International Game Targeted With Proxy Fight by Ex-CEO Mathewson

International Game Technology, the biggest slot-machine maker, faces a challenge from shareholders planning to nominate four people to its board, including former Chairman and Chief Executive Officer Charles Mathewson.

Mathewson is working with Ader Investment Management LP, run by former casino-industry analyst Jason Ader, according to a proxy filing yesterday by Reno, Nevada-based IGT. The group owns 8.05 million shares, or about 3 percent, of the stock.

The move follows an 18 percent drop in IGT’s share price last year, the third straight annual decline. IGT said it has held “numerous calls, e-mails and face-to-face meetings” with Ader, including his November 2012 presentation to the board.

“IGT has provided multiple opportunities for the Ader group to offer plans or strategies to enhance shareholder value,” the company said in its filing. “To date, it has not suggested any constructive alternatives to the company’s strategy.”

The Ader group plans to nominate Ader and Mathewson, along with Raymond J. Brooks and Daniel B. Silver, according to the filing. Through a spokesman, Ader and Mathewson declined to comment.

The shares fell 1.7 percent to $14.68 yesterday in New York. They closed at an all time high of $49.06 in February 2008.

IGT’s share price has been impacted by “economic headwinds that have not helped us,” Chief Executive Officer Patti Hart said today in a telephone interview. The company is in a “show me state” as result of its acquisition last year of social gaming business Double Down Interactive LLC for as much as $500 million.

“We’re not happy with the stock price either,” she said. “I think the stock price since I joined the company is up significantly.”

Executive Dispute

International Game Technology shares have advanced 54 percent since Hart became CEO on April 1, 2009.

IGT said its board believes the proxy fight is motivated by a long-running dispute between the company and Mathewson. In 2010 it severed financial ties with the executive, who retired in 2003, according to the filing.

Mathewson resigned from the position of chairman in Oct. 2003 after serving in that role since Feb. 1986, according to press release at the time. Hart said Mathewson received compensation until 2010.

“Mathewson has become less supportive of the company, driven by our continued work to extract him from the business,” Hart said.

Before it's here, it's on the Bloomberg Terminal.