In reaching its conclusion, ISS performed a detailed analysis of both sides' positions and concluded that:
"Given the apparent need to accelerate the company's efforts in reducing SG&A expenses, acquiring talent, and addressing the long tenure of the company's legacy directors, the dissident has made a compelling case that some degree of change at the board level is warranted."
Excerpts from ISS' Analysis & Recommendation:
ISS casted doubt on the superior operating performance touted by the Company:
"Upon comparison, as of the end of fiscal year 2015, SG&A as percentage of revenue was 29.6 percent for the company, whereas the median of the refined peer group was 23.5 percent. Management argues that SG&A as a percentage of revenue has decreased over the past five years, from 31.9 percent in 2010 to 29.6 percent in 2015 (based on management's figures). While this change represents a 230 bps improvement, it may be seen as limited given that the company's revenue increased 31.8 percent over the same period. Moreover, in 2015 the company's EBITDA margin declined to only 2.7 percent, which was 36 percent below its peer median of 4.2 percent."
"It seems clear that the company's cloud strategy is not progressing quickly enough to satisfy shareholders, as evidenced by GAMCO's decision to support the dissident slate."
ISS affirmed Ancora and other stockholder's concerns with the Company's stale incumbent board:
"Other than the two directors appointed by [Lone Star Value Investors, LP] in 2016 as a result of the activist campaign settlement, the average tenure of the rest of the board is 13 years. A lack of refreshment may have compromised independence from management and hindered new perspectives from being added to the board. Such concerns appear echoed in the fact that another large shareholder, GAMCO, has publicly voiced its support for the dissident's efforts."
ISS questioned the Company's conclusions reached after its failed strategic review process:
"Although the board claims that it identified a group of 15 strategic and 18 private equity suitors with potential interest in acquiring one or more of the company's discrete lines of business, it does not appear to have disclosed the detailed rationale to support its conclusion that a sale of individual segments as discrete assets was highly unlikely to maximize shareholder value. Some shareholders would probably appreciate a more compelling clarification as to why this might not be a viable option."
ISS recommended the addition of stockholder representatives to correct the Company's lack of transparency:
"Lack of visibility or compelling disclosure regarding certain concerns, such as the board's decision to rule out a sale of specific business segments, suggests that the board would benefit from additional shareholder representation. This could allow for further vetting of the dissident's claim that the company's SG&A level is excessive, and that the company's efforts to attract and retain talent are not progressing rapidly enough."
ISS praised the directly relevant experience of Ancora's nominees stating:
"DiSanto's banking and investment experience should be beneficial to the company's future acquisition expansion and assessment of strategic alternatives."
"Carpenter's IT industry experience would address an apparent area of need on the current board in light of the company's cloud-focused strategy."
EDGEWATER STOCKHOLDERS, ISS HAS SPOKEN, THE TIME FOR ACTION IS NOW. PLEASE SIGN, DATE AND MAIL ANCORA'S WHITE CONSENT CARD TODAY
If you have any questions, or require assistance with your vote, please contact our solicitor InvestorCom toll-free at (877) 972-0090 (Stockholders). Banks and Brokers may call collect at (203) 972-9300.
Ancora Advisors, LLC ("Ancora"), is a registered investment adviser with the Securities and Exchange Commission of the United States. Ancora offers comprehensive investment solutions for institutions and individuals in the areas of fixed income, equities, global asset allocation, alternative investments and retirement plans. A more detailed description of the company, its management and practices are contained in its "Firm Brochure" (Form ADV, Part 2A). A copy of this form may be received by contacting the company at: 6060 Parkland Boulevard, Suite 200 Cleveland, Ohio 44124, Phone: 216-825-4000, or by visiting the website, www.ancora.net/adv.
John Glenn Grau, 203-972-9300 ext. 11
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SOURCE Ancora Advisors, LLC