News - We're Dysfunctional https://www.datacast.com/media/pdfs/financial_report/2012_2013/IDC_AGM2012_Management_Proxy_Circular.pdf
Brace yourself...
Donkey.
Attachment 2
Statement of a Director
Made Under Section 110 of the Canada Business Corporations Act (Canada)
To: International Datacasting Corporation
I am writing in my capacity as a member of the board of directors to express my opinion and to alert
shareholders of International Datacasting Corporation (“IDC” or the “Corporation”) of what I
believe to be very serious matters with respect to your Corporation.
I was first appointed to the IDC board in December 2009. I am the longest serving member of the
board and a prior Chairman of the company. I am also a member of most of the Corporation’s
board committees, including the Corporate Governance & Nominating Committee, the
Supplementary Nominating Committee, the Compensation Committee, the Strategy Committee, the
Search Committee and the Investment Committee. The fact that such a small company requires so
many board committees should be taken as a red flag.
I believe that our core business is strong, and I would like to note my appreciation for the dedication
and skill of our staff at IDC in continuing to move the business forward. In December of 2010,
following two years of challenges, economic uncertainty and corporate restructurings, the board
completed a strategic review of the business and its prospects. This process resulted in the
unanimous approval of a compelling growth oriented investment strategy for IDC. The market
reacted to this news by driving our shares up by 30% on the day of the announcement with strong
trading volumes. I believe that in rebuilding a company, clarity of vision and a commitment to a long
term growth strategy are the necessary prerequisites for success.
In the first quarter of 2011, the market continued to respond positively -- with our shares at multiyear highs and our monthly trading volumes at the highest levels since the early 2000’s. Markets are
a discounting mechanism that were signaling optimism for our company’s future, while generally
ignoring news related to earnings or product announcements. At our Annual & General Meeting in
Toronto in July 2011, we highlighted the key elements of our strategy in detail. We received a great
deal of support and encouragement from you. You voted in overwhelming numbers to support
various special resolutions that we put before you to support this vision and our plan.
Shortly following that meeting, IDC’s growth strategy was altered and then deemphasized by the
board. A number of directors have since resigned. Our strategy is now at best incoherent and our
vision unclear. Your board is dysfunctional. It has proven incapable of defining or committing to
any consistent value creating strategies or actions for the business. The current board of directors
and governance structure at IDC is broken. This, in my view, is preventing the board of directors
from discharging its core mission and mandate to act as fiduciaries in the best interests of all
shareholders. As I noted above, the market acts as a discounting mechanism. At the present time, as
a result of these decisions and this dysfunction, your company is valued at or near multi-year lows,
with monthly trading volumes in the thousands rather than in the millions.
I am concerned that the board of directors does not – and as proposed to be constituted definitely
will not - represent the interests of shareholders. Mr. Ruffolo has been a net seller of IDC shares over the last twelve months. In my discussions with
him I have found him to be unduly preoccupied with determining the most effective method to
orchestrate a sale of his shares in the company. Decisions brought forward for consideration have
been, in my view and in the view of others, assessed by Ruffolo through this filter of their impact on
the net working-capital backing of his shares and the salability of his position. I believe that Mr.
Ruffolo’s desire to liquidate his share position; coupled with what I believe to be his high degree of
aversion to business and industry risks common to our sector, his lack of experience with
technology companies, and his lack of experience on public company corporate governance matters
compel me to oppose Mr. Ruffolo’s nomination or election to the board of directors.
Further, while I respect Graham McBride as a director, I believe that his relative lack of experience
with TSX listed companies and with technology related businesses in general, coupled with his close
association and working relationship with Mr. Ruffolo and his history and background in
liquidations, precludes me from supporting him as a nominee.
I should add that I have no reason to doubt that the recently proposed new director-nominees being
placed before you on management’s slate as a result of the recent resignations are men of high
calibre. However, I believe they have been selected by Frank and Graham and not through the
appropriate process. Though I am a member of all of the aforementioned committees, including the
Nominating Committee and the Supplementary Nominating Committee that was just announced in
February 2012, I was not afforded the opportunity to meet with these nominees by the other
members of the board or to discuss with them the issues facing our business or our long term
strategy. Taking the opportunity afforded to them by the recent resignations of other outside
directors, I was informed that Frank Ruffolo and Graham McBride acted as “independent directors”
to secure their nomination and excluded me from committee discussions. I do not believe they
compare favourably with other candidates previously considered by the board. I am also not clear as
to what final selection process was used to identify these individuals or who was responsible for
finalizing this slate.
As a result, I am unable to support these director-nominees to the board in my capacity as a director.
I have advocated on behalf of our shareholders, management and employees over the last twelve
months and will continue to do so. This statement is a statement of my views as a director based on
my judgment and duty of loyalty to the corporation. It is not intended nor should it be seen to be
disparaging in any way against my colleagues or other persons past or present at IDC.
Management’s proposed slate of nominee directors is flawed. The process through which this slate
of nominees has been selected and your support has been solicited in favour of a resolution electing
them also reflects deeply rooted dysfunction at the board level. I feel this so strongly I felt
compelled to formally register my opposition as a director to this proposed action.
I do not support it.
Regards,
Adam E. Adamou