Performance Sports Group Ltd., the sporting goods company whose stock has been battered by a weak Canadian dollar, said its former chairman plans to launch a proxy battle for a seat on the company’s board.
The Exeter, New Hampshire-based company is recommending that shareholders reject W. Graeme Roustan’s nomination at its annual meeting on Oct. 14 in New York, according to proxy documents filed with regulators Tuesday.
“It is unfortunate that Mr. Roustan has decided to engage in an unnecessary and costly proxy contest at a time when it is clear the company is successfully implementing its corporate strategy, capturing market share and driving performance,” the company said in a statement.
Roustan, who is still an investor in the company, declined to comment. His concerns were outlined in a May letter to the board expressing his reservations about its new retail strategy launched in January.
Roustan’s bid to return to the board comes as the lower Canadian dollar has dragged on Performance Sports’ stock. Shares have fallen almost 30 percent since its third-quarter results were released in April. The weaker dollar reduces the value of sales in Canada, where the company gets a third of its revenue.
Performance Sports, formerly known as Bauer Performance Sports Ltd., manufactures equipment for ice hockey, roller hockey, and lacrosse, as well as related apparel.
The company, founded in Canada in 1927, was purchased from Nike Inc. in 2008 by an investor group led by Kohlberg & Co., which appointed Roustan as chairman. The company went public in 2011 in Toronto and now trades in New York as well.
Roustan resigned as chairman in 2012 before withdrawing his name for reelection the same year. The Sherbrooke, Quebec, native has since gone on to several ventures, including a bid to bring a National Hockey League expansion team to Markham, Ontario, near Toronto. He continues to seek to bring another NHL team to the Greater Toronto Area despite failing to submit a planned bid for an expansion team this year.
Roustan has had other legal disputes with former business partners in Texas and New Jersey where settlements were eventually reached.
Roustan first approached Performance Sports’ board in January 2015 seeking a seat on the board before his request was rejected in April, according to the proxy material.
He subsequently sent a letter in May questioning the company’s imminent opening of its first “Own the Moment” Bauer Hockey retail store. The outlet is part of a new initiative that aims to open eight to 10 stores dedicated to hockey over the next two to four years in North America.
Roustan has made several more failed attempts to get on the board since, and finally in mid-August offered not to launch a fight if the board agreed to pay for some of his expenses, according to the proxy material. The board rejected that proposal because the cost was deemed to be too high, the documents state.
Martin Landry, an analyst with GMP Securities, said he believes the stock may have found a bottom, in a recent note to clients.
“While the currency headwinds facing PSG are material, these headwinds are not representative of operational issues and are out of management’s control,” he said on Sept. 3.
He said the company’s prospects were sound given expected margin improvements, reduced working capital needs, and market share gains across all its brands.