New York The chairman of Barnes & Noble Inc., Leonard Riggio, testified Friday that the poison pill plan the chain adopted after billionaire Ron Burkle increased his stake was about protecting the company, not him and his family.
Riggio disputed Burkle's allegations that the shareholder rights plan adopted last November was an effort by the book retailer's board to protect the Riggio family's controlling interest.
"It's about the company," said Riggio, founder and former CEO of Barnes & Noble, the Associated Press reported.
Burkle attorney Stephen Alexander responded to Riggio's testimony by playing a portion of the videotaped deposition he gave in advance of a trial that began Thursday in Delaware Chancery Court.
"The pill was about me and my family," Riggio said in the deposition.
Alexander also played a deposition excerpt in which Riggio said that remaining the largest shareholder would be good for both him and the company.
"I have a strong preference for being the largest shareholder of Barnes & Noble, being its founder," Riggio said.
Under cross-examination by an attorney for Barnes & Noble, Riggio later suggested that his deposition testimony referred to the fact that the rights plan put limits on the ability of him and his family to acquire additional stock, according to the report.
"We're not allowed to buy stock, period," he said.
Under the poison pill plan, no investor can buy more than 20% of the company's shares without board approval. That would allow other Barnes & Noble shareholders to buy stock at a steep discount, thus diluting the voting power of the acquiring investor.
Burkle argues in his lawsuit that the plan gives an unfair advantage to Riggio, who is allowed to keep his ownership stake of more than 30%and who, with other family members and insiders, controls roughly about 38% of the company's shares.
Burkle contends that his Yucaipa Cos. should be allowed to buy up to 30% of Barnes & Noble stock without triggering the poison pill.
The poison pill was adopted last year after Burkle increased his stake in New York-based Barnes & Noble to about 18%. Burkle wants to see changes in the company's corporate governance and expects to propose a slate of three new directors at the next annual meeting, which is scheduled to be held by Sept. 30.
But Gregory Taxin, founder of a proxy advisory firm for institutional investors, testified Friday that the rights plan makes it difficult for Burkle or others to wage a proxy contest.
Under questioning from Alexander, Riggio said he met with advisers this year to discuss antitakeover measures and how to respond to a request by Burkle to buy more shares without triggering the poison pill. Riggio said he doesn't believe other board members received copies of a document he had been given listing antitakeover measures, and that no other board members were invited to a February meeting to discuss how the board should respond to a letter from Burkle.
Riggio acknowledged that he and Burkle have had their differences since first teaming up in a business venture more than a decade ago, but that he doesn't see the dispute over the poison pill as a personal fight.
"This is not about Burkle and myself," he said.