A former chief executive and major shareholder of Emak Worldwide Inc. has halted an effort to shake up its board of directors, but has vowed to continue to press for change at the marketing services and consumer products company.

In January, Donald Kurz, who owns a 26 percent stake in the Los Angeles firm, kicked off a proxy fight to nominate six members to Emak’s board of directors. Kurz was a board member until he resigned in August of last year, shortly after he stepped down as chief executive in May.

Now president of Hollywood management consulting firm Insight Creative Solutions Inc., Kurtz wrote a letter to current Chief Executive James Holbrook that he only withdrew from the proxy fight “in light of certain changes that I believe you and the board have made in response to my efforts (and) at this time it is not in the best interests of the company, its customers or its employees.”

Emak is a global marketing services company with offices in Ontario, Chicago and six foreign countries. It does promotional marketing and other services for clients such as Burger King, Frito-Lay, Kellogg’s, Kohl’s, Kraft and Macy’s.

But its fortunes have tumbled over the past few years. The company lost $41 million in 2005, almost four times more than losses of $11.2 million the prior year. It earned a $6.5 million profit in 2003. The company’s stock, which traded above $15 per share in early 2004, dropped to $5.37 late last year though it has since rebounded to above $8.

Kurz contends that since his resignation the company’s leadership has lost a major client, failed to garner new ones and overcompensated Holbrook with a $500,000 base annual salary, a $300,000 signing bonus and an incentive program of up to 100 percent of base salary. He has suggested the company focus more on new business development, consolidate operations and make other changes to improve performance.

In response to Kurz’s proxy fight, Holbrook said the company has made no special concessions and that his predecessor ended the proxy battle because it was failing. “The proxy fight by the ex-CEO was a non-starter and was not going to get voted in, so Mr. Kurz thought it better to withdraw it than have it fail,” he said.

However, Holbrook acknowledged the board tried to entice Kurz to retreat from his efforts by offering him to retake his seat on the board but Kurz declined the offer.

The two sides have also fought over a poison pill Emak’s board approved. Kurz believes the plan was in response to his efforts and decried the measure. “This will discourage persons who might otherwise be interested in acquiring Emak at a price that is attractive to shareholders,” wrote Kurz.

Holbrook disagreed with Kurz, saying the measure wouldn’t restrict the company from making appropriate moves in the future. “The pill is highly digestible. I view it more as Maalox than poison,” he said. “It is there to keep the disruptions to a minimum.”

Meanwhile, Holbrook seemed ready to put disruptions behind him. He said he has an “amicable” relationship with Kurz and the two chatted over drinks recently.

Holbrook admitted that Emak is no success story in its current state. “We have good corporate board governance, we have restructured the company, (and) we have upgraded the management where we have needed to,” he said. “We are midst of a turnaround.”