We initially submitted a de-staggering proposal to be included on the Company's 2017 proxy statement nearly three months ago. For months, the Board spent Company and stockholder resources opposing the validity of our proposal and attempting to exclude the proposal from its proxy, in an effort to ultimately deprive stockholders of the opportunity to vote on the matter. Only after the Securities and Exchange Commission rendered a response on the matter, effectively stating the Company does not have a proper basis to exclude the proposal, is the Board now calling a special meeting to pre-empt our de-classification proposal and to limit shareholders' right to cumulate votes in what appears to be a blatant defense tactic. These documents are a matter of public record and can be viewed on the SEC's website. http://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2017/ironcompass012517-14a8.pdf
It is curious to us that the Company has decided to incur the additional cost of a special meeting to vote on de-staggering and removing cumulative voting after we sent a letter to the secretary of the Company on January 19, 2017 indicating our intent to elect for cumulative voting. After all, the Company could have simply allowed stockholders to vote on de-staggering the Board and eliminating cumulative voting less than one month later at the upcoming annual meeting of stockholders scheduled to be held on April 24, 2017. We believe that the Board is attempting to eliminate the right to cumulate votes at the 2017 annual meeting in an effort to insulate itself from change. We do not believe that eliminating cumulative voting represents good corporate governance. In fact, ISS's 2016 SR U.S. Proxy Voting Guidelines recommend a vote against management proposals to eliminate cumulative voting. https://www.issgovernance.com/file/policy/2016-sri-us-voting-guidelines.pdf
In our minds, the Board's recent actions are another example of how the Company's governance initiatives have only created an appearance of reform. For example, on October 19, 2016, the Board voted to lower outside director term limits from 20 years to 15 years and the Company explained this change by stating that it was meant to "facilitate refreshment and ensure a balance of perspectives." However, despite the fact that the average tenure of the current Board members is approximately 13 years, the Board specifically exempted all existing directors from the term limit. In other words, there is now no term limit for the existing directors and the first time a term limit could be enforced for any new director is the year 2032!
Taking steps to improve the Company's governance is critical to reversing the Company's lagging performance and maximizing shareholder value, and we remain committed to these goals for the benefit of all stockholders.
About Iron Compass
Iron Compass endeavors to be a long term owner of 'classically great' businesses. These are companies we believe have a distinct competitive advantage that allows them to generate high returns on invested capital, stable cash flow, and growth over the long term. The greatest businesses seek to outperform contemporaneously in both operations and capital management. www.ironcompassinvestors.com
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SOURCE Iron Compass LLC