Clinton Group can carry out its agenda of replacing the firm's CEO and revamping the company's marketing strategy, something it would have been able to do if all six of its board nominees had been elected.

While the victory of insurgents over incumbent board members was once a rare thing in corporate governance, it has become less so over the last several years, said Claire Hill, a professor at the University of Minnesota School of Law.

"In recent years, there has been a focus on the issue of having on the company board people who are not management's nominees," Hill said. "I would not be comfortable using the term 'rare.' "

The Clinton Group said its victory claim is based on its own survey of the top 25 owners of ValueVision stock, which includes institutional investors, mutual funds, hedge funds and other professional investment organizations. Based on that survey, Clinton said that four of its six nominees "received support from more than 70 percent of the shares voted."

Late Wednesday, the Clinton Group clarified that it was claiming four of its nominees had been elected, not six, as had appeared to be the case based on confusing wording in an earlier Clinton Group press release.

The outcome followed months of public shareholder-company feuding over the financial performance of ValueVision, which operates ShopHQ, a 24-hour television shopping network, and ShopHQ.com, an e-commerce website (until recently they were branded as ShopNBC). In the fiscal year that ended in February, the company lost $2.5 million on revenue of $640.5 million.

The Clinton Group, known as an activist investment firm, also let ValueVision know that it thought CEO Keith Stewart should be fired.

ValueVision's management had urged shareholders to consider its five-year track record of improving revenues and reducing net losses, along with decreasing transaction costs and increasing online sales. Management, the company said, was "transforming a business that was seriously challenged and near bankruptcy into a growing and vibrant company."

"ValueVision's record is clear and compelling," Randy Ronning, ValueVision's board chairman, said in a statement issued a week ago. He urged shareholders not to vote for Clinton Group's "superficial ideas to bet the company's future on costly, uncertain celebrity-linked products or strategies to be executed by an as yet undetermined CEO."