Sharper Image Agrees to Shake Up Its Board

Sharper Image Corp. said Tuesday that it would shake up its board of directors to pacify a dissident shareholder but retain its chairman as chief executive in a truce that averts a showdown for control of the slumping retailer of high-tech gadgets.

The company will drop four of the seven directors on its current board in response to a challenge from Knightspoint Group, a major shareholder that had threatened to lead an investor revolt at the company’s annual meeting in July.

Besides jettisoning the directors, Sharper Image agreed to expand its board to include three members from Knightspoint and three business leaders with no ties to the San Francisco-based company.

Those concessions apparently preserved the job of Sharper Imager CEO Richard Thalheimer, who founded the 191-store chain 29 years ago.

But Thalheimer’s 80-year-old father, Alan, will lose his spot on Sharper Image’s board -- a position that he had held for 25 years.

The other Sharper Image directors losing their seats are Tracy Wan, the company’s chief operating officer; Gerald Napier, a former I. Magnin executive; and Pamela Joyner, an investment marketing consultant.

Knightspoint, which owns a 12.8% stake in Sharper Image, had been threatening an attempt to seize control of the company’s board so it could oust Thalheimer -- Sharper Image’s largest shareholder, with a 20% stake -- and replace him with veteran executive Jerry Levin, who has been nominated to become one of the directors in the new regime.

The shareholder pressure has lifted Sharper Image’s stock price, which has climbed more than 50% since Knightspoint began its rebellion two months ago. Sharper Image shares gained 14 cents Tuesday to $15.09.

In statements issued Tuesday, Thalheimer and Levin promised to work together to reverse Sharper Image’s sliding sales. “We collectively look forward to ensuring that the Sharper Image remains one of the premier specialty retailers in the marketplace,” Thalheimer said.

Sales at Sharper Image stores open at least a year dropped 16% in fiscal 2005 and then plunged 30% during the three months ended in April. Thalheimer has promised performance will improve during the final half of the year as more new products are rolled out.

Levin, formerly the CEO of Sunbeam Corp. and Revlon Inc., praised Thalheimer’s “truly remarkable” retailing instincts.