PRELIMINARY
COPY SUBJECT TO COMPLETION
DATED
MAY 22, 2009
RAMIUS
VALUE AND OPPORTUNITY MASTER FUND LTD
___________,
2009
Dear
Fellow Stockholder:
Ramius
Value and Opportunity Master Fund Ltd (“Value and Opportunity Master Fund”) and
the other participants in this solicitation (collectively, the “Ramius Group”)
are the beneficial owners of an aggregate of [1,612,909] shares of common stock
of CPI Corp. (the “Company”), representing approximately [23]% of the
outstanding shares of common stock of the Company. As set forth in
greater detail in the enclosed Proxy Statement, we have significant concerns
with the overall composition and effectiveness of the Company’s Board of
Directors (the “Board”) and with certain aspects of its corporate
governance.
We have
serious concerns that Knightspoint Partners has disproportionate influence over
the Board relative to its share ownership through its two director
representatives, Chairman David M. Meyer and Michael
Koeneke. Knightspoint Partners controls approximately 3.5% of the
Company’s outstanding shares, including shares held individually by Mr. Meyer
and Mr. Koeneke. This amount includes approximately 1.5% of the
outstanding shares that Knightspoint Partners directly holds and an additional
2% of the shares outstanding granted over the past several years to Messrs.
Meyer and Koeneke by the Board as compensation. Compare this share ownership
percentage to the 33 1/3% of the Board that the Knightspoint Partners
representatives presently constitute. Comparatively, the Ramius Group is
collectively the largest stockholder of the Company, with an investment in your
Company close to [seven] times larger than that of Knightspoint Partners and its
affiliates, yet we have just one direct representative, whom the Board has
decided not to re-nominate for election at the upcoming Annual
Meeting.
We
question the need for Knightspoint Partners to maintain two direct
representatives on the Board in light of its ownership position in the Company
and we question the additional value that Mr. Koeneke brings to the boardroom.
We believe that Knightspoint Partners’ disproportionate influence at the Board
level is detrimental to stockholders and renders the Board incapable of
effectively overseeing and governing the Company.
We
believe stockholders would be better served by electing the Ramius Group’s
nominees, including incumbent director Peter Feld and a new, truly independent,
highly qualified director, Joseph Izganics. Our goal is to ensure
that the Board has the right balance of directors who have relevant industry
experience and who are independent-minded so as not to represent the interests
of any one stockholder over the interests of other stockholders.
Prior to
November 2008, the Board did not have a single member with directly relevant
experience in the retail and consumer products industries. The Ramius
Group had been encouraging the Company for quite some time to improve the
quality of the Board through the addition of director candidates with experience
in all aspects of the retail industry. In fact, the process which
resulted in the addition of Mr. Glazer to the Board in November 2008 was the
result of the Ramius Group’s insistence that such a process be
undertaken.
The
Ramius Group is seeking your support to re-elect incumbent director Peter Feld
and to elect Joseph Izganics. We believe Mr. Izganics has the
appropriate experience and skill set to assist management in improving the
performance of the Company. Mr. Izganics was identified through a
search process by an unrelated third-party firm based on his background in the
retail industry and his specific skill sets that could provide oversight and
guidance to CPI. We strongly believe that the election of our
nominees will help make CPI a stronger, more profitable, and more valuable
company.
We are
engaging in this proxy contest as a last resort. We have expressed our belief to
Mr. Meyer and the Board that it would be in the best interest of all parties
that a mutually agreeable slate of directors be nominated for election at the
Annual Meeting. To that end, Ramius proposed a settlement offer that
would result in the addition of two highly qualified, independent nominees and
one incumbent director not standing for re-election at the Annual Meeting. To
date, the Board has rejected our offer and has not presented any reasonable
alternative proposal. We have been prepared to engage in a meaningful
and constructive dialogue with the Board to reach an amicable
resolution. We believe, however, that Mr. Meyer’s desire to maintain
Knightspoint Partners’ disproportionate influence in the boardroom has precluded
any such constructive discussions. Unfortunately, at this time an
election contest is our only means for seeking to improve the overall quality of
the Board through the election of director candidates who possess extensive
industry experience and who are solely motivated to serve the best interests of
all stockholders.
We are
therefore seeking your support at the annual meeting of stockholders scheduled
to be held at the Company’s offices at 1706 Washington Avenue, St. Louis,
Missouri 63103-1717 at 9:00 a.m. (Central Daylight Time), Wednesday, July 8,
2009, for the following:
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1.
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To
elect Value and Opportunity Master Fund’s slate of two (2) nominees to the
Company’s Board of Directors in opposition to certain of the Company’s
incumbent directors; and
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2.
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To
ratify the appointment of KPMG LLP as the Company’s independent registered
public accounting firm for the fiscal year ending February 6,
2010.
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The Board
is currently composed of six (6) directors. Through the enclosed
Proxy Statement, we are soliciting proxies, pursuant to Rule 14a-4(d)(4) of the
Securities Exchange Act of 1934, as amended, to elect not only our two (2)
director nominees, but also the candidates who have been nominated by CPI other
than [______] and Michael Koeneke. This gives stockholders the
ability to vote for the total number of directors up for election at the Annual
Meeting. The names, backgrounds and qualifications of CPI’s nominees,
and other information about them, can be found in the Company’s proxy
statement. There is no assurance that any of CPI’s nominees will
serve as directors if our nominees are elected.
The
Ramius Group urges you to carefully consider the information contained in the
attached Proxy Statement and then support its efforts by signing, dating and
returning the enclosed
GOLD
proxy card
today. The attached Proxy Statement and the enclosed
GOLD
proxy card are first
being furnished to the stockholders on or about ___________, 2009.
If you
have already voted for the management slate, you have every right to change your
vote by signing, dating and returning a later dated proxy.
If you
have any questions or require any assistance with your vote, please contact
Innisfree M&A Incorporated, which is assisting us, at their address and
toll-free numbers listed on the following page.
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Thank you for your
support.
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/s/ Mark R.
Mitchell
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Mark
R. Mitchell
Ramius
Value and Opportunity Master Fund
Ltd
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If
you have any questions, require assistance in voting your
GOLD
proxy
card,
or
need additional copies of Value and Opportunity Master Fund’s proxy
materials, please call
Innisfree
M&A Incorporated at the phone numbers listed below.
Innisfree
M&A Incorporated
501
Madison Avenue, 20th Floor
New
York, NY 10022
Stockholders
Call Toll-Free at: (877) 800-____
Banks
and Brokers Call Collect at: (212) 750-5833
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2009
ANNUAL MEETING OF STOCKHOLDERS
OF
CPI
CORP.
_________________________
PROXY
STATEMENT
OF
RAMIUS
VALUE AND OPPORTUNITY MASTER FUND LTD
_________________________
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
Ramius
Value and Opportunity Master Fund Ltd, a Cayman Islands exempted company (“Value
and Opportunity Master Fund”), Ramius Enterprise Master Fund Ltd, a Cayman
Islands exempted company (“Enterprise Master Fund”), Starboard Value &
Opportunity Fund, LLC, a Delaware limited liability company (“Starboard Value
& Opportunity Fund”), Ramius Merger Arbitrage Master Fund Ltd, a Cayman
Islands exempted company (“Merger Arbitrage Master Fund”), Ramius Multi-Strategy
Master Fund Ltd, a Cayman Islands exempted company (“Multi-Strategy Master
Fund”), Ramius Leveraged Multi-Strategy Master Fund Ltd, a Cayman Islands
exempted company (“Leveraged Multi-Strategy Master Fund”), Ramius Advisors, LLC,
a Delaware limited liability company (“Ramius Advisors”), RCG Starboard
Advisors, LLC, a Delaware limited liability company (“RCG Starboard Advisors”),
Ramius LLC, a Delaware limited liability company (“Ramius”), C4S & Co.,
L.L.C., a Delaware limited liability company (“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”) (collectively, the “Ramius Group”) are significant
stockholders of CPI Corp., a Delaware corporation (“CPI” or the
“Company”). Each member of the Ramius Group is a participant in this
solicitation.
We have
significant concerns with the overall composition and effectiveness of the
Company’s Board of Directors (the “Board”) and with certain aspects of its
corporate governance. The Ramius Group is therefore
seeking your support at the annual meeting of stockholders scheduled to be held
at the Company’s offices at 1706 Washington Avenue, St. Louis, Missouri
63103-1717 at 9:00 a.m. (Central Daylight Time), Wednesday, July 8, 2009,
including any adjournments or postponements thereof and any meeting which may be
called in lieu thereof (the “Annual Meeting”), for the following:
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1.
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To
elect Value and Opportunity Master Fund’s director nominees, Peter A. Feld
and Joseph C. Izganics (the “Ramius Nominees”), to serve as directors of
the Company to hold office until the 2010 annual meeting of stockholders
and until their respective successors shall have been selected and
qualified, in opposition to certain of the Company’s incumbent directors
whose terms expire at the Annual Meeting;
and
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2.
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To
ratify the appointment of KPMG LLP as the Company’s independent registered
public accounting firm for the fiscal year ending February 6,
2010.
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This
Proxy Statement is soliciting proxies to elect not only the two (2) Ramius
Nominees, but also the candidates who have been nominated by the Company other
than [______] and Michael Koeneke. This gives stockholders who wish
to vote for the Ramius Nominees the ability to also vote for the total number of
directors up for election at the Annual Meeting.
As of the
date hereof, the members of the Ramius Group were the beneficial owners of an
aggregate of [1,612,909] shares of Common Stock, par value $0.40, of the Company
(the “Shares”), which represents approximately [23]% of the issued and
outstanding Shares.
CPI has
set the close of business on May 9, 2009 as the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting (the
“Record Date”). The mailing address of the principal executive
offices of CPI is 1706 Washington Avenue, St. Louis, Missouri
63103. Stockholders of record at the close of business on the Record
Date will be entitled to vote at the Annual Meeting. According to the
Company, as of the Record Date, there were 7,005,301 Shares
outstanding. The participants in this solicitation intend to vote all
of their Shares that are entitled to be voted FOR the election of the
Ramius Nominees.
THIS
SOLICITATION IS BEING MADE BY THE RAMIUS GROUP AND NOT ON BEHALF OF THE BOARD OF
DIRECTORS OR MANAGEMENT OF THE COMPANY. THE RAMIUS GROUP IS NOT AWARE
OF ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD
OTHER MATTERS, WHICH THE RAMIUS GROUP IS NOT AWARE OF A REASONABLE TIME BEFORE
THIS SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS
PROXIES IN THE ENCLOSED
GOLD
PROXY CARD WILL VOTE ON
SUCH MATTERS IN THEIR DISCRETION.
THE
RAMIUS GROUP URGES YOU TO SIGN, DATE AND RETURN THE
GOLD
PROXY CARD IN FAVOR OF
THE ELECTION OF THE RAMIUS NOMINEES.
IF YOU
HAVE ALREADY SENT A PROXY CARD FURNISHED BY CPI MANAGEMENT TO CPI, YOU MAY
REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES AND THE
CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY OTHER THAN JOHN [______] AND
MICHAEL KOENEKE BY SIGNING, DATING AND RETURNING THE ENCLOSED
GOLD
PROXY
CARD. THE LATEST DATED PROXY IS THE ONLY ONE THAT
COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL
MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR
THE ANNUAL MEETING TO THE RAMIUS GROUP, C/O INNISFREE M&A INCORPORATED,
WHICH IS ASSISTING IN THIS SOLICITATION, OR TO THE SECRETARY OF CPI, OR BY
VOTING IN PERSON AT THE ANNUAL MEETING.
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting
This
Proxy Statement and our
GOLD
proxy card are available
at
http://www.___________.com
IMPORTANT
Your
vote is important, no matter how few Shares you own. The Ramius Group
urges you to sign, date, and return the enclosed GOLD proxy card today to vote
FOR the election of the Ramius Nominees.
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If
your Shares are registered in your own name, please sign and date the
enclosed
GOLD
proxy card and return it to the Ramius Group, c/o Innisfree M&A
Incorporated in the enclosed envelope
today.
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·
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If
your Shares are held in a brokerage account or bank, you are considered
the beneficial owner of the Shares, and these proxy materials, together
with a
GOLD
voting
form, are being forwarded to you by your broker or bank. As a
beneficial owner, you must instruct your broker, trustee or other
representative how to vote. Your broker cannot vote your Shares
on your behalf without your
instructions.
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Depending
upon your broker or custodian, you may be able to vote either by toll-free
telephone or by the Internet. Please refer to the enclosed
voting form for instructions on how to vote electronically. You
may also vote by signing, dating and returning the enclosed voting
form.
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Since
only your latest dated proxy card will count, we urge you not to return any
proxy card you receive from the Company. Even if you return the
management proxy card marked “withhold” as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to the
Ramius Group. Remember, you can vote for our four nominees only on
our
GOLD
proxy
card. So please make certain that the latest dated proxy card you
return is the
GOLD
proxy
card.
If you
have any questions regarding your proxy,
or need
assistance in voting your Shares, please call:
Innisfree
M&A Incorporated
501
Madison Avenue, 20th Floor
New
York, NY 10022
Stockholders
Call Toll-Free at: (877) 800-____
Banks
and Brokers Call Collect at: (212) 750-5833
REASONS
FOR THE SOLICITATION
The
Ramius Group has been a stockholder of CPI for over five years and is currently
the largest stockholder, owning in the aggregate approximately [23%] of Shares
outstanding. As the largest stockholder of the Company, we have a
vested financial interest in the maximization of the value of all
Shares. Our interests are aligned with the interests of all
stockholders. The Ramius Group is proposing the changes outlined in
this proxy statement because we have significant concerns regarding the overall
composition and effectiveness of the current Board as well as certain corporate
governance issues.
Only
upon the urging by the Ramius Group did the Board initiate a process to add new
directors with relevant industry experience.
CPI is a
specialty retail company operating portrait studios primarily within third-party
hosts including Sears and Wal-Mart. At present, the Board is
comprised of six individuals, including one direct representative of the Ramius
Group and two direct representatives of Knightspoint Partners LLC (“Knightspoint
Partners”), an investment firm that controls approximately 3.5% of the Company’s
outstanding shares, including shares held individually by its director
representatives, David M. Meyer (“Mr. Meyer”), and Michael Koeneke (“Mr.
Koeneke”). Of the six members of the Board, only one individual has
relevant industry experience in the retail and consumer products
industries. In fact, this individual, Michael L. Glazer (“Mr.
Glazer”), was only added to the Board on November 24, 2008 following a process
that was conducted upon our insistence.
The
Ramius Group continues to believe that the current Board lacks sufficiently
independent-minded directors and directors with relevant industry experience to
assist management in developing and executing retail strategies to improve the
performance of CPI. Additionally, the Ramius Group has significant
concerns that Knightspoint Partners and its director representatives, who
collectively own approximately 3.5% of the shares outstanding, have
disproportionate influence over the Board given their outsized representation
relative to the size of their position, as well as the Chairmanship of Mr.
Meyer, a Knightspoint Partners representative. We question the need
for Knightspoint Partners to maintain two direct representatives on the Board in
light of its ownership position in the Company and further question the
additional value that Mr. Koeneke brings to the boardroom.
For some
time now, the Ramius Group has been encouraging the Company to improve the
quality of the Board through the addition of director candidates with extensive
relevant experience in all aspects of the retail industry. In fact,
the process which resulted in the addition of Mr. Glazer to the Board in
November 2008 was the result of the Ramius Group’s insistence that such a
process be undertaken. During this process, the Ramius Group
recommended two highly-qualified and independent individuals for
consideration. The initial feedback from the independent members of
the Board was quite positive regarding the two nominees. However, we believe due
to the insistence of the Knightspoint Partners representatives that these
individuals were unsuited to join the Board, the Board instead decided to
support the addition of Mr. Glazer, who had originally been recommended for
consideration by the Knightspoint Partners representatives.
Although
the Ramius Group is supportive of Mr. Glazer’s directorship given his background
in the retail industry, his appointment serves as an example, we believe, of the
level of influence that the Knightspoint Partners representatives have over the
other members of the Board. At the conclusion of the process, Peter
Feld, the Ramius Group representative, suggested that the Board be expanded by
two in order to accommodate the addition of both Mr. Glazer as well as one of
the Ramius Group recommended candidates. The Board was unwilling to
consider that proposal at the time.
The
Ramius Group continues to believe that CPI would benefit significantly from
additional retail expertise on the Board in the form of an independent-minded
and highly qualified director. The Ramius Group is seeking your
support to re-elect incumbent director Peter Feld and a highly qualified and
independent director nominee, Joseph Izganics, who we believe has the
appropriate experience and skill set to assist management in improving the
performance of the Company. Mr. Izganics was identified through a
detailed search process by an unrelated third-party firm based on his background
in the retail industry and his specific skill set that could provide oversight
and guidance to CPI.
We
have concerns with certain corporate governance practices at CPI relating
to
Knightspoint Partners’ disproportionate representation and influence over
Board decisions.
In
addition to increasing the concentration of retail experience on the Board, the
Ramius Group feels it is also crucial to improve corporate governance at
CPI. At the current time, Mr. Meyer and Michael S. Koeneke,
representatives of Knightspoint Partners, currently hold two out of six total
Board seats, or one-third (1/3) of the Board. Yet, Knightspoint
Partners, together with its affiliates, owns just about one-thirtieth (1/30) of
the Shares outstanding. By way of comparison, the Ramius Group
collectively owns approximately 23% of the Shares outstanding and has only one
direct representative serving on the Board, Peter Feld, who the Board has
decided not to re-nominate for election at the Annual Meeting.
Additionally,
Mr. Meyer is Chairman of the Board and receives additional compensation through
a consulting arrangement for his service in such capacity. Based on
the experiences of certain Ramius Group representatives who have served on the
Board, we believe that the Knightspoint Partners representatives have influence
over the Board that is disproportionate relative to their ownership of the
Company. To achieve a more balanced Board, the Ramius Group has
proposed that Mr. Koeneke, a representative of Knightspoint Partners, not stand
for re-election to the Board and, instead, CPI nominate for election in his
place one of the highly-qualified and independent nominees previously proposed
by the Ramius Group and nominated herein. We believe the Board has
not entered into meaningful discussions with us, in part, due to Mr. Meyer’s
desire to maintain Knightspoint Partners’ disproportionate influence in the
boardroom.
The
compensation practices of the Board with respect to Mr. Meyer provide one
example of our corporate governance concerns and the undue influence exerted by
Messrs. Meyer and Koeneke over the Board. On September 22, 2008, the
Compensation Committee of the Board approved a compensation agreement with Mr.
Meyer regarding his compensation for serving as Chairman of the
Board. The compensation agreement entitles Mr. Meyer to significant
compensation in the form of restricted stock payments and bonus
opportunities. During the process of negotiating such an agreement
with Mr. Meyer, the Ramius Group was disappointed that Mr. Koeneke, as a member
of the Compensation Committee, was allowed by the Board to actively participate
in the negotiation of Mr. Meyer’s compensation agreement. Outside of
their roles as Board members at CPI, Mr. Koeneke and Mr. Meyer are business
partners at Knightspoint Partners and, therefore, the Ramius Group believes Mr.
Koeneke is conflicted and should not have been allowed to participate in the
negotiation of Mr. Meyer’s compensation agreement. The Ramius Group
highlighted this concern to the Board, yet the Board allowed Mr. Koeneke to
actually participate in the negotiations. The compensation agreement
with Mr. Meyer calls for the payment of $200,000 of restricted stock annually in
addition to bonus opportunities based on Company performance and expense
reimbursements. As disclosed in the Company’s proxy statement, Mr.
Meyer received total compensation in fiscal 2008 of $612,537. As a
point of reference, CPI’s stock price declined by 61% in fiscal
2008. Additionally, for fiscal 2007, Mr. Meyer received total
compensation of $1,433,768. As a point of reference, CPI’s stock
price declined 62% in fiscal 2007.
The
objective of the proposals put forth in this proxy statement is to re-elect
incumbent director Peter Feld and to add an individual to the Board who has
extensive experience in the retail and consumer products industry. Our hope is
to improve the corporate governance of CPI and ensure the Company is being run
in the best interest of all stockholders. As the largest stockholder
of CPI, the Ramius Group’s interests are aligned with yours. We are
looking to create a more balanced Board with relevant industry experience and
good corporate governance practices.
We are
only engaging in this proxy contest as a last resort. We have expressed our
belief to Mr. Meyer and the Board that it would be in the best interest of all
parties that a mutually agreeable slate of directors be nominated for election
at the Annual Meeting. To that end, Ramius proposed a settlement
offer that would result in the addition of two highly qualified, independent
nominees and one incumbent director not standing for re-election at the Annual
Meeting. To date, the Board has rejected our offer and has not
presented any reasonable alternative proposal. We have been prepared
to engage in a meaningful and constructive dialogue with the Board in order to
reach an amicable resolution. Unfortunately, an election contest is
our only means for seeking to improve the overall quality of the Board through
the addition of director candidates who possess extensive industry experience
and who are truly independent of any influence by other members of the
Board.
Background
to the Solicitation
The
following is a chronology of events leading up to this proxy
solicitation:
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On
September 15, 2003, certain members of the Ramius Group filed with the
Securities and Exchange Commission (the “SEC”) a joint statement on
Schedule 13D with Knightspoint Partners, Knightspoint Capital Management I
LLC, Knightspoint Partners I, L.P., and Messrs. Meyer and Koeneke
(collectively, the “Knightspoint Entities,” and with such members of the
Ramius Group, the “Knightspoint Group”), disclosing a 9.4% stake in the
Company.
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On
April 8, 2004, the Knightspoint Group completed a consent solicitation
which resulted in the removal of seven incumbent directors and the
election of six new directors including representatives of the
Knightspoint Entities and the Ramius
Group.
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On
July 17, 2008, Mr. Feld, a member of the Ramius Group was elected to the
Board of CPI to replace Mark R. Mitchell, the previous director
representative of the Ramius Group. Mr. Feld replaced Mr.
Mitchell due to time restraints given Mr. Mitchell’s role as a Partner of
Ramius and Mr. Feld’s ability to dedicate more time and resources to serve
as a director of CPI.
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On
November 24, 2008, Michael L. Glazer joined the Board of CPI as the result
of a process conducted by the Nominating and Governance committee to
identify director candidates with relevant retail
expertise. The process was conducted at the insistence of the
Ramius Group.
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On
February 27, 2009, the Ramius Group ceased to be members of the
Knightspoint Group as it was deemed by the respective parties that the
Knightspoint Entities and the Ramius Group were no longer working as a
group under the definition of Section
13D.
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On
April 22, 2009, the members of the Ramius Group (excluding Messrs.
Izganics, Serino and White) filed with the SEC a statement on Schedule 13D
disclosing that (i) the Ramius Group had engaged in, and intend to
continue to engage, in discussions with CPI’s management and Board
concerning potential changes in the composition of the Board and (ii) the
Ramius Group reserved the right to nominate candidates for election to the
Board at the Annual Meeting should such discussions fail to result in the
Ramius Group agreeing with the Company on the composition of the
Board.
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On
April 24, 2009, certain members of the Ramius Group met with Mr. Meyer at
the Ramius Group’s offices to discuss the composition of the Board and a
proposal made by the Ramius Group.
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On
April 24, 2009, the Ramius Group delivered a letter to the Company
nominating Messrs. Feld, Izganics, Serino and White for election to the
Board at the Annual Meeting. Accompanying the nomination
letter, the Ramius Group sent a letter to Mr. Meyer providing the key
terms of a proposed settlement with the purpose of trying to find a
mutually agreeable outcome to avoid a protracted election
contest. The key terms of the proposed settlement were as
follows:
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i.
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Increase
the size of the Board to seven members;
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ii.
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Preserve
Mr. Feld’s re-nomination as an incumbent director for election at the
Annual Meeting;
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iii.
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Withdraw
the Company’s re-nomination of one other incumbent director for election
at the Annual Meeting; and
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iv.
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Include
in the Company’s slate of directors at the Annual Meeting two of the three
highly qualified independent nominees that the Ramius Group included in
its nomination letter.
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On
April 27, 2009, the Ramius Group invited all members of the Board to
participate in a meeting or conference call to discuss the Ramius Group’s
proposal with the intention of reaching a mutually agreeable solution to
avoid a contested election contest. The Ramius Group was
disappointed that the only members of the Board that participated were Mr.
Meyer, in person, and Mr. Glazer, by
phone.
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April
30, 2009 – May 18, 2009, certain members of the Ramius Group spoke
individually with the independent members of the Board of
CPI. The purpose of the calls, initiated by the Ramius Group,
was to encourage the independent members of the Board to play a leadership
role in negotiating with the Ramius Group. Instead, the Board has allowed
Mr. Meyer, a Knightspoint Partners representative, to represent the
Company in discussions with the Ramius Group regarding the proposed
settlement. The Ramius Group believes Mr. Meyer is conflicted with respect
to considering the proposed settlement given his business partnership with
Mr. Koeneke and his desire to maintain Knightspoint Partners’
disproportionate influence in the boardroom. Unfortunately, at this point,
no progress has been made with the independent members of the Board to
reach a mutually agreeable
settlement.
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PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The
Ramius Group is seeking your support at the Annual Meeting to elect the Ramius
Nominees. The Board is currently composed of six (6)
directors. The Ramius Group believes that six (6) directors are up
for election at the Annual Meeting to serve one-year terms expiring at the 2010
Annual Meeting and until their successors have been selected and
qualified. For the reasons stated above, we are seeking your support
at the Annual Meeting to elect the Ramius Nominees in opposition to two (2) of
the Company’s six (6) director nominees. Your vote to elect the
Ramius Nominees will have the legal effect of replacing two (2) incumbent
directors of the Company with the Ramius Nominees.
THE
RAMIUS NOMINEES
The
Ramius Group is seeking to elect two (2) highly qualified nominees, each of
whom, if elected, will exercise his independent judgment in accordance with his
fiduciary duties as a director in all matters that come before the Board. The
Ramius Nominees are independent of the Company in accordance with the SEC and
New York Stock Exchange rules on board independence and would seek to maximize
value for all stockholders. If elected, and subject to their
fiduciary duties as directors, the Ramius Nominees would have the ability to
work with the other members of the Board to take those steps that they deem are
necessary or advisable to unlock the Company’s intrinsic value.
Set forth
below are the name, age, business address, present principal occupation, and
employment and material occupations, positions, offices, or employments for the
past five years of the Ramius Nominees. This information has been
furnished to the Ramius Group by the Ramius Nominees. The Ramius
Nominees are citizens of the United States of America. The Ramius
Nominees have been nominated by Value and Opportunity Master Fund in accordance
with the Company’s advance notice bylaw provision.
Peter A. Feld (Age 30)
is a
Managing Director of Ramius LLC, a position he has held since November
2008. Prior to becoming a Managing Director, Mr. Feld served as a
Director at Ramius LLC from February 2007 to November 2008. Mr. Feld
joined Ramius LLC as an Associate in February 2005. From June 2001 to
July 2004, Mr. Feld was an investment banking analyst at Banc of America
Securities, LLC, the investment banking arm of Bank of America Corporation, a
bank and financial holding company. Mr. Feld has served on the Board
of Directors of CPI since July 2008. The principal business address
of Mr. Feld is c/o Ramius LLC, 599 Lexington Avenue, 20th Floor, New York, New
York 10022. Mr. Feld beneficially owns 6,588 Shares. For
information regarding purchases and sales during the past two years by Mr. Feld
of securities of CPI, see
Schedule
I
.
Joseph C. Izganics (Age 48)
most recently served as the Southern Division President of The Home
Depot, Inc. (NYSE:HD), the world’s largest home improvement specialty retailer,
from May 2007 to January 2009. Prior to becoming Southern Division
President, Mr. Izganics served as Senior Vice President, Pro Business and Tool
Rental, of The Home Depot, Inc. from 2005 to 2007. From 2002 to 2005,
Mr. Izganics served as President, Service Business, of The Home Depot,
Inc. Mr. Izganics served in various other positions with The Home
Depot, Inc. since 1989. The principal business address of Mr.
Izganics is 28 Hawks Branch Lane, White, Georgia 30184. Mr. Izganics
does not directly own, and has not purchased or sold during the past two years,
any securities of CPI.
Messrs.
Feld and Izganics are members of a “group” for the purposes of Rule 13d-5(b)(1)
of the Exchange Act with the other members of the Group and, as a result, are
deemed to beneficially own the [1,612,909] Shares beneficially owned by the
Group. Messrs. Feld and Izganics each disclaim beneficial ownership
of such Shares, except to the extent of his pecuniary interest
therein. For information regarding purchases and sales during the
past two years by the Group of securities of CPI that are deemed to be
beneficially owned by Messrs. Feld and Izganics see
Schedule
I
.
Value and
Opportunity Master Fund has signed letter agreements pursuant to which it agreed
to indemnify Mr. Izganics against claims arising from the solicitation of
proxies from CPI stockholders in connection with the Annual Meeting and any
related transactions.
Value and
Opportunity Master Fund and Mr. Izganics have entered into a compensation letter
agreement (the “Compensation Letter Agreement”) regarding compensation to be
paid to each of Mr. Izganics for his agreement to be named and to serve as a
Ramius Nominee and for his services as a director of CPI, if
elected. Pursuant to the terms of the Compensation Letter Agreements,
Value and Opportunity Master Fund has agreed to pay Mr. Izganics i) $10,000 in
cash as a result of the submission by Value and Opportunity Master Fund of its
nomination of Mr. Izganics to CPI and (ii) $10,000 in cash upon the filing of a
definitive proxy statement with the Securities and Exchange Commission relating
to a solicitation of proxies in favor of Mr. Izganics’ election as a director at
the Annual Meeting. Pursuant to the Compensation Letter Agreements,
Mr. Izganics agrees to use such compensation to acquire securities of CPI (the
“Nominee Shares”) at such time that he shall determine, but in any event no
later than 14 days after receipt of such compensation. If elected or
appointed to serve as a director of the Board, Mr. Izganics agrees not to sell,
transfer or otherwise dispose of any Nominee Shares within two years of such
their election or appointment as a director; provided, however, in the event
that the CPI enters into a business combination with a third party, Mr. Izganics
may sell, transfer or exchange the Nominee Shares in accordance with the terms
of such business combination.
Other
than as stated herein, there are no arrangements or understandings between
members of the Ramius Group and any of the Ramius Nominees or any other person
or persons pursuant to which the nomination of the Ramius Nominees described
herein is to be made, other than the consent by each of the Ramius Nominees to
be named in this Proxy Statement and to serve as a director of CPI if elected as
such at the Annual Meeting. None of the Ramius Nominees are a party
adverse to CPI or any of its subsidiaries or has a material interest adverse to
CPI or any of its subsidiaries in any material pending legal
proceedings.
The
Ramius Group does not expect that the Ramius Nominees will be unable to stand
for election. In the event that any Ramius Nominee is unable to serve or for
good cause will not serve, the Ramius Group may seek to replace such Ramius
Nominee with a substitute nominee to the extent substitution is permissible
under the Company’s advance notice provision in the Company’s By-Laws, Amended
and Restated as of November 24, 2008 (the “Bylaws”) or applicable law. In the
case that the Ramius Group is permitted to substitute a nominee, the Ramius
Group will file and deliver supplemental proxy materials, including a revised
proxy card, disclosing the information relating to any substitute nominee that
is required to be disclosed in solicitations for proxies for election of
directors pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Only in such case will the Shares
represented by the enclosed
GOLD
proxy card be voted for
substitute nominees. In addition, Value and Opportunity Master Fund
reserves the right to challenge any action by CPI that has, or if consummated
would have, the effect of disqualifying the Ramius Nominees. Value and
Opportunity Master Fund reserves the right to nominate additional persons, to
the extent this is not prohibited under the Bylaws or applicable law, if CPI
increases the size of the Board above its existing size. Additional
nominations made pursuant to the preceding sentence are without prejudice to the
position of Value and Opportunity Master Fund that any attempt to increase the
size of the current Board or to classify the Board constitutes an unlawful
manipulation of the Company’s corporate machinery.
YOU
ARE URGED TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES ON THE ENCLOSED GOLD
PROXY CARD.
OTHER
PROPOSALS
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
According
to the Company’s Proxy Statement, the Audit Committee of the Board has selected
KPMG LLP to serve as the Company’s independent registered public accounting firm
for the fiscal year ending February 6, 2010. We do not object to the
ratification of the appointment of KPMG LLP as independent registered public
accounting firm for the fiscal year ending February 7, 2010.
We are
not aware of any other proposals to be brought before the Annual Meeting.
However, we intend to bring before the Annual Meeting such business as may be
appropriate, including, without limitation, nominating additional persons for
directorships or making any proposals as may be appropriate to address any
action of the Board not publicly disclosed prior to the date of this proxy
statement. Should other proposals, which the Ramius Group is not aware of a
reasonable time before this solicitation, be brought before the Annual Meeting,
the persons named as proxies in the enclosed
GOLD
proxy card will vote on
such matters in their discretion.
VOTING
AND PROXY PROCEDURES
Only
stockholders of record on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. Stockholders who sell Shares before the
Record Date (or acquire them without voting rights after the Record Date) may
not vote such Shares. Stockholders of record on the Record Date will
retain their voting rights in connection with the Annual Meeting even if they
sell such Shares after the Record Date. Based on publicly available
information, the Ramius Group believes that the only outstanding class of
securities of CPI entitled to vote at the Annual Meeting is the
Shares.
Shares
represented by properly executed
GOLD
proxy cards will be voted
at the Annual Meeting as marked and, in the absence of specific instructions,
will be voted FOR the election of the Ramius Nominees to the Board, FOR the
election of the candidates who have been nominated by the Company other than
[______] and Michael Koeneke, FOR the ratification of the Board’s appointment of
KPMG LLP as the Company’s independent registered public accounting firm for the
fiscal year ending February 6, 2010, and in the discretion of the persons named
as proxies on all other matters as may properly come before the Annual
Meeting.
This
Proxy Statement is soliciting proxies to elect not only the Ramius Nominees, but
also the candidates who have been nominated by the Company other than [______]
and Michael Koeneke. This gives stockholders who wish to vote for the Ramius
Nominees and such other persons the ability to do so. Under
applicable proxy rules, we are required either to solicit proxies only for the
Ramius Nominees, which could result in limiting the ability of stockholders to
fully exercise their voting rights with respect to the Company’s nominees, or to
solicit for the Ramius Nominees and for fewer than all of the Company’s
nominees, which enables a stockholder who desires to vote for the Ramius
Nominees to also vote for those of the Company’s nominees for whom we are
soliciting proxies. The names, backgrounds and qualifications of the
Company’s nominees, and other information about them, can be found in the
Company’s proxy statement. There is no assurance that any of the
Company’s nominees will serve as directors if the Ramius Nominees are
elected.
QUORUM
A
majority of the outstanding Shares represented at the Annual Meeting in person
or by proxy will constitute a quorum for the transaction of
business.
VOTES
REQUIRED FOR ELECTION OF DIRECTORS
Vote required for the election of
directors.
If a quorum is present at the Annual Meeting, a
majority of votes cast (number of shares voted “for” must exceed the number of
votes “withheld”) at the Annual Meeting with respect to the election of each
director will result in the election of such director.
Vote required for the ratification
of the appointment of KPMG LLP.
If a quorum is present at the
Annual Meeting, a majority of votes cast (number of shares voted “for” must
exceed the number of votes “withheld”) at the Annual Meeting with respect to the
appointment of KPMG LLP will result in the approval of the appointment of KPMG
LLP.
DISCRETIONARY
VOTING
Shares
held in “street name” and held of record by banks, brokers or nominees may not
be voted by such banks, brokers or nominees unless the beneficial owners of such
Shares provide them with instructions on how to vote.
ABSTENTIONS
AND BROKER NON-VOTES
Abstentions
and broker “non-votes” will count as votes present for the purpose of
determining whether a quorum is present. A “broker non-vote” occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that proposal and has not received instructions with respect to
that proposal from the beneficial owner. Abstentions and broker
“non-votes” will not be counted as votes cast in the election of directors or
with regard to ratifying the appointment of KPMG LLP.
REVOCATION
OF PROXIES
Stockholders
of CPI may revoke their proxies at any time prior to exercise by attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute revocation of a proxy) or by delivering a
written notice of revocation. The delivery of a subsequently dated
proxy which is properly completed will constitute a revocation of any earlier
proxy. The revocation may be delivered either to the Ramius Group in care of
Innisfree M&A Incorporated at the address set forth on the back cover of
this Proxy Statement or to CPI Corp., 1706 Washington Avenue, St. Louis,
Missouri 63103, or any other address provided by CPI. Although a
revocation is effective if delivered to CPI, the Ramius Group requests that
either the original or photostatic copies of all revocations be mailed to the
Ramius Group in care of Innisfree M&A Incorporated at the address set forth
on the back cover of this Proxy Statement so that the Ramius Group will be aware
of all revocations and can more accurately determine if and when proxies have
been received from the holders of record on the Record Date and the number of
outstanding Shares represented thereby. Additionally, Innisfree
M&A Incorporated may use this information to contact stockholders who have
revoked their proxies in order to solicit later dated proxies for the election
of the Ramius Nominees.
IF
YOU WISH TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES TO THE BOARD OR FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP, PLEASE SIGN, DATE AND RETURN
PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
SOLICITATION
OF PROXIES
The
solicitation of proxies pursuant to this Proxy Statement is being made by the
Ramius Group. Proxies may be solicited by mail, facsimile, telephone,
telegraph, Internet, in person and by advertisements.
Value and
Opportunity Master Fund has entered into an agreement with Innisfree M&A
Incorporated for solicitation and advisory services in connection with this
solicitation, for which Innisfree M&A Incorporated will receive a fee not to
exceed $______, together with reimbursement for its reasonable out-of-pocket
expenses, and will be indemnified against certain liabilities and expenses,
including certain liabilities under the federal securities
laws. Innisfree M&A Incorporated will solicit proxies from
individuals, brokers, banks, bank nominees and other institutional
holders. Value and Opportunity Master Fund has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the Shares they hold of
record. Value and Opportunity Master Fund will reimburse these record
holders for their reasonable out-of-pocket expenses in so doing. It
is anticipated that Innisfree M&A Incorporated will employ approximately __
persons to solicit CPI stockholders for the Annual Meeting.
The
entire expense of soliciting proxies is being borne by the Ramius Group. Costs
of this solicitation of proxies are currently estimated to be approximately
$_____. The Ramius Group estimates that through the date hereof its
expenses in connection with this solicitation are approximately
$_______. The Ramius Group intends to seek reimbursement from CPI of
all expenses it incurs in connection with this solicitation. The
Ramius Group does not intend to submit the question of such reimbursement to a
vote of security holders of the Company.
ADDITIONAL
PARTICIPANT INFORMATION
The
Ramius Nominees and the other members of the Ramius Group are participants in
this solicitation. The principal business of each of Value and
Opportunity Master Fund, Enterprise Master Fund and Starboard Value and
Opportunity Fund is serving as a private investment fund. Each of
Value and Opportunity Master Fund, Enterprise Master Fund and Starboard Value
and Opportunity Fund has been formed for the purpose of making equity
investments and, on occasion, taking an active role in the management of
portfolio companies in order to enhance stockholder value. The
principal business of each of Leveraged Multi-Strategy Master Fund,
Multi-Strategy Master Fund and Merger Arbitrage Master Fund is serving as a
private investment fund. The principal business of RCG Starboard
Advisors is acting as the investment manager of Value and Opportunity Master
Fund and the managing member of Starboard Value and Opportunity
Fund. The principal business of Ramius Advisors is acting as the
investment advisor of Multi-Strategy Master Fund, Merger Arbitrage Master Fund,
Leveraged Multi-Strategy Master Fund and Enterprise Master
Fund. Ramius is engaged in money management and investment advisory
services for third parties and proprietary accounts and serves as the sole
member of each of RCG Starboard Advisors and Ramius Advisors. C4S
serves as managing member of Ramius. Messrs. Cohen, Strauss, Stark
and Solomon serve as co-managing members of C4S.
The
address of the principal office of each of Starboard Value and Opportunity Fund,
Ramius Advisors, RCG Starboard Advisors, Ramius, C4S, and Messrs. Cohen, Stark,
Strauss, Solomon and Feld is 599 Lexington Avenue, 21st Floor, New York, New
York 10022. The address of the principal office of each of Value and
Opportunity Master Fund, Enterprise Master Fund, Leveraged Multi-Strategy Master
Fund, Multi-Strategy Master Fund and Merger Arbitrage Master Fund is c/o Citco
Fund Services (Cayman Islands) Limited, Corporate Center, West Bay Road, P.O.
Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies.
As of the
date hereof, Value and Opportunity Master Fund beneficially owned 797,988
Shares, Starboard Value and Opportunity Fund beneficially owned 212,040 Shares,
Merger Arbitrage Master Fund beneficially owned 192,000 Shares, Leveraged
Multi-Strategy Master Fund beneficially owned 29,213 Shares, Multi-Strategy
Master Fund beneficially owned 179,614 Shares and Enterprise Master Fund
beneficially owned 202,054 Shares. 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 owned by Value and
Opportunity Master Fund and (ii) 212,040 Shares 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 owned by Multi-Strategy Master
Fund, (ii) 192,000 Shares owned by Merger Arbitrage Master Fund, (iii) 29,213
Shares owned by Leveraged Multi-Strategy Master Fund, and (iv) 202,054 Shares
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 owned by Value and Opportunity Master Fund, (ii) 212,040 Shares
owned by Starboard Value and Opportunity Fund, (iii) 179,614 Shares owned by
Multi-Strategy Master Fund, (iv) 192,000 Shares owned by Merger Arbitrage Master
Fund, (v) 29,213 Shares owned by Leveraged Multi-Strategy Master Fund, and (vi)
202,054 Shares owned by Enterprise Master Fund. Messrs. Cohen, Stark,
Strauss and Solomon share voting and dispositive power with respect to the
Shares 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.
Each
member of the Ramius Group, as members of a “group” for the purposes of Rule
13d-5(b)(1) of the Exchange Act, is deemed to beneficially own the Shares
beneficially owned in the aggregate by the other members of the
group. Each member of the Ramius Group disclaims beneficial ownership
of such Shares, except to the extent of their pecuniary interest
therein. For information regarding purchases and sales of securities
of CPI during the past two years by members of the Ramius Group, including the
Ramius Nominees, see
Schedule
I
.
Effective
January 23, 2009, Ramius LLC entered into a Sales Plan Agreement with Cantor
Fitzgerald & Co. (“Cantor”) for the purpose of establishing a trading plan
to effect sales of shares of Common Stock of the Company in compliance with all
applicable laws, including, without limitation, Section 10(b) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, including, but not limited to, Rule 10b5-1 (the “10b-5
Plan”). The purpose of the 10b-5 Plan is to allow Ramius LLC to
rebalance its portfolios. The members of the Ramius Group continue to own
over 1.6 million shares representing approximately 23% of the outstanding
shares.
On April
27, 2009, Value and Opportunity Master Fund, Enterprise Master Fund, Starboard
Value & Opportunity Fund, Merger Arbitrage Master Fund”), Multi-Strategy
Master Fund, Leveraged Multi-Strategy Master Fund, Ramius Advisors, RCG
Starboard Advisors, Ramius, C4S and Messrs. Cohen, Stark Strauss, Solomon, Feld
and Izganics (collectively the “Group”) entered into a Joint Filing and
Solicitation Agreement in which, among other things, (a) the Group agreed to the
joint filing on behalf of each of them of statements on Schedule 13D with
respect to the securities of CPI, (b) the Group agreed to solicit proxies or
written consents for the election of the Ramius Nominees, or any other person(s)
nominated by Value and Opportunity Master Fund, to the Board at the Annual
Meeting (the “Solicitation”), and (c) Enterprise Master Fund, Starboard Value
and Opportunity Fund, Merger Arbitrage Master Fund, Multi-Strategy Master Fund,
Value and Opportunity Master Fund and Leveraged Multi-Strategy Master Fund
agreed to bear all expenses incurred in connection with the Group’s activities,
including approved expenses incurred by any of the parties in connection with
the Solicitation, subject to certain limitations.
Pursuant
to the Company’s Rights Agreement, as amended, the Ramius Group granted an
irrevocable proxy to the Secretary of the Company to vote certain Shares
beneficially owned by the Ramius Group in the same proportion as the votes of
all stockholders of the Company to the extent that such Shares are"pro rata
shares", as such term is defined in the Rights Agreement, as
amended.
Except as
set forth in this Proxy Statement (including the Schedules hereto), (i) during
the past 10 years, no participant in this solicitation has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors); (ii)
no participant in this solicitation directly or indirectly beneficially owns any
securities of CPI; (iii) no participant in this solicitation owns any securities
of CPI which are owned of record but not beneficially; (iv) no participant in
this solicitation has purchased or sold any securities of CPI during the past
two years; (v) no part of the purchase price or market value of the securities
of CPI owned by any participant in this solicitation is represented by funds
borrowed or otherwise obtained for the purpose of acquiring or holding such
securities; (vi) no participant in this solicitation is, or within the past year
was, a party to any contract, arrangements or understandings with any person
with respect to any securities of CPI, including, but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies; (vii) no associate of any participant in this
solicitation owns beneficially, directly or indirectly, any securities of CPI;
(viii) no participant in this solicitation owns beneficially, directly or
indirectly, any securities of any parent or subsidiary of CPI; (ix) no
participant in this solicitation or any of his/its associates was a party to any
transaction, or series of similar transactions, since the beginning of CPI’s
last fiscal year, or is a party to any currently proposed transaction, or series
of similar transactions, to which CPI or any of its subsidiaries was or is to be
a party, in which the amount involved exceeds $120,000; (x) no participant in
this solicitation or any of his/its associates has any arrangement or
understanding with any person with respect to any future employment by CPI or
its affiliates, or with respect to any future transactions to which CPI or any
of its affiliates will or may be a party; and (xi) no person, including the
participants in this solicitation, who is a party to an arrangement or
understanding pursuant to which the Ramius Nominees are proposed to be elected
has a substantial interest, direct or indirect, by security holdings or
otherwise in any matter to be acted on at the Annual Meeting. There
are no material proceedings to which the Ramius Nominees or any of their
associates is a party adverse to CPI or any of its subsidiaries or has a
material interest adverse to CPI or any of its subsidiaries. With
respect to the Ramius Nominees, none of the events enumerated in Item
401(f)(1)-(6) of Regulation S-K of the Exchange Act, occurred during the past
five years.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires persons who beneficially own more than 10% of
the Shares to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the SEC. Based solely on its review of the Ramius Group’s
and the Ramius Nominees’ transaction history and ownership information with
respect to the Shares, the Ramius Group believes that all of the Section 16(a)
filing requirements were satisfied by the Ramius Group.
OTHER
MATTERS AND ADDITIONAL INFORMATION
The
Ramius Group is unaware of any other matters to be considered at the Annual
Meeting. However, should other matters, which the Ramius Group is not
aware of a reasonable time before this solicitation, be brought before the
Annual Meeting, the persons named as proxies on the enclosed
GOLD
proxy card will vote on
such matters in their discretion.
STOCKHOLDER
PROPOSALS
For
stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act to
be presented at the Company’s 2010 Annual Meeting and included in the Company’s
proxy statement, such proposals must be submitted and received by the Secretary
of the Company at the Company’s principal offices, CPI Corp., 1706 Washington
Avenue, St. Louis, Missouri 63103, no later than _______, 2010.
In
addition, Section 2.14 of the Bylaws requires that any stockholder intending to
present a proposal for action at an annual meeting must give written notice of
the proposal to the Secretary of the Company, containing the information
specified in Section 2.14, not less than 90 days nor more than 120 days prior to
the annual meeting; provided, however, if less than 100 days’ notice or other
prior public disclosure of the date of the meeting is given or made to the
stockholders, notice by the stockholder must be received no later than the close
of business on the 10
th
day
following the earlier of the day on which notice of the date of the meeting was
mailed or other public disclosure was made.
The
information set forth above regarding the procedures for submitting stockholder
proposals for consideration at the 2010 Annual Meeting is based on information
contained in the Company’s proxy statement. The incorporation of this
information in this proxy statement should not be construed as an admission by
the Ramius Group that such procedures are legal, valid or binding.
INCORPORATION
BY REFERENCE
THE
RAMIUS GROUP HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE REQUIRED
BY APPLICABLE LAW THAT IS EXPECTED TO BE INCLUDED IN CPI’S PROXY STATEMENT
RELATING TO THE ANNUAL MEETING. THIS DISCLOSURE IS EXPECTED TO
INCLUDE, AMONG OTHER THINGS, CURRENT BIOGRAPHICAL INFORMATION ON CPI’S CURRENT
DIRECTORS, INFORMATION CONCERNING EXECUTIVE COMPENSATION, AND OTHER IMPORTANT
INFORMATION. PLEASE NOTE THAT THE RAMIUS GROUP WAS NOT INVOLVED IN
THE PREPARATION OF CPI’S PROXY STATEMENT. SEE SCHEDULE II FOR INFORMATION
REGARDING PERSONS WHO BENEFICIALLY OWN MORE THAN 5% OF THE SHARES OF
CPI.
The
information concerning CPI contained in this Proxy Statement and the Schedules
attached hereto has been taken from, or is based upon, publicly available
information.
THE
RAMIUS GROUP
________,
2009
SCHEDULE
I
TRANSACTIONS
IN SECURITIES OF CPI CORP.
DURING
THE PAST TWO YEARS
Except
as otherwise specified, all purchases and sales were made in the open
market.
Shares
of Common Stock
Purchased
/ (Sold)
|
|
RAMIUS VALUE AND OPPORTUNITY
MASTER FUND LTD
|
100,883
|
|
09/10/2007
|
|
189,911
|
|
09/11/2007
|
|
56,396
|
|
09/11/2007
|
|
44,008
|
|
09/12/2007
|
|
100,870
|
|
09/12/2007
|
|
40,000
|
|
09/18/2007
|
|
12,000
|
|
09/20/2007
|
|
7,700
|
|
09/21/2007
|
|
7,800
|
|
09/24/2007
|
|
18,800
|
|
09/24/2007
|
|
14,998
|
|
09/25/2007
|
|
6,400
|
|
09/27/2007
|
|
29,600
|
|
09/28/2007
|
|
10,000
|
|
10/03/2007
|
|
25,000
|
|
10/04/2007
|
|
35,000
|
|
10/09/2007
|
|
25,000
|
|
10/10/2007
|
|
13,600
|
|
10/11/2007
|
RAMIUS ENTERPRISE MASTER
FUND LTD
|
(200)1
|
|
04/22/2009
|
|
(613)1
|
|
04/24/2009
|
|
(6,925)1
|
|
04/28/2009
|
|
(212)1
|
|
04/29/2009
|
|
(250)1
|
|
04/30/2009
|
|
(1,700)1
|
|
05/01/2009
|
|
(462)1
|
|
05/04/2009
|
|
(312)1
|
|
05/05/2009
|
|
(3,272)1
|
|
05/06/2009
|
1 Sale pursuant to a Rule 10b5-1 Sales Plan Agreement.
RAMIUS LEVERAGED
MULTI-STRATEGY MASTER FUND LTD
|
9,313
|
|
09/10/2007
|
|
17,189
|
|
09/11/2007
|
|
5,104
|
|
09/11/2007
|
|
3,946
|
|
09/12/2007
|
|
9,130
|
|
09/12/2007
|
|
(219)1
|
|
04/22/2009
|
|
(671)1
|
|
04/24/2009
|
|
(7,590)1
|
|
04/28/2009
|
|
(233)1
|
|
04/29/2009
|
|
(274)1
|
|
04/30/2009
|
|
(1,863)1
|
|
05/01/2009
|
|
(507)1
|
|
05/04/2009
|
|
(343)1
|
|
05/05/2009
|
|
(3,587)1
|
|
05/06/2009
|
STARBOARD VALUE &
OPPORTUNITY FUND, LLC
|
(1,003)1
|
|
04/22/2009
|
|
(3,072)1
|
|
04/24/2009
|
|
(34,736)1
|
|
04/28/2009
|
|
(1,066)1
|
|
04/29/2009
|
|
(1,254)1
|
|
04/30/2009
|
|
(8,527)1
|
|
05/01/2009
|
|
(2,320)1
|
|
05/04/2009
|
|
(1,568)1
|
|
05/05/2009
|
|
(16,414)1
|
|
05/06/2009
|
|
|
|
|
RAMIUS MERGER ARBITRAGE
MASTER FUND LTD
None
|
RAMIUS MULTI-STRATEGY MASTER FUND
LTD
|
|
(178)1
|
|
04/22/2009
|
|
(544)1
|
|
04/24/2009
|
|
(6,149)1
|
|
04/28/2009
|
|
(189)1
|
|
04/29/2009
|
|
(222)1
|
|
04/30/2009
|
|
(1,510)1
|
|
05/01/2009
|
|
(411)1
|
|
05/04/2009
|
|
(277)1
|
|
05/05/2009
|
|
(2,906)1
|
|
05/06/2009
|
|
RAMIUS ADVISORS,
LLC
|
|
|
|
None
|
|
|
|
RCG STARBOARD ADVISORS,
LLC
|
|
|
|
None
|
|
|
|
RAMIUS LLC
|
|
|
|
None
|
|
|
|
C4S & CO., L.L.C.
|
|
|
|
None
|
|
|
|
PETER A. COHEN
|
|
|
|
None
|
|
|
|
MORGAN B. STARK
|
|
|
|
None
|
|
|
|
JEFFREY M. SOLOMON
|
|
|
|
None
|
|
|
|
THOMAS W. STRAUSS
|
|
|
|
None
|
|
|
|
PETER A. FELD
|
|
|
2
Stock
award under the Company’s Omnibus Incentive Plan.
SCHEDULE
II
Security
Ownership of Certain Beneficial Owners
To the
Company's knowledge, based upon information contained in Schedules 13D and 13G
filed with the Securities and Exchange Commission, the following table sets
forth beneficial owners of five percent (5%) or more of the common stock of the
Company as of May 9, 2009.
|
Name
|
|
Number
of Shares
|
|
Percent
|
|
Ramius
Group
|
|
1,612,909
|
|
23.0%
|
|
Van
Den Berg Management
|
|
1,086,461
|
(1)
|
15.5%
|
|
Lafitte
Capital Management LP
|
|
508,265
|
(2)
|
7.3%
|
|
(1)
|
As
reported in its Amendment 11 to Schedule 13G/A, dated as of December 31,
2008, Van Den Berg Management has beneficial ownership of 1,086,461
shares, shared voting power for 1,084,451 shares and shared dispositive
power for 1,084,451 shares. The address of this stockholder is 805 Las
Cimas Parkway, Suite 43C, Austin, Texas
78746.
|
|
(2)
|
As
reported on Schedule 13G, dated February 15, 2008, as of January 31, 2008,
Lafitte Capital Management LP has shared voting power for 508,265 shares
and shared dispositive power for 508,265 shares. The address of this
stockholder is 701 Brazos, Suite 375, Austin, Texas
78701.
|
IMPORTANT
Tell your
Board what you think! Your vote is important. No matter how many
Shares you own, please give the Ramius Group your proxy FOR the election of the
Ramius Nominees by taking three steps:
● SIGNING
the enclosed
GOLD
proxy
card,
● DATING
the enclosed
GOLD
proxy
card, and
|
|
●
|
MAILING
the enclosed
GOLD
proxy card TODAY in the envelope provided (no postage is required
if mailed in the United States).
|
If any of
your Shares are held in the name of a brokerage firm, bank, bank nominee or
other institution, only it can vote such Shares and only upon receipt of your
specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute the
GOLD
proxy card representing
your Shares. The Ramius Group urges you to confirm in writing your
instructions to the Ramius Group in care of Innisfree M&A Incorporated at
the address provided below so that the Ramius Group will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
If you
have any questions or require any additional information concerning this Proxy
Statement, please contact Innisfree M&A Incorporated at the address set
forth below.
Innisfree
M&A Incorporated
501
Madison Avenue, 20th Floor
New
York, NY 10022
Stockholders
Call Toll-Free at: (877) 800-____
Banks
and Brokers Call Collect at: (212) 750-5833
PRELIMINARY
COPY SUBJECT TO COMPLETION
DATED
MAY 21, 2009
CPI
CORP.
2009
ANNUAL MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE RAMIUS GROUP
THE
BOARD OF DIRECTORS OF THE CPI CORP.
IS
NOT SOLICITING THIS PROXY
P R O X Y
The
undersigned appoints Mark R. Mitchell and Peter A. Feld, and each of them,
attorneys and agents with full power of substitution to vote all shares of
common stock of the CPI Corp. (“CPI” or the “Company”) which the undersigned
would be entitled to vote if personally present at the 2009 Annual Meeting of
Stockholders of the Company scheduled to be held at the Company’s offices at
1706 Washington Avenue, St. Louis, Missouri 63103-1717 at 9:00 a.m. (Central
Daylight Time), Wednesday, July 8, 2009, and including at any adjournments or
postponements thereof and at any meeting called in lieu thereof (the “Annual
Meeting”).
The
undersigned hereby revokes any other proxy or proxies heretofore given to vote
or act with respect to the shares of common stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as
directed on the reverse and in the discretion of the herein named attorneys and
proxies or their substitutes with respect to any other matters as may properly
come before the Annual Meeting that are unknown to the Ramius Group a reasonable
time before this solicitation.
IF
NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSAL ON THE REVERSE, THIS
PROXY WILL BE VOTED FOR PROPOSAL NO. 1 AND FOR PROPOSAL NO. 2.
This
Proxy will be valid until the completion of the Annual Meeting. This
Proxy will only be valid in connection with the Ramius Group’s solicitation of
proxies for the Annual Meeting.
IMPORTANT: PLEASE
SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
[X]
Please mark vote as in this example
THE
RAMIUS GROUP STRONGLY RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE NOMINEES
LISTED BELOW IN PROPOSAL NO.1
Proposal No.
1 – The Ramius Group’s Proposal to elect Peter A. Feld and Joseph C. Izganics as
directors of the Company.
|
|
FOR
ALL
NOMINEES
|
WITHHOLD
AUTHORITY
TO
VOTE
FOR ALL
NOMINEES
|
FOR
ALL
EXCEPT
NOMINEE(S)
WRITTEN
BELOW
|
|
|
|
|
|
|
Nominees: Peter
A. Feld
Joseph
C. Izganics
|
[ ]
|
[ ]
|
[ ]
________________
________________
|
THE
RAMIUS GROUP INTENDS TO USE THIS PROXY TO VOTE (I) “FOR” MESSRS. FELD AND
IZGANICS AND (II) “FOR” THE CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY TO
SERVE AS DIRECTORS OTHER THAN [______] AND MICHAEL KOENEKE FOR WHOM THE RAMIUS
GROUP IS NOT SEEKING AUTHORITY TO VOTE FOR AND WILL NOT EXERCISE ANY SUCH
AUTHORITY. THE NAMES, BACKGROUNDS AND QUALIFICATIONS OF THE
CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY, AND OTHER INFORMATION ABOUT
THEM, CAN BE FOUND IN THE COMPANY’S PROXY STATEMENT.
THERE IS
NO ASSURANCE THAT ANY OF THE CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY
WILL SERVE AS DIRECTORS IF THE RAMIUS GROUP’S NOMINEES ARE ELECTED.
NOTE: IF
YOU DO NOT WISH FOR YOUR SHARES TO BE VOTED “FOR” A PARTICULAR RAMIUS NOMINEE,
MARK THE “FOR ALL NOMINEES EXCEPT” BOX AND WRITE THE NAME(S) OF THE NOMINEE(S)
YOU DO NOT SUPPORT ON THE LINE BELOW. YOUR SHARES WILL BE VOTED FOR
THE REMAINING RAMIUS NOMINEE(S). YOU MAY ALSO WITHHOLD AUTHORITY TO
VOTE FOR ONE OR MORE ADDITIONAL CANDIDATES WHO HAVE BEEN NOMINATED BY THE
COMPANY BY WRITING THE NAME OF THE NOMINEE(S) BELOW.
___________________
___________________
___________________
___________________
THE
RAMIUS GROUP MAKES NO RECOMMENDATION ON PROPOSAL NO. 2
Proposal No.
2 – The Company’s proposal for the ratification of the appointment of KPMG LLP
as the Company’s independent registered public accounting firm for the fiscal
year ending February 7, 2010.
|
|
o
FOR
|
|
o
AGAINST
|
|
o
ABSTAIN
|
DATED: ____________________________
____________________________________
(Signature)
____________________________________
(Signature,
if held jointly)
____________________________________
(Title)
WHEN
SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH
SIGNING. PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS
PROXY.