Urges Stockholders to Create a More Balanced Board of Directors by
Voting FOR Ramius' Nominees on the GOLD Proxy Card Today NEW YORK,
June 23 /PRNewswire/ -- RCG Starboard Advisors, LLC, a subsidiary
of Ramius LLC (collectively, "Ramius"), today announced that it has
filed with the Securities and Exchange Commission (the "SEC")
definitive proxy materials in connection with the 2009 Annual
Meeting of Stockholders of CPI Corp. ("CPI" or the "Company"),
scheduled for July 8, 2009, and is mailing the following letter to
the Company's stockholders. Ramius is the largest stockholder of
CPI, owning approximately 23% of the Company's outstanding shares
of Common Stock. Ramius' nominees for election at the Annual
Meeting include Peter A. Feld, a Ramius representative and an
existing Director of CPI, and Joseph Izganics, a new independent
director nominee with extensive experience in the retail industry.
The full text of the letter follows: June 22, 2009 Dear Fellow CPI
Corp. Stockholder: WE ARE SEEKING A BOARD WITH MORE BALANCE AND
RELEVANT RETAIL EXPERIENCE THAT WILL REPRESENT YOUR BEST INTERESTS
DO NOT BE MISLED - WE ARE NOT SEEKING CONTROL OF THE BOARD - JUST A
BETTER BOARD WE WANT THE BEST BOARD FOR ALL STOCKHOLDERS - HELP US
ACCOMPLISH THAT GOAL BY VOTING THE GOLD PROXY CARD The Ramius Group
collectively owns approximately 23% of the common stock of CPI
Corp. We are the Company's largest stockholder and have been a
stockholder and board member of CPI for over five years. We are
engaging in this election contest only as a last resort. We have
long tried to work cooperatively and constructively with the
Company to reach an amicable resolution with the objective of
creating a balanced board that would represent the best interests
of all stockholders and avoid the necessity for a costly proxy
contest. To that end, as a settlement, we proposed the following
seven-member Board: -- Five independent directors, three of whom
have relevant retail experience; one direct Knightspoint
representative; and one direct Ramius representative CPI rejected
that settlement, and, instead proposed the following six-member
Board: -- Two direct Knightspoint representatives, zero direct
Ramius representatives; and four independent directors, only two of
whom have relevant retail experience. The table below specifically
lays out the two competing Board proposals: Ramius Gold Proxy
Company White Proxy ----------------- ------------------- David
Meyer David Meyer (No retail exp / Knight direct) (No retail exp /
Knight direct) James Abel James Abel (Ind / No retail exp / Knight
rec) (Ind / No retail exp / Knight rec) Michael Glazer Michael
Glazer (Ind / Retail exp / Knight rec) (Ind / Retail exp / Knight
rec) Paul Finkelstein Paul Finkelstein (Ind / Retail exp / CPI rec)
(Ind / Retail exp / CPI rec) Joeseph Izganics Mike Koeneke
---------------- ------------ (Ind / Retail exp / Ramius rec) (No
retail exp / Knight direct) Peter Feld Turner White ----------
------------ (No retail exp / Ramius direct) (Ind / No retail exp /
Knight rec) Legend: Ind - Independent Knight rec - Knightspoint
recommended Retail exp - Retail experience Knight direct -
Knightspoint direct representative No retail exp - No retail
experience Ramius rec - Ramius recommented CPI rec - CPI
recommended Ramius direct - Ramius direct representative THE
DIFFERENCES BETWEEN THE TWO PROPOSALS ARE CLEAR: THE COMPANY
PROPOSAL SERVES KNIGHTSPOINT'S BEST INTERESTS THE RAMIUS PROPOSAL
SERVES ALL STOCKHOLDERS' BEST INTERESTS The Ramius proposal would
create a board with the right balance of directors with relevant
retail industry experience and independence so as to not represent
the interests of any one stockholder over the interests of others.
Even though Ramius owns 23% of the total outstanding shares, our
proposal entails only one direct Ramius representative, Mr. Feld,
who is currently an incumbent member of the Board. On the other
hand, the Company's proposed Board calls for two direct
Knightspoint representatives, despite their owning only 3.5% of the
total outstanding shares, and zero Ramius representation even
though Mr. Feld is currently on the Board. In addition, five out of
the six directors on the Company's proposed Board are either
directly affiliated with Knightspoint, or were previously
recommended to the Board by Knightspoint, thus ensuring
Knightspoint's effective control over the Company. CPI stockholders
should not be satisfied with a pro forma Board with just one new
Board member, Paul Finkelstein, who has no previous relationship
with Knightspoint. Ask yourself if Mr. Finkelstein alone will be
able to serve as a check on Knightspoint's unbridled influence in
the boardroom. Unfortunately, we know from our direct experience on
the Board that the answer is 'no'. Knightspoint's influence over
all Board matters will continue just as it has over the past
several years if you elect the Company's nominees. CPI IS UNWILLING
TO SETTLE BECAUSE IT WOULD REDUCE KNIGHTSPOINT'S EFFECTIVE CONTROL
OVER THE COMPANY Although the Ramius proposal is clearly in the
best interests of all stockholders, CPI has no interest in any
settlement that would erode Knightspoint's control of the
Boardroom. Instead, Knightspoint is seeking to dominate a Board
with members whose past relationships with Knightspoint will ensure
their continued support, regardless of performance. David Meyer and
Michael Koeneke, Knightspoint's direct representatives, have turned
CPI from an investment opportunity into a career opportunity. Even
as the CPI stock declined by 75% over the past two years, Mr. Meyer
and Mr. Koeneke, working part time, have reaped millions of dollars
in "service" fees from the Company. We do not believe Mr. Meyer and
Mr. Koeneke have any other material sources of income besides CPI.
AS A RESULT, RAMIUS HAS BEEN FORCED TO SEEK THE ELECTION OF TWO
HIGHLY QUALIFIED CANDIDATES TO CREATE BALANCE AND NEEDED RETAIL
EXPERIENCE ON THE BOARD The Company's unwillingness to compromise
has forced us to undertake a proxy contest to seek the election of
a balanced, experienced Board. Therefore, we have recommended for
election two highly qualified director candidates; Peter Feld, an
incumbent director and representative of Ramius, the largest
stockholder of the Company, and Joseph Izganics, a seasoned retail
executive with 20 years of experience driving and improving
stockholder value at Home Depot (NYSE:HD). Our nominees will be
paired with who we believe to be the four most qualified and
experienced directors on the Company's slate - resulting in the
following six-member Board: -- Four independent directors, three of
whom have relevant retail experience; one direct Knightspoint
representative; and one direct Ramius representative The table
below specifically outlines the candidates on each slate should
this contest go to a vote: Ramius Gold Proxy Company White Proxy
----------------- ------------------- David Meyer David Meyer (No
retail exp / Knight direct) (No retail exp / Knight direct) James
Abel James Abel (Ind / No retail exp / Knight rec) (Ind / No retail
exp / Knight rec) Michael Glazer Michael Glazer (Ind / Retail exp /
Knight rec) (Ind / Retail exp / Knight rec) Paul Finkelstein Paul
Finkelstein (Ind / Retail exp / CPI rec) (Ind / Retail exp / CPI
rec) Joeseph Izganics Mike Koeneke ---------------- ------------
(Ind / Retail exp / Ramius rec) (No Retail exp / Knight direct)
Peter Feld Turner White ---------- ------------ (No Retail exp /
Ramius direct) (Ind / No retail exp / Knight rec) Legend: Ind -
Independent Knight rec - Knightspoint recommended Retail exp -
Retail experience Knight direct - Knightspoint direct
representative No retail exp - No Retail experience Ramius rec -
Ramius recommented CPI rec - CPI recommended Ramius direct - Ramius
direct representative Since Ramius is proposing just two candidates
for election at the Annual Meeting, you will also have the ability
to vote on Ramius' GOLD proxy card for the Company's four director
nominees who Ramius believes are most qualified to serve your best
interests. You only need to vote on the GOLD card to elect a full
slate of directors to the Board. We believe our proposed Board
offers stockholders significantly more balance and retail
expertise. By contrast, consider this disturbing fact about the
Company's slate - five out of six of the Company's director
candidates are either directly affiliated with, or have been
hand-picked by Knightspoint. The election of the Company's slate
would mean that Knightspoint's effective control over your Board
would only further increase and that Ramius, the Company's largest
stockholder, would have zero representation. Clearly the Company is
attempting to send the message to stockholders that it is only
concerned with what is best for Knightspoint and its direct
representatives, and not what is best for all stockholders. HOW CAN
CPI CLAIM THAT IT IS REPRESENTING ALL STOCKHOLDERS BEST INTERESTS
WHEN IT SEEKS TO STACK THE BOARD WITH KNIGHTSPOINT REPRESENTATIVES
AND TO REMOVE A REPRESENTATIVE OF THE LARGEST STOCKHOLDER? RAMIUS'
TWO DIRECTOR CANDIDATES WILL WORK CONSTRUCTIVELY WITH THE REMAINING
DIRECTORS TO REPRESENT YOUR BEST INTERESTS THE CHOICE IS CLEAR!
Joseph Izganics: Mr. Izganics was formerly one of only three
Division Presidents of Home Depot, directly responsible for over
$20 billion in sales and 110,000 associates. Previously, he was the
head of the pro business and tool rental business where he
supported a contractor base of $20 billion in sales. Prior to that,
Mr. Izganics was the President of the $3 billion services business.
Mr. Izganics is widely credited at Home Depot for: -- Developing
and implementing operational and merchandising programs company
wide that enhanced the customer experience within the store --
Implementing processes that improved capital allocation and return
on invested capital (ROIC) to the highest in company history --
Developing and implementing marketing campaigns that increased
consumer and associate awareness to record levels -- Pioneering two
store prototypes that dramatically improved sales per square foot
and profitability throughout Home Depot Peter Feld: Mr. Feld is a
Managing Director at Ramius LLC, an investment management firm
which oversees $7.5 billion of assets, and the largest stockholder
of CPI. Mr. Feld has been instrumental in the success of Ramius and
its investments. Mr. Feld has strong expertise in corporate
finance, restructuring, investment banking, and corporate
governance. He has been a director of CPI since July 2008. During
his time on the Board, Mr. Feld: -- Recognized the lack of retail
expertise on the Board and pushed for the process that ultimately
resulted in Michael Glazer, the Company's only director with
relevant retail experience, being appointed to the Board. Without
Mr. Feld's hard work, we firmly believe the board would still be
comprised of zero members with relevant retail expertise -- Led an
initiative to re-evaluate field compensation practices which
resulted in field personnel having the opportunity to earn
substantially more money by meeting certain financial goals -- Upon
joining the Board, Mr. Feld recognized the clear need for the
current directors to spend more time in the studios. Mr. Feld urged
directors to contact their closest district managers and go through
the Company's score cards and analytics to better understand the
business -- Negotiated a lower compensation package for Mr. Meyer's
consulting "services," despite Mr. Koeneke's insistence that Mr.
Meyer be paid substantial compensation for part time work THE
RAMIUS NOMINEES HAVE THE RIGHT EXPERIENCE TO HELP TRANSFORM CPI
INTO A BEST OF BREED SPECIALTY RETAILER The skill set required on
this Board has changed from when we first invested in CPI in 2003.
Although the Company has created a more efficient cost structure
through converting its studios to a digital platform, opportunities
in the future for further improvement in financial performance will
depend upon successful management of the following critical issues:
-- Negative sittings trend -- Relationship with hosts -- Customer
attrition rate -- Strength of marketing programs -- Quality of the
customer experience -- Improving field execution The Board
desperately needs qualified retail experience to achieve best
practices and transform CPI into a best of breed specialty
retailer. David Meyer is not a retailer and, by himself, does not
have the skills necessary to drive best practices at a specialty
retailer. It is also important to recognize that the current Board
has overseen the Company through substantial turmoil. These
missteps include: -- Over-reliance on David Meyer in the
negotiation of the Sears contract resulting in an 11th hour deal on
expensive terms to CPI stockholders. -- Coming precariously close
to breaking minimum EBITDA covenants which could have had seriously
negative implications for CPI stockholders -- Overseeing a 99%
decline in the stock price from its high on May 15, 2007 to its low
on December 4, 2008 NOW IS NOT THE TIME FOR COMPLACENCY MICHAEL
KOENEKE AND TURNER WHITE PROVIDE LITTLE INCREMENTAL VALUE TO THE
BOARD The most significant contribution that either Mr. Koeneke or
Mr. White bring to CPI is to further facilitate the effective
control of the Knightspoint Group. Mr. Koeneke's primary reason for
being on the CPI Board, we believe, is to earn a living off of your
company. To our knowledge, Mr. Koeneke has no other material source
of income other than his board fees at CPI and his potential
participation in Mr. Meyer's CPI compensation through the
Knightspoint partnership. In the Compensation Committee discussions
concerning Mr. Meyer's compensation, Mr. Koeneke has been the most
vocal on Mr. Meyer's behalf. Mr. White also adds no incremental
value to CPI except to facilitate the stream of compensation that
flows from your company to Mr. Meyer and Mr. Koeneke. Mr. White
possesses no relevant retail experience and has only limited
financial experience. However, as head of the compensation
committee, Mr. White has proposed and supported Mr. Meyer's
generous compensation packages for part time work. KNIGHTSPOINT'S
STRANGLEHOLD OF POWER HAS RESULTED IN MATERIAL CONFLICTS OF
INTEREST THAT CAN ONLY BE ADDRESSED THROUGH A CHANGE IN THE BOARD
For example, consider the facts: -- The Company continues to allow
Mr. Koeneke to be a member of the Compensation Committee that
determines the compensation for David Meyer, his business partner
and long time friend. We believe this has allowed Mr. Meyer to make
millions of dollars in restricted stock for providing part time
consulting "services" to CPI, even as the stock price has declined
materially. In 2007, Mr. Koeneke helped negotiate a pay package of
$1.4 million for Mr. Meyer, despite the fact that the stock was
down 62%. In 2008, Mr. Koeneke helped negotiate compensation for
Mr. Meyer of $613 thousand despite the stock being down 61%. Ask
yourself how it makes sense for Mr. Meyer, the non executive
chairman of the Company, working part time, to be compensated 75%
more over the last two years for providing consulting "services"
than the CEO who works full time operating the company? -- Stan
Meadows, CPI's "independent" outside counsel has a previous
relationship with Knightspoint acting as their outside counsel as
well as being a long time friend of Mr. Meyer and his family. This
results in Mr. Meadows insisting that Mr. Meyer is "independent"
even though he receives material compensation from the Company in
the form of consulting "services." RAMIUS HAS TRIED TO WORK THROUGH
THE NUMEROUS CONFLICTS ARISING FROM KNIGHTSPOINT'S EFFECTIVE
CONTROL OF CPI - BUT IT HAS PROVEN IMPOSSIBLE -- Ramius has
repeatedly questioned whether David Meyer's compensation is treated
as income to Knightspoint Partners, and whether Mr. Koeneke
receives a portion of that income as part of their partnership
agreement. Knightspoint has failed to provide any substantive
responses to these inquiries. -- The Company falsely asserts that
"Mr. Meyer's additional compensation arrangements as
Chairman...were in every instance determined and approved
unanimously by the entire Board (including the Ramius Group
representative)." In 2008, then Ramius Board member Mark Mitchell
voted AGAINST David Meyer receiving a discretionary compensation
award for providing "services" to CPI during 2007. Mr. Mitchell
viewed such an award as excessive in light of the previous award at
the time of the PCA acquisition and the subsequent 62% decline in
CPI stock for all of fiscal 2007. However, he was out-voted by the
remainder of the Board, all of whom were either directly affiliated
with Knightspoint or had been recommended to the Board by
Knightspoint. -- Mr. Feld, the current Ramius representative on the
Board, has repeatedly voiced his concern that Mr. Koeneke should
not be part of the Compensation Committee that determines the
compensation for David Meyer, his friend and business partner.
Unsurprisingly, he was out-voted by the remainder of the Board.
STOCKHOLDERS CANNOT STAND IDLY BY AND ALLOW THEIR COMPANY TO BE
CONTROLLED BY THOSE ONLY LOOKING OUT FOR THEIR OWN SELF INTERESTS
DO NOT BE DISTRACTED BY THE COMPANY'S SELF-SERVING AND MISLEADING
STATEMENTS Unfortunately, the current CPI Board has chosen to run a
campaign that evades legitimate stockholder concerns about the
Board's lack of relevant experience, Knightspoint's effective
control over the Company and the material conflicts of interest
that exist at the Board level. Instead, they have chosen to run a
campaign based on false accusations regarding our nominees and
mistruths regarding our intentions for CPI. The Company is only
attempting to distract stockholders from the real and critical
issues facing the Company. We urge you to focus on the facts so
that you can make an informed decision. YOU HAVE THE OPPORTUNITY TO
ELECT A MORE BALANCED BOARD BY VOTING THE GOLD CARD TO ENSURE THAT
YOUR BEST INTERESTS ARE REPRESENTED IN THE BOARDROOM WE ARE NOT
SEEKING CONTROL OF THE BOARD - JUST A BETTER BOARD WE ARE ASKING
FOR YOUR SUPPORT TO ELECT TWO RAMIUS RECOMMENDED DIRECTORS FOR A
MORE BALANCED AND EXPERIENCED BOARD WHO WILL REPRESENT YOUR BEST
INTERESTS Please vote for Mr. Feld and for Mr. Izganics on the
enclosed GOLD proxy card. We offer you the opportunity to elect to
the CPI boardroom stockholder representatives committed to building
the value of your investment. In the meantime, we urge you NOT to
return any WHITE proxy card CPI sends you. We look forward to your
support at the 2009 Annual Meeting. Best Regards, Mark R. Mitchell
Partner Ramius LLC About Ramius LLC Ramius LLC is a registered
investment advisor that manages assets in a variety of alternative
investment strategies. Ramius LLC is headquartered in New York with
offices located in London, Tokyo, Hong Kong, Munich, and Vienna.
Media Contact: Peter Feld Ramius LLC (212) 201-4878 CERTAIN
INFORMATION CONCERNING PARTICIPANTS Ramius Value and Opportunity
Master Fund Ltd ("Value and Opportunity Master Fund"), together
with the other participants named herein, has made a definitive
filing with the Securities and Exchange Commission ("SEC") of a
proxy statement and accompanying GOLD proxy card to be used to
solicit votes for the election of a slate of director nominees at
the 2009 annual meeting of stockholders of CPI Corp., a Delaware
corporation (the "Company"). VALUE AND OPPORTUNITY MASTER FUND
ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT
AND OTHER PROXY MATERIALS 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 UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR. The participants in this proxy
solicitation are Value and Opportunity Master Fund, Ramius
Enterprise Master Fund Ltd ("Enterprise Master Fund"), Starboard
Value & Opportunity Fund, LLC ("Starboard Value &
Opportunity Fund"), Ramius Merger Arbitrage Master Fund Ltd
("Merger Arbitrage Master Fund"), Ramius Multi-Strategy Master Fund
Ltd ("Multi-Strategy Master Fund"), Ramius Leveraged Multi-Strategy
Master Fund Ltd ("Leveraged Multi-Strategy Master Fund"), Ramius
Advisors, LLC ("Ramius Advisors"), RCG Starboard Advisors, LLC
("RCG Starboard Advisors"), Ramius LLC ("Ramius"), C4S & Co.,
L.L.C. ("C4S"), Peter A. Cohen ("Mr. Cohen"), Morgan B. Stark ("Mr.
Stark"), Thomas W. Strauss ("Mr. Strauss"), Jeffrey M. Solomon
("Mr. Solomon"), Peter A. Feld ("Mr. Feld") and Joseph C. Izganics
("Mr. Izganics"). As of the date hereof, Value and Opportunity
Master Fund beneficially owned 797,988 shares of Common Stock,
Starboard Value and Opportunity Fund beneficially owned 212,040
shares of Common Stock, Merger Arbitrage Master Fund beneficially
owned 192,000 shares of Common Stock, Leveraged Multi-Strategy
Master Fund beneficially owned 29,213 shares of Common Stock,
Multi-Strategy Master Fund beneficially owned 179,614 shares of
Common Stock and Enterprise Master Fund beneficially owned 202,054
shares of Common Stock. As of the date hereof, RCG Starboard
Advisors (as the investment manager of Value and Opportunity Master
Fund and the managing member of Starboard Value and Opportunity
Fund) is deemed to be the beneficial owner of the (i) 797,988
shares of Common Stock owned by Value and Opportunity Master Fund
and (ii) 212,040 shares of Common Stock owned by Starboard Value
and Opportunity Fund. As of the date hereof, Ramius Advisors (as
the investment advisor of Multi-Strategy Master Fund, Merger
Arbitrage Master Fund, Leveraged Multi-Strategy Master Fund and
Enterprise Master Fund) is deemed to be the beneficial owner of the
(i) 179,614 shares of Common Stock owned by Multi-Strategy Master
Fund, (ii) 192,000 shares of Common Stock owned by Merger Arbitrage
Master Fund, (iii) 29,213 shares of Common Stock owned by Leveraged
Multi-Strategy Master Fund, and (iv) 202,054 shares of Common Stock
owned by Enterprise Master Fund. As of the date hereof, Ramius (as
the sole member of each of RCG Starboard Advisors and Ramius
Advisors), C4S (as the managing member of Ramius) and Messrs.
Cohen, Stark, Strauss and Solomon (as the managing members of C4S)
are deemed to be the beneficial owners of the (i) 797,988 shares of
Common Stock owned by Value and Opportunity Master Fund, (ii)
212,040 shares of Common Stock owned by Starboard Value and
Opportunity Fund, (iii) 179,614 shares of Common Stock owned by
Multi-Strategy Master Fund, (iv) 192,000 shares of Common Stock
owned by Merger Arbitrage Master Fund, (v) 29,213 shares of Common
Stock owned by Leveraged Multi-Strategy Master Fund, and (vi)
202,054 shares of Common Stock owned by Enterprise Master Fund.
Messrs. Cohen, Stark, Strauss and Solomon share voting and
dispositive power with respect to the shares of Common Stock owned
by Value and Opportunity Master Fund, Starboard Value and
Opportunity Fund, Multi-Strategy Master Fund, Merger Arbitrage
Master Fund, Leveraged Multi-Strategy Master Fund and Enterprise
Master Fund by virtue of their shared authority to vote and dispose
of such shares of Common Stock. As of the date hereof, Mr. Feld
holds 5,252 shares of restricted stock awarded under the Company's
Omnibus Incentive Plan that vest in full on February 6, 2010. As of
the date hereof, Mr. Izganics directly owns 500 shares of Common
Stock. As members of a "group" for the purposes of Rule 13d-5(b)(1)
of the Securities Exchange Act of 1934, as amended, each of the
participants in this proxy 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. DATASOURCE: Ramius LLC CONTACT: Peter Feld of
Ramius LLC, +1-212-201-4878
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