TMZ reports that a Playboy (PLA) shareholder has filed a lawsuit against the company, alleging that majority shareholder and chief creative officer Hugh Hefner has intentionally sabotaged multiple deal possibilities in an effort to hold onto his own lifestyle.
"If you were Hugh Hefner, 81, would you give up the parade of busty blonds, the fancy mansion and the reality TV show for a payout?" the lawsuit asks. "Hefner has continued to live the good life and make sure everyone knows it. Hefner remains in the limelight, showing up at media events and at the Playboy mansion ... with his girlfriends by his side."
The lawsuit further notes that "within the last six months Hefner has scuttled two attempts by potential suitors, Iconix Brand Management ('Iconix') and Golden Gate Capital ('Golden Gate') to acquire all or parts of Playboy at a significant premium as Playboy's stock price continues to deteriorate." The Courthouse News Service has more details.
Anyone who's followed the Playboy story over the years knows that the substance of the allegations is basically true: shareholders have suffered greatly while Mr. Hefner has lived the high life. But the problem is Playboy's lousy corporate governance and share structure: Mr. Hefner owns 70% of the company's A shares, which are the only shares with voting rights. Its that share structure that has allowed nepotism to flourish at the company -- Hef's daughter Christie was chair and CEO of the company from 1988 until early 2009, a 20-year run marked by absolutely horrible returns for shareholders.
So yes: Playboy is an absolute toilet bowl of corporate governance, and shareholders have suffered greatly because of it. But a quick skim through the company's proxy statement would have told prospective investors that, and there's probably nothing the courts can/will do to provide relief to investors who are being raped by a greedy cadre of insiders who don't care about minority shareholders.
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Reader Comments (Page 1 of 1)
2-09-2010 @ 11:51PM
tracyesty said...
Jealous anyone?