Imation Corp An Activist Proxy Battle A Case Solution

In 2010, Lucas was appointed as the COO of the company and he devised a strategy named Quilt, to take the company back to data storage, given the current market scenario and increased demand for data security. However, this required a large investment which would come from the auctioning of the magnetic tape and consumer electronics business by an investment banker. Therefore, it was decided that the revenue streams from existing businesses would be used to generate investment for the new data security business. 

From 2010 to 2014, Imation’s stock performed poorly in the market, yielding a 63% return towards the end of 2014. Gross margins improved slightly during this period, however revenue and gross profit declined, and operating loss increased by 75%. Overall, the company was not performing well and was struggling to fund its new business venture. Despite the decline in revenue and profits, the executive board’s compensation rounded up to a hefty US$37 Million during this period. 

The current ratio had also declined a figure that signifies the ability of any business to meet its short time debts through cash or other liquid assets. Inventory had decreased drastically, which may indicate that they were being sold off. Intangible assets had also declined. 

When compared to the industry average, it can be observed that peer groups received positive stock returns, going as high as 619% during the period of 2010-2014. The average compensation of directors for peer groups was lower than the compensation at IMN.