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