LCA-Vision’s Former Executive Management Team Sends Open Letter to LCA-Vision Stockholders
18 December 2008 - 12:00AM
Business Wire
The LCA-Vision Full Value Committee, comprised of Dr. Stephen N.
Joffe, Craig P.R. Joffe and Alan H. Buckey, today announced that it
has sent a letter to the stockholders of LCA-Vision Inc. (NasdaqGS:
LCAV). The members of The LCA-Vision Full Value Committee
collectively own approximately 11.4% of the Company�s outstanding
shares. The full text of the letter follows: A Message from the
LCA-Vision Full Value Committee � ATTENTION LCA-VISION STOCKHOLDERS
� December 17, 2008 Dear Fellow Stockholder: � IT IS TIME FOR A
CHANGE! � Dr. Stephen N. Joffe, Craig P.R. Joffe and Alan H. Buckey
(collectively, �The LCA-Vision Full Value Committee�) own in the
aggregate approximately 11.4% of the outstanding shares of
LCA-Vision, Inc.(NasdaqGS: LCAV) (�LCA-Vision� or the �Company�),
making us one of the largest stockholders of the Company. The
LCA-Vision Full Value Committee is comprised of the founders and
former executive management team of LCA-Vision that helped build
the Company from the ground up into the industry leader it once
was. In a very short period of time, over 90% of the Company�s
value has been wiped out under the existing executive management
team and Board of Directors of the Company (the �LCA Board�).
What�s more, the management and Board do not seem to share our
serious concerns, or feel any sense of urgency regarding this
dramatic decline in the Company�s operating and stock performance.
� In the two years since Steve Straus was hired as CEO by the Board
of Directors in November 2006, LCA-Vision shares have decreased
over 90% from $32.71 to $3.12, the closing price on the day before
we disclosed our 11.4% position in a filing with the Securities and
Exchange Commission. This represents an astounding loss in market
capitalization to the Company�s stockholders of hundreds of
millions of dollars and is simply unacceptable. Regardless of the
metric or indicator one looks at - whether it be the Company�s
market capitalization, same store revenues, procedural volume,
marketing costs, cash on the balance sheet, or employee attrition
and morale - the story of abysmal performance is the same. While we
know macroeconomic, industry and consumer challenges have
contributed, in part, to the Company�s difficulties, we believe the
Company�s disastrous performance is primarily attributable to a
lack of strategic direction, poor decision-making, and poor
execution by the LCA Board and executive management team. � The
Company�s management and Board are leading the Company down a path
to self-destruction. We, on the other hand, have a plan to right
the ship and put the Company back on the path towards maximizing
stockholder value. In light of our past experience both with the
Company and in the laser correction industry generally, we are
uniquely positioned to help turn LCA-Vision around. We will do
everything within our power to save the Company that we worked so
hard to build into an industry leader. Under our leadership, as
recently as 2006, LCA-Vision was named one of the top Small Cap
Growth companies in the United States by Fortune and one of the
�Hot Growth Companies� by Business Week. With a lot of hard work by
a passionate team that knows what they�re doing, we are committed
to turn the Company around to get there again. � LCA-VISION�S
CURRENT BOARD JUST DOESN�T GET IT! � It has become clear to us that
LCA-Vision�s Board just does not get it! We were both shocked and
disappointed to read in a December 10, 2008 letter from the
Company�s Chairman, E. Anthony Woods, the LCA Board does not agree
with our description of the Company�s condition as �dire� or its
prognosis as �poor.� How bad does it have to get for stockholders
before management and the Board to acknowledge the gravity of the
situation facing the Company? � We have attempted numerous times to
voice our serious concerns to the Board regarding the Company�s
woeful performance and to offer our assistance and expertise to
work together to help turn the Company around. How did the Company
respond? By adopting a self-serving �poison pill� designed to
entrench the Company�s Board and management. Although the Board has
done little to actually help the Company or its shareholders,
apparently our significant concerns did not fall on totally deaf
ears. � Do not be fooled! This �poison pill� is not nearly as much
about protecting your interests as it is about protecting and
promoting the self-serving interests of management and the LCA
Board. We find it rather ironic that the Company claims the �poison
pill� was adopted to protect stockholders against tactics that
could impair the LCA Board�s ability to represent stockholders�
interests fully. In fact, it appears to us that the ones who
stockholders really need protection from is a Board and management
team who are burning $2 million of cash per month, adopting �golden
parachutes� for executives, and paying out excessive compensation
to executives and members of the Board, all despite the Company�s
abysmal performance. Furthermore, the Board would have you believe
that �the stockholder rights plan adopted by LCA-Vision is similar
to rights plans adopted by many other publicly traded companies.�
What they conveniently fail to tell you is that the �poison pill�
contains an overbroad, unusual and uncustomary �adverse person�
provision that essentially gives the Company �carte blanche�
authority to lower the poison pill�s ownership threshold to just 10
percent if a majority of the LCA Board determines that an
individual or group of investors (including existing 10% holders)
is an �adverse person.� As the Board also neglected to tell you,
RiskMetrics (ISS) generally looks down upon �poison pills� that
include provisions like this that could cause a large stockholder
to inadvertently trigger the pill. � DO NOT BE MISLED! � In the
coming months, LCA-Vision stockholders will be making critical
decisions regarding the future of our Company. As such, it is
imperative that you have all the facts straight and understand
precisely how the interests of the LCA-Vision Full Value Committee
are squarely aligned with those of all stakeholders. We urge you
not to be distracted by any �smokescreens� the Company may use to
divert your attention from the real issues affecting the Company.
The bottom line is that no �smokescreen� can conceal the plain
truth about the Company�s disastrous performance. � WHAT THEY MAY
SAY: �The LCA-Vision Full Value Committee is seeking to take
control of the Company without paying a premium. The members of the
LCA-Vision Full Value Committee are short-term opportunistic
stockholders. They acquired more than 10% of the Company over a
period of less than a month at current low price levels. As such,
their interests may not be aligned with those of long-term
stockholders. In fact, the members of the LCA-Vision Full Value
Committee were exploring a potential transaction to take your
Company private as recently as July of this year.� � THE REALITY:
Make no mistake about it: the members of The LCA-Vision Full Value
Committee are long-term stockholders of the Company. As such, our
interests are directly aligned with the interests of all
stockholders. If elected to the LCA Board, we are committed to
working tirelessly to increase stockholder value. The members of
the LCA-Vision Full Value Committee terminated all substantive
discussions in connection with a potential transaction in July of
this year and began to independently acquire shares of the
Company�s common stock based on their belief that the shares
represented an attractive investment opportunity. � WHAT THEY MAY
SAY: �Each of the members of the LCA-Vision Full Value Committee
has previously served as an executive officer of LCA-Vision and, in
the case of Dr. Joffe and Craig Joffe, also as a director. Each of
these gentlemen voluntarily resigned from those positions to pursue
alternative personal or business objectives. The LCA Board believes
that their recent offers to help the Company are not genuine
especially since they previously abandoned the Company.� � THE
REALITY: Dr. Joffe, Craig Joffe and Alan Buckey left the Company at
different times, under different circumstances. Dr. Joffe resigned
as CEO in February 2006, and was replaced as Chairman of the Board
in March 2006. The backdrop surrounding these events was a
disagreement with the Board over the terms of his compensation. Dr.
Joffe was never awarded a single stock option or share by the Board
during his entire tenure with the Company. The LCA-Vision Full
Value Committee is fully committed to tying the CEO�s compensation
to performance and will not continue the Company�s unfortunate
trend of rewarding the CEO with increased compensation and benefits
while stockholder value suffers, regardless of who the CEO is.
Craig Joffe resigned as a Director, Chief Operating Officer &
General Counsel in March 2007. After serving as Interim CEO of the
Company from March-November 2006, Craig Joffe worked with Steve
Straus for approximately five months before concluding that Mr.
Straus would not lead the Company in a direction with which Craig
Joffe would be proud to be associated. Alan Buckey resigned in June
2008. Mr. Buckey had serious concerns with the performance of Mr.
Straus as CEO and encountered problems in attempting to work with
Mr. Straus and the members of the LCA-Board to increase stockholder
value. Mr. Buckey presented the Chairman of the Board a long list
of concerns about Steve Straus�s continued role at the Company.
After the Chairman continued to blindly support Steve Straus, Mr.
Buckey realized he had no choice but to resign. Since his
departure, the serious concerns Mr. Buckey had perceived and voiced
regarding the Company and CEO Straus have been unfortunately
realized, as evidenced by the recent disastrous performance and
loss of confidence in the CEO. With Mr. Buckey�s departure, the
loss of institutional knowledge and history in the Company�s
executive suite was complete. � A number of surgeons have indicated
their strong support for the return of Dr. Joffe and the other
members of the LCA-Vision Full Value Committee. On more than one
occasion in the past year, a majority of the Company�s affiliated
surgeons have informed the Company�s Chairman and independent
directors that they have �NO CONFIDENCE� in the ability of Mr.
Steve Straus as a leader. � WHAT THEY MAY SAY: �One of the primary
reasons Dr. Joffe resigned his positions with the Company in 2006
was due to his undisclosed interests in TLC Vision Corporation
(�TLC�), one of the Company�s primary competitors. In 2007, Dr.
Joffe expressed interest in a potential transaction to take TLC
private and then threatened an election contest in 2008. How can
you trust that Dr. Joffe is fully committed to LCA-Vision and that
his interests are aligned with yours?� � THE REALITY: Dr. Joffe is
fully committed to LCA-Vision, the Company he founded. He feels
financially, ethically, and reputationally compelled to help rescue
LCA-Vision before it implodes. Dr. Joffe looks forward to the
opportunity to once again help build LCA-Vision into the industry
leader it once was under his auspices. Furthermore, if elected to
the LCA Board, Dr. Joffe would agree not to take an interest or
ownership position in any ophthalmic-related company and his focus
would be on maximizing stockholder value at LCA-Vision. � WHAT THEY
MAY SAY: �Dr. Joffe and Craig Joffe co-founded Joffe MediCenter, a
competitor of LCA-Vision in certain markets. As such, stockholders
should question their true intentions with regard to their
investment in LCA-Vision and should ask themselves whether their
interests are aligned.� � THE REALITY: Joffe MediCenter, a laser
vision and aesthetic company, operates in just two locations in the
U.S. and arguably competes with LCA-Vision vision centers in these
markets. With its two locations, Dr. Joffe and Craig Joffe do not
believe Joffe MediCenter is material to LCAV�s financial and
operational results. Cognizant of any potential for perceived
conflicts of interest, however, Dr. Joffe and Craig Joffe would
agree, if elected to the LCA Board, to explore, in good faith,
selling to the Company their interests in Joffe MediCenter, among
other options. In addition, during such discussions with the Board,
Dr. Joffe and Craig Joffe would agree not to open any new locations
that compete with LCA-Vision vision centers in such markets.
Stockholders should know that the investment in Joffe MediCenter,
in which Craig Joffe serves as the CEO, has enabled Dr. Joffe and
Craig Joffe to remain current in the laser vision correction
industry, including operating in the challenging macroeconomic and
consumer environment that exist today. In addition to growing its
LASIK business during these challenging economic times, Joffe
MediCenter has provided Dr. Joffe and Craig Joffe key insights
regarding possible revenue streams LCA-Vision may want to assess as
it looks to diversify its revenue streams going forward, including
laser-based and other aesthetic procedures. The LCA-Vision Full
Value Committee believes that it can make the most out of these
insights in helping to restore value at the Company. � ASK YOURSELF
WHETHER THE CURRENT BOARD�S INTERESTS ARE ALIGNED WITH YOUR BEST
INTERESTS AS STOCKHOLDERS � We believe the apparent lack of concern
for stockholder value is at least in part due to the fact that the
current directors have little personal stake in the company. It
should be noted that collectively the members of the LCA Board and
the executive management team beneficially own less than 1% of the
Company. And approximately half of the shares owned by the Board
were granted by the Company as compensation to the Board for their
service. Despite the Company�s disastrous performance, management
continues to reward themselves with large payouts. In the first
quarter of 2008, the LCA Board granted the CEO an 8% raise. In the
second quarter of 2008, upon announcing disastrous financial and
operating results, the LCA Board significantly increased the CEO�s
guaranteed payments under a golden parachute from one year to two
years, and provided him with other benefits. We urge all
stockholders to ask themselves whose interests the Board has in
mind when it fails to tie the compensation of its CEO to
performance, and when it responds to our genuine offer to help
restore value by adopting an overly broad poison pill without
stockholder approval. We believe the answer is clear. � WE ARE NOT
THE ONLY ONES WHO HAVE LOST CONFIDENCE IN THIS BOARD AND MANAGEMENT
TEAM � Since announcing our significant stock position in the
Company, we have had the opportunity to speak to a number of
LCA-Vision�s stockholders and analysts. Needless to say, it has
become abundantly clear to us that we are not the only ones unhappy
with the Company�s performance. Since Steve Straus was appointed
CEO in November 2006, over 10 of the Company�s leading
ophthalmologists have either resigned or been terminated by the
Company, apparently without cause. In addition, in a letter dated
June 10, 2008, a majority of the Company�s affiliated surgeons
informed the Company�s Chairman and independent directors that they
had �NO CONFIDENCE in the ability of Mr. Steve Straus to right the
direction of LCA-Vision as a businessman and as a leader of
surgeons and staff.� This letter, which was signed by 40 of the 46
surgeons contacted, was followed up by subsequent correspondence to
the LCA Board from the surgeons declaring their lack of confidence
in the CEO. How did the LCA Board respond? By adopting more
protective indemnification agreements to further insulate them from
their own accountability �to the fullest extent of the law.� Does
this sound like a Board that is more committed to advancing
stockholders� interests, or its own? � STOCKHOLDER VALUE CONTINUES
TO ERODE UNDER THIS BOARD AND MANAGEMENT TEAM � While the Board
spends its time and our money looking for ways to further entrench
itself and protect its own interests, LCA�s operational and
financial performance continues to deteriorate. Over the past nine
months, stockholder value has continued to erode under this Board
and management team�s misguided strategic direction, and there does
not appear to be an end in sight. � IT IS TIME FOR ACCOUNTABILITY �
Enough is enough! It is time for stockholders to be heard. This
Board has made a mockery out of corporate governance, while the
Company continues to lose money at an alarming rate and
stockholders suffer significant losses. Given the current Board�s
history of weak oversight and poor judgment, we do not believe the
current Board has the ability or willingness to make the necessary
structural, leadership and operational changes required to maximize
stockholder value. Accordingly, the LCA-Vision Full Value Committee
believes the best way to address these issues is by removing all
members of the current LCA Board and replacing them with highly
qualified and experienced individuals committed to enhancing
stockholder value. � In the coming days, we will yet again reach
out to the LCA Board in hopes that they are now ready to engage in
meaningful discussions with us regarding our serious concerns with
the Company and the reconfiguration of the LCA Board to include the
members of The LCA-Vision Full Value Committee. If the LCA Board
continues to rebuff us and summarily dismiss us as a �distraction,�
we will not hesitate to take all necessary action to protect our
investment, including seeking to remove and replace the existing
LCA Board. We hope that you share our sense of urgency and support
us as we continue to do everything within our power to save the
Company and maximize stockholder value. � Thank you in advance for
your support. � � Sincerely, � The LCA-Vision Full Value Committee
CERTAIN INFORMATION CONCERNING PARTICIPANTS The LCA-Vision Full
Value Committee intends to make a preliminary filing with the
Securities and Exchange Commission (�SEC�) of a consent
solicitation statement relating to the solicitation of written
consents from stockholders of LCA-Vision Inc., a Delaware
corporation (the �Company�), in connection with seeking to remove
and replace the current members of the Board of Directors of the
Company. THE LCA-VISION FULL VALUE COMMITTEE ADVISES ALL
STOCKHOLDERS OF THE COMPANY TO READ THE CONSENT SOLICITATION
STATEMENT AND ANY OTHER SOLICITATION MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH
SOLICITATION MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC�S
WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN
THIS SOLICITATION WILL PROVIDE COPIES OF THE CONSENT SOLICITATION
STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD
BE DIRECTED TO THE PARTICIPANTS� SOLICITOR. The participants in the
consent solicitation are Dr. Stephen N. Joffe, Craig P.R. Joffe and
Alan H. Buckey. As of the date of this filing, Dr. Joffe directly
beneficially owns 1,171,952 shares of Common Stock of the Company,
Craig P.R. Joffe directly beneficially owns 863,829 shares of
Common Stock of the Company, and Alan H. Buckey directly
beneficially owns 77,900 shares of Common Stock of the Company. For
the purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of
1934, as amended, each of the participants in this solicitation is
deemed to beneficially own the shares of Common Stock of the
Company beneficially owned in the aggregate by the other
participants. Each of the participants in this proxy solicitation
disclaims beneficial ownership of such shares of Common Stock
except to the extent of his or its pecuniary interest therein.
(MM) (NASDAQ:LCAV)
Historical Stock Chart
From Jun 2024 to Jul 2024
(MM) (NASDAQ:LCAV)
Historical Stock Chart
From Jul 2023 to Jul 2024