Steel
Partners Urges Adaptec Stockholders to Follow Recommendation of RiskMetrics,
Proxy Governance to Remove CEO Sundaresh, Legacy Director Loarie
With
Consent Deadline Approaching, Encourages Stockholders to Sign, Date and Return
WHITE Consent Cards TODAY
NEW
YORK--(BUSINESS WIRE)--Steel Partners II, L.P. (“Steel Partners”) announced
today that it has delivered the following letter to stockholders of Adaptec,
Inc. (“Adaptec” or the “Company”) (NASDAQ:ADPT - News) urging them to
follow the recommendation of RiskMetrics Group and Proxy Governance, Inc. to
consent to the removal of CEO S. “Sundi” Sundaresh and Legacy Director Robert J.
Loarie by signing, dating and returning the WHITE consent card today. In
the letter, Steel Partners said that the substantial show of support from
RiskMetrics and Proxy Governance, two truly independent third parties, validates
Steel Partners’ plans to maximize value at Adaptec and its call for changes to
the Adaptec Board. Steel Partners added that the support from these two
independent proxy advisory firms invalidates the Legacy Directors’ personal
attacks on Steel Partners and their attempts to distract stockholders from the
real issues facing the Company.
Steel
Partners told Adaptec stockholders that time is of the essence and encouraged
stockholders to sign, date and return WHITE consent cards TODAY to enable Steel
Partners to meet the November 2, 2009 deadline to deliver the consents and bring
urgently needed change to Adaptec.
Full text
of the letter follows:
RISKMETRICS
GROUP AND PROXY GOVERNANCE, INC. RECOMMEND STOCKHOLDERS CONSENT TO THE REMOVAL
OF ADAPTEC CEO SUNDARESH AND LEGACY DIRECTOR LOARIE
TIME IS OF THE ESSENCE! VOTE THE WHITE CONSENT CARD TODAY FOR
REAL CHANGE AT ADAPTEC!
Dear
Fellow Adaptec Stockholder:
We are
writing to urge you to follow the recommendation of RiskMetrics Group and Proxy
Governance, Inc. to consent to the removal of CEO S. “Sundi” Sundaresh and
Legacy Director Robert J. Loarie by signing, dating and returning the WHITE consent card today. If
for whatever reason you were unsure how to vote in this consent solicitation, we
hope it is clear now! The deadline for us to deliver the consents is November 2,
2009. Each and every consent is critical to the success of this consent
solicitation and the future of your investment in Adaptec. Our aim is to have
the number of consents we need by Friday, October 30, 2009.
If
you have not done so already, please sign, date and return the enclosed WHITE consent card TODAY to
remove Messrs. Sundaresh and Loarie and to restore order at
Adaptec!
TWO
LEADING INDEPENDENT PROXY ADVISORY FIRMS WERE NOT FOOLED BY THE COMPANY’S
“SMOKESCREENS”, DISTORTIONS & SMEAR TACTICS!
Our
motives are clear - we believe it is time for accountability and real change at
Adaptec. Two of the leading independent proxy advisory firms clearly agree with
us. As RiskMetrics wrote in its report, “given the history of poor financial and
share price performance, coupled with recent questionable governance actions,
the dissidents have made a valid case for greater management and board
oversight.”
The
massive show of support from RiskMetrics and Proxy Governance, two truly
independent third parties, not only validates our plans to maximize value at
Adaptec and our call for changes to the Adaptec Board, but also invalidates the
Legacy Directors’ personal attacks on us and their attempts to distract you from
the real issues facing the Company in this consent solicitation. Pay no heed to
the increasingly desperate self-serving statements and half-truths from Messrs.
Sundaresh, Kennedy and Van Houweling, who will say and do anything to try to
retain their grip on the Board.
Both
RiskMetrics and Proxy Governance noted that the Board hired an independent
financial advisor to explore strategic alternatives for the Company and that the
financial advisor recommended the Company explore the sale of the Company’s
current operating business, intellectual property and real estate, and then look
to redeploy its capital in a way to maximize the value of the net operating loss
carry forwards (“NOLs”). We do not believe the Legacy Directors intend to abide
by the recommendation of the financial advisor. Apparently, RiskMetrics shares
our concern, stating in its report, “Although this proposal was approved by a
majority of the board at this meeting, based on
management’s objections to this proposal, shareholders may reasonably conclude
that the "market check" option may not be pursued further if the consent is
rejected.” We are wholly
committed to moving forward with this recommendation of the Company’s financial
advisor!
FOUR
YEARS OF VALUE DESTRUCTION AND FALSE PROMISES UNDER CEO SUNDARESH
The
reality is that the Legacy Directors and CEO Sundaresh have had four years to execute a
successful business plan and turnaround. All they have to show for it is a
horrendous track record of stockholder value destruction. Enough is enough.
THE LEGACY DIRECTORS AND CEO
SUNDARESH HAVE FAILED TO GENERATE VALUE FOR STOCKHOLDERS AND NOTHING THEY HAVE
DONE SUGGESTS THAT THIS WILL CHANGE IN THE FUTURE.
DO
NOT BE MISLED! MR. SUNDARESH’S BUSINESS PLAN IS NOT GAINING ANY
TRACTION!
Proxy
Governance sums it up best: “After four years under a turnaround CEO, the
company should not only have shed the dead weight of its past blunders but also
built a foundation for...sustainable business success. By contrast, the hard facts…bear out Steel
Partners’ assertions that the legacy directors are either unwilling or unable to
address the core business, strategic and managerial issues which continue to
afflict the company.”
Rather
than acknowledging these failures and taking real action to benefit
stockholders, the Legacy Directors have instead resorted to back-handed
entrenchment maneuvers and in so doing have made a huge mockery out of corporate
governance. They have attempted to distract stockholders from the real corporate
governance issues by trumpeting false allegations concerning Board conduct by
our director representatives and unjustly, after the fact, attacking the
qualifications of Jack Howard in an attempt to justify his unwarranted removal
as Chairman of the Board.
RISKMETRICS
WAS APPARENTLY NOT FOOLED BY THE LEGACY DIRECTORS’ SPIN CAMPAIGN
In its
report regarding corporate governance under the Legacy Directors, RiskMetrics
stated:
· “Noting
that the board was aware of Mr. Howard’s qualifications when he was elected to
the board in 2007 and also unanimously supported his appointment as Chairman in
2008…the timing and mode of his replacement calls into question the reasons
cited for his removal.”
· “We find
recent events and governance practices taken by the board in its efforts to
restructure the board unusual, troubling and contrary to good corporate
governance.”
· “Corporate
governance wise, we believe some of the board’s actions when taken together,
call into question the board’s ability to govern effectively and serve to
disenfranchise shareholders by marginalizing the ability for shareholder voices
to be heard on the board.”
THE
LEGACY DIRECTORS AND CEO SUNDARESH ARE NOT PROPOSING REAL CHANGE - ONLY MORE OF
THE SAME FAILED BUSINESS PLANS AND EMPTY PROMISES
Given
that their plan for the future of the Company involves more of the same from a
CEO who has already presided over $200 million in operating losses during his
tenure, is it any wonder that the Legacy Directors would like nothing more than
to silence the voice of stockholders? As RiskMetrics noted, “…a more substantial
minority position helps achieve the purpose of supporting the dissidents in the
first place: providing a significant alternative voice on a board where
shareholders have concluded change is warranted.” Unfortunately, the Legacy
Directors’ idea of change is a Board dominated by the Legacy Directors and
packed with Mr. Sundaresh’s handpicked nominees.
OUR
INTERESTS ARE DIRECTLY ALIGNED WITH YOURS -- THE INTERESTS OF THE LEGACY
DIRECTORS ARE NOT
Despite
what the Legacy Directors would have you believe, our interests are firmly
aligned with all stockholders. Ask yourself whose statements and conclusions you
should trust -- those of two leading independent proxy advisory firms or those
of a group of increasingly desperate Legacy Directors willing to say anything to
maintain their grip on the Board. We think the answer is obvious!
Removing
CEO Sundaresh and Legacy Director Loarie leaves stockholders with a balanced
Board that is well-equipped to manage the Company’s affairs and ensure
management acts with the discipline needed to protect and enhance stockholder
value in the future. Electing the Company’s proposed slate would result in a
Board dominated by the Legacy Directors and Mr. Sundaresh’s handpicked
nominees.
DO
NOT LEAVE THE BOARD IN THE CONTROL OF THE LEGACY DIRECTORS AND MR. SUNDARESH’S
HAND-PICKED DIRECTORS
Time is
of the essence. Consents to remove directors Sundaresh and Loarie will not be
effective unless the delivery of the written consents is made by November 2,
2009. A UPS Overnight return envelope is enclosed to ensure that your consent
card is received by the November 2nd
deadline. We recommend that all stockholders sign, date and return the WHITE consent card today. We
urge you not to revoke your consent by signing any gold consent revocation card
sent to you by Adaptec or otherwise, and to revoke any consent revocation you
may have already submitted to Adaptec. Follow the simple voting instructions
contained on the WHITE
consent card or contact MacKenzie Partners, Inc. at 800-322-2885 or
212-929-5500.
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Sincerely,
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/s/
Warren G. Lichtenstein
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Warren
G. Lichtenstein
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Steel
Partners II, L.P.
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About
Steel Partners
Steel
Partners Holdings L.P. ("SPH") is a global diversified holding company that owns
majority-owned subsidiaries, controlled companies and other interests in a
variety of operating assets and businesses. SPH seeks to work with the
management of these companies to increase corporate value over the long term for
all stakeholders and shareholders through growth initiatives, Steel Partners
Operational Excellence programs, the Steel Partners Purchasing Council, balance
sheet improvements and capital allocation policies.
Steel
Partners II LP is a wholly-owned subsidiary of SPH.
Contact:
Steel
Partners
Jason
Booth, 310-941-3616