Entrenched Board Illegally Hiding Facts About the Company and Its Actions
Shawn H. McCreight, the founder of Guidance Software, Inc.
(NASDAQ:GUID), and a trustee of The McCreight Living Trust, the
Company’s largest stockholder, today announced the release of the below
letter to fellow stockholders.
Dear Fellow Stockholders,
On April 7th, my counsel sent a letter seeking information from the
Company so that I could continue to fulfill my fiduciary duties to all
stockholders. A copy of that letter is printed below. Since my
termination from the Company as an executive in January 2016, the board
of directors (the “Board”) of Guidance Software, Inc. (the “Company”)
has held a number of meetings and made important decisions without my
involvement. The Board has also withheld important Company information
from me. I take my fiduciary duties seriously and, accordingly, I am
making a books and records demand under Section 220 of the Delaware
code. I believe this Board is withholding information to shield itself,
and an under-performing management team, from accountability. I and all
stockholders demand that this Board share the key facts describing the
business, its leadership, its compensation and its prospects so that I
as a director, and you as owners, can thoroughly evaluate the choice
before us at the upcoming shareholder meeting. Vote using the GOLD proxy
card with me to install a fresh slate of directors aimed at setting the
Company back on the correct course.
Copy of Shawn H. McCreight’s April 7, 2016
Letter to the Company
April 7, 2016
CONFIDENTIAL
Via E-mail
Alfredo Gomez
SVP, General Counsel and Corporate
Secretary
Guidance Software, Inc.
1055 Colorado Blvd., Ste 400
Pasadena,
CA 91106
Alfredo.gomez@guid.com
Re: Guidance Software, Inc.
Dear Alfredo:
Recognizing that we are in the midst of a proxy contest, my client,
Shawn H. McCreight, continues to be an active, engaged member of the
board of directors of the Company with responsibilities as a director to
all stockholders. For about the first month after the contest began, I
very much appreciated being copied on materials being sent to Shawn as
board meetings occurred (even if, in many cases, the meetings were
special meetings with precious little advance notice to Shawn).
More recently, though, Shawn has stopped receiving customary information
that he (and all other board directors) needs to stay properly informed
and exercise his duties. Decisions have apparently been made without any
involvement of Shawn, even though they typically would have been issues
presented to the entire board.
Accordingly at this time, with the March quarter having been closed and
important issues apparently not being raised inside the boardroom with
Shawn’s involvement and engagement, Shawn requests that management
immediately and forthwith send to him – and all other independent board
members if they have not already received – the following documents and
other answers:
1. Draft Q1 2016 financials, including a detailed income statement,
balance sheet and cash flow statement. Shawn advises me that, while the
financial team and outside auditors will continue working on these
statements, there are traditionally drafts already available.
2. Information on new customer win-rates, gross margins on new product
sale.
3. Any information given to any other director regarding Q1 2016
performance.
4. The most recent estimates from the Product Engineering team about the
release schedule for EnForce Risk Manager.
5. Board and committee minutes for all meetings not attended by Shawn in
his capacity as director in the last nine months.
6. Board and committee minutes approving recently announced changes to
senior executive compensation, including any materials prepared and
discussed.
7. Board and committee minutes and all materials related to the
consulting contract entered into with former director O’Neil.
8. Any analysis and results that were completed by our auditor regarding
the contract entered into with former director O’Neil and shared with
the Board.
9. As you know, two requirements in the offer letter and contract for
the CEO were (a) the ability to obtain a Top Secret Security Clearance,
and (b) the relocation of his primary residence to the local area.
Kindly confirm both requirements were met. If the clearance was denied,
let me know why.
10. In addition, it has come to Shawn’s attention that there may be
possible impropriety related to the CEO’s expense reports. Accordingly,
provide all expense reports submitted by the CEO since he joined the
company in April 2015.
11. Board and committee minutes and any materials supporting any change
to director compensation for the last 12 months.
Please forward this letter to all of the independent directors and
confirm that has been done. Please be advised that Shawn will
affirmatively exercise all of his rights if these materials are not
immediately produced.
Best regards,
Murray A. Indick
Additional Information and Where to Find It:
Shawn H. McCreight is the largest stockholder and founder of Guidance
Software. Mr. McCreight, John P. Colbert, Jonathan R. Mather, Michael J.
McConnell and Roberto Medrano (together, the “Participants”) have filed
with the Securities and Exchange Commission (the “SEC”) a definitive
proxy statement and accompanying form of GOLD proxy card to be used in
connection with the Participants’ solicitation of proxies from the
stockholders of the Company for use at the Company’s 2016 annual meeting
of stockholders (the “Proxy Solicitation”). ALL STOCKHOLDERS OF THE
COMPANY ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS
RELATED TO THE PROXY SOLICITATION, WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL
INFORMATION RELATED TO THE PARTICIPANTS. The definitive proxy statement
and an accompanying GOLD proxy card are, along with other relevant
documents, available at no charge on the SEC’s website at http://www.sec.gov/.
Information about the Participants and a description of their direct or
indirect interests by security holdings is contained in Annexes I and II
to the definitive proxy statement filed by the Participants with the SEC
on March 30, 2016. This document can be obtained free of charge from the
SEC’s website at http://www.sec.gov/.
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