You might remember the scene in the “Godfather” in which the consigliere exhorted the hotheaded Sonny to squelch his angry impulse to avenge the assassination attempt on his father.
“Your father wouldn’t want to hear this, Sonny,” shouted Tom Hagen, the character played by Robert Duvall. “This is business! Not personal!”
I couldn’t help but think of that scene last week when I read the articles about how L.A. billionaire Ronald Burkle was snubbed by shareholders of Barnes & Noble. After all, Burkle seemed poised to win his proxy fight to put himself and two compatriots on the bookseller’s board, but lost in a close election Tuesday.
Could it be because Burkle had turned what was, after all, just a business proposition into something very personal and nasty? So much so that it turned off some shareholders? It felt that way.
Burkle’s Yucaipa Cos. hammered Barnes & Noble’s directors and especially its chairman, Leonard Riggio, in an increasingly venomous way. One of Burkle’s main complaints was that Riggio was self-dealing by having the bookseller buy companies in which the Riggios had an ownership interest, which is a perfectly valid complaint, but Burkle couldn’t seem to keep himself from calling Riggio and his family names. Directors, too. (Burkle, by the way, was represented by L.A.’s Sitrick and Co. public relations firm during some of the proxy fight.)
For example, in a Sept. 1 letter, Burkle labeled directors’ statements as “ironic and hypocritical” and accused them of using a scare tactic to try to fool stockholders. He also said: “Riggio and his family have contributed to the destruction of millions of dollars of shareholder value.”
In a different letter to shareholders, Burkle wrote that the chairman doesn’t ask a member of the Barnes or Noble families to cut ribbons at store openings. “Riggio doesn’t want anyone else in his story,” he wrote.
In a letter on the eve of the shareholder vote, Burkle sank to his lowest, implying that Riggio is such a snake that he’s incapable of making a good-faith bid to buy the company himself, as Riggio suggested he would.
“Do you trust that Leonard Riggio will do anything other than make a low-ball bid and then seek to block any other bidder…?” asked Burkle.
To be fair, Riggio and Barnes & Noble got in the gutter during the fight, too. But – also to be fair – it came off as a defense against a nasty attack.
Funny, but Burkle may have had the better argument. Riggio’s stewardship does, in fact, smack of self-dealing. The company’s
stock has swooned, and the bookseller’s board underestimated the existential threat from the
electronic age. (It’s e-reader, called Nook, seems like a late-to-the-party pipsqueak screaming “Me too!”)
But Burkle lost his argument on style. Shareholders (I’m not one, gratefully) have good reason to read all those nasty letters and shake their heads. They may have concluded that this guy Burkle made some good points, but man, is he the guy you’d want on your board, attacking the chairman and his family?
Maybe, like good consiglieres, they didn’t want to hear such hotheaded, personal stuff. After all, it’s just business.
By the way, Burkle has a fair chunk of stock in L.A.’s American Apparel. That company’s chief, Dov Charney, may be wondering if he’s next to get the Riggio treatment.
Charles Crumpley is editor of the Business Journal. He can be reached at email@example.com.
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