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 Final proxy tiff looms over Restoration Hardware    

Corte Madera, Calif. – With the recent court challenge to the planned Restoration Hardware buyout agreement with Catterton Partners, the retailer’s management team has presented recommendations by two independent proxy advisors to support their plan.

Advisor firms RiskMetrics Group (formerly Institutional Shareholder Services or “ISS”) and Glass Lewis have each issued positive statements, according to Restoration Hardware.

In a press release, RH quoted RiskMetrics as saying, in part, “We believe that the merger agreement warrants shareholder support.” RH did not quote Glass Lewis.

“Both of these leading proxy advisory firms recognized the substantial premium value that the transaction will provide our stockholders,” said RH director Raymond Hemmig, who chairs the board’s compensation committee, and has been a director since 1994.

The merger-acquisition matter is to be decided by a vote at the special meeting of shareholders set for June 12. One day prior, a hearing is to be held in Marin County (Calif.) superior court in which a dissident group of shareholders will argue to block the proposed buyout.

This week company also filed an amended 10-K with the Securities and Exchange Commission that details executive compensation and related matters. Part of the form documents “the consideration expected to be received by each of our directors and executive officers in connection with the merger.”

About $15.5 million in cash will be received by the 12 executives named, with the largest amounts going to Gary Friedman (chairman and ceo), $6.994 million; Glenn Krevlin (board member since 2001), $6.231 million, and Ray Hemmig, $1.122 million. This table does not include the value of any stock in the new parent company that will be received by the execs.

The value of the proposed Catterton deal, pegged at $4.50 per share, is about $175 million, mostly in cash.

The deal also includes a $25 million subordinated loan that will convert to equity upon the closing.

The Catterton move was countered by an offer from Sears Holdings, which first expressed interest in acquiring Restoration Hardware in June 2007; RH management opted for the revised Catterton bid on Jan. 24.

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