Largest Outside Shareholder to Introduce Floor Proposal, Calling for the Company to Put Itself Up for Sale
Files Schedule 13D Amendment; Issues Letter to Board of Directors
LAPORTE, Ind., May 28, 2013 (GLOBE NEWSWIRE) -- Timothy Stabosz, at 7.2% ownership, the largest unaffiliated shareholder of Scott's Liquid Gold, Inc. (OTCBB:SLGD), today announced the filing of a Schedule 13D Amendment with the Securities and Exchange Commission. The main filing can be found at the following web link:
http://www.sec.gov/Archives/edgar/data/88000/000116289313000003/slgd13d6.txt
In the filing, Stabosz, who plans on attending the June 14th, 2013 annual meeting, announced his intention:
1) to vote to WITHHOLD the entire board of directors,
2) to vote AGAINST the executive pay ("say on pay"),
3) to vote for ONE YEAR "say on pay" in the future, and
4) to vote FOR Proposal #4, a shareholder proposal calling on the company to adopt cumulative voting for directors.
In addition, at the annual meeting, Stabosz intends to introduce a proposal, off the floor, calling for the company to put itself up for sale. In his 13D filing, Stabosz recommends that the board accept any "fully shopped" bid for the company, that meets or exceeds 50 cents per share. Stabosz's floor proposal, and supporting statement, can be found at the following web link:
http://www.sec.gov/Archives/edgar/data/88000/000116289313000003/slgdprop.txt
In his board letter, Stabosz criticizes the board, for continuing to allow founding family scion, CEO Mark Goldstein, to continue to run the company, whose management Stabosz characterizes as "an epic and colossal failure." Stabosz questioned, "What board, in its right mind, would retain a CEO who has caused the company to suffer a net loss for 10 YEARS IN A ROW, and 14 out of the last 15 years? I'll tell you what board...a board that is 'stacked' by the CEO, and consists of 4 out of 6 members that are employees, or former employees of the company, who are beholden to the CEO, who were handpicked by the CEO, and whose primary purpose is to 'protect' the CEO's $400,000 a year pay package, and his spouse's nepotistic employment arrangement."
Stabosz's entire letter to the board can be read at the following web link:
http://www.sec.gov/Archives/edgar/data/88000/000116289313000003/slg.txt
Moreover, in the board letter, Stabosz documents what he calls a pattern of behavior on the part of the CEO, providing 3 examples in which Stabosz accuses the CEO of "pocketing" bids and/or expressions of interest in purchasing the company, over the years. "While I can't purport to being aware of every example," Stabosz stated, "I have talked to a number of parties, who were interested in buying the company, and who, without exception, told me that they simply couldn't 'get past' Mark Goldstein, and that Goldstein otherwise 'blew them off.' Not one of these parties told me that they had been passed on to an independent board member, or a special committee of the board," Stabosz ruefully noted. "It was their impression that Goldstein was overseeing corporate M&A, with little or no board oversight. Even more alarmingly, based on some of the ludicrous 'fantasy values' that Goldstein was coming up with for the company ($100 million+), these M&A players generally believed that Goldstein's primary purpose was to allow him to maintain his paid employment position with the company, and SABOTAGE any sale of the company, regardless of the premium."
Stabosz continued, "With Scott's Liquid Gold's having recently closed on a major real estate sale, the company is now in the enviable position of having a clean balance sheet, with $3.3 million in cash, and no debt. The company is, therefore, in my view, ripe for a sale. This is an opportunity to maximize value for all shareholders, which explains my proposal at the upcoming annual meeting. I hasten to remind the board members that, if they should continue to turn a 'blind eye,' in contravention of their moral and fiduciary obligations, and let a nakedly self-interested CEO dispense, of his own accord, with firm offers to buy the company, or credible expressions of interest that may offer shareholders a sizable takeover premium, the board will be subject to a breach of fiduciary duty lawsuit," Stabosz warned.
"The compelling question remains," Stabosz noted, "after experiencing year after year of outside shareholder pain, resentment, and suffering, and wanton destruction of shareholder value, at the hands of a dysfunctionally insular, nominally public, family run company, will the board finally step in, get off its duff, and fulfill its fiduciary duty, giving all SLGD shareholders a 'way out,' whether through a sale of the company, a going private transaction, or a self-tender? With knowledge that the world is watching, let us hope the answer is a resounding 'yes,'" Stabosz concluded.