GoFor – I am not inclined to vote in favor of the proposals.
In my view, Mr. Marshall has spent a good deal of time and company resources protecting his paycheck. 1) the voting terms for the BOD assure that the slate of five will be retained absent there being one or more candidates put forward by shareholders and one or more receiving more votes than a current slate member receiving the least number of votes; 2) the authority under the Preferred shares is activated upon a change of control; 3) Mr. Marshall’s note has provisions should there be a change of control. At all turns, Mr. Marshall is thwarting changes in control. IMO, as currently written, the vote for the slate of BOD members could be cast by any one shareholder, and that would be sufficient to retain the slate. It’s hardly a vote.
If Mr. Marshall was confident in his ability to articulate to shareholders the benefits he has brought to the company and his vision for the company and capacity to execute, he would hardly need to take the variety of actions that protect his position. In large respect, his ability to retain control rests with 1) the presentation of additional BOD candidates, and 2) in large measure, whether the FL group wants to maintain the status quo or if they finally perceive the need for change and vote for one or more alternative BOD candidates, if presented. Absent an altered slate, their view won’t be evidenced.
Business Items 2-4 are perfunctory.
Item 5. The preliminary proxy materials acknowledge that the BOD could use the Preferred authorization to raise capital. Why don’t they? Read the filing. In essence, Ed states that it would be untimely and inconvenient to use the Preferreds. Heaven forbid that they would need to come back to the shareholders for authorization. It is clear that there is no intent to alter the communications with shareholders and it remains clear that there is no business plan, else a proposal to use part or all of the preferreds to raise requisite capital could have been articulated at the upcoming meeting rather than asking for additional common share authorization. Asking for the additional common authorization simply perpetuates the poison pill attributes of the preferreds.
Not voting in favor of the new authorization is not cutting your nose to spite your face. The company does have an alternative means of raising capital via the preferreds, but that would require a degree of business plan articulation and communication heretofore absent. As I read the request for 100MM more common shares, it’s the same blank check. It can be argued that authorizing the 100MM really doesn’t matter. On the one hand, if there is some advancement, EPA approval for example, additional shares will presumably be priced at a reasonably higher valuation and dilution will be minimized. If there is no good news, Ed will take a few years to fritter away the new authorization and the outcome will nonetheless be the same; it will just take a few years for him to be back for more, if he lives that long.
To me, the question about raising capital isn’t an issue. Whether done via common or preferred shares, it needs to happen. To me the question has been and continues to be whether this management team has what it takes for this company to succeed. Even if we were fortunate enough to get EPA approval, I haven’t seen any plan that gives me any confidence Ed knows what the next steps are or how to execute. So, why would I want to perpetuate his ability to collect a check?
If the BOD presented a qualified CEO, I’d vote in favor of the authorization question as the company would need capital to move forward and to pay Ed off according to the terms of his new employment agreement and note.
Item 6 – The company has issued themselves over 20MM shares of performance compensation related shares without shareholder authorization. One can ask, what performance justified the payment? Additionally, one can ask, how much is enough? Many have observed a lack of understanding of what Ed does, has accomplished, to justify his salary, much less ‘performance bonuses’. If the company is successful and the conditions precedent to that, EPA approval, seems a fairly short distance away, does Ed really need more shares versus the 16MM held to be amply rewarded for his service? The same for the BOD members. Do they need more shares to “stimulate their efforts”? Hardly. If we need to provide share compensation to a new employee or BOD member, then come back to the shareholders to seek such authorization. To continue to allow the self-ingratiation of this crew is absurd. As there is no mention of new staff or BOD members requiring incentive, I vote ‘no’ on the question.
It should also be noted that the BOD has, in the past, re-awarded granted shares that expired according to their terms, an act I believe is contrary to the intent of the incentive nature of the Plan. If an award has a 2-5 year vesting period and becomes worthless due to lack of performance (i.e. execution price is greater than market) then it is clear the person/company did not perform as expected and to simply reissue the grant serves the opposite of incentive as there was no consequence for lack of performance.
I’ve yet to decide whether to take the time to attend the meeting. I rather expect, depending upon share ownership by the FL group, that the requested votes are perfunctory. I would like to have management and the BOD look shareholders square in the eye and articulate a specific vision for the future. Given the worldwide location of shareholders and current state of technology, I would expect there is the capacity to telecast the meeting. Who knows whether that has been considered?
