The proxy battle for Barnes & Noble is heating up with Ron Burkle’s Yucaipa Companies filing new proxy materials urging B&N shareholders to vote for Yucaipa’s slate of board candidates and to support its proposal to amend the retailer’s poison pill provision. In asking for shareholder support Burkle laid out familiar complaints against the current management, led by his assertion that since August 2009 B&N’s stock price has significantly underperformed the S&P 500, the Dow Jones Specialty Retail Index and B&N’s “self-selected peer group.”

The August date is key because the proxy materials show that Burkle’s biggest issue with B&N is the acquisition of B&N College Booksellers which closed last September. The new proxy materials call the acquisition of the college stores, “the most egregious of the many related party transactions.” The deal “saddled” the company with $400 million in new debt, a portion of which is owed to B&N chairman Len Riggio who had owned the college stores. “In Yucaipa’s view,” the proxy states, “the B&N College acquisition benefitted the Riggio family but does not make strategic sense for the Company.” The B&N College acquisition came after Riggio had told Burkle that he was against Burkle’s idea of acquiring key Borders locations because Riggio did not want to increase B&N’s exposure in the bricks-and-mortar market or increase B&N’s debt. The College acquisition, Burkle said, was contrary to both those points.

The proxy materials also confirm reports that a settlement between B&N and Burkle over the poison pill provision was close, but that the board rescinded the deal at the last minute.

In summarizing why Burkle is challenging the B&N management, the proxy includes the following statement: "We believe Barnes & Noble’s stockholders deserve better leadership than the current Board has provided. We believe the incumbent Board is rife with business and personal conflicts and historically has been a rubber stamp for the Riggio family’s interests. In our view, this Board’s failure to act independently of the Riggio family’s agenda has contributed to the Company’s poor stock performance, has enriched the Riggio family at the expense of the other Barnes & Noble stockholders, and has led to numerous corporate governance and strategic missteps."

To see the complete proxy statement click here