Marcato lost every seat at Deckers — and Deckers did the turnaround anyway

In February 2017 Marcato Capital disclosed an 8.4% stake in Deckers Brands, the maker of UGG boots whose stock had fallen as the sheepskin trend cooled. Marcato urged spinoffs, expense cuts, store closures and buybacks, and when talks failed it nominated a full nine-member slate, later trimmed to three candidates, and sued in Delaware to force Deckers to hold its annual meeting.

At the December 14, 2017 annual meeting shareholders re-elected all nine incumbent directors. BlackRock and Vanguard backed management, even though ISS had supported Marcato; Glass Lewis said the activist's plan 'would likely derail the progress made by the company.' Marcato's Mick McGuire conceded but claimed the campaign had 'created significant value for all stockholders.'

He turned out to be right about the value, if not the vote. Deckers executed the turnaround it had promised under pressure: centralizing procurement, cutting headcount, optimizing retail and diversifying UGG while scaling HOKA One One. It reached its target of $100 million in operating-profit improvement by fiscal 2020, and the shares that closed at $74.15 on vote day passed $200 by 2020 as HOKA became a running-shoe phenomenon.

Deckers hit its plan to lift operating profit by $100M by fiscal 2020; the stock rose from ~$74 at the vote to over $200 within three years.

Deckers could point to a margin plan already in motion, so proxy advisors backed the incumbents.

Index giants BlackRock and Vanguard sided with management, dooming the activist slate.

Management treated the campaign as a binding promise and delivered the $100M profit target.

HOKA's explosive growth gave the turnaround a growth engine no cost-cut plan could match.

Losing the vote is not losing the campaign: when an activist's diagnosis is right, management often implements it after the shareholders send the activist home.

Deckers' revenue and margins compounded through 2020 and beyond, driven by HOKA, and the stock multiplied several-fold from 2017 levels. Marcato exited and the episode became a textbook case of a company that won the proxy vote by adopting the activist's homework.