Open Letter to SM&A Stockholders on Preserving Good Corporate Governance
02 May 2008 - 10:28PM
Business Wire
SM&A�(NASDAQ:WINS) announces open letter to SM&A
stockholders on preserving good corporate governance: May 2, 2008 �
Dear Fellow Stockholders: � As you consider the upcoming May 23
shareholder vote, we thought it would be helpful to give you some
perspective on the philosophy and objectives of your Board. � Our
Board has an unwavering commitment to continue to enhance our
governance practices and policies to ensure the best and most
comprehensive stockholder representation at the Board level, and we
embrace this critical objective so prevalent in corporate America
today. Our stockholders rightfully demand superior representation
of their interests. That includes having truly independent
directors, highly qualified audit, compensation and corporate
governance committees, open disclosure of policies, linking pay to
performance and a myriad of other sound practices that ensure the
best and most unbiased oversight and stewardship at the top. � In
addition, through board education programs, we ensure that our
Board members are current with the requisite "best practice"
policies and have the experience and knowledge to provide oversight
that results in sound and robust policies and processes. It is with
this backdrop that we urge you to support our nominees and to
reject the dissident slate. Let me be clear: We are not at all
opposed to giving serious consideration to qualified candidates who
have the experience, business acumen or expertise that may be able
to add value to SM&A. In this case, however, we are hard
pressed to identify any such attributes. � When it comes to our
leadership team, we impose high standards and are demanding of each
member � from our fellow directors to the CEO and others down the
line. We have always held them accountable for the rise and fall of
the business, and will continue to do so. We expect quality
performance and acceptable returns for our stockholders, and are
willing to make changes when necessary and appropriate; which we
have recently demonstrated. Today, unlike in the past, a modicum of
business knowledge and experience, coupled with a casual
association with the CEO, is grossly inadequate to fulfill the
increasing demands of directors and committee chairs of public
companies. We believe when you analyze the four Myers nominees, you
will also conclude that they simply cannot fill the shoes of your
current Board members. � The current slate of nominees your Board
is recommending you re-elect not only understands the demands and
requirements of stockholder representation but also has the
experience and have demonstrated their commitment to insuring ALL
stockholders are fully represented. � Former CEO Steven Myers wants
to replace them with himself and his hand-picked slate made up of
Kenneth Colbaugh, Albert Nagy and Redge Bendheim. Let's be clear:
this is a transparent, de facto takeover attempt by four friends,
whose ties to each other will make them anything but independent
and whose experience and track record in guiding a public company
through the demands expected by our stockholders today is severely
limited and unacceptable to the remaining Board members and Company
leadership. � For the last nine months our Board has worked with
our new management team to address the problems of the past and at
the same time build for the future. We firmly believe we have
positioned the Company for revenue growth through the strategies we
are implementing and believe we have a sound operating plan
currently in place, which has already resulted in increasing
earnings from our operations, before non-operational charges. �
Much of the credit goes to four highly qualified, independent and
independent-thinking directors�William Bowes, Joseph Reagan, Robert
Untracht and John Senbit�who are all dedicated not only to the very
best in corporate governance, but to tirelessly watching out for
your interests as stockholders. � Since Myers and his slate are
running on their record of the past, we believe it is only fair
that you have a chance to evaluate them with the information below.
As we have repeatedly stated, we are confident that when you review
their records you will agree that our path to the future does not
involve a detour into the past. � Steven Myers Myers would have you
believe that he can do a better job managing the finances of
SM&A than current management, but ask yourself - how can he say
that when history shows otherwise? With one of his current nominees
as chairman of the compensation committee, Myers earned annual
compensation of $1 million that was criticized by industry
observers as disproportionate and excessive. According to a report
by Sidoti & Co., �Mr. Myers, as CEO of one of the smallest
companies in our IT Services covered universe, was paid more than
almost every other CEO in the group.� During the period in which he
headed SM&A as a public company, Myers spent nearly $1.1
million of shareholder money so he could travel on private jets
provided by an aviation company in which he was the owner. While
Myers professes to be interested in the Company�s long-term value
and touts his stock holdings, he continues to dispose of shares
even in a down market and at low prices. He appears to be a
short-term player who is selling, not buying. Myers' idea of
efficient cash deployment apparently includes four failed
acquisitions, $90 million in losses and a public company which was
de-listed after 36 months of the initial public offering.
SM&A�s record during his tenure does not demonstrate effective
cost management. Myers' track record clearly demonstrates a
continual loss of talent and intellectual property during his
leadership which has directly resulted in the development of at
least five competing firms today. Kenneth Colbaugh Myers would have
you believe Colbaugh and other members of his slate provide
"credibility," but ask yourself - do the following facts support
that contention? As COO under Myers, Colbaugh helped take the
company public in January 1998. Nine months later guidance was
substantially missed, laying the groundwork for a severe plunge in
the share price of SM&A�s stock, which eventually traded as low
as 62 cents a share a mere 36 months later. Thirteen months after
the IPO and telling SM&A�s new stockholders the benefit of
investing in SM&A, Colbaugh resigned and formed a competitor
that raided executives from the Company. One result: a costly
lawsuit SM&A filed to protect its trade secrets. Except for his
brief term on the SM&A Board, Colbaugh has not served on the
board of directors of a public company and has no relevant or
current experience or effective oversight. Albert Nagy Myers would
have you believe Nagy is deserving of a seat on your Board, but ask
yourself - is there any benefit from a conflicted and inexperienced
candidate? Nagy served as head of the compensation committee when
Myers was drawing $1 million in compensation and spending
shareholder money to travel on jets through a company he owned. As
head of the compensation committee, Nagy enjoyed lucrative
consulting agreements with SM&A. Nagy is not currently serving
as a director at a publicly traded U.S. company and Myers in fact
replaced him with one of the independent board members Myers wishes
to unseat today. Why the change of heart? Redge Bendheim Myers
would have you believe Bendheim has the experience to serve on your
Board, but ask yourself - with these qualifications, what can he do
for you? Bendheim, from reading Myers� proxy materials, has no
experience serving on the board of a publicly traded company and,
as a retired tax partner, has no relevant or current experience in
public company governance, audit requirements or Sarbanes-Oxley
requirements. There is no evidence Bendheim has the kind of audit
or internal controls experience at a publicly traded company that
an audit committee member requires. WE URGE YOU TO VOTE THE WHITE
CARD TODAY AND SEND A STRONG MESSAGE TO MYERS THAT THE SM&A
STOCKHOLDERS WILL NOT STAND FOR BOARD DETERIORATION. � Sincerely, �
� Dwight Hanger � YOUR VOTE IS IMPORTANT -- SIGN, DATE AND RETURN
THE WHITE PROXY CARD TODAY � The Stockholder meeting will be on
Friday, May 23, 2008 with stockholders of record as of April 9,
2008 eligible to vote. � If you have any questions or need
assistance in voting, contact MacKenzie Partners, Inc. Toll-Free:
(800) 322-2885 winsproxy@mackenziepartners.com � Please discard and
do not sign any gold proxy cards sent to you by Myers. � We urge
you to sign, date and return the enclosed WHITE Proxy Card today or
to vote by telephone or Internet by following the directions on
your card. About SM&A SM&A is the world's foremost
management consulting firm providing leadership and mentoring
solutions to PLAN for business capture, WIN competitive
procurements and profitably PERFORM on the projects and programs
won. Our proven processes, people and tools have delivered
significant top-line and bottom-line growth across markets,
products and services. From the largest aerospace and defense
contractors, through the major software providers, to healthcare
and financial/audit service providers, SM&A is the partner many
companies turn to WHEN THEY MUST WIN. All stockholders of SM&A
are advised to read the definitive proxy statement and other
documents related to the solicitation of proxies by SM&A for
use at the 2008 annual meeting of stockholders of SM&A. They
contain important information regarding the election of directors
and other matters. The definitive proxy statement and form of proxy
have been mailed to stockholders of record of SM&A along with
other relevant documents. They are available at no charge on the
SEC�s website at http://www.sec.gov. In addition, SM&A will
provide copies of the definitive proxy statement without charge
upon request. Some statements made in this news release refer to
future actions, strategies, or results that involve a number of
risks and uncertainties. Any number of factors could cause actual
results to differ materially from expectations, including a shift
in demand for SM&A's Competition Management and Program
services; fluctuations in the size, timing, and duration of client
engagements; delays, cancellations, or shifts in emphasis for
competitive procurement activities; declines in future defense,
information technology, homeland security, new systems, and
research and development expenditures, and other risk factors
listed in SM&A's SEC reports, including the report on Form 10-K
for the year ended December 31, 2007. Actual results may differ
materially from those expressed or implied. The company does not
undertake any duty to update forward-looking statements.
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