The Eastern Company (NASDAQ: EML) today announced that it has filed
definitive proxy materials with the Securities and Exchange Commission
in connection with its 2015 Annual Meeting of Shareholders, which is
scheduled to be held at 11:00a.m. local time on May 20, 2015 at the
Company’s offices, located at 112 Bridge Street, Naugatuck, Connecticut.
The Company’s shareholders of record as of April 2, 2015 will be
entitled to vote at the Annual Meeting. Further information about the
2015 Annual Meeting of Shareholders can be found at www.eastern2015meeting.com.
In conjunction with the definitive proxy filing, the Company is mailing
a letter to shareholders urging them to use the BLUE proxy card to vote
“FOR” the Company’s independent, experienced and qualified director
nominees to the Board of Directors, Samantha Allison and David C.
Robinson.
The full text of the letter is below:
April 10, 2015
Dear Fellow Eastern Company Shareholder:
At The Eastern Company’s upcoming 2015 Annual Meeting of Shareholders to
be held on May 20, 2015, you will be making important decisions
regarding the future of your Company. This year your vote is especially
important, given the contested election of directors. Specifically,
Barington Companies Equity Partners, L.P. and certain of its affiliates
(the “Barington Group”), which beneficially own approximately 5.2% of
the Company’s outstanding shares, have launched a proxy contest against
the Company’s nominees and are attempting to insert two of their own
nominees on the Board of Directors. Your Board urges shareholders to
vote the BLUE proxy card in support of the
Company’s independent nominees.
YOUR BOARD AND MANAGEMENT TEAM HAVE POSITIONED THE COMPANY FOR
LONG-TERM GROWTH AND ARE COMMITTED TO SHAREHOLDER VALUE CREATION
Your Board urges you to support The Eastern
Company and its business strategy by voting in favor of the Board’s
nominees using the BLUE proxy card. Your Board and
management team have the experience, knowledge and commitment to enhance
value for our shareholders in a variety of ways, including organic
growth, acquisitions and dividend consistency. Indeed, the Company’s
most recent dividend represented the Company’s 298th consecutive
quarterly dividend.
We have a track record of focusing our efforts
on maximizing profit and producing cash flows to adequately fund new
product development, efficiency improvements and dividend payouts.
From 1997 to 2007, the Company made a series of acquisitions and
established new operations in China, increasing the Company’s sales from
the mid $60 million-dollar level to as high as $156 million in revenues,
and increasing the Company’s EBITDA from $9 million to $20 million. In
the aftermath of the financial crisis in 2008, the Company focused on
strengthening its position for long-term growth. It developed new
product lines to become a preferred supplier with key top-tier customers
(such as Bombardier Inc., Chrysler, Freightliner Trucks and Kawasaki
Heavy Industries), made inroads into new market sectors, improved
operating processes and reduced costs. Additionally, since 2000, the
Company has successfully integrated nine companies through acquisitions,
which have opened new markets to the Company and have had a positive
impact on our earnings. For example, in 2002, the Company acquired
Canadian Commercial Vehicles, which gave the Company access to the Class
8 truck market and was immediately accretive to earnings. More recently,
in December 2014, the Company acquired the assets of Argo Transdata
Corporation, a manufacturer of printed circuit boards. The acquisition
of Argo provided the Company with an expanded market, opportunities for
operational synergies and, due to the fact that the Company now has its
own captive circuit board supplier, the potential to improve margins and
profitability. We believe these successes position the Company to
achieve future long-term growth. It is our intent to continue to
increase sales and generate sustained profitable growth through organic
investments as well as additional value-creating acquisitions as they
become available.
We have retained the services of Wells Fargo
Securities to assist the Company and Board in evaluating all
of the strategic opportunities available to the Company. Your Board and
management team, as always, will thoroughly review these opportunities
with the objective of maximizing shareholder value and pursuing courses
of action that are in the best interests of the Company and its
shareholders. The Company will update shareholders regarding this review
process as appropriate.
Two areas of opportunity for The Eastern
Company are security and safety, which have emerged over the last few
years as major needs in the United States. With a strong
balance sheet, we believe we are well-positioned to make further
strategic investments in all of our businesses and to continue to
fortify growth in the areas of security and safety. In recent years,
working very closely with the U.S. military, we developed the latching
and locking systems needed to meet the security and safety needs of our
military during the Afghanistan and Iraq wars. Now, the Company is
specified as the supplier of choice by the U.S. military for latching
systems for the new Joint Light Tactical Vehicle (JLTV) when the program
begins. Also, working with Homeland Security, we developed a
TSA-approved keyless combination lock for locking luggage at airports.
Another successful security solution introduced by our Company is our
optical coin recognition meter, which can be utilized in a wide variety
of applications where coins are accepted for payment. With the
capability to adapt to almost any foreign currency or application, our
optical coin recognition meter gives our Company the opportunity for
growth by tapping into new global markets.
We are a nearly 160-year-old New England
Company with enduring core values. We have always believed it
is important not to take unnecessary risks with our shareholders’
assets, but we have never been hesitant to strategically invest
resources in ways that will create value for shareholders over time.
Consistent with those values, we are focused on generating shareholder
value with the addition of two new board members, the retention of Wells
Fargo as a financial advisor and the targeting of our highest potential
customer markets.
YOUR BOARD UNANIMOUSLY RECOMMENDS YOU VOTE FOR THE COMPANY’S
INDEPENDENT NOMINEES USING THE BLUE PROXY CARD
Your Board takes a long-term view of our
business and is focused on increasing shareholder value over time.
With four returning directors and two new directors – including our
nominee Samantha Allison and our expected appointee, James H. Ozanne –
we believe we have a highly qualified Board with experience relevant to
our business and a strong commitment to acting in the best interests of all
of our shareholders.
Up for election at the 2015 Annual Meeting of Shareholders:
-
New nominee, Samantha Allison, will bring
to the Board years of experience in the areas of acquisition
evaluation and integration, strategic growth and management, having
served in senior management positions at GE Healthcare and GE
Healthcare Financial Services and subsequently founding and serving as
President of Top Floor Consulting, Inc., a management consulting firm.
Furthermore, as a Six Sigma Black Belt (certified by the General
Electric Company), Ms. Allison has a deep understanding of the Six
Sigma methodology, which involves leveraging statistical data analysis
to clearly define an issue/problem, determine a baseline metric for
performance, analyze root causes, identify optimal solutions, and then
ensure sustainability of an improvement once implemented. We believe
Ms. Allison has knowledge of a valuable tool set and is well
positioned to support the Board and the Company’s management team in
driving process improvements at the Company.
-
Returning director, David C. Robinson,
has a deep understanding of the Company’s business and the challenges
that it faces. With experience in the areas of pensions, employee
benefits and compensation, including his experience as an enrolled
actuary and former head of his own insurance agency, Mr. Robinson
provides the Company with extensive knowledge in the areas of employee
benefits and risk management.
To be appointed immediately following the 2015 Annual Meeting of
Shareholders:
-
New appointee, James H. Ozanne, will
provide the Board with a fresh manufacturing and financial perspective
from his extensive experience serving in executive positions in the
manufacturing and financial services industry since 1972. During this
time he has held the positions of Chief Financial Officer, President,
Chief Executive Officer and Chairman of several leasing, rental, and
consumer finance businesses ranging from industrial battery
manufacturing and leasing to full service railcar leasing, general
equipment finance and grocery pallet rental. Previously, he was
President and Chief Executive Officer of Nation Financial Holdings and
its predecessor, US WEST Capital. Mr. Ozanne also served as Executive
Vice President of GE Capital responsible for the Consumer Finance and
Operating Lease/Asset Management business units. Additionally, Mr.
Ozanne has significant public board experience (including audit
committee experience), previously serving as a Director of United
Rentals, Inc. and NMI Holdings, Inc., and currently serving as a
Director of ZBB Energy Corporation.
YOUR BOARD URGES YOU NOT TO RETURN THE
WHITE PROXY CARD SENT TO YOU BY THE BARINGTON GROUP
The Barington Group nominees, James A.
Mitarotonda and Michael A. McManus, Jr., are not right for The Eastern
Company’s shareholders. The Barington Group has filed
its own proxy statement to insert its two nominees on the Board. We
believe the Board’s current directors, its nominees for election at the
Annual Meeting and its expected appointee to the expanded Board
following the Annual Meeting, are much better qualified to represent all
of the Company’s shareholders than either of the Barington Group
nominees.
Mr. Mitarotonda and Mr. McManus are wrong for the Company’s shareholders:
-
The Barington Group has not presented an
actionable strategic plan for the Company. In more
than four years of communications with representatives of The Eastern
Company, the Barington Group and Mr. Mitarotonda, who is Chairman of
the Board, President and Chief Executive Officer of Barington Capital
Group, L.P., have suggested on multiple occasions that they could
assist in developing a new strategic plan for the Company, but they
have yet to provide any meaningful, actionable suggestions. The
only definitive proposal that the Barington Group ever made to the
Company was for the Barington Group to provide the Company with vague
strategic planning, acquisition and integration “services” in exchange
for, among other things, 60,000 restricted shares of the Company
(which at the time were valued at almost $1 million) that would vest
if the Company’s 20-day average stock price met certain price targets
within five years from the date of grant (15,000 shares at $18.00 per
share, 30,000 shares at $20.00 per share and 15,000 shares at $22.00
per share). Your Board rejected this proposal as not in the best
interests of the Company’s shareholders. This proposal also sheds
light on what we believe are Mr. Mitarotonda’s short-term,
self-interested motivations that are not aligned with the interests of all
shareholders.
-
Mr. Mitarotonda is over-extended.
As a current CEO, a current director of at least three other public
companies and activist investor involved in a number of other proxy
campaigns, Mr. Mitarotonda will not have the time to focus on the
additional responsibilities of serving your interests if he is elected
as a director of The Eastern Company. Indeed, the 2015 U.S.
Summary Proxy Voting Guidelines of ISS Proxy Advisory Services
recommend that shareholders vote against or withhold votes from
director nominees who “[a]re CEOs of public companies who sit on the
boards of more than two public companies besides their own.” In fact,
in the recent uncontested director election at OMNOVA Solutions Inc.’s
2015 Annual Meeting, ISS recommended shareholders withhold votes from
Mr. Mitarotonda for being over-boarded and more than 25% of OMNOVA’s
voting shareholders withheld their votes from Mr. Mitarotonda – which
was the highest percentage of withhold votes of all of the candidates
and over 2.5 times more than the second highest candidate.
-
Mr. McManus has close ties with both the
Barington Group and Mr. Mitarotonda. Mr. McManus currently
serves as an advisor to Barington Capital Group, L.P. and has been a
Barington Group nominee in at least one other proxy contest. In 2006,
the Barington Group nominated Mr. McManus to the Board of A. Schulman,
Inc. and, since that time, Mr. McManus and Mr. Mitarotonda have served
on A. Schulman’s board together. Given Mr. McManus’s ties to both the
Barington Group and Mr. Mitarotonda, we have serious concerns as to
whether Mr. McManus is sufficiently disinterested from the Barington
Group with the ability to present truly independent ideas to properly
represent the interests of all
shareholders.
-
We believe the Company’s nominees are better
qualified than Mr. Mitarotonda and Mr. McManus to provide the
strategic guidance and corporate governance that the Company’s
shareholders deserve. The Board’s nominee, Samantha
Allison, and its expected appointee to a sixth Board seat, James H.
Ozanne, represent decades of practical and strategic experience in
such areas as mergers and acquisitions, acquisition integration,
change management, process improvement, manufacturing, financing and
leasing. By contrast, Mr. Mitarotonda’s primary role is that of
activist investor and he has built a reputation through his
participation in proxy battles with other companies, but we believe he
lacks the industrial and operational experience necessary to provide
strong contributions as a Board member of The Eastern Company.
YOUR VOTE IS IMPORTANT - VOTE THE BLUE PROXY CARD TODAY
Your vote is extremely important, no matter how many or how few shares
you own. We urge you to vote today by telephone, online or by signing
and dating the enclosed BLUE proxy card and returning it in the
postage-paid envelope provided. Please do not
return or otherwise vote any WHITE proxy card sent to you by the
Barington Group.
On behalf of your Board of Directors and management team, we appreciate
the continued support of The Eastern Company shareholders.
Sincerely,
The Board of Directors of The Eastern Company
If you have any questions or require any assistance with voting your
shares, please contact the Company’s proxy solicitor:
Georgeson
Toll-free number: 888-549-6618
E-mail address: EasternCompany@georgeson.com
About the Company
The Eastern Company is a 156-year-old manufacturer of industrial
hardware, security products and metal castings. It operates from 12
locations in the U.S., Canada, Mexico, Taiwan and China. The diversity
of the Company’s products helps it to respond to the changing
requirements of a broad array of markets. More information on the
Company can be found at www.easterncompany.com
Important Additional Information
The Eastern Company (the “Company”), its directors and certain of its
executive officers may be deemed to be participants in the solicitation
of proxies from the Company’s shareholders in connection with the
Company’s 2015 Annual Meeting of Shareholders. Information regarding the
names of the Company’s directors and executive officers is set forth in
the Company’s definitive proxy statement for the 2015 Annual Meeting of
Shareholders filed with the U.S. Securities and Exchange Commission (the
“SEC”) on April 10, 2015 and in the Company’s Annual Report on Form 10-K
for the fiscal year ended January 3, 2015, filed with the SEC on March
13, 2015. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the proxy
statement and other related materials to be filed with the SEC when they
become available.
The Company has filed a definitive proxy statement and BLUE proxy card
and other related materials with the SEC in connection with the
solicitation of proxies for the Company’s 2015 Annual Meeting of
Shareholders. COMPANY SHAREHOLDERS AND OTHER INVESTORS ARE STRONGLY
ENCOURAGED TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND
SUPPLEMENTS) AND BLUE PROXY CARD AND OTHER RELATED MATERIALS WHEN THEY
BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.
These documents, including any proxy statement (and amendments or
supplements thereto) and other related materials filed by the Company
with the SEC, are available for no charge at the SEC's website at www.sec.gov
and at the Company’s website at www.easterncompany.com.
Copies may also be obtained by contacting The Eastern Company Investor
Relations by mail at 112 Bridge Street, P.O. Box 460,
Naugatuck, CT 06770 or by telephone at 203-729-2255.
Safe Harbor for Forward-Looking Statements
Statements in this document regarding the 2015 Annual Meeting of
Shareholders and any other statements about the Company’s future
expectations, beliefs, goals, plans or prospects constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statements that are not statements of
historical fact (including statements containing the words “believes,”
“plans,” “anticipates,” “expects,” “estimates” and similar expressions)
should also be considered to be forward-looking statements. There are a
number of important factors that could cause actual results or events to
differ materially from those indicated by such forward-looking
statements, including those set forth in the Company’s reports and
filings with the Securities and Exchange Commission. The Company is not
obligated to update or revise any forward-looking statements as a result
of developments occurring after the date of this document.
Copyright Business Wire 2015