Riggio dips into his pocket for more Barnes & Noble…

Though we don’t normally do a lot with proxy fights here at footnoted — the last one we can recall really caring about was the dust-up between Target (TGT) and Pershing Square’s Bill Ackman last year — this revised proxy statement filed late yesterday by Ron Burkle’s Yucaipa Co. over Barnes & Noble (BKS) caught our attention. Just to recap, Yucaipa owns just shy of 20% of the stock and is proposing three directors at next months’ annual meeting. There’s a brief summary of the background here.

According to yesterday’s filing Barnes & Noble Chairman (and founder) Leonard Riggio, who had owned just shy of 32% of the outstanding shares, purchased additional shares in the week since Burkle threw down the gauntlet. But it’s not just any shares: Riggio cashed in underwater stock options to up his position to just over 33%. Here’s how Burkle et al describe it in yesterday’s filing:

On August 13, 2010, the last business day before the record date of the Annual Meeting, Leonard Riggio acquired an additional 1.7% of the outstanding shares by exercising out-of-the-money stock options and paying approximately $2.5 million in excess of the market value for those shares, based on the closing trading price on the same date.”

This Form 4 filed on Monday backs up the claim. Riggio paid $16.96 a share on a day when Barnes & Noble closed at $14.46. It’s hard to imagine what that extra 1.7% of outstanding shares gets him or why he would pay $2.5 million more than the shares were worth. Then again, it’s one way to show your passion for the business that you’ve built and $2.5 million to Riggio is more or less pocket change.

Image source: Barnes & Noble


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