Cabela's announcement of shareholders' meeting is next chance for clues of company's fate

Cabela's employees and shareholders wondering what's ahead for the Sidney, Nebraska, retailer could have an answer by the end of the month.

If past years are any indicator - and Wall Street types say they should be - Cabela's will announce the date of the company's annual shareholders' meeting by the end of April.

That meeting takes on extra importance this year: It's the first annual meeting since the company has been under pressure from a powerful "activist" investor, New York-based Elliott Management. Elliott has been pressing Cabela's to make big changes.

Setting a date for the meeting is important because it starts the clock on a 30-day window to nominate people to Cabela's board of directors.

Those nominations will give Elliott its chance to say whether it's satisfied with what Cabela's has done since the activist fund announced its 11 percent stake in the retailer.

Oftentimes activist hedge funds try to take over boards of directors when they don't make changes the activists and other shareholders want in order to "unlock" value in the stock price.

But if Cabela's announces a sale of all or parts of the company at the time of its annual meeting announcement, and Elliott is satisfied, the activist hedge fund would have little reason to take over the board.

So it's likely any big changes at Cabela's will be announced at the same time as the annual meeting, a number of people who track activist investors told The World-Herald.

Cabela's declined to comment for this story. Elliott didn't respond to a request for comment.

For many on Wall Street, it's not a matter of whether Cabela's will sell but when the outdoors retailer will make the sale public, and who the buyer will be.

"The assumption we're operating under is that the company is trying to sell itself," said Don Bilson, a research analyst with New York-based Gordon Haskett, a firm that keeps track of hedge funds.

Selling all or part of Cabela's are moves Elliott said it would get behind back in October when it disclosed to the Securities and Exchange Commission that it had amassed about 11 percent of Cabela's stock.

Bilson said Cabela's likely has had enough time to talk to companies that would be interested in buying the retailer. He said he'd expect something to happen in the second quarter of the year - in other words, between now and the end of June.

Cabela's said in December it would undergo a "strategic review" - Wall Street-speak for looking at selling the business or jettisoning parts of it.

Shane Goodwin, a fellow at the Harvard Business School with 20 years of experience in investment banking, said the time is ripe for Cabela's to disclose exactly what its plans are.

"That's plenty of time to find out where they are today," Goodwin said of the time since Elliott announced its stake.

Elliott and Cabela's both have been tight-lipped about any changes.

In the case of other companies Elliott has targeted for change, the hedge fund hasn't been so quiet, often issuing blistering public letters condemning boards and management. (Activist hedge funds - called "corporate raiders" in the 1980s - amass big stakes in publicly traded companies and then press for changes designed to pump up the company's stock price, often for a quick profit.)

The fact that Elliott hasn't tarred and feathered Cabela's - at least in public - suggests things might be going the hedge fund's way.

Unlike Cabela's employees and residents of Sidney, Elliott likely has some idea of what's going on behind board room doors, Goodwin said.

"These guys, they make a living in trafficking info," he said. "They're attuned to who and what is happening. They can probably hear it from others out there as well, and they can find out if the process is going well or not."

Cabela's also may have been working with Elliott behind closed doors, said Nick Gantchev, a finance professor at the University of North Carolina at Chapel Hill who researches shareholder activism.

"They may have agreed with Elliott not to schedule (the annual) meeting before some decision is reached, which will allow Elliott to nominate an alternative slate of directors if they are unhappy with the outcome," Gantchev said.

Elliott may get a few seats on the board even if a sale is announced, said David Larcker, a professor at the Stanford University Graduate School of Business who studies corporate governance.

"If I had to guess I would say they've had some sort of reconciliation where Elliott gets a couple board seats and (Cabela's) agrees to spin off some stuff and there's some restructuring," he said. "That would be the most likely outcome."

Cabela's lucrative credit-card business and the real estate the retailer owns both have been called out as likely candidates to be carved off and sold.

Meanwhile, if the annual meeting is announced without any update on the sale process, "then you kind of have to ask what happened," said Bilson, the research analyst.

If that's the case, Elliott will have a shot at nominating directors to the board, perhaps even taking over the whole board, if the hedge fund isn't satisfied with the outcome. Cabela's directors serve only one-year terms, so they're all up for election.

If there's no information that comes out with the annual meeting announcement, investors would have to ask "Did they try to sell it and they couldn't get the price they were looking for?" Bilson said. "That would be an interesting development."

Jim Zipursky, managing director of Corporate Finance Associates in Omaha, said "the silence would be deafening" if the meeting is announced without an update on the strategic review.

"That would be a real chin scratcher," he said.

Over the past five years Cabela's has released its proxy statement and the date of the annual meeting in the final weeks of April. It's also due to report first-quarter earnings at the end of the month.

Corporate bylaws dictate that the meeting be announced no more than 60 and no fewer than 10 days out from the annual meeting. The meeting historically has been held in the first week of June.

Delaware law dictates that companies cannot delay meetings for more than 13 months after the last one, Goodwin said. (Cabela's is incorporated in Delaware, as are many large companies.)

Short of waging an expensive, distracting campaign against Elliott and gaining support from other shareholders, there might not be many moves left in Cabela's playbook.

"There are only so many prescriptive things you can do," Goodwin said. "Ultimately, it really is going to be the will of the majority of the other shareholders and what they're willing to live with."

TIMELINE

Sept. 24, 2015 Cabela's lays off 4 percent of its corporate workforce, about 70 people, including Sidney, Nebraska, Mayor Mark Nienhueser, a vice president

Oct. 22 Cabela's announces dismal third-quarter earnings

Oct. 28 Activist hedge fund Elliott Management, run by Paul Singer, above, reveals an 11.1 percent stake in Cabela's, calls for changes, including selling the business

Nov. 5 Reuters reports that Bass Pro Shops could buy Cabela's; Bass Pro won't comment

Nov. 19 Bloomberg reports that Cabela's is shopping itself around to private equity firms; Cabela's won't comment

Dec. 2 Cabela's announces it will undergo a strategic review - which is often Wall Street-speak for selling the company or parts of it

Jan. 5, 2016 Cabela's changes its bylaws to delay director nominations in 2016 - a sign, some say, that Elliott was giving Cabela's "breathing room" to pursue a sale

Feb. 9 Cabela's splits the roles of chief executive and president, promoting Scott K. Williams to president; Tommy Millner remains CEO

Feb. 10 Chairman Jim Cabela reports to the SEC that he moved about 11.2 million Cabela's shares into a charitable trust sometime in 2015

??? The date of the Cabela's annual meeting, when the fate of the company could be learned.

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