NEW YORK, March 4, 2021 /PRNewswire/ -- VIEX Capital
Advisors, LLC, who together with its affiliates beneficially own
approximately 3.4% of the outstanding shares of common stock of KVH
Industries, Inc. (the "Company") (NASDAQGS:KVHI), today issued an
open letter to stockholders and announced that it has nominated two
highly-qualified directors – John
Mutch and Eric Singer – for
election as Class I Directors to the Company's Board of Directors
at the Company's upcoming 2021 annual meeting of stockholders.
The full text of the letter follows:
March 4, 2021
Dear Fellow KVH Stockholder:
VIEX Capital Advisors, LLC, together with its affiliates and the
other participants named herein (collectively, "VIEX" or "we"), a
significant stockholder of KVH Industries, Inc. ("KVH" or the
"Company"), beneficially owning approximately 3.4% of the Company's
outstanding shares of Common Stock, is dedicated to maximizing
value for KVH's stockholders, the true owners of the Company. As a
substantial stockholder of the Company, our interests are directly
aligned with those of all KVH stockholders - to maximize the value
of the Company's stock.
In order to create this value for stockholders, in mid-January
we nominated two highly-qualified independent directors for
election as Class I Directors to the Board of Directors (the
"Board") at the Company's upcoming 2021 annual meeting of
stockholders (the "Annual Meeting"). We have nominated our
candidates because we are deeply concerned by the Company's
inadequate corporate governance, stale incumbent board and poor
stock price performance.
It is evident to us that the Board must be refreshed with truly
independent directors to ensure that the interests of KVH's
stockholders are adequately represented in the boardroom and that
the Board takes the necessary steps to help the Company's
stockholders realize the true value of their investment.
Incessant Destruction of Stockholder Value
at KVH
Despite a recent uptick this year, KVH's stockholder value has
historically underperformed its peers under the incumbent Board's
oversight. The Company's total shareholder returns were
negative over the past ten-year period and have significantly
lagged behind market and industry peers' growth over the past one-,
three- and five-year periods. The even longer term performance over
the past ten- and fifteen-year periods puts in bold relief the
underperformance of KVH under the leadership of this Board.
Over each period, KVH has significantly trailed the Russell 2000
Index, the Russell 30000 Index and the Russell 2000 Utilities:
Telecommunications Index:
Total Shareholder Returns
|
KVH
|
Russell 2000
Index
|
Russell 3000
Index
|
Russell 2000
Utilities:
Telecommunications Index
|
1-year
|
8.70%
|
27.39%
|
22.80%
|
36.74%
|
3-year
|
9.00%
|
39.43%
|
49.54%
|
29.50%
|
5-year
|
41.22%
|
114.06%
|
123.26%
|
66.77%
|
10-year
|
-7.22%
|
307.20%
|
333.75%
|
162.73%
|
15-year
|
11.27%
|
272.28%
|
310.45%
|
N/A
|
Source: Bloomberg
Total Shareholder Returns as of 1/14/2021
The Company Retains Poor Corporate
Governance Mechanisms
The Company maintains several defensive corporate governance
tactics that have permitted the Board to entrench itself and become
stale, including the following:
- Classified Board. The Company has a classified
Board, with only two Class I directors to be considered for
election at the 2021 annual general meeting – dampening
stockholders' voice at any one meeting.
- Combined Chairman/CEO. Martin Kits van Heyingen
serves as both the Chairman of the Board and the CEO. In our
view, combining these positions negatively affects the independence
of the Board and ability of the stockholders to hold the Chairman
accountable.
- No Action By Written Consent. KVH's amended
and restated by-laws (the "Bylaws") flatly prohibit stockholders
from taking or approving any action by written consent, thereby
requiring all actions to taken or approved at a duly constituted
annual or special meeting and increasing the overall cost and
expense of such actions to the Company's stockholders.
- Supermajority Vote to Amend Bylaws. Any amendment
or repeal of the provisions of the Bylaws governing the Board
requires the affirmative vote of the holders of an incredible 75%
of the Company's outstanding stock – deterring any effort to
address these provisions.
- Board Includes Two Insiders. Just a mere three
years after the conclusion of over thirty years of service to the
Company, the Board appears to have recently determined that
James Dodez is now an "independent
director" to appoint him to the Nominating and Corporate Governance
Committee and the Audit Committee in August 2020. Not only do
we find that this close reading of the NASDAQ independent director
definition is unlikely to be accurate in practice in Mr. Dodez's
case, but there seems no reason to have two effective insiders in
the Boardroom, particularly in light of the Company's dismal
stockholder performance.
We believe that these governance provisions and actions are an
improper use of the Company's corporate machinery to insulate the
incumbent Board.
The Class I Directors are Entrenched and
Stale
As shown below, the Class I Directors to be considered for
election at the Annual Meeting both have almost 25 year tenures on
the Board. In addition, both Class I Directors serve on the
Nominating and Corporate Governance Committee, with Mr. Ain serving
as the Chairman of such committee. We believe they have neglected
their duties to continuously evaluate the Board's composition given
the average tenure of the Board is 16 years and the fact that they
have permitted effectively two insiders to remain on the Board.
Name
|
Committee
Positions
|
Age
|
Tenure
|
Mark S.
Ain
|
Chairman of the
Compensation Committee (since 1997)
Chairman of the
Nominating and Corporate Governance Committee (since February 2015;
member since 2004)
Audit Committee
Member (since 2000)
|
77
|
24 years
|
Stanley K.
Honey
|
Nominating and
Corporate Governance Committee Member (since 2004)
Audit Committee
Member (from 1997 to 2003 and reappointed in 2011)
|
65
|
24 Years
|
Our Nominees Will Help Refresh the
Board
Our two nominees, John Mutch and
Eric Singer, will bring a much
needed stockholder's perspective into the boardroom, as well as
extensive public company board and technology sector
experience.
VIEX's nominees are:
John Mutch is a seasoned
operating executive and investor in the technology industry with
over 30 years of public and private company operating and investing
experience with a long, sustained track record of creating
shareholder value and extensive executive management experience.
Mr. Mutch serves as managing partner of MV Advisors LLC ("MV
Advisors"), a strategic block investment firm that provides focused
investment and strategic guidance to small and mid-cap technology
companies. Previously, Mr. Mutch served as President, CEO and
Chairman of the Board of Directors of BeyondTrust Software, a
privately-held security software company. He also served as
President and CEO of both Peregrine Systems and HNC Software, an
enterprise analytics software provider. Mr. Mutch currently serves
as a member of the Board of Directors of Agilysys, Inc., and as the
Chairman of the Board of Aviat Networks and previously served as a
director of Maxwell Technologies, Inc., YuMe, Inc., Steel Excel
Inc., Phoenix Technology, Edgar
Online, Aspyra, Inc., Overland Storage, Inc. and Brio
Software, Inc.
Eric Singer has
demonstrated financial expertise and significant experience serving
as a director of various technology companies. Mr. Singer
serves as the managing member of each of VIEX GP, VSO GP II and
VIEX Capital. Currently, Mr. Singer serves on the board of
directors of A10 Networks, an application controller and firewall
cloud security company, where he has served as Lead Independent
Director since September 2020, and
Immersion Corporation, a premier licensing company focused on the
creation, design, development, and licensing of innovative haptic
technologies, where he has served as Executive Chairman since
August 2020. Previously, Mr. Singer
served as chairman of the board of directors of RhythmOne plc,
YuMe, Inc. and Sigma Designs, Inc., and as a director of Quantum
Corporation, Support.com, Numerex Corp., TigerLogic Corporation,
IEC Electronics, Meru Networks, Inc., PLX Technology, Inc. and
Zilog Corporation.
We view the upcoming Annual Meeting as a referendum on decades
of poor performance. We have no intention of engaging in a lengthy
and drawn out public battle and believe the Company's poor stock
performance and long-tenured directors speak for themselves.
If elected, our nominees are committed to working cooperatively
with the remaining board members to explore all opportunities to
unlock shareholder value
Best Regards,
Eric Singer
VIEX Capital Advisors, LLC
SOURCE VIEX Capital Advisors, LLC
CERTAIN INFORMATION CONCERNING THE
PARTICIPANTS
VIEX Opportunities Fund, LP – Series One ("Series One") together
with the other participants named herein (collectively, "VIEX"),
intends to file a preliminary proxy statement and an accompanying
proxy card with the Securities and Exchange Commission ("SEC") to
be used to solicit votes for the election of its slate of director
nominees at the upcoming 2021 annual general meeting of
stockholders of KVH Industries, Inc. (the "Company").
VIEX STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ
THE PROXY STATEMENT AND OTHER PROXY MATERIALS WHEN AND AS THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S
WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN
THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT
WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES
SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are anticipated to be
VIEX Opportunities Fund, LP – Series One, VIEX Opportunities Fund
II, LP ("VSO II"), VIEX GP, LLC ("VIEX GP"), VIEX Special
Opportunities GP II, LLC ("VSO GP II"), VIEX Capital Advisors, LLC
("VIEX Capital"), John Mutch and
Eric Singer (collectively, the
"Participants").
As of the date hereof, Series One beneficially owns 345,606
shares of Common Stock directly, including 1,000 shares held in
record name. As of the date hereof VSO II beneficially owns 267,658
shares of Common Stock directly. VIEX GP, as the general partner of
Series One, may be deemed to beneficially own the 345,606 shares of
Common Stock beneficially owned by Series One. VSO GP II, as
the general partner of VSO II, may be deemed to beneficially own
the 267,658 shares of Common Stock beneficially owned by VSO
II. VIEX Capital, as the investment manager of Series One and
VSO II, may be deemed the beneficial owner of the 345,606 shares of
Common Stock beneficially owned Series One and the 267,658 shares
of Common Stock beneficially owned by VSO II.
Mr. Singer, as the managing member of VIEX GP, VSO GP II and
VIEX Capital may be deemed the beneficial owner of the 345,606
shares of Common Stock beneficially owned Series One and the
267,658 shares of Common Stock beneficially owned by VSO II.
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SOURCE VIEX Capital Advisors