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UPDATE 1-Deckers wins proxy contest against hedge fund Marcato

(Adds details on vote, comment from Marcato, stock price)

BOSTON, Dec 14 (Reuters) - Deckers Outdoor Corp beat back a challenge from activist hedge fund Marcato Capital Management, but shares of the maker of UGG boots fell as much as 4 percent on news that all its directors had been re-elected.

Shareholders voted to return all nine board members to their positions, the company said in a statement. They rebuffed Marcato's effort to replace the three most senior directors with the hedge fund's own candidates.

Thursday's result caps a 10-month long battle between Deckers and Marcato, which has been prodding management to consider spinoffs, cut costs, and allocate capital more wisely.

"Todays outcome reaffirms that we are on the right track," the company's statement said.

Marcato owns 8.5 percent of the company and had won votes from many other active investors, including other hedge funds. However two top owners, BlackRock Inc and Vanguard voted to back Deckers' directors, two people familiar with the situation said on Thursday.

Deckers shares had climbed 71.4 percent since Marcato disclosed its stake in the company on Feb. 8, but on Thursday they dropped as much as 4 percent before partially rebounding.

Marcato founder Mick McGuire said the hedge fund's involvement had already benefited shareholders but warned that more work lay ahead.

"We continue to believe that the status quo at Deckers is unacceptable," he said in a statement, "and the Board must take meaningful steps to avoid repeating its many historical failures." (Reporting by Svea Herbst-Bayliss Editing by Chizu Nomiyama and Lisa Von Ahn)