sec document
SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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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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-2-
An Important Message to Stockholders
from
The RORID Committee
(RESPONSIBLE OWNERS REPLACING INCUMBENT DIRECTORS)
- - - - -
Dear Fellow Stockholders:
We are the owners of 850,800 shares of SL Industries, Inc. ("SL"). We believe
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 nominees committed to maximizing the
value of SL for all stockholders, as described in our proxy statement, at the
annual meeting of stockholders scheduled to be held on January 22, 2002.
WE BELIEVE THAT INCUMBENT DIRECTORS OF SL HAVE AN UNACCEPTABLE MANAGEMENT
RECORD, AS EVIDENCED BY THE FOLLOWING:
o Following the fiscal year ended July 31, 1999, the Board changed SL's
fiscal year-end from July 31 to December 31. We question whether this
change in fiscal year served any business purpose, or if it 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%.
WE BELIEVE THAT THE INCUMBENT DIRECTORS HAVE AN UNACCEPTABLE CORPORATE
GOVERNANCE RECORD, AS EVIDENCED BY THE FOLLOWING:
o Prior to the Annual Meeting scheduled to be held on January 22, 2002, the
incumbent directors had not scheduled an annual meeting of stockholders
for close to two years. We question whether this annual meeting was only
scheduled as a result of our legal action against SL, and why no meeting
had been held in the past two years in violation of New Jersey law, New
York Stock Exchange rules and standard corporate practice.
o In 1997, the Board eliminated cumulative voting for the election of
directors. Cumulative voting is a mechanism which can allow minority
stockholders to elect one or more directors. We believe the elimination of
cumulative voting had the effect of reducing minority stockholder rights.
WE BELIEVE THAT THE INCUMBENT DIRECTORS HAVE NOT PROVIDED AN ADEQUATE LEVEL OF
CORPORATE OVERSIGHT, AS EVIDENCED BY THE FOLLOWING:
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
significant losses, the SL Board has recently awarded management lucrative
"golden parachutes." What were the compelling business reasons for awarding
"golden parachutes" to management of a company with results as poor as SL?
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
significant payments (over $1.1 million in the case of CEO Owen Farren and
over $360,000 in the case of Vice President David Nuzzo) and other
benefits if the executives are terminated following a change in control of
SL. We believe that the change in control agreements are unwarranted and a
waste of corporate assets in view of SL's stock price and operating
performance, as described in our proxy statement.
o Management has spent over $30 million in cash on acquisitions since 1998,
as disclosed in SL's public filings. In making such acquisitions, we
estimate that SL has increased its long-term debt from $833,000 to over
$40 million, substantially increasing the financial risk to SL
stockholders.
o We believe that SL is in a financially distressed state,
o management has discontinued SL's quarterly dividend - a dividend
that has been paid for years, as discussed in SL's public filings;
and
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", as disclosed in SL's public filings.
The directors and executive officers own outright in the aggregate less than 1%
of the outstanding shares of SL (and own beneficially only 7.2% of the
outstanding shares). We believe that the lack of significant actual ownership of
SL shares by the incumbent SL Board and management may contribute to the SL
Board's and management's lack of commitment to maximizing the value of the SL
shares.
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, toll-free at (888) 750-5834,
bankers and brokers call collect (212) 750-5833.
THIS LETTER SUPERSEDES AND REPLACES THE LETTER TO STOCKHOLDERS PREVIOUSLY
DELIVERED TO STOCKHOLDERS ON OR ABOUT DECEMBER 21, 2001.
Thank you for your support,
Warren G. Lichtenstein
On behalf of The RORID Committee