Assails Longtime Director Gerald C. "Bud" Laber for Serving as an "Unabashedly Derelict Witness" to "Goldstein's Betrayals"
Confronts Board of Directors at the Annual Shareholder Meeting; Follows up With Letter to the Board, Filed on SEC Schedule 13D
LAPORTE, Ind., Sept. 13, 2013 (GLOBE NEWSWIRE) -- Timothy Stabosz, at 6.5% ownership, the largest outside shareholder of Scott's Liquid Gold, Inc. (OTCBB:SLGD), today announced the filing of a Schedule 13D Amendment with the SEC. The main filing can be found at the following web link:
http://www.sec.gov/Archives/edgar/data/88000/000116289313000006/slgd13d9.txt
In the filing, Stabosz lays out the case how, under the current CEO's 20+ year tenure, sales of the company's signature household product line have been thoroughly decimated, peaking at $22.5 million in 1992, and dwindling to $4.9 million in 2012...a staggering 78% decline. (Adjusted for inflation, as measured by the CPI, the decline is a devastating 87%.) Stabosz further accuses a "do-nothing board" of "looking the other way," and allowing the CEO to "cannibalize" the company, for the sake of his (approx.) $400,000 annual pay package, and his spouse's "nepotistic employment arrangement."
Stabosz ruefully observed, "The board has countenanced the virtual destruction of a once great brand, hiding behind the 'business judgement rule,' and facilitating the maintenance of Mr. Goldstein's outrageous 22 year record of wanton value destruction, incompetence, nepotism, cronyism, self-dealing, and self-entrenchment. It is time for this effrontery to STOP. The company has lost money for 10 consecutive years, and 14 out of the last 15, under Mr. Goldstein, but the board continues to, inexplicably, stand behind the SLGD family scion. The purpose of a board is not to indulge a CEO, merely as an ongoing 'family tradition,'" Stabosz pointed out. "Goldstein has been thoroughly discredited as a manager...and yet this board continues to support him, and pay him an exorbitant sum, for the privilege of 'fleecing' SLGD's outside shareholder base. Where is the board's self-respect?"
Stabosz also singled out long-time director Gerald C. "Bud" Laber for criticism, noting how, as the longest serving nominally independent director (Laber joined the board in 2004), Laber still owns NO common stock outright. Stabosz, furthermore, accused Laber of being a "professional enabler" of Goldstein. Stabosz explained, "Sitting on a total of 5 corporate boards as he does, is Bud Laber's 'head-in-sand' attitude, one wonders, the result of him spreading himself too thin, or is it that this classic 'Mr. Nice Guy', like the CEO himself, is simply incapable of confronting reality, facing facts, and making tough decisions? The net result is the same: more pain, and more suffering, for SLGD shareholders. What I have noticed about Mr. Laber is that robust notions of fiduciary duty take a disheartening back seat to his overweening preference for maintaining loyalties to individual people. That is why, tragically, he has catered to the CEO's wishes, and shielded the CEO from the stark truth of his epic managerial failures. In this way, Laber has deserted the outside shareholder base...and the rightful, true, and noble concept of fiduciary duty. Specifically, Goldstein's seeming 'birthright' to continue to run SLGD, into perpetuity, has always been a 'given' with Mr. Laber. No other considerations seem to have seriously entered his mind, in 9 desultory years on the SLGD board,'" Stabosz opined.
In Stabosz's 13D letter to the board, he reported on the results of this summer's annual meeting, and made certain requests. The letter can be found at the following web link:
http://www.sec.gov/Archives/edgar/data/88000/000116289313000006/slgdexh1.txt
Summarizing the letter, most importantly, Stabosz reported how, by his rough calculations, a commanding 2/3 of the outside shareholder base voted to WITHHOLD the continuing directors. Stabosz commented, "It's unfortunate that about 37% of the shares are held by affiliated entities, which pretty much vote in lockstep with the board's wishes. Nevertheless, the outside shareholder base flexed its muscles, and voted, dramatically and convincingly, to withhold the entire board. This can only be taken as a stark repudiation of the board, and its support of the CEO. These results are all the more impressive, considering there was no formal proxy contest, or 'vote no' campaign conducted.
In the letter, Stabosz also requested that the company:
1) appoint a new director, sourced from the outside shareholder base, as was greatly emphasized by many outside shareholders, who attended the annual meeting
2) immediately cut the CEO's pay 50%, pending the naming of his eventual successor
3) institute a mandatory stock ownership plan for directors and officers, as the board promised at the annual meeting
4) put the company up for sale, have the CEO take SLGD private, or conduct a tender offer at 50 cents per share, so that shareholders who want to, may rightly "take their capital and leave"
5) separate the chairman and CEO positions, so that Mr. Goldstein is no longer allowed to "corruptly oversee himself"
6) institute cumulative voting for directors, since the outside shareholders supported a shareholder resolution by a roughly 2 1/2 to 1 margin, requesting as such, and
7) eliminate the "poison pill," whose only purpose is to entrench the CEO
In conclusion, Stabosz stated, "It is time for the SLGD board to FINALLY focus on what the broader shareholder base of the company wants, and NOT on what the Goldstein family's financial and personal needs are. Until that happens, I will continue to publicly witness the storied betrayals of Mark Goldstein, and his 'stacked' boards...and will similarly call the new board to task, roundly, if this, the most potentially independent board SLGD has had in a generation, continues to perpetrate those same betrayals."