sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant: /x/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
SL INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
THE RORID COMMITTEE
STEEL PARTNERS II, L.P.
WARREN G. LICHTENSTEIN
NEWCASTLE PARTNERS, L.P.
MARK E. SCHWARZ
GLEN KASSAN
JAMES R. HENDERSON
STEVEN WOLOSKY
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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EXPLANATORY NOTE
The RORID Committee (the "Committee") is filing materials contained
in this Schedule 14A with the Securities and Exchange Commission in connection
with a solicitation of proxies in support of the election of the Committee's
nominees to the Board of Directors of SL Industries, Inc. ("SL") at the Annual
Meeting of Stockholders scheduled to be held on January 22, 2002.
TABLE OF CONTENTS
Cover letter to Definitive Proxy Statement from the
Committee to SL stockholders dated December 14, 2001.....................Item 1
Open letter from the Committee to SL stockholders........................Item 2
PowerPoint presentation to SL stockholders...............................Item 3
ITEM 1
THE RORID COMMITTEE
December 14, 2001
Dear Fellow Stockholder:
The RORID Committee is composed of individuals representing combined
shareholdings of 850,800 shares of SL Industries, Inc. Common Stock. We are
convinced that the current board is not acting in your best interests, and we
are therefore seeking your support for the election of our five nominees to the
SL Board of Directors at the January 22, 2002 Annual Meeting of Stockholders.
We urge you to carefully consider the information contained in the
attached Proxy Statement and then support the efforts of The RORID Committee to
maximize value for all stockholders by signing, dating and returning the
enclosed GOLD proxy today.
If you have already voted for the incumbent management slate you
have every right to change your vote by signing 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 below.
Thank you for your support,
/s/ Warren G. Lichtenstein
--------------------------
Warren G. Lichtenstein
On behalf of The RORID Committee
[INNISFREE M&A INCORPORATED LOGO]
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
CALL TOLL FREE: (888) 750-5834
BANKS AND BROKERS CALL COLLECT: (212) 750-5833
-2-
ITEM 2
AN IMPORTANT MESSAGE TO STOCKHOLDERS
FROM
THE RORID COMMITTEE
(RESPONSIBLE OWNERS REPLACING IRRESPONSIBLE DIRECTORS)
Dear Fellow Stockholders:
We are the owners of 850,800 shares of SL Industries, Inc. ("SL"). We are
convinced that the full value of our investment will never be realized under the
leadership of the existing Board and management. We are offering stockholders
the opportunity to vote for a slate of accomplished, experienced businessmen
committed to maximizing the value of SL for all stockholders at the annual
meeting of stockholders scheduled to be held on January 22, 2002.
A MISERABLE MANAGEMENT RECORD:
o Following the fiscal year ended July 31, 1999, the Board changed SL's
fiscal year-end from July 31 to December 31. This change in fiscal year
served no justifiable business purpose but instead served to obfuscate
financial reporting and confuse the comparisons of SL's financial
performance with prior periods by creating a 5-month "stub" period.
o Since the beginning of the 5-month "stub" period, SL has reported a
staggering $18.6 million in restructuring charges through the quarter ended
September 30, 2001. Additional restructuring charges of $1.2 million are
projected for the quarter ending December 31, 2001, for a total of $19.8
million in charges. The $19.8 million in charges exceeds total cumulative
net profits reported by SL since July 31, 1990.
o CEO Owen Farren stated in SL's 1999 annual report that "we believe that SL
Industries' common stock represents an outstanding investment opportunity."
Since then, SL's share price dropped from $12.75 to recent prices of around
$6 - a decline of over 50%.
o In October 2001, SL's share price sank to a low of $3.76, a price level not
seen since 1994.
A MISERABLE CORPORATE GOVERNANCE RECORD:
o Until we took legal action against SL, management did not schedule an
annual meeting of stockholders for close to two years. We believe that the
Board's failure to schedule an annual meeting of stockholders was intended
to entrench management and the Board and to avoid accountability for SL's
dismal financial and share price performance.
-3-
o In 1997, the Board eliminated cumulative voting for the election of
directors, a mechanism intended to allow minority stockholders to elect
directors. This action which effectively abrogates minority stockholder
rights has absolutely no defendable business purpose.
A FAILURE OF OVERSIGHT:
The Board of Directors of a public company is charged with overseeing the
management of the company on behalf of the stockholders. Yet despite SL's
disastrous results, the SL Board has recently, and in our opinion ludicrously,
awarded management lucrative "golden parachutes." The Board seems blindly loyal
to a management out of touch with the realities of SL's business.
o Since we announced that we would challenge SL's incumbent directors with
our slate of nominees, certain SL executives entered into "change in
control" agreements with SL under which they would be entitled to
exorbitant payments (over $1.1 million in the case of CEO Owen Farren) and
other benefits if the executives are terminated following a change in
control of SL.
o Management has spent over $30 million in cash on acquisitions since 1998.
In making acquisitions, we estimate that SL has increased its long-term
debt from $833,000 to over $40 million, substantially increasing the
financial risk of SL.
o SL is in such a financially distressed state that:
o management has discontinued SL's quarterly dividend - a dividend that
has been paid for years;
o SL's auditors have indicated that they might have to modify their
report with respect to SL's ability to continue as a "going concern";
and
o the NYSE is threatening to delist SL common stock.
A LACK OF COMMITMENT:
The directors and executive officers own in the aggregate less than 1% of the
outstanding shares of SL. With no significant investment stake in SL, the
Board's and management's interests are clearly not aligned with the interests of
SL stockholders.
A REAL ALTERNATIVE:
As the second largest stockholder of SL, The RORID Committee believes that its
interests are clearly aligned with yours. We urge you to support our efforts by
signing, dating and returning your GOLD proxy card today. If you have already
voted for the incumbent management slate you have every right to change your
vote by signing and returning a later dated GOLD proxy. If you have any
questions or require any assistance with your vote, please contact Innisfree M&A
Incorporated, which is assisting us, at the address and toll-free numbers set
forth in the enclosed Proxy Statement.
-4-
Thank you for your support,
/s/ Warren G. Lichtenstein
--------------------------
Warren G. Lichtenstein
On behalf of The RORID Committee
-5-
Item 3
THE RORID COMMITTEE
"RESPONSIBLE OWNERS REPLACING IRRESPONSIBLE DIRECTORS"
THE RORID COMMITTEE
o The second largest stockholder of SL Industries.
o Believes that SL's historical financial and stock price performance has
significantly trailed its peer group.
o Believes that recent actions of the SL Board have not been in the best
interests of the stockholders.
o Has nominated its slate of directors in opposition to the SL Board.
o Elections for the Board will be held at the annual meeting of stockholders
on January 22, 2002.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
THE RORID COMMITTEE
o The Committee, along with all of the participants in the solicitation, are
the beneficial owners of 850,800 shares (14.9%).
o We are committed to giving all SL's stockholders the opportunity to receive
the maximum value for their shares.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
NOMINEES FOR DIRECTOR
o Warren G. Lichtenstein
o Mark E. Schwarz
o James R. Henderson
o Glen Kassan
o Steve Wolosky
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
OUR NOMINEES
o Are committed to maximizing shareholder value through a sale of the company
or other strategic alternatives.
o Are seeking to replace five incumbent directors whose interests, we
believe, are not aligned with the interests of SL's stockholders.
o Will constitute a majority of the current eight-member board if elected.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
SL'S LAGGING SHARE PRICE
o We believe that SL's share price over the past several years demonstrates
the Board's failure to create value for its stockholders.
o During the period from July 31, 1995 through December 31, 2000, SL's stock
price performance has lagged its peer group index by 201% with cumulative
total returns for the S&P Electrical Equipment group index of approximately
308% compared to cumulative total returns for SL's shares of approximately
107%.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
SL'S LAGGING SHARE PRICE
o On December 29, 2000, SL shares closed at $11.44. Since then, the share
price has fluctuated between $14.90 (February 15, 2001) and $3.72 (October
9, 2001), representing a stunning 67% decrease since December 29, 2000.
STOCK PERFORMANCE GRAPH
PRICE HISTORY - SL (1/1/2001 - 12/14/2001)
DATE: 1/1/2001 4/2/2001 7/2/2001 10/1/2001 12/14/2001
PRICE: $11.4375 $13.00 $11.00 $5.69 $6.10
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
CONTINUED LOSSES
o SL realized net losses of approximately $7.5 million for the nine month
period ended September 30, 2001.
o SL recorded losses from the restructuring plan of approximately $8.2
million and $4.1 million in the second and third fiscal quarters of 2001,
respectively.
o SL expects to record approximately $1.2 million in losses from the
restructuring plan in the fourth fiscal quarter of 2001.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
GOING CONCERN
o We are extremely concerned with SL's ability to continue as a going
concern.
o SL has exhausted the availability of funds under its credit facility with
$38.8 million of principal outstanding, as of September 30, 2001, of the
maximum $40 million availability.
o SL has advised its banks that it was in default of the financial covenants
in its credit facility at September 30, 2001.
o The auditors have advised SL that failure to resolve these matters prior to
the completion of their fiscal year 2001 audit may result in a modification
of their audit report with respect to the company's ability to continue as
a going concern.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
REASONS FOR THE SOLICITATION
o We question whether the interests of the SL Board and management are
aligned with the interests of SL stockholders in view of their limited
ownership of securities of SL. Directors and executive officers own
outright a total of 47,828 shares (less than 1%).
o We believe that the SL Board must promptly explore other alternatives to
maximize stockholder value including a sale of the entire company.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
REASONS FOR THE SOLICITATION
o On November 15, 2001, SL announced that the regular semi-annual cash
dividend payment has been suspended.
o SL has been in violation of NYSE listing criteria, due to its failure to
comply with market capitalization requirements. On December 11, 2001, SL
announced that it submitted a plan of compliance to the NYSE. If the NYSE
rejects this plan, SL will be subject to delisting, which would adversely
affect stockholders' liquidity.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
CHANGE IN CONTROL AGREEMENTS
o The SL Board Compensation Committee has stated in public filings that it
"believes that executive compensation should be linked to value delivered
to shareholders."
o On May 1, 2001, certain executive officers of SL (Owen Farren, David Nuzzo
and Jacob Cherian) entered into change in control agreements with SL
indicating to the Committee that current management's interests may not be
aligned with the interests of SL stockholders.
o These agreements are inconsistent with the philosophy of the Compensation
Committee.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
CHANGE IN CONTROL AGREEMENTS
o Under the agreements, each officer will be entitled to receive two times
(2.99 times for Mr. Farren) the average of his combined annual salary and
cash bonus for each of the previous three full calendar years and benefits
for up to 24 months (36 months for Mr. Farren) in the event the executive
is terminated within one year following a "change in control."
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
SL BOARD'S RESTRUCTURING PLAN
o We believe that the SL Board's restructuring plan is not in the best
interests of the stockholders.
o On March 19, 2001, SL announced that it had engaged Credit Suisse First
Boston (CSFB) to explore a sale of the company.
o In November 2001, SL's Board announced that it did not believe that it was
in the best interests of the stockholders to sell the entire company.
o In November 2001, the Board also announced that it was in the process of
negotiating the sale of two subsidiaries of SL.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
THE COMMITTEE'S VIEW ON THE SL BOARD'S RESTRUCTURING PLAN
o We believe that SL should be sold at the current time.
o We are concerned that the potential sale of these two subsidiaries will be
for substantial losses and will not maximize stockholder value for the SL
stockholders in the immediate future.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"
PROXY VOTE
o Stockholders of record at the close of business on December 5, 2001 are
entitled to vote at the annual meeting.
o Vote for Nominees committed to a sale of the company.
o Vote the GOLD Proxy. A vote on management's white proxy card, even voting
against the management slate, will cancel a previous vote for the
Committee.
The RORID Committee -- "Responsible Owners Replacing Irresponsible Directors"