Sometimes public corporate documents are almost as good as soap operas. Usually, mind you, they're about as dry as a German romance novel. But when companies remove their gloves, there can be plenty of entertainment value.
In some cases, the company controls the message, such as Expeditors International's (NASDAQ:EXPD) monthly roasting of those who dare ask bad questions. In others, such as Chapman Capital's recent savaging of management at Footstar (PinkSheets: FTST.PK), they result in the CEO being shown the door. And there are always those corporate battles that resemble little more than a divorce hearing, a la Disney's (NYSE:DIS) recent recriminations between Michael Eisner and former board member Roy Disney.
Finally, there's eUniverse (Pink Sheets: EUNI:PK). An intrepid reader informed me of the ongoing public brawl between Brad Greenspan and the company. Greenspan, who is the largest shareholder, was CEO and Chairman prior to October of last year, when he was replaced. Greenspan held on to a board seat until mid December, when he resigned from that position as well. At issue seems to be a fundamental difference in how the company will be run, how new funding is being applied, and how board members are, in Greenspan's view, becoming "entrenched."
What has followed is a nasty public battle in which Greenspan, who, while no longer a director or officer, still controls 23% of the company's outstanding stock and has urged shareholders to vote for his alternate slate of directors. With 23% of the votes definitely going Greenspan's way, he's got a chance for success. But the bigger question is: Who would want to have anything to do with shares in such a mess? Greenspan's fired off several letters to shareholders detailing the miserable deal they're getting based upon the interests of the board and management.
Last week, eUniverse fired back, detailing the history of the company when Greenspan was in charge. They noted that the company:
- Discovered the need to restate the first three quarters of fiscal year 2003
- Became the subject of an informal inquiry by the U.S. Securities and Exchange Commission
- Had its stock halted from trading for almost four months
- Was delisted from NASDAQ
- Was sued by stockholders in various class action and derivative lawsuits
- Needed to raise additional capital
Not exactly CEO Hall of Fame material. Greenspan's response got even nastier, insinuating in a release yesterday that the full compensation packages for several directors have not fully been disclosed to shareholders.
There's not much of a lesson here -- it's just a mess, but a darn entertaining one. In 2002, eUniverse sent communication upon communication to us trying to have us help them "get their story out." We ended up covering the company in passing one time, mentioning that it had been profitable for several quarters. Seeing as at least one of those quarters became the subject of a restatement, I think perhaps that coverage was even too much.
