NEW YORK, May 29, 2014 /PRNewswire/ -- Lone Star Value Management, LLC (together with its affiliates, "Lone Star Value") today issued an open letter to the shareholders, clients and employees of Hudson Global, Inc. (NASDAQ: HSON) ("Hudson Global" or "Hudson" or the "Company"). The letter thanks shareholders for their overwhelming support in electing Lone Star Value's two highly qualified nominees, Richard K. Coleman, Jr. and Jeffrey E. Eberwein, to Hudson's Board of Directors (the "Board") and details items they will immediately put up for a director vote at their first Board meeting as directors. The full text of the letter is included below:
May 29, 2014
Dear Hudson Global Employees, Clients and Fellow Shareholders:
We Appreciate the Overwhelming Support of our Fellow Hudson Global Shareholders in Electing Both our Nominees by a Large Margin
We would like to thank our fellow shareholders for their overwhelming support for change at Hudson Global. While we appreciate the vote of confidence, we are acutely aware of the great responsibility that comes with it. We look forward to having an immediate, positive impact on the Company, and expect this impact to come in two waves. First, we will immediately put up for a director vote at our first Board meeting a number of items to improve corporate governance and shareholder rights at Hudson. Second, with the benefit of the information available to all directors, we will work with the rest of the Board to review all aspects of Hudson's current strategy with the objective of maximizing long-term profitability and value creation for all shareholders. Our candidates join the Hudson Board with an overwhelming mandate having captured 26,100,463 votes or close to 80% of all shares outstanding at the 2014 Annual Meeting. In fact, shareholder support was so great, that faced with the imminent results of the contest Hudson issued a press release on May 23 (6 days before the 2014 Annual Meeting) conceding the election – we note that at the time of Hudson's press release, 68% of all shares outstanding had been cast supporting our GOLD proxy card, representing 95% of all votes cast at that time.(1) The ratio of shareholders voting for change on our GOLD proxy card versus the status quo on the incumbents' WHITE proxy card was greater than 20:1.
It is regrettable that Hudson's concession and announcement that Mr. Dubner and Ms. Laing would step down after the 2014 Annual Meeting came only after a large and unnecessary waste of Company resources. As disclosed on its recent earnings call, Hudson expects to spend $1 million in Q2 for its part in the proxy contest and for retaining Alix Partners. Hudson could have spared this expense by welcoming shareholder input and actively seeking to reconstitute the Board via constructive engagement with Lone Star in our numerous attempts to reach a mutually agreeable resolution. Now that Hudson's shareholders have spoken resoundingly in electing Lone Star Value's nominees by a large margin, we believe that the message to the entire Hudson Board is clear -- to immediately enact real and positive changes for the benefit of all stockholders, clients and employees.
OUR IMMEDIATE AGENDA
Hudson's newly elected Board members - Jeff Eberwein and Rick Coleman – will seek to put the following items to an immediate vote at the first Hudson Board meeting held after their election. We believe the following proposals will significantly improve Hudson's corporate governance and shareholder rights:
- De-staggering of the Board.
- ALL Board members should be up for re-election at the 2015 Annual Meeting.
- Elimination of ALL Board member compensation until the Company returns to profitability.
- Immediate termination of Hudson's shareholder rights plan.
- Repealing supermajority voting provisions within Hudson's corporate charter.
- Allowing shareholders representing at least 10% of the outstanding shares to call special meetings.
- Allowing shareholders to act by written consent.
- Immediate election of a new independent Chairman.
- Substantial representation of the new directors on key committees of the Board.
- Elimination of the Executive Committee of the Board
We view these proposals as only the first wave of changes Hudson's shareholders expect us to make – they are a down payment on Hudson becoming a more shareholder-oriented company. The proposals to de-stagger the Board, repeal supermajority voting provisions, allow stockholders to call special meetings and to act by written consent require shareholder approval in addition to Board approval and we believe that such proposals should be put to a shareholder vote no later than the 2015 Annual Meeting. We look forward to implementing further enhancements at Hudson after we have access to the same information as Hudson's remaining Board members.
HUDSON'S EMPLOYEES – THE GREATEST ASSET
Most importantly, we would like to acknowledge that without the dedicated work of Hudson's employees there would be no Company to turn around and that it is because of their hard work and commitment that Hudson has such great potential. We would like to assure all employees that we do not intend to be a disruptive influence, nor are we seeking a short term propping up of Hudson's stock price and a subsequent quick exit from the Board and our ownership position. We believe that Hudson's long term value is much greater than its current share price and this value can only be achieved through empowering Hudson's greatest asset – its employees – to produce at the highest levels. We believe that Hudson has temporarily lost but not permanently forgotten many of the strengths that will make it a much more profitable organization going forward. We also want to assure Hudson's clients that we will work diligently to restore credibility among them and strengthen client relationships. First and foremost, the key to higher profits and shareholder returns involves positive change for employees and clients - involving a real turnaround strategy with real goals that the organization can clearly comprehend and execute. To this end, we will seek the support of the other directors to cease all Board compensation until Hudson returns to profitability, which we hope Hudson employees and shareholders will take as a token of our determination to help realize the very high potential of this franchise.
I personally look forward to beginning a bright new chapter in Hudson's history and both Rick Coleman and I are extremely excited at the opportunity to help an organization with so much potential.
Jeffrey E. Eberwein
Lone Star Value Management, LLC
About Lone Star Value Management:
Lone Star Value Management, LLC ("Lone Star Value") is an investment firm that invests in undervalued securities and engages with its portfolio companies in a constructive way to help maximize value for all shareholders. Lone Star Value was founded by Jeff Eberwein who was formerly a Portfolio Manager at Soros Fund Management and Viking Global Investors. Lone Star Value is based in Old Greenwich, CT.
John Glenn Grau
(203) 972-9300 ext. 11
(1) Voting totals: 22,341,866 votes had been cast for the GOLD proxy card vs. 1,081,988 votes cast on management's WHITE proxy card as of 2:30pm on 5/23/2014.
SOURCE Lone Star Value Management, LLC